dani: good morning.

this is "bloomberg daybreak: europe." in its first earnings report since the ubs takeover, credit suisse says outflows topped 61 billion swiss francs in the first quarter. we are live from direct. on the back foot, asian stocks in u.s. futures in the red before data that may illuminate the path forward for interest rates. treasury yields take forward. plus, a chinese diplomat stokes theory in europe by questioning the sovereignty of x soviet states. big outflows from credit suisse but now we have phillips earnings raking across the terminal just now, seeing just under 600 million euros in provisions from their sleep apnea recall compensation. that's the headline figure. 575 million euros. this is just one of three different legal provisions they

might face. this one is over the economic recall. it also says it is confident in its plan for 2023. we saw some big job cuts from phillips last earnings. it is that litigation and compensation that will have investor attention. 575 million euros. what will the timeline be? it also said restructuring is on track. for the figures, sales coming in just above estimates, 4.1 7 billion euros. sales also higher by 5.7%. we will dig into those numbers in a bit with the phillips ceo at 6:40 a.m. london time. the big earnings that have grabbed our attention this morning have been the big outflows from credit suisse. their first earnings report since announcing the ubs takeover. not as a stark as last quarter but still they are seeing about

61 billion swiss francs in outflows. let's get to manus cranny, who is in zürich covering this story. these numbers just broke 15 minutes ago. quick digestion for you and move outside of credit suisse. what are your main takeaways? manus: the drive-by which happened in the middle of march in terms of the exodus of funds could have been a lot worse. 61 billion swiss francs did walk out the door. there is undoubted pressure. what they've told us is the market expected over 100 billion, sort of the fluttering number in the wind. to put it in context, in the fourth quarter of 2022, on hundred 10 billion walked out the door. 61 billion have gone out the

door. that's not as bad as the fourth quarter number. they are taking a goodwill impairment charge in the wealth management business of 1.3 billion. some things to get your head around you look at these numbers -- you need to step back and pause. money walking out the door of a massive institution like credit suisse, deposits can fly out the door like that. that is done in a matter of minutes in the swift system. where the complicated evolution of this story comes is when clients decide to exit the bank and go with a wealth manager, those are more difficult to move out. what should give you some keer -- cheer for ubs, it's not a massive exodus. the difference between deposits and those more deep-rooted client management relationships. for now this could have been a lot worse.

that is a whopping outflows and a goodwill impairment of 1.3 billion. good morning. dani: good morning. and the outflows as they put in their earnings have not yet reversed although maybe it is moderated, it is still an issue. what you make of credit suisse announcing they terminated the acquisition of client group? this was something we expected with the integration of ubs. manus: part of the great turnaround plan announced was this idea that they would step back from investment banking, push off in two the slightly more risky business of investment banking. it has been made abundantly clear, the chairman at ubs has made it abundantly clear that the agenda is to downsize the investment bank and put it as a

natural feeder into the wealth management. that will be downsized to 25% within credit suisse. to me that's not necessarily huge, hugely new, this is about who we are, what we are and what we do from switzerland. the managed situation, the assets at the start of trade -- what you pay 3.3 trillion four? the assets. it has a knock on effect of the massive growth splurge that ubs and credit suisse is expected to have. this is not as bad as citi expected to walk out the door. wealth management, 524 billion, and a smaller portion, 526.

this could have been worse is my initial take. but from bitter experience when you try to move wealthy clients from an institution, the road to hell is paved with good intentions. they promised me a lot and a lot of them still owe me a lot. they moved their money. dani: there's something poetic when you're talking about money moving, we have the swiss trams moving behind you. it is an evocative and very swiss scene. manus: we should have waited for the tramp to go past. dani: i wish you had shown up in one and stepped out. to make sure we are not too swiss, i want to bring our reporter in london. leo, we've had a number of european banks report, we will have a number of european banks report. manus was talking about credit

suisse. expand the conversation. these banks are dealing with a very different environment, but what are we expecting? leo: it's the fixed income traders that will be in focus when they report on thursday. revenues are expected to drop by 10% respectively. that is because of the volatility that traders had to navigate last year. by comparison it is very strong. to be fair, a 10% drop would be roughly in line with what we've seen from goldman and morgan stanley earlier this month. any positive surprise would really help deutsche bank and barclays shares. dani: manus will be in deutsche bank later this week so we will be on top of that. one of the things we learn from u.s. banks, some of them captured more market share. perhaps from ubs or credit suisse. do we expect european banks to see similar flow if credit

suisse is announcing over 61 billion swiss franc's in outflows? will it go to european rivals? leo: what the barclays ceo said is they've seen a boost from outflows at kreis weise and investment bank clients so i think yes, they could see a boost. dani: manus, let me bring you in. we did see the u.s. bank report, some of the inflow when it came to credit suisse. you're going to be going to ubs and deutsche bank. what will the readthrough for these numbers be with these other banks you will be speaking to? manus: take the morgan stanley numbers -- this is a video syncretic but there with me -- engaging with new wealth management clients, that's what really drove the engagement wealthy families, wealthy individuals. skittish about who they are with. the door is open. this is a gift to any wealth

manager out there, any guy or girl trying to build their book. this is a gift moment where they will engage in families will engage. you can be sure. they told us in switzerland this all assets under management and money flow in i will get julius baer to speak. you can be sure there was a proliferation of relationships beyond these borders, which many people thought they'd never get a chance to eat that piece of cake. within the domain of these borders, and beyond these borders be assured there are wealth managers tripping over themselves to get a piece of this cake. dani: thank you both so much for that. you can follow all of the latest from credit suisse on bloomberg tv and get commentary from our expert editors we will be

covering this through the morning and program. that is the tliv earnings for you. as we keep an eye on that, big moves across markets at least the past week when it comes to data. leveraged funds, a.k.a. hedge funds, now have the biggest net short on 10 year treasuries on record. the fed might say they are done hiking rates but this is a hedge fund cohort still obsessed with sticky inflation. s&p futures more negative, they were trapped in a range last week but finally some movement. it's to the downside. s&p 500 futures saw the larger short position in two years based on that data as well. we also have testifying in front of parliament into pair -- in japan making it clear the communication style is different from jay powell.

we interpret this as dovish in the yen weekends this morning. crude oil down, wiped out nearly all of the games since opec-plus cut supply. there are growth concerns and u.s.-china relations concerns weighing on crude this morning. iron ore is also dropping over china concerns as well. a busy week. the fed blackout period did just start. let's look at some other things we will watch out for. first republic, which is the embattled regional bank that's had some support from other banks, is set to report earnings after the bell in the u.s.. we will get german ifo data as well. then the earnings flood in, we will get ubs, and microsoft will also report, the start of the big tech earnings. that follows on wednesday. meda will report, and standard chartered will also report. we will get u.s. gdp data and

more earnings from amazon. to round out the week on friday, cpi and gdp data from across europe to include france, germany and spain. japan will deliver its first rate decision under the new governor. coming up, we will talk about that big short on 10 year treasuries, the biggest for hedge funds on record. we will dig more into that and phillips first quarter adjusted beats estimates, announcing 570 5 million euros in provisions for the recall compensation. we will speak to the ceo at 6:40 a.m. london time. this is bloomberg. ♪

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dani: the feds's a blackout period has begun ahead of their next interest rate decision but hedge funds have made their final verdict. sticky inflation is a problem and still a problem. according to the latest data, the industry has placed its biggest ever short position on 10 year treasuries. let's bring in our guest. maurice, hedge funds clearly in the data happy to short treasuries. are you doing the same? is sticky inflation a problem and will we see yields keep climbing?

maurice: good morning. sticky inflation is an issue but we think the other side of hedge funds because we are overweight on the safe segments of fixed income. we think is not just about inflation, which should -- in the coming quarters. we think there is a compelling risk. we are not in the same direction as hedge funds. dani: fair enough. that's more of a safety sort of defensive play. are you doing the same and equities? maurice: it's an interesting one. when it comes to our location, there are several levels of uncertainty. uncertainty on inflation of course and uncertainty on the central bank response. in mid-these uncertainties it's more about being selective. we are overweight cash because

cash is the best uncorrelated a set. but also fixed income, when it comes to equity, we are neutral, with a preference for emerging markets. but it's about where we put our risk. overall, the issue is about valuations, pricing in the perfect scenario. dani: this is the thing, i feel like this is a market where we are all just holding our nose and continuing to buy equities. all of the surveys, people don't like stocks right now. we have another large short on s&p futures, the largest in 12 years. does the negative sentiment just meme stocks will keep going up? maurice: there are some mysteries currently in the market and i think the first one is that despite all the uncertainties we have and we did

not even talk about the war and everything. volatility is a bit of a mystery. in friendly the rally in u.s. stocks surprised us. however, we are in the same directions as hedge funds because we are clearly on the way to -- stocks. u.s. stocks in particular are pricing in a perfect scenario of soft landing and rate -- and down the road which may not happen. emerging market stocks is another story, we are overweight there and neutral on equities. dani: i like this because you are bucking the trend with the hedge funds when it comes to treasuries but maybe following along on equities. you are truly your own man. we are about to get more data from the u.s., yesterday we got -- not yesterday, last week we got data from europe and the

u.s. when it comes to pmi and services become really strong. are we at a risk of the economy in both europe and the u.s. re-accelerating? maurice: ahhh, i would say yes from data, as you point out. global gdp on track to reach maybe 4% annualized 10 -- annualized in q1. i think i lost my microphone. dani: you can just hold it up, we love it. this is live tv. maurice: the economy is stronger than expected, yes. there is a narrow path to a happy ending to the current situation. on one hand, the economy is stronger. we cannot say it is bad news, it's only bad news because justifies more tightening from central banks.

the stress in the banking system is probably the equivalent of one or two hikes from the fed in terms of tightening a financial conditions. if we have another 25 point hike from the fed, plus maybe 50 equivalent from the stress and the banking sector, we are where the fed should be. we don't need more tightening. maybe we have a narrow path to avoid a recession and have something very mild. and at the end, reset the cycle. dani: quickly, what data are you looking at to get that idea, because this is something we are all grappling with. how much of what we have seen in tightening replaces fed hikes? or how much tightening has there been. what are you looking at? maurice: i think the key to look at is the u.s. job market. it's all about that.

the big scare of central banks is the wedge price inflation spiral. if we had only one data to look at it would be the job market. we will have an avalanche of data. the fed's preferred measure i think on friday. we hope to see some moderation. talking about the u.s., already superlow. europe is may be different and china continues to boost. dani: maurice, great to catch up with you this morning. ever the tv pro, re--mic-ing himself on the spot. coming up, the u.s. and u.k. have airlifted diplomats to safety as countries ramp up efforts to evacuate staff from

sudan. we will give you the latest details. this is bloomberg. ♪

>> this is your bloomberg first word news. speaker kevin mccarthy says the house will pass its plan to increase the u.s. debt ceiling this week. his proposal will stave off a default for about a year and trim of $4.5 trillion in spending over the next decade. sources tell us the u.s. house speaker has not yet lined up enough votes at the effort is making progress. prime minister rishi sunak is to hold talks with 200 high-profile u.k. business leaders and investors today. this comes as his government seeks to fill the void left by the implosion of a business lobby group. dozens of major companies quit the group following allegations of sexual misconduct against

staff. and the prime minister of japan's party has nearly secured wins in elections over the weekend. they kept the three seats they previously held and also picked up a fourth. the victories will add to speculation that he may call a national election after hosting the g7 summit in may. that's global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thank you so much. several nations have ramped up efforts to evacuate consular workers and ex-pats from war-torn sudan. let's get the latest. we had a cease-fire announcement over the weekend. did that hold? jennifer: yeah, there's concern it didn't hold. there was the potential it would, but there is shooting and shelling still happening. over 400 people potentially

killed, thousands more potentially injured. there's a lot of concern the violence will continue escalating especially because, as you mentioned, a lot of foreign law mats -- diplomats evacuated over the weekend. we're hearing from a lot of international leaders about the concern around this country and the violence potentially escalating. sudan borders seven african nations and there's concern this could spill over into other countries. the last we heard was from the african union, one of many groups speaking out about the violence. they said they have suspended sudan potentially from the african union at this point. a lot of concern about what is happening on the ground and to civilians. no access to a lot of necessities and this potentially turning into a full civil war. dani: what is next in terms of evacuating more folks? jennifer: we heard from a lot of

international powers, from president biden over the weekend talking about u.s. officials in particular. we heard from u.k. p.m. saying the concern around the escalation in violence made more countries want to evacuate their own citizens did we are also potentially going to hear from japan. there's a lot of concern about how this will affect international power. we will have to watch for more. dani: thank you so much. this is bloomberg. ♪

dani: good morning, happy

monday. this is "bloomberg daybreak: europe." i am dani burger in london. credit suisse posts its first earnings report since the ubs takeover with outflows topping 61 billion swiss francs in the first quarter. asian stocks and u.s. futures in the red before data this week that might illuminate the path forward for interest rates. plus, a chinese diplomat stokes fury in europe by questioning the sovereignty of ex soviet states good it is -- states. it is a monday and we are in a fed blackout period. data came out last week, pmi strong. still a strong economy. we spoke with our guest who said he was long when it comes to government bonds, but it is more of a safety play and less of a directional bat. yields sinking this morning after we saw record treasury

shorts coming from hedge funds be a lame show you what markets are doing. -- hedge funds. let me show you what markets are doing. we had shorts on those build up the most since 2011 on the latest data. weakening after some comments saying they cannot talk about why cc yet --ycc, and he can't communicate the same as the fed. we've heard him say the policy changes need to be a surprise. the yen moving lower against the dollar this morning. nymex crude down one and a third percent. fears of economic growth after the opec-plus cut. top story, credit suisse reporting $69 billion of outflows in the fourth quarter. it underscores the challenge for

ubs and retaining key clients and assets after the emergclet', who is covering the story in zürich. you are on your europe tour, we have these stark numbers from credit squeeze, maybe not as bad as before but still $61 billion of swiss francs. that's a tough reality they have to live with. manus: it is. perhaps a little more compacted in that it came into that vortex of the week of the 12th of march. 60 odd billion out the door. 47 from wealth. that is far below the worst ex the most, the likes of citi expecting 100 billion. in an extreme scenario they see dissipation from wealth management and asset earning

earnings to be up near 300 billion. i would say this is about deposits and not necessarily asset relationships. i said that to you 30 minutes ago. there are some other interesting items here. i want to focus a little bit on the 1.3 billion of a write-down in the wealth management business. this is a sort of starting point for the injury afflicted on the wealth management business by the nervousness, the exodus of money, the risk of human capital leaving the bank, i the risk of major clients and family relationships leaving management. this write-down is in there as well. this bank took liquidity support in this quarter and we have to see if this is as slow -- a slow dissipation in both management. they haven't reversed outflows

yet. dani: digging deeper, what did we learn especially when it comes to the new swiss giant that will emerge when this is over. manus: there are a number of things that will become more and more apparent. when you look at the numbers, this is what ubs ought, $1.3 trillion of assets they could earn money from. the risk is this -- the more that flows out from wealth management, the bigger the risk is to the overall golden ball, the ballon d'or that is the credit suisse and ubs tieup. i want to give you some context, the wealth management business they got their hands on is 541 billion. this is the close of business at the end of 2022.

credit suisse also said they are going to make a substantial loss in the second quarter, in this year in wealth management. this was universal business, 526 billion and the asset management is 400 billion under management. these are the numbers at the close of this on 2022. so far, 60 billion has walked out the door. nowhere near as bad as estimated. i am drawn to the comment about dine sizing the -- downsizing the investment bank and getting the assets and wealth managers family money across the line. the heavens are opening here quite literally shucking it down. dani: looking forward to your coverage tomorrow. maybe bring your umbrella just in case. there we go. now we literally cannot see you.

[laughter] manus cranny lurking in the shadows. there is some foreshadowing for tomorrow for you. looking forward to that. manus cranny in zero computed we will have a lot of european earnings through the week and interviews, including the ceo of ubs with manus cranny, our cleat and natwest, cfo of standard chartered, santander. stay with us for all of those. let's talk about the latest on at the diplomatic road. china's ambassador to france says some a former soviet nations doesn't have effective sovereign status under international law. he spoke to a french tv network. >> they don't have, how do you say, effective status and international rights because

there are no international agreements to recognize their status as a sovereign nation. dani: let's get over to maria tadeo. this comes with the backdrop of europe trying to court france. this isn't the first time he's made controversial comments, is it? maria: no, it this may be one too many. as you stated, it started on the friday night he went on french tv, he was interviewed. he was asked simply, does crimea belong to ukraine, which is a fair but pertinent question if you believe china will be a mediator in the war. if you look at the internationally recognized borders of ukraine after the soviet union, the answer to that question is yes. the issue is he alluded that a lot of it depends on history, it

depends on the perspective, and the comment that gets him in trouble is he goes on to suggest the fundamental issue is a lot of the former soviet republics have a questionable status under international law. if you strip away the drug on, it means they have -- the sovereignty of these countries is questionable. the problem is they are also members of the european union and nato. we look at the reaction of the baltics, it was fury, starting on saturday. they asked the chinese ambassador to france to retract his comments and they will reach out to the respective chinese diplomats in their countries for an explanation. a very heated comment indeed. dani: heated also, as i was mentioning, we had micron -- m acron trying to repair

relationships with china or at least keep them intact. where does this leave eu-china relations? maria: that's a good question, going back to what is the role china can play in the war in ukraine. it will reassert a lot of the fears and concerns particularly in eastern europe that china cannot be trusted with that role, that china has a strong pro-russian bias and it will not respect to the sovereignty of companies -- countries like ukraine in this potential peace deal. the baltics say it is a proposal and they don't agree fundamentally with it. at the same time, comments from the top european diplomat saying you can only hope these are his personal comments and not the views of the chinese communist party. but you could argue that is already problematic. dani: maria, thank you. here are comments from the french foreign minister.

coming up, philips puts aside recall litigation costs, and they also posted first quarter even at that beat estimates. the ceo joins me next. this is bloomberg. ♪

dani: phillips says it will put aside $630 million in the u.s. to compensate patients as part of a recall of equipment to treat sleep apnea. they adjusted ebit and the first quarter that beat estimates. right, it's great to speak with you. let's talk about supply chains

but i want to talk about the recall and compensation because this will be top of mind for investors. 600 million euros is the figure you have pretty economic competition. how much do you expect to set aside when it comes to the health damage and personal injury litigation? >> for those, we cannot estimate if there is any that has to be put aside, we are early days in the process of the litigation around personal injury and medical moratoria. we are very happy that when we look at this quarter, we had a lot of strong developments, both solid growth we reported on with 6%, supporting our better margin but also better cash flow, and making progress and executing our plan as well as simply find the organization. on safety and quality, we have

remediation, we are at 95 percent of the remediated devices. in the settlement cases, we are taking the first step for economic loss, making a provision because we expect to come to a settlement we can announce when we have the final details close. dani: what is your timeline when it comes to the compensation for patients? roy: we are working through getting the final conclusion of the settlement and that would mean the expect that from probably the first quarter next year, there would be payouts coming once we reach a settlement. dani: fair enough. in terms of other timelines, the fda and italian courts have been calling out slow delivery times on the new devices. how many of your patients at this point are still waiting on new devices? roy: if you look at the progress

we've been making, we are at 95% will produce good currently we have 4 million devices we've been providing to patients and home care providers. those are already in the hands of patients. then we have one million to go that we are working on very hard to get them back into the hands of the patients, together with home care providers that are partnering with us to get that resolved. there's a lot of progress made there, especially on the sheep side, and we also have ventilation, the remaining 5% we are working toward a resolution. dani: you start out talking about things are looking stronger especially when it comes to supply chains. how far away are we from complete normalization, getting back to the way things were before covid started to upset supply chain issues? roy: that is a big claim because to be honest it won't be easy to

get to the full stability we had before covid, just given current geopolitical circumstances. but we are making great strides and you saw that also coming back into -- coming in the quarter results. we are de-risking the high-risk components and it allows us to convert faster in the quarter. we see also continuing strength of the supply chain in the year. we see that strength continuing and also the market is improving. we don't see this will return to full stability yet. as you know, in the chip industry, we still have certain electronic components that are short. if you look at requirements for health care, there are specific requirements that are not fully unconstrained in the market. but it will get better quarter for quarter. dani: you will get better quarter over quarter. what about china's demand? china coming back, less restrictions, has that floated

through to you? are you seeing signs that demand is robust to their? -- robust there? roy: china is a strong contributor to our strong first quarter results. we see the health care demand is already coming back at full strength. there was pent up demand given that covid repressed what they could do in the country. we see in the first quarter, we had double-digit contribution from china and we expect china to be very strong. on the consumer side, first quarter is still more subdued from a china perspective, but from second quarter, we also expect them to return to growth. china we think this year will be overall an important contributor to the global economy and also specifically for phillips as we have a strong position we can build on. dani: when we talked last quarter you had just announced another 6000 job cuts by 2020

five, including 3000 this year. how far along are you with that goal and doesn't remain in place? is that still the pace of staff adjustments you are expecting? roy: i spoke about that. the organization has to become more agile to address the new world, it's important for us. part of that is getting to the new operating model, but also a necessary measure of using our workforce. we reduced 3000 roles last year. we said this year we would do another 4000 roles, a totality of 10,000. out of the 4000 currently we have already reduced 2400. we are very well on track, the totality of 2400. dani: thank you very much, i

appreciate your time this morning. i quickly want to mention, we are getting the vendee earnings, organic revenue climbing. first quarter revenue at 2.3 billion euros, a growth of just 3% year-over-year. the first quarter revenue at 2%, assuming constant currency. let's get to your bloomberg business flash with sam. sam: nbc universal ceo is leaving his role after admitting to an "inappropriate relationship with an employee." he has served as ceo since january 2020 and worked at its parent company comcast for almost two decades. the firm has not yet named an immediate successor. u.s. retailer bed, bath & beyond

will close all of its stores and liquidate inventory in the next two months after its turnaround failed. it filed for chapter 11 bankruptcy over the weekend that also said it is searching for a buyer for all or some of its assets. the filing will allow it to begin liquidating its 480 branches immediately. china has approved more new coal power plants in the first three months of this year than in all of 2021. according to research by greenpeace, provincial governments gave the green light to more than 20 gigawatts of new coal capacity in the first quarter. that as beijing continues a rapid expansion of a full fulfill generation in an effort to guarantee reliable electricity supplies. that is your bloomberg business flash. dani: thank you. coming up, u.s. house speaker kevin mccarthy says the house will pass his $1.5 trillion debt ceiling bill but does he have enough votes? analysis next. this is bloomberg. ♪

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dani: u.s. house speaker kevin mccarthy says the house will pass his 1.5 trillion dollar debt ceiling plan this week, putting off the chance of a default until next year. sources tell us mccarthy has not yet lined up enough votes. bill, this is what everyone is looking at. how much time do they have? is mccarthy's confidence misplaced that he can win support for this proposal? bill: he said the vote will happen this week so he is heading -- betting he will have the votes lined up in time. the consequences would be a

humiliating defeat for him just four months after it took more than a dozen rounds of votes for him to become speaker. i think he's aching that the moderates and -- banking that the moderates and conservatives are going to line up behind him just to prevent that kind of defeat. dani: what are the challenges? how can mccarthy bring -- his margin is so thin as you mentioned -- what are some of the levers he can pulled a make sure he has backing? roy: his proposal -- bill: his proposal is to carry the u.s. through basically spring of 2024. in exchange for that he is calling for about 4.5 trillion dollars of budget spending cuts over the next decade. there are conservatives who say that plan doesn't go far enough, they would like to see greater cuts made. there are moderates that think

some aspects of his proposal such as tightening the work requirements for people on food stamps for instance maybe go too far. i think in the end, his bet is that those folks on either side are going to decide they can get in line with these changes for now, maybe get a second shot at making tougher changes less than a year from now when the debt ceiling would come up again. they will go for that over republicans looking like they are in disarray and providing a defeat for their speaker. i think that is what mccarthy is betting on. it doesn't seem he has the votes yet but he must feel internally confident he's getting close enough to schedule the vote sometime in the coming days. dani: less than a minute emme but we have a better idea of when the date might be when the u.s. potentially runs into

default? bill: the treasury department makes all kinds of maneuvers to stave it off but our best estimate right now is sometime in june, early june, the debt ceiling will hit. dani: bill, thank you very much. mccarthy's proposal, $1.5 trillion. as we take you to the end of the hour i want to quickly show you iron ore, it is falling quite a bit this morning. this is over china concerns, down nearly 4%, going toward $100 a barrel. demand has been flopping in across the board.n commodities this is bloomberg. ♪

anna: