tom: this is "bloomberg daybreak: europe" i am tom mackenzie with manus

cranny. manus: failing to capitalize on fixed income trading. morgan stanley stanley hits the tape today. the last major lender to report. looking forward, netflix declines and extended trade-off by cracking down on password sharing. plus we wait for cpi data. inflation falling to single digits for the first time in seven months. we have breaking news from asml. the world of tips, net sales coming in at $6.5 billion above the estimated number. that growth is 25%, relative to 2022. this is the first top line we are getting on asml.

$6.75 billion, the estimate was $6.3 billion. tom: the margin beat from asml. above the estimate of 49.8%. this is the dutch company that provides and builds the machines that are essential and production of semi conductors. there is weakness when it comes to the memory chips. asml on these top lines. they see demand coming through. the risk is that going forward adding capacity could deliver a slight improvement on the margins.

good morning, good to be with you. in terms of sentiment, i don't know whether it is netflix, china growth, it is not evoking a spirit to the upside. i think it is more to do with the fed speak. tom: on the fed to speak, both are pushing markets pricing in 25 basis points in may. the question is, do they go again in june? interesting severe -- interesting to hear the terminal rate. manus: another line coming in. just to confirm, demand will exceed capacity, it has gone red already. demand is strong, the force is with asml. [laughter] tom: we will tie things into the market. we do see further green on the

screen for european markets and stock it's as they continue to grind higher your to date. double digits now for some european stocks. features now in terms of how we position, there is a whole mixture of events coming for investors on the earnings front from fed officials. ecb coming through with a line on further hikes. across asia, a little bit of pressure coming through for chinese tech shares period that has put a bit of pressure on hstech. broadly across asia, asia-pacific currently down .4%. tom: -- manus: one of the implications, ireland saying they were game for another rate hike.

euro-dollar up to 114. we are waiting on the european cpi data a little later. yields are a little higher. bostic wants to get to five and hold. buehler thinks we could see things get to 5.5. that has hurt the market to some extent. i mixed crude is lower almost pointed -- .2. also you have upgrades to the china story. ubs up with -- also up. a little bit of momentum coming in from ozzie. tom: that optimism going through from china. let's get some reports from around the world. we have the inquiry -- angle on

central banks. we have the moves from netflix. manus: plenty of eyes on inflation data this morning. the debate rages on as to whether the bank of england is done with raising rates. we are expecting the final reading of inflation data today. the form in dublin, up for another hike. >> we have seen a reversal of supply shocks. much lower gas prices. why would say, as of now, two weeks away, the baseline is that we should increase interest rates in may. manus: getting with mark with the mliv team, what are we expecting from the u.k.?

will things drop below the double digit line? >> the economy is forecasting a slightly lower cpi number. ironically, that might be the biggest market reaction, if we do get confirmation because yesterday we had average earnings starting higher. earnings were way above forecast. we also had a large chunk around 123.5 below market trading. if we get cpi, traders would certainly be encouraged to push towards strikes and that might be where you get the best momentum today. if we get a bead on the upside, fed speakers coming out as well,

there is now on if the boe will hold or not hold. it will be cleaner if we get a miss the upside. tom: and we have those net west. when it comes to the ecb, officials there are betting on another rate hike. what will today's data tell us about the direction for the european central bank? >> in a way, they have already front run that data. ecb has increased their data for this year to a higher level than it was at the end of last year. the ecb clearly is worried that core inflation is not coming down. it matters more what the members themselves think about the direction of inflation. they are all going to talk about a rate hike in the next meeting.

you can probably see yields go higher. if you look as well as happened, we saw german yields were nicely rising. yields backtrack by a lot. we have not gone back to those higher yields levels that we saw in march. we are still sitting somewhere above those. there is plenty of room to take a more bearish position if data inflation confirms what the ecb is worried about. probably the biggest reaction you will see is on the long end of the market, in terms of the yield curve. probably sitting below where it needs to be reflective the ecb has more hiking's to do and they will probably hold the rate a higher level to make sure a -- make sure it beats inflation.

tom: mark from our mliv team, thank you for the preview on cpi out of the u.k. and the eurozone. goldman sachs failed to capitalize on what the rest of wall street had last year, that includes rival bank of america. for the details, let's bring in charlie wells. walk us through goldman sachs and bank of america earnings, the details, way disappointment for goldman sachs. >> two there he different banks and two very different stories. you mentioned the fixed income trading, that was down 17%. that makes them the only major bank to post a drop. down 26%, that was in line with expectations.

we are seeing them offload a chunk as well. let's look at bank of america. that was a very different story, a 30% increase in fixed income trading. there really was part of the bonanza. the amount of money they make on lending come up .5%. that beat expectations. bank of america, very much did what they need to do to stay with pace of the rest of the pack. manus: it just was not supposed to be that way. what happened to goldmans and the fcc. netflix reported lower subscriber gains. they are forecasting a growth following a crackdown on password sharing. for us -- for more let's get with alex webb.

i hope you do not share your password. >> i do share my account with my wife. i don't think they care about those. the increase in the subscribers was not as much as the market expected. they increased by $1.3 million, they were expected to increase by $1.5 million. initially, the stock plummeting fell as much as 12%. there was more time to understand the numbers. as you look to the full year, the cash flow estimate is higher than people expected. the market expected $3.4 billion. another pity is that they are finally getting ready -- getting

rid of the dvd leasing business at the core of netflix. that is finally going after years. tom: we were talking about this. dropping dvd sales, that is what they built the business on. more alex webb and more things tech in the second half of the show. i know we will have a musical reference from manus as well. the european economy, not going in recession, another hike is in order. we will bring you those comments, this is bloomberg. ♪

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the economy will not go into a recession. under those scenarios, it would be appropriate to keep rates at that level for a while before returning back to normal. manus: ecb philip lane speaking there at the forum in dublin. making the case for keeping rates at a fairly limited impact out of europe. headlines around the world. adrian wong from hong kong. >> fox to pay in settling lawsuits. they were accused of bogus claims that ripped the election against donald trump. they concluded it was free speech against the first

amendment. they are trying to avoid an embarrassing six week trial from fox. fighting raged between groups and sit on suggesting -- in sudan, has left more than 100 people dead and many injured. the french president is seeking china's help to ring russia and -- to bring russia and ukraine to the negotiating table. they will work with top diplomats for future negotiations. sources say french president sees talks happening soon as the middle of this year if all goes well. global news, 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2,700 journalists and analysts in more than 120 countries. i am adrian wong, this is bloomberg. manus: thank you. -- tom: password crackdown in

netflix. they will clampdown on users in separate households using the same password. also, more on job cuts. this is bloomberg. ♪

manus: we have just heard from an economist at the ecb setting the stage for his expect action -- his expectation for the rate hike. across the pond, they say they favor raising rates further. our guest today is aneeka gupta from wisdom tree.

the consensus is for another rate hike, another three rate hikes that would take us to 3.5%. is that enough to view a recession or is that overdue at 3.5%? good morning. aneeka: good morning. i think the european economy is moving along in a nice trajectory. that is likely to be faced by three more rate hikes, exerting more pressure on the european economy as we move along. we are facing an intimate -- we are facing an imminent u.s. slowdown. that is a challenging environment where there is trouble with much higher inflation, likely to put pressure and having to deal with

much higher rates will put pressure on the european consumer. tom: what does that 3.5% do to your inflation forecast by your and? -- by your year end? aneeka: we could see inflation approaching the new marked with headline inflation coming down quite significantly. a decline in energy prices stemming from natural gas. [inaudible] we have been seeing some since the middle of 2022. manus: in terms of exposure from europe, we have one of the most bearish stocks to bonds stories. when it comes to your, they have -- due to deteriorating credit

conditions. everything i have seen so far has delayed this discussion. do you think you will get some material decline in credit conditions, is that the risk? aneeka: yes. so far, we have seen is slight regional banks taking it at a record pace. yours looks quite different from that point of view. from there, we are getting a gauge is that credit standards are beginning to tighten. banks have suggested it has been a devastating case even before the banking crisis.

given the effect of the ecb raising rates and the fact that we are likely to have tighter standards will exert even more pressure. tom: to what extent, as we take that into consideration and think of comments from members, getting to 575 despite those conditions, is that how high the fed to go? as soon as shall i -- as soon july? aneeka: between the fed continuing to mention that they want to maintain aggressive on rates, we should expect one more rate hike in may. after that, we are likely to see a positive pending on economic data.

they expect the recession to be a lot more dense period we're hearing from the fed is, given the banking crisis that we have seen, a lot of the work would be done by the banks because they are already in a tightening mood. the markets barely shocked afterwards. one more rate hike and then followed by a pause. we could see rate hikes in 2024 based on the economic story at that time. manus: i am drawn to your

comment about the recovery in china. the normalization of savings would provide potential upside. we don't expect any major policy improvement in europe, do you think you just let the recovery open up naturally but you are not expecting significant liquidity injections, right cuts at the mlif? how does it play out for you? aneeka: we have seen a steady, consistent improvement in chinese consumer spending. we started off in november last year, it was actually -- and it has bounced up. i think that seems to be the core angle this year.

so far, i think we have seen economic data and that is in the chinese economy so far. what they are skeptical on is not to support china anymore -- all of it has to be done internally. i think they seem to be echoing where households that were previously saving a lot more because the appetite for risk was low. i think we now oversee the crease and flatline and we are seeing spending increase in the picking up of household loans, able to take on more risk taking on the sign that should -- for

2023. tom: aneeka gupta, thank you. director of research at wisdom tree. coming up, asml. demand made strong for a post

manus: this is "bloomberg daybreak: europe" i am manus cranny in dubai with my colleague in london, tom mackenzie. tom: goldman sachs shares slip

as they fail to capitalize on wall street fixed income trading boom while bank of america beats , the last major lender to report. netflix drops and lender training -- trading after cracking down on password sharing. asml, outlook driven by strong demand for their chipmaking. manus: let's talk about the asml report and their numbers. let's get to amsterdam. the earnings, these guys have a virtual monopoly down to producing machines.

they beat estimates, demand rate is strong. talk me through the numbers. >> good morning. asml reported a second quarter forecast that beat analyst estimates. the company was also able to maintain their financial outlook for the year. they still see a growth of more than 20% this year. they have seen mixed signals from the customers. demand is still exceeds capacity in the fed has a robust backlog to work with. tom: any details on where that is coming from,, and how the china situation could be a drag? >> in china, i think that is something that is very much in focus for this company. they currently have restrictions

on chipmakers in china. asml does not believe it will have an impact. they believe the firm is still waiting for more details. in terms of backlog, they still have a lot to work with. asml is the world's only manufacturer of the systems. they really have the market share in that respect. tom: a dominant component. our can -- our reporter on asml. coming up, william de gale from blue box -- bluebox. let's start with the semi

conductor space. something different from memory chip and these machines. then, there are that geopolitical risks in china. what is your take on what we are seeing in terms of the hardware component piece within semiconductors and that demand going forward? william: as you said, there is definitely a distinction between different elements. there is no particular shortage and has not been for a while. it is not the healthiest market but is very cyclical, it will come back in time. the other extreme is controlled through analog. we are waiting to see over the next couple of weeks, more of the results. at the moment, --

[indiscernible] there is a balance between short-term demand and long-term drivers in general. this is certainly boosted by government as they try to bring things back china. manus: very good morning. the eu $43 billion plan as opposed to de-risk on the asian producing chip -- asian to producing nations. will it succeed or will it end up a massive oversupply? william: [indiscernible]

in a world where things have been duplicated, the semi conductor industry always affairs capacity. to build new capacity away from existing fan base in taiwan and korea, it takes longer. you have to build the infrastructure first. it takes quite a long time for them to come online. the weakness is currently not having to do with supply. even if you do get oversupply, the industry is very trusting. this tree, if prices have stopped falling -- [indiscernible] in the end, that more than makes

up for the loss of the original volume. i'm not too worried. tom: on the china part of the story, i was visiting beijing a couple of weeks ago, spent a lot of time in that country. he says he is not seen such aggressive outreach policymakers to encourage foreign investors back in to the tech space. he is encouraged that some of the pivot around tech is real. are you convinced, would you want to up your exposure to china? whether in the tech space or elsewhere? william: we would not invest in any chinese stocks. while they might be trying to encourage investment, the policy is the only stakeholder that matters. as demonstrated it can benefit

long profit. they have change the rules of the game, have stopped requiring new survivors. it is terrible to invest in. manus: very rich phrase. the other story is the potential ban on tiktok. do you think it will happen and what will the backwash be? william: [indiscernible] the u.s. federal government is probably going to try. there are questions on whether

or not that is possible given freedom of speech laws in the u.s.. they will find a way to do it. if the u.s. did panic, i would expect -- there are already countries who have banned the use. extending that to the general population might be tricky. maybe you could lean on these stores and making tiktok apps available. it is challenging. there does not seem to be a lot of will to do this. tom: just broadly. i may take a lot in terms of investing. i want to get your sense on where things look like. look at these nasdaq gains, the

worrywart's saying there is further downside for tech, would you want to be leaning in on the tech rally at this point? william: yes, at least as much as normal. anyone who waits for a recession to come and go to play the equity market, they will always be a year late. the market will already be a year ahead. people were worried last year about recession. it is all beginning this year. the recession will probably not be that severe. it has also been pushed out a little bit. the market in october probably did not come until a year later. we saw a massive decline last year. an awful lot of bad news priced in, and then the market gets over it. you see the upside. manus: it did raise up 28% in

the first quarter. it was like, what happened at the end of last year? we have very short memories, whether in a quarter or decade perspective. thank you very much, william de gale from bluebox, reacting from the tech numbers. another check number was netflix reporting lower than expected numbers. it is forecasting that during the second half it will get better. that is after the streaming giant has begun to crack down on password sharing between different households period shares tank 12%. alex webb is with us now for bloomberg "quicktake." how or how quickly will things happen and how will that impact

revenue? >> that is part of the reaction, that it has been happening more slowly than the impact anticipated. they telegraphed this crack happening in north america, it did not really. it will happen increasingly as the year progresses. there have been trials in latin america and it yielded soft success. the real trout will be if those subscribe it -- if those password shares will become subscribers. that is what they're trying to work out. tom: that will be very important. in terms of disney, we are getting more in terms of job cuts, potentially happening next year. what has prompted this and where will the ask land?

-- where will the axe land? >> disney was trading around 20 times, excessively 50 times more. investors came into double down on disney plus, it went all way up to the 80's at one stage. i interest rates, people coming out of the pandemic, not using as many streaming services. it went all the way down again. that is really driving the decision-making. back towards value. it will span tv, film, themepark, across the border. one thing, the metaverse division will be scrapped completely. manus: that will be a big one. let's talk about apple. this is a bloomberg scoop.

$3000, would you spend $3000 to take yourself into another universe? tom: on a day like today, maybe i would. but i would not be the first out. you always want to wait for the second edition. but some people are chomping at the bit. i wonder where alex lies in this. manus: he is chomping at the bit for a different paradigm. >> it is hard to convicts one in the mass-market to sell -- two by $3000 headsets. they expect them to maybe sell one of these a day. i give us a sense of how many they will sell. the big news is the big push

apple is making to get people to make apps. millions on millions are developing apps for its platforms. that is the thing that will make these products appealing. if you can go in and there is a huge amount of things to play with. that they hope it will -- that they hope will give it the edge. if there are not that many products out there, it will be hard to convince people about the headphone. it is a huge challenge and potentially a huge opportunity. tom: thank you. we are looking forward to manus donning those headsets. manus: i live in a parallel universe most days anyways. [laughter] tom: coming up, goldman fixed income traders, will they lose

out as bank of america beats estimates? we will have more on those bank estimates next with charlie wells. this is bloomberg. ♪

>> if they don't turn investments, will perform well? >> we will not always execute perfectly. our risk management culture has allowed us to navigate while continuing the to actively support our clients. tom: that was the bank of america ceo followed by goldman sachs discussing their earnings and how the banks held up during this period of volatility.

manus: indeed. and it was not supposed to be this way. goldman was not supposed to be trounced by be of a. further wells is on the story. talk us through the differential between goldman sachs and bank of america. let's run through the two differences. charlie: a tale of two very different banks reporting earnings yesterday. disappointing numbers from goldman, a bank in transition. the fixed income trading revenue was down 17%. that makes goldman the only major bank to show a drop in the division. also disappointing, investment banking revenue down, in line with expectations. different story at bank of america. fixed income is smaller at bank of america but they had a big

surprise. there revenue was up 30%. that really be expectations. you noted the ceo of bank of america having a somewhat upbeat of a tone. deposits were down, net interest was up. bank of america with some very healthy headlines. tom: so in the wound for goldman sachs later today. as you step back from these numbers, what you learned from the health of the banking system and industry? charlie: there was a lot on the line, more than any other season as we had so much drama in the banking sector. some calling it march madness. it is good to be big. a lot of these banks stemming the flow towards higher.

net interest income seeming to potentially peak. some banks trying to say they might see such big figures. tom: charlie wells, excellent as always on these big banks. the importance of being big versus regional. some are seeing a rebound in their fortunes. western alliance, interesting in the context of what is happening. beating earnings, deposits have actually recovered. why do we care for the first time in a long time about western alliance? >> they are one of the regional banks hardest hit in the aftermath of svb. nearly 90% after the collapse. they said in the earnings presentation that they recouped 40% of deposit loss from the 20th of march two the 14th of

april, just last friday. this is a great sign from other banks do report later this week, especially u.s. bancorp, the seventh largest bank in the u.s.. if these earnings still sing a story of stabilization we could be talking about a fed that has to hike towards 6%. if it does not turn up like we think. manus: maybe paying a little more attention. thank you natalie. coming up, we discussed the u.k. economy with cpi data. 8 minutes away. counting down to inflation data in the u.k. right here on bluebird. ♪ -- here on bloomberg.

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manus: after an unexpected jump in u.k. wage growth, we will be watching cpi in just under five minutes. lizzy burden will give us the top line. good day. lizzy: good day. this will be the deciding factor in whether the bank of england hikes in its may meeting. the day was surprisingly strong yesterday, renewing momentum in the private sector. on the back about, a number of economists including goldman changing their course. that said, economists still reckon that you will see the fed print as just a blip. they will see a jump in single

digits to date for march because of a long line between behavior and inflation. what will drive this number down is oil and goods. they will focus on service inflation. it will drop from 6.6% in february to 6.4% in march. the prime minister will watch these numbers because his top numbers are harming inflation by the end of the year. the good news is that they say inflation will drop by the end of the year. tom: we will confirm that in the next couple of minutes. lizzy burden with a preview. europe, conference in dublin, bringing together leaders from private and public sectors to discuss the most pressing problems. we will speak to a host of

newsmakers at the event. manus: that should be an interesting one. that would be nice. i am interested to see with what they make on whether or not we have passed the worst of the banking crisis. i am missing that, i live too far away, we don't have direct lights that would take me there. ♪

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anna: good morning and welcome to "bloomberg markets: europe." i am anna edwards in london and mark cudmore joins us from singapore to take us through the