dani: this is bloomberg "daybreak: europe". i'm tom mackenzie in london with manus cranny in dubai. these are the stories that set your agenda. >> slowing momentum, the beige book suggests the u.s. economy stalled in recent weeks as

access to credit tightened. stocks and futures plummet. debt maneuvers. the u.s. speaker kevin mccarthy proposes a 1.5 trillion dollar increase in the debt ceiling. fears grow that slowing tax revenues could increase the date for the people. elon musk signals the ev maker will continue to cut prices to ward off the rivals. very good morning to you. was a beige book blip, or is it right that we have recession obsession? how mckenzie, good morning. >> manus, good morning, that recession obsession is being reflected in the commodities space. we will check on oil prices shortly, iron ore and cover all down on the back of concerns. the fed beige book pointing to tighten conditions around credit. john williams reiterating that

fear, underscoring that even if you get 25 basis points in may which is largely based in by markets, the case for a pauses there. a redhead on the earnings front, renault first quarter revenue is a beat. 11.5 billion euros versus the s&p's 11.31 billion. we will check in on the asian session. the msci asia pacific currently down .2%. just are electing the cost become the best performing major market in asia today, close to a bull market, gains. today a bit of profit taking across the main korean index. futures in the u.s. pointing lower by .2%, after u.s. markets ended flat yesterday. the futures in europe waiting to flat as well after modest losses yesterday. we await the further earnings picture. manus: and look, the beige book, the economy stalled, credit narrowed, but after the kumble

sing moment of svb, the kiwi is down, inflation is way below the estimate. inventories are drawing down in the united states of america. natural gas has come off a pretty good run in the states. the weather is getting milder and there is a view that that may take some of the heat out of that. iron ore down 1.4%. the new york fed recession model says 60%, credit suisse is at 80%. let's revert back to the renault numbers, we will hear more about elon musk's margin pressures in a moment, they are saying ev pricing pressure -- revenue rose 30% at 11.5 billion, above the limitless -- the analyst

estimates. the order book will keep supporting the group's commercial activity. interesting that they talk about ev margins, isn't it? tom: it really is fascinating. you compare u.s. counterpart, gm, margins of 6.6%, or 4%, i believe. then tesla still 11% margins despite the two price cuts. but this is the renault story, the order book looking pretty decent for the year, quoting, the group is off to a solid start, that is the line from the cfo also saying supply chain constraints have been addressed. we will talk the fed with michelle jamrisko and the debt ceiling. danny lee is here to break the tesla earnings followed by a raft of big bank u.s. bank reports with another other than charlie wells. manus: let's focus on the u.s.

economy, access to credit narrows the fed's monthly beige book survey, so that economy has little changed despite some signs of slowing trade let's bring in our asia reporter michelle jamrisko, is it a beige book blip because of the time the data was gathered, or is there something more ominous in the data? >> i think everyone can agree that the message on the beige book is that there is a downshift happening. there is no debate about that. the real debate is the nuanced one around to what extent are credit conditions tightening? to what extent is the labor market and inflation slowing down, and with that force the fed to pause now? investors are still looking for that quarter-point hike at their next meeting, then maybe a pause thereafter. the beige book is one of my favorite reports, you get anecdotal evidence across the 12 regional fed banks, we saw topline hiring slowing, credit

narrowing, lower lending volumes, even reduced deposits at banks. at the same time, people are saying things have stabilized quite a bit since the silicon valley bank failure. so we will continue to see that debate raged among fed officials all as investors. other lessons, the region is moderating, and consumer spending generally seen as flat to down slightly. a number of factors that are showing that downshift in the economy. two details to point out, always great to get colorful detail, new york fed reported higher mortgage delete with you rates. -- delinquency rates. and at some firms have begun to leverage the use of artificial intelligence in lou of hiring for certain professions. look out manus, the robots are coming. tom: that is great color on the implications of ai.

manus sitting there pretty comfortably, you are not worried about the bots, i don't think. john williams, talked was about the fed officials and for commentary around credit. what are these flagging credit conditions? >> entirely appropriate for the new york fed chief to talk about financial conditions there. he said the system is sound and resilient. the boilerplate the fed was to go with to calm all these nerves. there is nothing systemic going on. things have stabilized. he reminded everyone about the fed's quick action after the initial bank failures prayed the discount window in the special program is doing exactly what is wanted, that was his quote. he also warned they are seeing tighter credit. he acknowledged the beige book report. he said that will put a lot of

pressure on spending, along with households and businesses. tom: thank you, michelle jamrisko, on the commentary from john williams and the implications of what the reader crosses from the fed's beige book in terms of recession risk. the u.s. house speaker has proposed raising the u.s. debt limit for a year and cut spending, the house votes on the republican plan next week. for more, let's bring in bloomberg's derek. how do this change the prospect for a u.s. debt limit showdown? >> the first thing you have to ask is, is this the thing democrats except? the answer is no, not even close. democrats have said plainly, you heard from president joe biden recently, they want something clean. they want a debt limit increase without conditions attached. certainly, without conditions that would be republican wish list items they would circle to

pass otherwise. kevin mccarthy has a challenge. house republicans have not released a budget. that's probably not going to happen. but he has a list of demands. what he will try to do next week is get this passed by the house. basically saying there has been something put forward, now it is your turn. that legislation includes a lot of things republicans really want, work requirements on some entitlement programs, forex apple. but it is not clear how these boats will come down. it will be a narrow margin either way because you shouldn't expect to see any democratic votes for this. so republicans will have to do this by themselves. republicans have also been nervous about voting for debt limit increases in the past, regardless of conditions be let's say this gets through, this will leave us in a position with republicans on record in

favor of increasing the debt limit in exchange for something, while democrats demanded they do it in exchange for nothing. that narrows the playing field, but it is worth noting we are pretty close to a deadline. and with not really an obvious endgame in place yet. x date estimated sometime between june and august. but it is worth noting, we have talked about this in a number of different subjects, a lot of times in washington, it is no, no, no, then you get to yes. manus: i like the word yes. it is good to have you back on the show, derek. i just put it to christine lagarde, these might be famous last words, i cannot believe they would let such a major, major disaster happen. i have watched a lot of [indiscernible] derek wallbank on the

nailbiter which is the debt ceiling. tesla introducing price cuts to boost demand prayed let's get more with asia transport reporter danny lee. we are showing a beautiful red tesla on the screen. the question is wire they having to cut prices to sell more of those people red tesla's? >> elon musk really wants to maintain market share. he has a lot of competition, not just in the u.s. or europe, but in china where they are leading with a whole range of vehicles at different price points. and they are a lot cheaper fundamentally. so elon musk is chasing after the chinese who are nipping at his heels. you see it in the price cuts over the past to help love months that it is affecting margins. we still see double-digit margins which is pretty good, but you look at the cost of trying to maintain market share,

there is a flow one affect as a result. but you compared it to earlier the u.s. and european automakers, tesla is far in front in the ev transition, and can maintain some pretty healthy double-digit margins. tom: 11% even after two price cuts in the u.s. now to the rest of the agenda. what to look out for on the trading front. 12:30 p.m. u.k. time, the ecb will publish his latest account of its monthly policy meeting. on them hour later, an update on the u.s. later more market with initial jobless claims. 3:00 p.m., u.s. existing home sales data comes out. manus: we have some pretty tough calls on the repossessions of of autos in the states. later in the day, more fits be. it is a feast before the quiet period. chris waller talking at 5:00

p.m. a short time later, the cleveland fed governor, loretta mester, to speak at an event in florida. tom: we will get more on these markets, as the ecb's de cos says the central bank may have to continue raising rates. that is next. this is bloomberg. ♪ seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply.

>> if the baseline scenario in the march projections is confirmed, we will still have to make sure that inflation is stamped out. tom: that was the ecb's de cos on the possibility of keeping rates elevated. manus: the market thanks another

three hikes will be done. jeremy's stretch is here, the g10 fx strategist at the cibc. at 1.10 for cash, is the endpoint now fully priced in euro-dollar, jeremy, or is my risk that this gap between the fed and ecb actually might widen further to dollar favor? jeremy: we are not necessarily at endgame as far as euro is concerned. we have seen a discount with a lot of good news, but there is further scope for euro appreciation. we will see more portfolio flows coming into the euro zone, that is constructive. as we see that china's reopening narrative extending, we will see potentially additional reserve recycling back into euros which is also favorable. if you look at the front end yield spreads, although they have stabilized of late, which

is why we are oscillating around this 1.09-1.10 area, we will see the euro benefiting additionally. we still have room for euro appreciation. the fed is getting close to his endgame. we have the 25 basis points next month but that is probably it. we can and will see the euro trading higher through the latter half of this year. so we wouldn't be surprised if we are heading towards a 1.14-1.15 trend in the second half of 2023. tom: 1.15, on euro-dollar, has this moved away from being an energy story to a rates story? jeremy: when you look at the storage levels of gas compared to previous years, the euro zone's five percentage points higher than previous cycles. there is less of a refilling story through the course of this

year. we are also seeing prices back pre-ukraine levels. we are not seeing the same drag on the euro zone from the energy spectrum. if we see that china's reopening narrative benefiting the german manufacturing and export sector, that is encouraging. at the same time, you have portfolio flow which is favoring europe in terms of the recovery in the equity sector relative to u.s. you also see interest rate spreads have proven to be favorable for the euro zone. there is a confluence of factors which are supportive. yes, we have seen significant pickup in positioning, but there is scope for the to appreciate further. manus: it wasn't supposed to be this way, jeremy, inflation was not supposed to remain above 10% yesterday in the united kingdom. it did. it was a little bit of a shock. was it a shock to you, or is there a long, variable lag, excuse that pun, a lot of

invective about the bank of england getting to 5% now is overdone? jeremy: in the context of getting to 5%, that is overdone. i don't see the necessity to encourage the bank to tighten to that degree. you are right, there is this long and variable lag, we're still seeing the legacy of this aggressive tightening cycle that began at the backend of 2021 still working through the system. how things said that -- having said that, i was surprised about the resilience of the headline cpi print yesterday. but we have resilience in core and service prices pray that is where the boe will prove to be increasingly concerned. but yesterday cpi print end of the wages data the previous day, we have revised our terminal rate assumption for the u.k. to 4.5%. we don't see the necessity of getting to 5%, because it clearly, the bank feels the need to tighten to that degree, the

degree of destruction in terms of demand, or in terms of activity in the real estate market will be significant. that would prove to be mel to the sterling story, rather than providing a significant degree of yields important appreciation as far as the currency is concerned. tom: do we get to the 1.30 level that has been flagged by nomura and hsbc? jeremy: it comes back to the euro-dollar story, but we see euro-sterling moving up, that is the reason probably why we see sterling proving to be a little less supported against the dollar dynamics. we see euro-sterling getting back to the 90 pence mark, we can see sterling rising a little, to 1.26, something of that nature rather than 1.30. in terms of broader trading ranges, we are still in this 1.10-1.30 four

sterling. but it is not something we will see running through quickly, even though we are less than optimistic in terms of the dollar story from here. manus: how concerned are you about the debt ceiling? goldman says it could become critical in june. only 108 billion dollars came into the coffers of the treasury yesterday on tax day, which could make jiggery pokery a lot more difficult. with a be so blase as to let the debt ceiling go? what happens to the horses if we really go to the wire on the debt ceiling? jeremy: as far as u.s. politics, the word is bipartisan. we need to see some degree of bipartisan processing to avoid that debt ceiling issue becoming a major systemic risk. those tax flows were relatively modest compared to where we

might've have hoped. that circled x date could potentially be slightly earlier. we have this situation where we are nervous about how republicans and democrats will find some degree of resolution. will they run into the wire, most likely? will they push the u.s. over the edge of the cliff, if we are using metaphors, i don't think they will. but from a market perspective, it is another reason to be nervous about holding dollars and u.s. assets, if we are going to see that lack of bipartisanship get us very close to a cliff edge. tom: always with the ability to cut through the noise on these markets, jeremy stretch, head of g10 fx strategy at the canadian imperial bank of commerce, on possibly complacency around u.s. debt ceiling risks, a all of 1.15 on euro-dollar and 1.25 for the pound. president are to one promises to

cut the country's dependence on imports. that is next. this is bloomberg. ♪

manus: president erdogan has promised to cut turkey's import dependence ahead of the election next month. the toughest he has faced in 20 years. let's get to our reporter in istanbul. patrick, good to have you with us. the details around this gas field? the size and scope, the veracity of what is there, what have geologists said? >> it's the biggest find of gas in the black sea, 710 billion cubic meters. they will start small, 10 million cubic meters per day.

they plan to ramp that up by 2027 to 40 million cubic meters per day. that would meet 25% of turkeys current gas consumption. it could make a significant dent in gas imports for a country that is currently around 99% reliant on them. tom: 99% reliant on gas imports. what is the potential impact of the economy of turkey? specifically the politics as we lead up to those elections. >> it is a completely political project as well as an energy one. it goes back to the time of erdogan's son-in-law when he was energy minister. the election is coming up may 14. erdogan has been on the campaign trail just yesterday. he will be doing that right up to election day. we expect him to speak as well today. he has promised an appeal to

both voters' pride and their project. he is saying, look at these grand megaprojects we can pull off. and look also at the impact it could have on your bills. this at a time when inflation on energy is everywhere a big issue, in turkey, at 50%. still plenty of of western europe -- above western europe. the pro-government press is egging them on to announce cuts to energy prices, potentially even a freeze or partial amnesty for some users, so it will be interesting what everyone says later today. manus: we will leave it there. we are running up to that election and will have full coverage. patrick and the team will be there. we will be with you across the four days of the election. join us then. this is about hsbc. what's going on? tom: this is a really

fascinating story. we will talk about the details. hsbc pushing back quite strongly it should be said against a proposal to spin off its asia businesses. the proposal is not new, but the aggressiveness of its largest shareholder ping an really is. the details on that battle with the top shareholder next. this is bloomberg. ♪ (jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy. release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time

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manus: it is "bloomberg daybreak: europe", with me, manus cranny in dubai. tom mackenzie alongside in london. tom: the fed suggest the u.s. economy stalled in recent weeks, as access to credit tightens,

stocks and futures our next. u.s. speaker kevin mccarthy proposes a $1.5 trillion increase in the debt ceiling, as fears grow that falling tax revenues could hasten the date of a potential default. plus, tesla slumps 6% post-market as elon musk signals the ev maker will continue to cut prices to ward off rivals. manus: let's get into this tsmc numbers. tliv for everybody on your terminal. net income to hunt $6 billion is what we get -- $206 billion is what we get in terms of taiwan dollar's. the estimate was 94. on the margin side, it is expanding its margins to 56 point 3% from 64.4%, so a very comfortable beat. we're just waiting for a little

more of a breakdown. the question is this, what kind of orders will they get from the u.s.? what kind of big new deals will they get from the u.s., and biden is pushing taiwan come on shore, friendsure to us, come to america. tom: the leading producer of semiconductors globally. tsmc headquartered in taiwan. margins 56.3, beating the estimates. the u.s. is pushing for subsidies of around $50 billion for their u.s. chip plane. there is also conversation to what extent artificial intelligence and the chips needed to power that revolution is going to drive demand. you are right to underscore the fact that it is the outlook, particularly for the full-year revenue guidance, that will be key. that has been flagged by analysts watching the tsmc results. we keep an eye across that

guidance. the top line is a beat on income and gross margin in the first quarter for tsmc. now to all things macro. governing councilmember pablo hernandez de cos says the ecb will have to continue raising rates if it's macro economic outlook remains intact. >> something we need to stress is that the financial tensions i just prefer to, before our meeting in march, imply an additional element of uncertainty around the scenario that growth -- that was prepared by staff. this was prepared before this took place. this extra uncertainty makes us to stress even more the data-dependent approach we have been following since the start of our tightening cycle back in

december 2021. it basically means our monetary policy will depend on numerous sources of risk, including those related to financial market developments. in other words, this is something philip lane our chief economist was stressing this morning, this is conditional, if the baseline scenario in the march projections is confirmed, we will still have ground to cover to make sure inflation is stamped out. there are various sources of uncertainty, this is why we are emphasizing data dependence. this means we are committed to [indiscernible]

in particular, the implications of this turmoil have been relatively contained. should they persist, that could lead to sharper than expected tightening of conditioning. they could lower our confidence and give rise to a scenario of more rapidly declining inflation. the eu banking sector is strong in both capital and liquidity terms. capital is much higher than it was 15 years ago. the liquidity position of european banks is robust. tom: ecb governing councilmember de cos speaking. morgan stanley's investment banking and wealth unit beat first quarter expectations even

as profits fell from a year ago. we're joined by charlie wells with the details. what went right for morgan stanley? >> wealth certainly went right at morgan stanley. that unit saw an increase of 11% from the year before. there cfo said $20 billion in assets came to that unit thanks to the turmoil of march. now morgan stanley, always a referred juggernaut in wealth management, seeing $4.6 trillion there, much of the envy of its competitors. what went wrong? the dealmaking slump is still weighing on this bank. we saw loan loss provisions quadrupled. we were talking yesterday about goldman sachs. morgan stanley's equities trading unit lost its top spot to goldman sachs. it did well in fixed income, but equities trading notched down. manus: charlie, good to see you, we are wrapping up hurling'-- earnings season in the u.s.,

credit suisse will give some numbers and deutsche bank. but regional banks are perhaps the next most important thing in the u.s. to really hone in on. we have looked at deposits flowing back in to one or two of them, but what can we expect? >> we don't focus so much on regional banks, but after march, they are so crucial to understanding the stability of the financial system and what could be coming next. it is all about deposits, where did that money go after march? some banks have been rewarded in their share price by indicating there has been stabilization, that they were able to attract back money. it may not be as negative as one may have expected, but also, we're hearing smaller banks saying they have to pay more to keep those deposits, that could put these banks under pressure in the months ahead. manus: that's the squeeze on the nims. charlie wells in london paid let's continue the banking

conversation. we have this clash between hsbc and its biggest shareholder heating up. the battle with ping an comes ahead of the general meeting that will test investor support for the proposal to spin off hsbc's lucrative asia business. to hong kong we go, jonas joins us with this story, heelys our coverage for greater china finance. what is the latest development? it is a long-running dispute. >> that's right, manus. we broke this story about ping an wanting to spin off hsbc a little more than a year ago. for most, it has been a stealth battle, but it is becoming more and more public. of note this week, ping an called specifically for a spin off of a bank that would be based in hong kong. but also criticized hsbc for not entering into a proper dialogue. hsbc hit back, saying it had

indeed had extensive meetings with ping an, where both sides had agreed to disagree on the issue. there is a lot more action going on ahead of the agm coming in early next month. shareholders will get to vote on two proposals put up by hong kong shareholders. tom: as you allude to, it seems the gloves are coming off for both sides. how fundamentally ruptured is this relationship? what are you looking for in the weeks and months ahead? >> what we're really looking for is some sort of broader support for ping an's china deal, and a lesser degree, some local hong kong shareholders. we have not seen that anyway. the two proposals being voted on next week will get some. they are not going to spin off, but they are mainly saying that the bank should provide more information, more regular updates on its asia business.

and also restore dividends to pre-pandemic levels. hsbc has voiced its opposition to these proposals, saying it doesn't want to tie itself up like that. other shareholder proxy organizations have also said people shouldn't back it. it will be interesting to see at the general meeting, just how much support these proposals would have, we will see the underlying support for any efforts by ping an. tom: bloomberg's jonas bergman, appreciate it, out of hong kong on the increasingly fraught relationship between hpc and's largest shareholder. ryanair is expecting to see double-digit price increases for airfares this year. >> people are determined to spend, and on travel in particular. they have been locked up for two years and that has driven people back to the beaches of europe. last year we saw fares rise

14-15%, we think the summer, we might get to double digits again, maybe 10% increase in airfares. that will be two years in a row of double-digit airfare increases. we are nowhere near american level of airfares. southwest's average airfare last year was $110, our average was 44 euros, it is much cheaper to fly in europe but it is getting a little more expensive, particularly as we move through the summer of 2023. manus: the ryanair ceo michael o'leary, at the bloomberg new economy gateway forum outside dublin. we will speak to a few more guests from the gateway in europe throughout the day, they include -- tony blair, blackrock vice chairman and the irish

finance minister all joining the new economy gateway. tom: coming, tesla drops after hours after operating margin calls in the first quarter. more on those results. the ev maker slashing prices, what it means for competition across the space. this is bloomberg. ♪

>> while we reduced prices considerably in early q1, our operating room margin remains among the best in the industry. higher volumes and larger fleet is the right choice versus lower volumes and higher margin. tom: the tesla ceo, elon musk, on a called to analysts after those results. for more details on the ev maker

is bloomberg's alex webb. we heard from elon musk saying the priority is volumes over margins. we know they are cutting prices not just in the u.s., but china as well, what have those done to these results? >> we have seen certificate decline in the operating margin. the profit margin was 19% a year ago, 16% in the previous quarter. it has now gone down to 11%. tesla frames this as getting share from competitors at a time when we have more generous operating margins than they do, so we can essentially afford to do it. don't forget that tesla nunnally has been expanding its capacity significantly over the past few years in shanghai, berlin and texas. it needs to run those at a certain capacity to be profitable. it also is essentially valued on

growth. but that growth is predicated on being profitable. that is why it is able to trade at 50 plus times multiples of forward earnings. if you are massively discounting your vehicles and the margin is coming down, one part of that thesis starts to fall apart a little bit. manus: the margins are 11.4% in the quarter, down from 19.2%, but this is still way ahead of their country cousins at ford and other places. one thing i would love to see, the cybertruck unveiling at a hall of farmer. take me back tothree years ago where he broke the window and made a massive dent in it. if anybody else did this, it would be a pr disaster. but look at that, that is very tom.

tom: it is an aspiration. alex, when is this coming online, i guess is the question manus is building up to, that little piece of cybertruck history. >> our projections has it is likely to be in production later this year. it would solve a lot of their problems when it comes to capacity. trucks are the biggest selling product category in the u.s. when it comes to autos. you could also make the case that actually smashing the window that wasn't supposed to smash actually generated more publicity for the thing than if it had just shown that yes, it is not quite bulletproof, but hammer proof. it generated a lot of publicity well before the lunch and generated a lot of preorders. manus: last question, alex.

a long time ago, i bought a very big jeep. i lived in west london where there was never a hill, where i would never need four-wheel-drive, and where i was never able to park the thing. and sold it within six months and took a bath on it. all i will say is if you are thinking about buying a big truck in a flat city, you won't need it. tom doesn't need it, he lives in a much more refined part of london than i did. >> you are not the demo for this thing. this is very much people in the midwest where trucks are a way of life for vast tracts of middle america. it is a market tesla doesn't necessarily address with its sedans and sports cars. that is something -- that is the market he is trying to tackle. probably more than the dozen is -- denizens of west london.

tom: i want to keep going down memory lane with manus and his car purchases but we have to move on to the battery space. catl, what are they doing? >> we have seen from catl that they are investing -- or taking investing -- they are in talks with apple about the possibility of investment for what happens with their ev batteries. do you know what, i must apologize. i have been looking at the wrong story, for which i apologize profusely. i will have to pass on that particular question. manus: alex, that was the bravest swerve i have seen yet on live tv. do you know why i am glad? it is tom mackenzie that asked

the question and not me. well done, you are on the button every day. alex webb with the very latest on tesla. apparently i am not the target market for the new truck. i am devastated. >> the fed's beige book says the u.s. economy stalled in recent weeks with hiring and inflation slowing and access to credit narrowing. it marks a step down in tone from the previous edition published in early march, just before the collapse of silicon valley bank. the report will reinforce expectations that the fed will pause rate hikes following an increase at the next meeting. turkey is set to start natural gas production from the biggest field in the black sea today. the state run producers says the sakarya field will provide 10 million cubic meters per day. it gives president erdogan an opportunity to slash energy

prices ahead of elections. by 2028, the field will produce enough gas to produce three quarters of turkish consumption. chinese bank kept benchmark lending rates unchanged. the people's bank of china maintained its one-year low crime rate at 3.65% for the eighth straight month, as the economy continued its recovery. l'oreal sales jumped more than expected. like-for like sales in the first quarter were up 13%, well ahead of forecast for a gain of 8%. north asia was a weak spot, with the company reporting supply constraints. global news powered by more than 2700 journalists and analysts in more than 120 countries. i'm adrian wong. tom: tsmc first quarter profit beats estimates. we will focus on the world's

largest contractor chipmaker. what it says about demand. this is bloomberg. ♪

manus: tsmc's profit beat expectations after its chip margins have done better than anticipated. the march quarter earnings may come as taiwan's largest company grapples with persistently weaker demand. consumers and corporations are tightening up their budget belts. let's get to our bloomberg opinion columnist in taipei. they hit it out of the park, how, why? is there a damascene moment of demand? >> there revenue came at the long end of guidance. they had already reported that both the top end was amazing. having a quick look at the p&l

that came out 20 minutes ago, there margins are did very well. gross operating margins were well above guidance. there is a little bit of a forex impact, but cost control looks to have been very good. the fact that they were at the lower end of guidance is not necessarily good news, but not necessarily bad either. what is really important is that they missed by a lot in all this bad news. so they have room to spend more, they have room on the margins to rein in costs. for investors who are worried about the bottom line, they are looking good. what it means for long-term on the next few quarters, we will find out in just a few minutes at the top of the hour, tsmc holds their ir call, if you have a terminal, i recommend going to tliv , it will be one of the most fascinating talk lives we have run in while given what's happening in the market. tom: given the hammering over

inventories and the slowdown in memory, what is the quarter outlook for the broader market? >> i'm glad you mention inventory. i had a quick look at tsmc's numbers. inventory has inched up a little bit. t-1 was a low period for the industry. that sometimes happens. what we have seen in the cuts that have been forecast by tsmc antler claims has been to digest that inventory, as well as weakness at the end market. the fact that inventory did not get digest is as -- digest it as much as we want is a concern. i will want to hear what the company says in the next hour. but that is something we will look out for from samsung and intel open next week but also report earnings. if the inventory is stubborn and doesn't get down, that will portend weakness for probably a few quarters. tom: tim culpan on those tsmc earnings and listening out for

the call. manus, recession risks are front and center. your european futures are flat. manus: it is a slow drift. let's see what the rest of the fed speakers say today. we have a whole host before the quiet period. from my part of the world, i wish everybody a good break, at home and in the uae. ♪ introducing the sleep number climate360 smart bed. the only smart bed in the world that actively cools, warms,

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was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com anna: good morning. welcome to "bloomberg markets: europe." i am anna edwards in london and mark cudmore joins us from singapore to take us through the action this hour. slowing momentum. the fed's beige book suggests

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