>> good morning, this is bloomberg daybreak: europe, i'm dani burger in london and these of the stories that set your agenda. hike or hold, jay powell looks to balance fighting inflation against the banking crisis. markets are, with stocks higher and treasury yields down. unwinding the spinoff, ubs said to favor dealmakers rather than building out first boston as a separate unit. christine lagarde is among policy officials who will speak today at the ecb in its rot -- watchers conference in frankfurt. breaking lines coming through on ubs. ubs will buy back some balin notes post credit suisse deals. these are the ones that have been seen totally wiped out after the swiss reglet tory framework. but this are ubs own bail and

notes. to give you the specific language, it says the issuer has decided to launch the exercise as a result of prudent assessment of recent developments in the issuer's long-term commitment to the credit investors. trying to restore confidence in these specific types of notes were wiped out because of the new regulatory framework. these are two different notes that they will buy back. they will tender their notes for cash. we will keep on top of those lines as they come through. meanwhile, the focus stays on ubs, stays on credit suisse, but we now have to incorporate the fed where they will be deciding what is more important, is it financial stability, is it inflation? do they have to forsake one for the other? this is the most uncertain we have been around the fed decision for the market. the market is calm ahead of the decision. stocks climbed yesterday. there is ubs as of the last

close, it climbed 12%. msci asia-pacific is falling off of the wall street rally of more than 1% yesterday. s&p 500 futures are flat. bitcoin still above 28,000. is this the vindication for bitcoin that it's been able to rally amid the turbulence, or is it a dead cat bounce for crypto? you are looking at more calm in the front end yields for the u.s. it has been wild to see these moves on short dated bonds. the two year yield was up 21 basis points yesterday. we have 80% priced and that we will get a 25 basis point hike. some of that destruction in the bond space is carrying over to asia. australia three-year yields are up 17 basis points in the dollar hovers around a one month low. let's get to our reporters from around the world. it's a fed decision, we will talk about the banking turmoil

and xi jinping's visit to moscow. starting with the fed, policymakers are trying to balance the inflation fight. we are counting down to the policy decision later today, so let's bring in bloomberg's market reporter. what do we expect today? is there any certainty as to what the fed will do? valerie: the fed will likely meet market expectations for a 25 basis point hike. at how quickly things have moved. it has been in the last four sessions we have gone from fright -- pricing in a positive pricing in a 25 basis point hike. what the dots will reveal will be the key message on the path forward. will they revise them hired to show confidence that the regional banking crisis is contained for now and will they repeat that word ongoing rate increases are needed. the other side of the coin is will they revise them lower? signaling the lagged effects of

monetary policy are upon us and the contraction of lending conditions that the banking upheaval will cause will do the work for them on inflation. dani: does the fed have to face this dichotomy of price stability or financial stability? valerie: it will be about the assessment of what has this two-week upheaval in the u.s. regional sector, what will it do on credit conditions and the real economy in the u.s. those are key to extending credit to consumers, to commercial real estate, to residential real estate. we've had big names throwing their hats into the ring on this discussion. mike from j.p. morgan said the slower loan growth will shave nearly 1% off gdp in the next year. mike wilson of morgan stanley saying the credit crunch risk has increased materially. lastly, from apollo, claiming the recent disruption equates to

150 basis points of a fed hike. let's look at the bloomberg financial conditions index on what has been priced in since the banking upheaval started. you can see a sharp contraction that felt with the collapse of silicon valley bank and conditions continue to tighten as the regional banking sector came under a big spotlight. the other thing is, perhaps the fed won't be in a rush to pivot. maybe they learn from the mistake of january that they were too optimistic about disinflation and will perhaps keep their options as wide as possible. dani: a lot of options to be had, it feels like a lose lose situation. we learned moments ago that ubs will be offering to buy back some of its bail and note. that's its euro denominated senior unsecured notes do march 2028. these are the bonds that have

been under scrutiny after credit suisse saw those wiped out as a part of the deal. bloomberg has learned that ubs wants to cherry pick top filmmakers from credit suisse instead of supporting the plan that has been off of it as an independent firm. let's get to our finance reporter. great to speak with you. this story is quickly changing. let's talk about boston. what is the future of this spin out? >> the future of the spin out looks dead. last year credit suisse struck a deal to spin out its investment banking division, merge it with boutique business, pay him $175 million in the process, and get that out from under there may -- the main company. ubs is doing this deal, it was a force deal for them, but they want to keep the best bits. some of the investment banking advisory business is something

ubs really values. in asia, ubs has only a quarter of the share of the market that credit suisse does and investment banking. you could see why they would value that and why they don't want that first boston spin out to happen. dani: over in the u.s. the drama continues. what are the new efforts to bolster first republic? >> this is a fast-moving story so what we know, the latest is that this is about avoiding another u.s. bank collapse and it's about pretty in up first republic for a sale. we are now talking about government backing potentially for the business. last week 11 banks got together and injected a $30 billion deposit into first republic in an effort to shore that up. shares have continued to plummet , so now we are talking about a government guarantee, a

government intervention in that could look like the government pulling out that assets. it could also look like offering liability protection, implying capital rules more flexibly and removing the ownership cap to make it a sweeter deal for potential investors or buyers of that business. dani: thank you very much. that's bloomberg's correspondent. as the world continues to be buffered by political tensions, high inflation and challenging supply chains, we will have a conversation at bloomberg with some of the top financial thinkers. i will speak with man group ceo luke ellis on how to invest in this climate at today's bloomberg invest event. i quickly do want to mention s&p giving out their lines when it comes to the banking sector. it's not clear what part of s&p this is, but saying the base case is that european banks to

be resilient. credit suisse was a clear outlier among major european banks and not seeing evidence that u.s. deposit outflows have spread widely. a vote of confidence when it comes to the larger european banking sector. let's take a break from the banks and top politics, xi jinping and vladimir putin have pledged closer ties after two days of talks. bloomberg's bruce einhorn in hong kong has more. where do we stand on this relationship? >> this was day two of the three-day meeting and president putin praised the peace plan that china has put forward for the war in ukraine and called it a basis for resolving the conflict. this is a peace plan that the u.s. and other western nations have dismissed as overwhelmingly pro-russia. ukraine has also not shown a lot

of interest in it at the moment. the chinese foreign ministry issued a statement saying the two sides agreed on a need for dialogue to resolve the ukraine crisis. always interesting that china uses the words crisis rather than talking about the war in ukraine. the russia state media reported the two sides talked about military cooperation. this is something that was a concern in the west with worries that china would be providing increased military assistance to russia. the nato secretary-general said yesterday that while that is a concern, so far, they have not seen signs that that is happening. dani: elsewhere there are more restrictions being unveiled when it comes to the chipmaking industry in china from the biden administration. what does the latest round look like? roos: last year congress passed

a huge bill to promote semiconductor manufacturing in the u.s. called the chips act. the commerce department has now released rules that it will be implementing as part of that legislation. according to these rules, companies that are taking money as part of the chips act to invest in the u.s. will face restrictions on what they can do in china. there will be restrictions increasing their capacity in the most advanced levels of semiconductors to 5%. for other types of semiconductors it's 10%. other restrictors will apply. this could be a major issue for taiwan semi conductor manufacturing, which has a major operation and an eastern chinese city. if they want to expand capacity there, it means they might have to forgo money from the chips act to expand capacity in the

u.s.. another sign the u.s. is keeping on the pressure when it comes to making companies make a choice between do you invest in the u.s. or do you invest in china? dani: that's bloomberg's bruce einhorn in hong kong, global bonds are last in another day a major short date moves. volatility continues ahead of the fed and poe rate decisions this week. this is bloomberg. ♪

dani: another day, another crazy trading session for front end bonds. they might be more calm today, but let me show you what the two year yield has done over the past five days from moving higher, to a big rally, to

yesterday looking at the front end getting crushed. at one int it moved up 21 basis points. there's so much uncertainty as to what the fed will do. after yesterday's session we priced in 80%. there is still that unknown with whether they look more towards financial stability, or to fighting inflation. let's bring in antoine to try to assess this. it's been a crazy week, and how do you think about this volatility in front end rates? how do you trade this? antoine: it's difficult to trade, besides the volatility. the spread has widened dramatically. times of the day is difficult. generally speaking for banks it's a very difficult environment, very difficult for our clients. it reflects the uncertainty at

the macro letter -- level. there is a lot hanging in the balance. with the future decisions of the fed, torn between two different scenarios. one is inflationary, one where the fed needs to tighten more. which they told us they would do. one where the tightening has been done for them through thanks. dani: bloomberg economics has this piece out where they say the banking crisis has equated 50 basis points worth of tightening. does that sound right to you? antoine: i came here thinking you would ask me that question. i don't have that number. there is a lot of assumptions to make. the first one is no further contagion in an environment where there's no further contagion. cost increase, cost of capital increase, and that will result in a tightening of these conditions. there's the -- of how much

contagion do we have and is this it. in the second scenario where we see no further contagion, it's probably something that will allow the fed to hike 25 basis point. beyond that is a big question mark. we have always said the fed would be in a position to cut later this year. the peak in the cycle would be the first or second quarter. our conviction has been forced. dani: what does it look like if the fed puts the inflation in the backseat or tolerates higher inflation and the sake of financial stability? antoine: i'm pretty sure they won't frame it that way. i think if they stop hiking rates at this meeting, the may meeting, it will be because the financial stability risk is spilling over into economics.

solving the inflation problem for them. it's a simplistic view. we have no certainty of that, but the potential credit crunch is a reduction in credit for the economy we talked about. that and it of itself is something that reduces demand side of the economy and helps with the inflation fight. as you know, this inflation is mix and the proof is in the pudding. we will only know down the line whether this was enough to kill inflation. dani: the other dilemma we are faced with in the aftermath is trying to understand whether we've accurately priced risk or understand the risk of different investment vehicles. a lot has been made that svb's downfall is very safe bonds and then we have the eight c -- eight t one, but then we have ubs buying back bail and notes. are there more issues within the fixed income space of not

appropriately understanding risk? are there more cockroaches to come crawling out of the fixed income world as a result of bankers -- central bankers aggressively hiking from below zero interest rates? antoine: i wish i could put it forward to explain my point, but i don't know. some of the issues i just mentioned are regulatory decisions by the authorities. that's a decision and not something that can be forcing into the bonds. as far as losses by treasury, the question is how much needs to be realized. there is an amount of debt in the market that is underwater, if you were to market. the question is under what conditions would the debt have to be for sellers or realize the

losses? that's what the question is for these banks because the deposit flight, they now have to realize the losses. there are steps taken by the fed a week and a half ago that worn they allow them not to realize these losses. the difference is the drive on profitability to be carried for several years. there will be a drought. it doesn't necessarily need to be a financial crisis or something that hits us now, but it will be a drought for the whole system. higher interest rates are meant to be a drive on the economy. we will see that happen. i don't have a sector or specific place where leverage is elevated or the unrealized losses are everywhere that will be a problem. dani: do you feel more

comfortable now that the worst of this crisis, the worst of this volatility has come to an end? antoine: there's a lot of rational reasons to think so. that would be my main point. the measures that have been taken in the u.s. or in switzerland, or the single resolution -- supervision board in the eurovision made that point that euro banks are safe, all these arguments are valid. the only one is where confidence disappears in the banking sector. this is wim the risk is impossible to dismiss. dani: we witnessed how quickly that can happen. really fantastic to catch up with you. seeing great strategist at ing bank. nike third-quarter revenue beats estimates.

we will dig into those results in the for your outlook for the world's biggest shoemaker. this is bloomberg. ♪ go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars. go big. or go home. from software that delivers new cures at warp speed, to technology that makes clean energy reliable, emerson innovation helps make the world healthier, safer, smarter and more sustainable. go boldly. emerson.

dani: welcome back to bloomberg daybreak: europe, nike reported revenue of $12.4 billion in the third quarter, beating estimates and higher by 14% year on year. world's biggest sports shoemaker worked down its excess inventory on profitability missed -- estimates amid markdowns. joining us now was bloomberg's joe easton. what were your takeaways? >> was a solid report on the top line with the numbers you mention, with massive sales on the course of $12 billion in revenue. not many sports companies or

clothing companies do those kind of numbers. but the margins were weaker than expected. there was a lot of discounting. input costs are higher, energy costs are higher, so the stock was down a few percentage points. that's because the stock is priced to perfection. it's one of the most expensive stocks on the street across most categories. the earnings had to be good to keep it at that level or even push higher. given the margins were slightly weaker, that's where you saw that easing of the share price. dani: not even just for nike, but for u.s. retailers this is the thing that concerns investors. they kicked off with target last year in terms of the post-covid adjustment. has nike found its way through that problem yet? joe: on the face of it they have the inventories up slightly, but up much less than they were last quarter. last quarter inventories were up more than 40%. now they were up about 15%.

better on that front. the dollar value inventory has declined because slight weakness in the dollar during that quarter. that's been positive. the commentary does suggest inventory will keep coming down, it is important because i inventory means they have to discount their products and sales prices and margins get weaker. on the face of what they are saying, the inventory situation is getting better. dani: what about growth? where does that come from? joe: the big one is china and because china is the most profitable area for nike because they make their goods there and therefore a cost plus to get it out to the market. that's where they need to push up their growth. the other thing they are doing is direct consumer. they are doing more fat, online websites, storms, nike town on oxford street i tend to avoid it. by getting the product to

consume has pushed up the margin better. that along with china should improve the growth outlook. dani: i only just realize you say nike, not nike. you will come on within american and say mike. joe: i say every time i will say it and then i don't. dani: we will talk about my bad pronunciation of adidas. we will talk after this and get it correct. thank you for joining us, bloomberg's joe easton. nike did fall post market about two and a third percent after those earnings. coming up, pause or no pause, we discuss the options on the table for the fed after the turmoil in the banking sector.

dani: good morning, this is bloomberg daybreak: europe, i'm dani burger in london and these other stories that set your agenda. it's fed dilemma day as jay powell looks to balance fighting inflation against the banking crisis. markets are, for now with stocks higher and treasury yields down. unwinding the spinoff, ubs is said to favor credit suisse dealmakers rather than building up first boston as a separate unit. christine lagarde is among policy officials who will speak today at the ecb and its watchers conference in frankfurt. a credit event risk, that is back as the top till risk according to the latest bank of america fund manager survey. that is the dilemma that the fed faces today. do they hike and potentially make things worse or do they hold and perhaps confirmed that they are worried about the current market environment?

at the moment, this equity market is not so worried. we had a big rally on wall street yesterday up more than 1%. asia-pacific up more than half a percent. euro stocks gains as does most euro stock futures. bitcoin holding above the 28,000 level, perhaps a vindication for some of the bitcoin bulls, but there is that concern, is this potentially a dead cap bounce for bitcoin? looking across sectors, the two-year yield had a big move upwards. at one point as much as 21 basis points. it comes in some this morning but australia picks up the mantle as does new zealand up 17 basis points. bloomberg dollar spot is slightly weaker, down by about 1/10 of 1%. this is where we stand at the moment. it is unknown what the fed will do. one of the least convictions we've had ahead of a fed fight

-- hike. the first time this cycle we haven't priced in a full hike. fed policymakers, what's at stake is they are balancing the inflation fight with the turmoil in the banking sector. the are counting down to the policy decision later today. let's bring in valerie tytel and paul. let's set things off. set the scene. what's expected? valerie: the fed is likely to meet market expectations for a 25 basis point hike, but it will be about the dots and what they signal on the path. he mention uncertainty around the feds path forward has been extremely notable. if you look at front end interest rate voles, they are at record levels. in the last few session, the markets are acting like the banking wobbles might be done. the fed acted swiftly and preemptive measures. there was not a lot of pull from the dollar swamp lines -- swap

lines. the new lending facility take up was not that large. perhaps we go quickly to pricing that everything is sound and we go back to worrying about inflation. if you look at funding metrics, that's a very important funding metric. it has been well contained. cross currency spreads have been well contained in credit spreads broadly. they did not surpass levels of last year. i think the market will very quickly pivot to worrying about a hawkish fed, higher dots, and the fight against inflation is yet done. dani: what say you, can we go 25 basis points, can we go back to concentrating on the inflation fight? paul: i think the fed's purpose is clear and easy. if they stick with what's priced in and what's expected, that will cause the minimum amount of ruffles in the market. it's up to powell to navigate the questions during the press

conference, to strike that balance, to give the impression that, yes they are taking into account what's going on in the banking sector, but also still concerned about inflation, it could be about a past. if you deliver the 25 basis point, maybe we get something with a wide scope of expectations that doesn't give us that much meaning. if the fed does publish or they decide to take a pause, which is a possibility because of the uncertainty in the volatility we've seen of late. dani: i have to bring up the fantastic emily of peace you published. the title of which is bank risk matter more for macro traders this week. what do you mean by that? paul: it's a provocative post. but what i'm trying to say is, if the fed does all that, really how much upset in the market will it cause? we've seen huge volatility in the short end of the interest rate curve.

the commodity trading advisors we know about the macro hedge funds. that cuts their positions drastically. they are unlikely to go back into it after the fed. that takes around an element from the fed. also, if the fed does little to jog the long end of the yield curve, that will have little impact across the rest of the market and the rest of the world's concerns. i think you want to be concerned or keep an eye on what's going on with first republic bank and the rest of the u.s. banking sector. if it can be brought under control, that's a great thing, but i don't know if it is contained. we had efforts by the largest u.s. banks to backstop deposits. now we have the authorities talking about other measures that they might need to take to stand behind it as well. even then the market didn't like that. he saw a drop in the share price and after our trading in the

u.s. session. i think unless the risk can be brought under control, that's still where things can be shaky and rocky for macro investors. dani: i imagine what the fed and jay powell says about the banking system will be because the fed, more than anyone else, has the best insight on the american banking system. valerie: they spent the last seven days on the phone with regional banks to get a glimpse of how they've been reacting to deposit flight, if that's existing, and what has that had on their lending standards. we know regional banks are key to extending credit, goldman had a fabulous statistic. 80% of commercial real estate lending is done by smaller banks in the u.s. if this two weeks of volatility has caused them to pull back on lending, that could have pretty sizable knock on effects.

when do we see this turning up in the data? when do we see it turning up ever in the data and will the fed wait for that? perhaps they won't be in a rush to prevent until the evidence is clear, but it could be a good four to six months. dani: valerie, paul, really fantastic to speak to both of you. thank you both very much. let's get to some of our other top stories this morning. with the first word news is madison mills and dubai. madison: the imf has reached a staff level agreement for $15.6 billion loan for ukraine. that crash delivered over four years with the latter face supporting the nation's recovery and reconstruction. it's the first time in the international monetary fund 77 year history that has made a loan to a nation currently at war. the loan is subject to approval by the fund's executive board.

former u.k. prime minister boris johnson said he did not deliberately mislead the house of commons over a series of rule breaking parties during covid lockdowns. is 52 page legal submission comes ahead of a highly anticipated televised hearing by a parliamentary committee. if he is found in contempt of parliament, he could be suspended and face a reelection fight in his constituency. bloomberg learned the eu propose a roadmap for addressing german concerns over its planned ban on new cars with combustion engines. in a letter to berlin, the european commission promised to publish timelines to allow new combustion engines running on e fuels to be registered after the 2035 ban. global news, 24 hours a day, on air and on bloomberg quicktake, powered by 2700 journalists and analysts in more than 120 countries. this is. dani: madison mills and dubai. coming up, we bring you the latest on the turmoil in the

banking sector. that's next. this is bloomberg. ♪

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>> the premise of the question is that we are an asset allocator. we are not. we invest exclusively in

disruptive innovation, nothing else. what we did do is concentrated our flagship strategy so ar kk, a r k, a rk w, ar kf, and we moved in the flagships case from 58 names in february of 2021 when we peaked, down to 27, 28 names. we have a scoring system and the scoring system is based on variables -- variables we believe are important to innovation. so we concentrated the portfolio. many people in the traditional asset management world, when they go through a risk off, they will diversify their portfolios by moving closer to their benchmarks. what they are doing is typically selling our kinds of names. so with that is why they are putting extreme pressure on them will create losses by selling

stocks, and that gives us a tax loss asset. it's over $2 billion right now against which we can take future gains and concentrate towards our highest conviction names. we have the paper on our site that shows the benefits of this concentration strategy during risk off and diversification strategy during risk on. when it's a off, you've underperformed. i know people will say you are always looking in a long time five your outlook perspective, but look at from here over the last five years and it has been a turbulent time, and interest rate hike time and you've underperformed the s&p 500. what do you say to those who have a shorter time frame in terms of investing. those looking to and -- to retire in the next five to 10 years? do they have to be long-term investors to have exposure to arc investment?

>> we are this -- we are the closest thing to a venture capital fund and the public equity market. a venture fund has a long-term investment horizon. if an investor cannot have that long-term investment horizon, then they should allocate a small amount to our strategy. say 1% or 2%. which, by the way, from what we can tell, most advisors have us at that 1% to 3% range. dani: arc investment ceo cathie wood talking about the silverlining of losses. some future tax bills that will be offset. this morning ubs said it would buy back some of its vale and bonds after the credit suisse deal, which saw credit suisse bail and bonds totally wiped out. this was the important part from the statement. it's all about restoring

confidence saying the issuer has decided to launch this exercise as a result of a prudent assessment of the recent developments in the issuer's long-term commitments to its credit investors. let's bring in bloomberg's finance editor on this. what do you make of this statement and this plan from ubs? >> it seems like another hasty deal that has been brought around by ubs. it's a deal that opens today. these are bonds coming due 2028, 2032. it seems that they are erring on the side of caution, they are being prudent as a backdrop to the side of credit suisse. let's see what the appetite is. dani: speaking of being prudent, these talks, first reported by the ft to unwind michael klein's first boston plan, what we know about this?

>> what we are hearing is the big plan for the ubs takeover to spin out the investment bank. now it seems it could all be falling apart. michael klein's plans, it looks as though ubs would prefer to cherry pick the top credit suisse investment bankers. so, any plans he might have had for a spin off look as though they might not happen. having said that, the executives are still holding out for this plan and they are talking to potential suitors who might still be interested in this spinoff. we will have to wait and see what happens in that space. dani: while the ubs purchase of credit suisse has way to go until it's resolved, one thing in the u.s. that has yet to be resolved is the potential rescue of first republic bank. where do we stand? >> that's it from one trouble

lender to another. what we are learning now is that u.s. officials and wall street leaders are in talks to really try to get a deal done for this bank. they are looking at offering public backing. it will be a deal suite to any potential suitor that will come in. and there are free incentives like looking at lifting out the assets that had eroded its balance sheet. so it is just a carrot to anyone looking at the bank. dani: all these details continue to be worked out. i could ask you roughly 1000 more questions, but i'm afraid we have to end it there. as the world continues to deal with this market volatility, still high inflation and not to mention a fed decision, we will speak with financial thinkers. i will have conversation with luke ellis at 9:20 a.m. here at

bloomberg at the bloomberg invest event. this is bloomberg. ♪

dani: now we turn to frankfurt where the annual ecb and its watchers conference begins today, ringing the world of central banking, academic and business together. it's been a week of turmoil, so the focus is on the state of the european banking system. it's get over to maria who is at the conference in frankfurt. there's a lot that could be discussed today. what are we expecting to hear from madame lagarde? >> there's a lot that will be discussed today. this is a conference that it is special because it does bring

this consolation around central-bank and brings the academics. also the bankers. it's a great working opportunity. before we get to the debate, the highbrow debates that go into this, a lot of it will be in the moment. it will be about the now in this bank and turmoil we've seen play out for a week. just to run you through the choreography, we will hear from the head of european central bank, christine lagarde. this is the first -- the third time we hear from the president of ecb. the first time was when we could go on thursday. then on monday she was in brussels trying to instill confidence in the market after the credit suisse deal. today she will be back at the conference with a keynote. a lot of this will ba reiteration of the message we've heard from the european central bank, now for a week, which is

this idea that there is no trade-off between price stability and financial stability that they can handle both at the same time. and that this idea systemic contagion risk for european banks has been contained. if you look at what european banks did yesterday at the close, you could argue she succeeded in instilling some confidence. dani: in terms of confidence there has been criticism of the swiss regulatory framework. the decision to wipe out the day one bonds. is that around in frankfurt right now? maria: i suspect this will come up a lot in every coffee break today, and it will be one of the issues that gets debated on and off the record. this is a huge talker in the world of banking. we've seen the european central bank come out first with a statement, but iteration on monday that this is something

that should not be seen as a precedent for european legislation. she said clearly the swiss do not set standards for the eu. there is a statutory order that needs to be respected when it comes to who absorbs the losses, that message was repeated yesterday by head of the supervisory board of the ecb, who interestingly said yesterday that the european central bank is not considering restricting neither buybacks nor dividends, even in the context of banking turmoil. dani: those are double negatives that make my head spin. you can see ubs concern considering they announced that they would buy back those bonds. it sounded right to me, but i got it. thank you so much. you did perfect. maria in frankfurt. elsewhere in the world of central banking and economic data, u.k. inflation is due out shortly, set to show prices rising -- price rises cooling in

frankfurt. let's bring our u.k. correspondent. this happens in five minutes time, what are we expecting? >> for the first time in six months we expect u.k. inflation a single digits. this is a big priority of the prime minister, richie sue not mailed his reputation. he wants to have inflation by the end of the year. beyond the headline rate, the monetary policy commission of the bank of england will look at core services inflation because it strips out airfares and volatile price changes that surprised us to the downside last month. also, it will be interesting to look at core inflation because economists expect that to ease for the second month in the u.k. where it has gathered pace in the euro zone for three months on the trot. not only likely to see a divergence in the data, this is where you can see it in the central-bank action. february is notoriously difficult for forecast because

this is when the weighting of the cpi basket changes, so there could be a bit of a surprise in five minutes. dani: to what degree does the boe face the same dilemma that the fed does in terms of banking stability versus inflation? does the credit suisse news complicate things? >> is the same debate. as maria said, does the bank of england prioritize fighting inflation, show its confidence in the financial system or conclude that financial conditions have tightened so much that the work has been done for it? the bank of england, it should be noted, back the takeover of credits stress credit suisse by ubs. it said it made a great deal of saying it's confident in the banking system, and, if you listen to its communications over many months, it said it's not concerned with short-term volatility. it's data-dependent. if you look at the data more broadly than just the inflation

figures, the economy has grown faster than expected, you had fiscal loosening from the chancellor. but then andrew bailey the governor has said, don't assume we will hike again and you seen a wage growth slowing. out -- our economists reckon you will get a 6-3 split with a pause. dani: when the boe thinks it's necessary is willing to step in to prevent any financial instability, as we learned a few months ago. thank you very much, bloomberg's lizzy burden who will be back with us tomorrow to cover the boe decision. we cover this throughout the day. i will speak with luke ellis around 9:20 a.m. in london at the bloomberg invest conference, so much to talk about, stay with us here on bloomberg. ♪

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