dani: good morning and welcome to "bloomberg daybreak: eyrope." i'm dani burger in london.

the reserve bank of australia pauses its year-long tightening cycle but warns may hikes may be required. asia shares are mixed while oil extends gains. credit suisse holds its first meeting since the takeover announcement. we are live in zurich. donald trump arrives in new york for his arraignment. he is said to plead not guilty while the city is on high alert for the historic proceedings. it is time to wait and assess, that is the word from the rba. there was a warning that they may need more tightening, they might need further hikes. even that were, that language is a pullback from the most hawkish language they have. usually rba set the pace for what global central banks do. will we see more holding? the immediate reaction in the

aussie in australia and three year yields. we will not linger on this too much but you see slightly higher yields for the u.s. 10-year yield. manufacturing data coming in weaker than expected. lisa cook said the disinflation process has started maybe has the u.s. thinking along the same lines as the rba. bloomberg dollar rises despite dovish central-bank comments, up 0.1%. any losses in the dollar will be capped by other central banks that are starting to pause. if everybody is pausing, maybe the downside and the dollar is not great. tech is losing the most this morning in the asian session. alibaba and tencent are leading us lower. they had a large rally following alibaba's lands to separate into ipo. s&p 500 futures more or less

flat. nasdaq futures leading to the downside after a really strong march. let's get to these stories and our reporters around the world. we will discuss the rba rates. oliver crook is at credit suisse, and we will cover u.s.-china relations. as i have been saying, the rba paused its year-long tightening cycle but it did warn it is ready to resume raising borrowing costs should the economy require it. let's get the bloomberg's chief rates correspondent, garfield reynolds. the market is interpreting this as hawkish. the aussie dollar is weaker. how are you interpreting it. garfield: it is not as dovish as you might have expected considering they held rates, but if you look underneath the surface, there were pointers to some extent they were looking

for reasons to hold more than reasons to hike. perhaps the global banking crisis scared them a fair bit. australia has not been affected but it is a reminder that there are consequences to rate hikes. in australia there is a lot of focus on what will happen in the next couple of months when a lot of australians who fixed their mortgages three years ago have them roll off and they will be 3%-4% higher. what will be the impact of that on the economy? the rba noted there were signs of households demand slowing substantially. they saw enough reason to wait and assess, even though they remain concerned that inflation is not back in the bottle and they will have to resume.

it was a balanced decision. if saw anything on how the rba voted at a particular meeting, this is one where if they had a vote, it would be a close one. they sounded up like they were weighing out the two sides. they will hold but be ready to go again. manus: we have seen in this cycle that the rba has led as has new zealand central-bank. will this be the same thing? lisa cook talking about a disinflation process that had begun. manufacturing was weaker than expected. is the fed likely to follow suit? garfield: the fed faces the same conundrum. jay powell, after the last meeting where they did hike, he said they expect what is happening in the banking sector will act to slow the economy

because it will spread pain. the fed got a shot across its bow from that crisis, along the lines with they want to be careful not to break the economy. they want to slow things down but not bring them crashing down. that is the point all central banks in the hiking cycles, we have the bank of canada on the sidelines, now a second bank, the rba, on the sidelines. it will be interesting to see what new zealand does tomorrow. they are expected to hike but slow the pace of hikes. what will they say about the terminal rate? what is going into its calculations? there have been worrying signs about the new zealand economy, slower growth profiles, an increase in mortgage arrears. if we get another expression of extreme concern that we are

close to breaking things beyond the point that we need to come that would give encouragement to the idea that the fed, for example, does not have many more hikes left in it, and bond investors are on the mark where they have started positioning for an end to global tightening cycles. manus: you could say -- dani: you could say something has broken and we do not know the effects of that. another reason for these banks to pause. bloomberg's garfield reynolds, thank you for joining. as the trauma of swiss banking continues, credit suisse will hold its agm today, then tomorrow the return of ubs. oliver crook is there now, what are we expecting today? oliver: trauma is right. you have the agm that will not exist as a stand-alone entity in a couple months, which is a

strange set up. this is the first in person agm between the board and shoulders since april 20 6, 2019. if you held shares since that day, you got wiped out to the tune of 93%. it was a $135 billion giant and sold for $3 billion. this will be an uncomfortable situation for the board in this building behind me. at 1030 time you have the chairman speaking, then open to the shareholders to air their grievances, ask their questions. late into the evening at 6:00, the question will be, can shareholders get anything from this or is it symbolic? there will be the reappointment of votes, this could be symbolic but for some shareholders, is there money that can be extracted for this?

it is something they can look at. was there any alternative to this deal? another big question for the shareholders today. dani: this irony of shareholders not getting any say in the merger, and any say might be symbolic today. oliver crook will be covering that agm all day today. the biden administration is pushing back against claims the white house is trying to contain china. it was said that measures were necessary to produce a level playing field. every day it feels like we are getting a new headline of som e sort of tension between the u.s. and china, this one around business. what does this say about where we stand? rebecca: the u.s. is simply trying to create a level playing

field and compete with these so-called national champions that enjoy the full force of backing from the chinese state, things like tax break advantages . that is according to jose fernandez. this criticism leveled from china and the u.s. on a near daily basis. it inherently is not a new issue. the u.s. has long complained china affords advantages to its state backed players that makes it impossible to compete. the u.s. maintains these are not containment measures, which in fairness when you look at the u.s.-trade -- u.s.-china trade at record levels, there is a level of cooperation and exchange even as the u.s. tries to target strategic industries around tech. dani: china insists there

containment measures. -- china insists there are containment measures. >> xi jinping has returned to the private sector, asking the private sector and calling them up for their national duty to combat some of these containment measures by the u.s. although china has been muted in responding in terms of economic statecraft and the sanctions leveled by the u.s., we are starting to see more bite from china with this move. macron, one of china's agencies, is launching a probe into products sold in china. it may be the first signal that beijing is willing to step up and push back against some sanctions and restrictions the u.s. has for a year leveled at it without much retaliation. dani: thank you very much.

let's look at the key things we will be watching to set you up for the trading day. credit suisse is holding its agm in zurich. that is likely to go late into the day. it comes a day before ubs will hold its own agm. at 9:30 we will get u.k. services and composite pmi's for the u.k. economy. 3:00 this afternoon, u.s. jolts report for february is due out. we are expecting to see the job openings fell for a second straight month. 3:00 u.k. time we will have the latest u.s. factory orders. yesterday's ism showed more weakness than expected. coming up, policy makers say the fight against inflation has a way to go but the disinflation

process is underway. meanwhile, the rba, they hold. we are back in zurich, credit suisse has its agm today for shareholders. this is bloomberg. ♪

>> we are still going to see inflation but we have seen wage moderating quite a bit, so that is a hopeful sign.

the disinflationary process, we are not there yet. dani: disinflation is in play, that was lisa cook on the same day as ism manufacturing data disappointed. is disinflation in play in the markets? let's get to stephen gallo, global fx strategist, bank of montreal. do you wager against the market or against the fed? how would you answer that question yourself? you are literally the person who opposed it, but how do you answer it? stephen: are you saying i trapped myself in a difficult question? dani: exactly. stephen: when the dust settles, we will get to a point where we realize probably the fed is not 100% right and neither is the market 100% right. you are talking about one of the

most interesting, biggest gaps right now between what the fed is telegraphing and what the rates market is pricing in. when all is said and done, we will end up somewhere in the middle. in other words, probably one more hike from the fed, or maybe a pause in may. a summer pause, then as we get into the autumn, maybe more of a support of language from the fed on policy when it starts to realize it does not have to think about inflation control as a number one priority, and can start looking at supporting growth. the short answer to the question is, i do not think either will be 100% right unless we have a deep recession in the united states, then the market will be 100% right. i would lean in the direction that over the course of the second half of the year, the fed

will have to turn more supportive. maybe not with easing in q3, there is a chance of that priced in by the rates market, but probably turning more supportive at least with its language. dani: i love this, you are fighting the market in the fed at this point, which is bold on all fronts. that sounds like the peak of the dollar is in david can the weakness of the dollar move as fast as on the way up? stephen: i think you are right, i think a number of factors over the last 3-6 months confirmed the peak for the dollar is in. short-term i expect the dollar to trade pretty soft. the fx market is looking at interest rate differentials and using the logic that the fed was the first tightening come of the first in and out, so it will be

the first to ease. i have some sympathy with that argument, but what i would not do now is chase the dollar lower aggressively. simply because there is so much uncertainty. with a 3-6 month horizon, you are looking to average in or fade in dollar strength looking for a weaker dollar in 3-6, but i would not chase the move aggressively. i cannot emphasize enough that we are in a discovery phase when it comes to the implications of the banking sector stress, the lag impact of fed rate increases. we need to see more data on credit conditions, corporate balance sheets, and of course the labor market. that is what ultimately will drive fed policy. dani: looking over your note, you are saying we will not get monetary and credit conditions for the euro area from march until may 2.

that is a long time away. surely, we cannot wait that long to understand how much credit conditions tightened. where do you look in the meantime to get clues on that front? stephen: survey based evidence, and unfortunately the rest of it is anecdotes. we will pick anecdotes up here and there, but they are hard to come by. anecdotes is where i think a lot of the focus will be. it is probably too early to see impacts on corporate balance sheets. over the next quarter or so, you will potentially see that. for now, anecdotes, market sentiment around this, you cannot even say funding conditions because at the moment funding conditions, like the cross currency basis, they look relatively stable with terms of

the availability of dollar liquidity and the fed expanding last month. that helps in that regard. we really need hard data on the labor market, credit conditions, and corporate balance sheets to see how this will play out. it is clear we will have a slow down, the question is how deep. i reiterate we are in this discovery phase. that explains the divergence between the rates market and the fed, and the price action in some markets like the foreign exchange market. i say, 3-6 months i think we will have a lower dollar than now, but because of uncertainty, i would not chase the move aggressively. average intuit, fade into it. dani: it must be said one area that has not been fighting the fed and is fighting the market

are these em markets, south africa, philippines, egypt, colombia, mexico -- all to their own debris had a hawkish decision whether hiking were saying further hike start to come. these are large and geographic diverse em countries saying inflation has not been vanquished. what do you make of that? stephen: generally speaking, there are a couple of cases in europe, individual countries leave you are seeing signs of sticky inflation, but inflation overall is starting to moderate. central banks, we are seeing that evidence with the rba today. central banks want to do with the bank of canada did, pause and assess the impact of the rate increases. you mentioned a diverse basket of em currencies and countries.

i think the currencies are holding up reasonably well right now. in the case of mexico, very well because of the real return they are offering to investors. that is one of the things that is supportive for the asia-japan bloc. rates are moderate and real rates are in some cases positive and do not have to go much higher to bring inflation down. because inflation started from a lower base and did not price is much as the g10 countries -- dani: i have to jump in, unfortunately we are out of time. stephen gallo, global fx strategist, bank of montreal. coming up, lori l -- loreal has agreed to acquire aesop.

this is bloomberg. ♪ ingredients and blend up a delicious smoothie anytime, anywhere. blendjet 2 even cleans itself. just add water, a drop of soap, recharge quickly with any usb port. ready to fall in love? order yours now on blendjet.com dani: loreal has agreed

to buy aesop for $2.5 billion. anyone that is a fan of skincare products probably knows of aesop, but why is the parent company looking to sell it? >> it is an interesting deal. for loreal it gives away into a global brand of luxury, a skincare brand so they can tap into that globally and use their network to grow the brand in places like china. there is a lot of room for growth.

it will be very helpful to tap into that wider network. it will help the company reduce their debt and focus on strengthening the balance sheets , so investors applauded the deal is a way for the company to streamline their portfolio. dani: what does that mean to be more streamlined and reduce their portfolio? >> i think the company had been struggling growing the brand. they had some acquisitions that put the company in a financial stretch. even though they are coming out of covid and geopolitical tensions that have affected companies in general, they will refocus on their plans to grow

in latin america, their core region. this brand was on the periphery for them. while it was an engine for growth, they needed more investment and felt they could get a good price. dani: $2.5 billion is a good price. thank you very much. loreal when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo, i was barely eating but the weight wasn't going anywhere. the secret to losing weight and keeping it off is managing insulin and glucose. golo takes a systematic approach to eating

that focuses on optimizing insulin levels. we tackle the cause of weight gain, not just the symptom. when you have good metabolic health, weight loss is easy. i always thought it would be so difficult to lose weight, but with golo, it wasn't. the weight just fell off. i have people come up to me all the time and ask me, "does it really work?" and all i have to say is, "here i am. it works." my advice for everyone is to go with golo. it will release your fat and it will release you. dani: good morning, this is

"bloomberg daybreak: europe." i'm dani burger in london. taking stock, the reserve bank

of australia pauses its year-long tightening cycle, but warns more hikes may be required. asia shares are mixed while oil extends gains. facing the shareholders, credit suisse holds its first agm since the ubs takeover announcement. the lender risks bankruptcy ahead of the deal. we are live in zurich. donald trump arrives in new york for his arraignment. he is set to plead not guilty while the city is on high alert for the historic proceedings. the rba holding this morning and saying they need to assess where the economy is. it is a long and variable lags of monetary policy, but they did say more tightening may be required. they said may be instead of will be here at the aussie dollar falling this morning. yields are moving higher on the short end for australia. bonds are being bid. australia three year lower.

the 10-year yield is unchanged. lisa cook yesterday talking about a disinflation process that has begun. we were talking to stephen gallo who said it is in between were the markets and the fed is. by the end of the year the fed will have a more accommodating stance. will it be full on cuts? perhaps not. gallo telling us the dollar has reached a peak, but it is uncertain and a period of discovery. looking at equities, tech leading. alibaba down 2%. euro stocks futures up while the s&p is little changed. former u.s. president donald trump is in new york for his arraignment today. simone foxman brings us the

details. simone: new york city is bracing for a historic moment, former president trump expected to be arraigned in a downtown courtroom. at that time we will find out what the charges are against him. they are expected to be related to a hush money payment that michael cohen made to pour star, stormy daniels, but we do not know what other charges may entail. that will help us determine the gravity of the charges. i stand outside of trump tower. we did see some protesters gathering. we saw hundreds of journalists lined up waiting as trump moved from laguardia to trump tower before going to the courtroom. all of that and more, to come. in new york city, simone foxman, bloomberg news.

dani: now joining us is elisabeth braw, senior fellow, american enterprise instititue. thank you for staying up late. there is reporting former president trump was offered to surrender quietly and could have done it over resume, but he opted to come in the middle of the day for a high profile booking at that manhattan courthouse, which seems that he wants a spectacle. what is the result of this turning into a spectacle? >> it is certainly a spectacle. it is a global spectacle, not just something that concerns the u.s. yesterday i was on a television interview talking about nato and finland's acceptance to nato, which had been pushed because trump was making his way to the airport in florida. it was an international

television station, so it demonstrates how important this news is, not just to the u.s. and people living in the u.s. but people all over the world. this is a man who will certainly run in the next presidential election if he is to be believed at the moment, and he may have a shot at winning. if we have someone charged with a criminal offense running the country, this is something that will fascinate the world and have implications on the way america is seen in the world, and how he conducts his policy should he win. dani: every aspect of this is unprecedented. the fact he is being arraigned, a former u.s. president, and we could environment where you have the leading republican candidate and

potentially the republican candidate facing felony charges. does that help him to be fighting this off at the same time? >> it may help him with his supporters, it will most likely help him with his supporters because they are highly motivated and will see this as politically motivated. but in terms of how he conducts himself as a candidate, it may not help him. it will color his candidacy. we should remember when he was in office last time, there were constant doubts and questions about his behavior, whether he had crossed the line of legality in certain cases.

not just in domestic policy but foreign policy but foreign policy, we should remember there were constant questions about his relations with russia, and whether that influenced his approach to russia. this is a really important area of foreign policy, the u.s. relations with russia. it will become more important considering the state russia is in now conducting a war that the whole west is trying to bring an end to. dani: this specific case is not about russia. it is from 2016 and was then candidate trump and is about campaign-finance. was this the right case to bring against trump given the very political nature and backlash the manhattan d.a. has received from republicans?

>> one wonders whether it was the right case. it is certainly a case that makes it easy for trump supporters to claim he is being politically harassed were singled out by political adversaries. that makes the american justice system look not very good internationally. we should remember the justice system with officials politically appointed or elected , that is an anomaly in most countries. officials within the justice systems are civil servants and completely on political -- nonpolitical for the simple reason the justice system should

be seem to have no political preference or favor whatsoever. this will further color people's view of the american system and not in a good way. it is unfortunate, the outcome of this. dani: what are the practical implications of a negative view of america and american institutions from the outside world? >> we are seeing the world splitting into two blocs. we survived the cold war and the collapse of the soviet union, now we are seeing two blocs based not on the military but the economy, one led by china and one led by the u.s. other countries including in latin america and in asia, but

china will make it easy for countries that it wishes to attract to its bloc to say look at america, it is not the beacon of hope and democracy that it has pretrade itself as. -- that it has portrayed itself as. it is easy for china to say we are not a democracy, but do you need a democracy? what you need is debility. every turmoil in the u.s. helps make it easy for china to make such a case. that makes it so different from the cold war when there was no doubt what countries aspired to, to be like the u.s., and the soviet union kept countries under its command. as these new blocs are forming,

it would be fantastic for the west to say, we are the best system and you want to be friends with us. dani: is the damage already done regardless of the outcome of this case in the next presidential election? >> no, i don't think so, but every case in the u.s. that shines and ugly light on usia makes it easy for china to claim you do not want western democracy. look how immoral they are. it does not hinge on this case alone, but -- and the u.s. is still a beacon of hope and democracy for many countries and many citizens -- but it does not help. that is why it is so indicative there is this global fascination with this case. it is tabloid news it is best but much more than that,

america's role in the world. america does not look good with footage like this. dani: i'm afraid we have to leave it there. elisabeth braw, senior fellow, american enterprise instititue. let's get to the first word news. >> nato is said to be pushing members to 500 million euros to help ukraine with nonlethal aid. includes funding for fuel, equipment and anti-drone systems, and comes as foreign ministers meet in brussels. england will become the 31st -- finland will become the 31st member of nato with a flag raising ceremony later today. the u.s. military says a suspected spy balloon shot down in for barry had gathered intelligence from military sites . nbc news reported it was able to

transform information from the balloon in real time but the military took action to ensure china gained little value. bloomberg has learned hb a was close to a deal for a harry potter tv series based on the seven books. it hopes the series will be a cornerstone of a new streaming strategy. it will be announced next week. the eight harry potter films generated ticket sales of over $7 billion. nigel lawson, margaret thatcher's most important chancellor, has died at age 91. one of the conservative party's best-known figures, he oversaw the big tank deregulation in 1986, and a tax cut field an economic boom. he remained active in politics for half a century, including in the house of lords, which he

attended as recently as last year. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you very much. coming up, swiss trauma continues. credit suisse will hold its agm later today. shareholders getting kind of a say. more on that, next. this is bloomberg. ♪

dani: if credit suisse had not been sold to ubs, it would have gone bankrupt the next trading day, causing a global financial crisis, according to the swiss national bank vice president. credit suisse holds its agm today, and it is an opportunity for shareholders to speak directly to the board. oliver crick is outside in

zurich, what are we expecting today? oliver: they are speaking face-to-face, which is notable in the wake of what has happened the last three weeks, but notable in what has happened over the last four years. this is the first time they meet face-to-face at an agm since april 20 6, 2019. 93% of shareholder value has been wiped out from a $35 billion company that sold for $3 billion. shareholders have a lot to say to the board this morning. everything will begin at 10:30. the chairman will speak, then the ceo, then it opens to the shareholders. probably in equal measure of statements and questions today. a fairly uncomfortable position for the board. this institution will not exist as a standalone and a couple

months. dani: what is the focus for shareholders? it is not like they have a say of this merger can happen or not? oliver: this is one of the main issues come up shareholders had no say but were informed like everybody else. for them, there will be questions on what happened over that time, but there are substantive questions as well. many contentious votes ahead of this, because the situation had changed, but there will be other votes like the reappointment of the board and the chairman. norges bank has said they will not vote to reappoint the chairman. a lot of this will be symbolic, but going forward over the next few months, the board in place will oversee this transition and will furnish shareholders for ubs and regulators with information. one shareholder wants to make

sure the board sitting now does not have any entanglements with the issues over the last few years. dani: to that point maybe the more important and less symbolic will be ubs's agm tomorrow. oliver: if the one for credit suisse is a farewell, the one tomorrow is for an entirely new company, or at least one having a different conversation than they were anticipating. if you were a credit suisse shareholder, you are now a ubs shareholder. the shares are being converted into one ubs chair, and these are shareholders who had this forced upon them. that will be about laying out what this business looks like going forward. we have had reports of job cuts, a lot of talk about spinoffs and

whether the business will be held as it is today. these shareholders need an idea of what this looks like going forward. ermotti said he needs a few months but this will be a q&a to figure out what ubs is looking for, and what this bank looks like in the future. dani: you will have some great interviews coming up, speaking to shareholders. what will be your top questions -- not to spoil things to come -- but what of the big unknowns at this moment? oliver: for them, how do they view this agm? going into this and saying what they want to say, what is it? critically, what do they need to leave the room knowing? this is such an odd situation for this board, and a company that will not exist anymore, is

that an aggressive therapy session for shareholders, or are there real things of substance? we will speak to the ethos foundation later, but is there any way shareholders can be compensated? is there anything in the form of renumeration? these are open questions. i do not think there is a huge degree of optimism, but this is an area where you will get a lot of shareholder questions. dani: that question, can they get anything out of this? they were pretty much wiped out. we are looking forward to the rest of your coverage today. as he mentioned, he will speak to one of the shareholders. do not miss that. it is with ethos foundations.

coming up, after opec surprised with an output cut, we assess how markets continue to react. this is bloomberg. ♪

>> this was a surprise, the opec decision, whether it will have a lasting impact is a question. when oil prices fluctuate around, it is hard to track that . some of it may feed into inflation and make our job more difficult. dani: james bullard on the challenges of the volatile oil market. it is not shaping his view too much but says it makes things more difficult. president biden is reacting to the opec-plus announcement but he downplayed the impact, telling reporters it is not as bad as you think.

what does the market think? let's bring in bloomberg's oil reporter. we got that 6% gain yesterday, what is the market's view of this? >> it is day two since the opec-plus announcement came out. it is clear that announcement has inflamed the markets. oil was looking at a global economic slowdown and concerns around that, and they were looking at stronger demand from a recovering china. a lot of analysts are talking about $100 barrels again. things have shifted, and before the announcement, people were talking expectations for a tight supply situation in the second half of the year.

this opec-plus cut should exacerbate that situation significantly. the oil market is faced with a couple of questions to answer. the market was looking at a possible demand slowdown from a slowdown in the economy globally, and that was a situation being considered when energy prices in oil prices were lower, inflation was slowing in some nations. the prospect of higher oil prices will hijack the entire situation. the question is, how will it affect oil demand down the road. the last time the cartel pulled off such a move, they were preempting a demand patch. one could guess this is the same situation here. dani: it is interesting that biden downplayed the remarks.

thank you so much. oil hangs onto its gains elsewhere. the rba decision is moving markets, the aussie dollar weaker this morning after the rba holds. they are divided whether they will hold or hike. is this setting the tone for the rest of markets? 10 year yields slightly higher. up next, "bloomberg markets." this is bloomberg. ♪ sit

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♪ >> good morning. welcome to bloomberg markets europe. i'm dani burger live in london. the cash trade is less than an hour away. here your top