dani: good morning. this is "bloomberg daybreak: europe". i'm dani burger in london, these are the stories that set your agenda. ubs reports net new fee generating assets that topped estimates. the ceo sergio ermotti joins us in the next hour. spain's santander beats on first quarter profit despite booking 200 billion euros in windfall tax payments. we will hear from the cfo this morning. first republic shares plunged 22% in late trading after were reporting worse than expected deposit outflows, really writing concern -- reigniting concern about prospects for the bank. let's get to the drug companies. novartis reporting earnings. pps that beat estimates, $1.7, the estimate was $1.57.

they see 2023 sales growing in the mid-single digit percentage. they have raised guidance for 2023. that is the big takeaway. we're looking for any results when it comes to the trial of their new medicine in breast cancer. that is the real focus for investors, but at least the top line numbers are a beat. it is a rays of their 2023 group guidance. that is drug companies. ubs attracted $28 billion from wealthy clients in the months leading up to the takeover of credit suisse. it comes as the bank reports wealth management next new fee generating assets up for the first quarter ahead of estimates. at first glance, some results are a bit next -- mixed. we have new aphid -- assets, that is a beat. how much comes from credit suisse, they don't break that out.

investment banking was a mess. we know the troubles at credit suisse's investment bank. fees dropped, 63 percent slide in advisory revenue. first quarter rote was 8.1 percent, significantly below the expected 14.6%. we also had that really big rmbs litigation, $665 million as well. that is from the subprime crisis 15 years ago, so we still have a litigation provision. we will dig more into those numbers with ubs ceo sergio ermatti at 7:00 a.m. london time. the other bank that also reported was santander. net income for the first quarter beat estimates. we will speak with the cfo hosea

garcia can tara, at 7:10 a.m. london time. let's start on santander with stefania bianchi. what were the takeaways from these earnings? >> it has already been an interesting morning. we had ubs earnings. shortly after came santander. while ubs missed estimates, santander actually beat estimates. one of the key things i would take away from these earnings is there net provision number for loan losses. while these are relatively high, they were lower than some analysts had estimated. on that front, not too bad. dani: of course, it is a big week of big banks. we will set aside be ubs of it all, but barclays reports on thursday, what are we expecting? >> barclays on thursday.

here we expect fixed income to drive revenue. perhaps this may offset not so good performance on the equities and deal fronts, as we have talked about before on this show, dealmaking has been difficult for a long time. lester was difficult, so we're not expecting any huge change in that. perhaps fixed income will be the savior for barclays. dani: let's go to the elephant in the room. it was only 20 minutes ago, but what were your takeaways from the ubs report this morning? >> there were two initial takeaways, obviously, the litigation in the u.s. they set aside almost $700 million for that historic litigation. date ac -- it dates back to the financial crisis and is linked to the role selling mortgage-linked securities to

the financial crisis. this is now come around again many years later and is impacting the top line. investors will be looking to see how much new money went into ubs, and how much came from credit suisse. yesterday, credit suisse reported they had outflows of $70 billion. well we can't tell how much of this went into ubs, we have seen $28 billion went into ubs during the first quarter. about $7 billion came after the deal for credit suisse was announced. ubs has been a big benefactor from credit suisse's troubles. dani: that's important because as a combined bank they want to keep those flows. the release itself was pretty scant on details of credit suisse. it talked about completing it in the second water -- quarter. what does this mean in terms of executive commentary? what do we want to hear from her

body --ermotti about the initially formed bank? >> it interesting because we know the deal for credit suisse, it's investment taking -- banking, it is on hold now. it will be interesting to see how they will get around this. what they will do instead. that will be one thing to watch. also, more details on how this takeover will actually work in terms of job losses. the bankers themselves will be curious to hear more. we have seen concerned bankers going to headhunters and other banks. any more details will be definitely interesting to your. -- here. dani: stefania, thank you so much. joining us is alison williams,

director of research at bloomberg intelligence. i want to start with this idea of how much credit suisse flow has gone to ubs. this is something you have written about in your reporting and research. we have any sign how much load from the one swiss bank to the other? >> we will not know exactly. we did see about the flows came in better than expected. ubs has shown extremely resilient flows the last couple of quarters. one has to assume that at least some of the money from credit suisse is going to ubs. the bigger question over time is how much overlap is there between the two banks in terms of plans that might have to much exposure to the combined entity and might have to reduce exposure? that will not be helpful in the long run. that is our biggest concern, the client attrition risk. also the challenge attrition risk you just mentioned.

are they able to retain the talent? one of the areas ubs is very interested in leveraging for credit suisse is the m&a business. we saw revenues there decline significantly at credit suisse yesterday. dani: the investment bank also underperforming it ubs, what does that mean for a ubs-credit suisse investment bank if both of them aren't performing as expected? >> that is the key question. we did see softness across ubs's core businesses on the revenue side. the wealth business is the number one business we care about. it looks like there is softness, we haven't gone totally through the results. will want to dig into that more. of the investment bank, the story of this quarter is fixed income trading. this business is small for ubs,

so revenue looks like it was resilient, up 1%. that's a very strong result. however it is a smaller business, they're much bigger businesses equities, and that was down over 20%. that is on the weaker side of things. certainly, we will not judge the merger on a business -- but that business was week at credit suisse, and we will want to hear how they are able to retain the parts of that, that they want. dani: before we let you go, i know it basically monday, but folks in europe will wake up to the results from first republic. i want to play sound from a 15-minute investor share call, take a listen. >> we are pursuing strategic options to expedite our

progress, while reinforcing our capital position. i also want to underscore the key aspects of our business that will remain unchanged. these include, operating a simple and straightforward business model focused on delivering exceptional client service. dani: that was follow by no questions from analysts. shares fell 22%, a pretty brutal earnings amid regional banks that have otherwise been okay. >> with first republic, it is not so much about earnings, but about deposits. that was where the big miss was. deposits was also the story yesterday with credit suisse, in terms of clients moving money away from the bank. four first republic, this is a situation they want to resolve.

it will continue to weigh on their net interest income. they have relatively stable yield. now their cost of funding is rising. not only are deposits going, but the ones that are staying are costing more, that is adding pressure. we have had a handful of banks that have had issues, this is one of them. this is a situation where they are looking at alternatives, and hopefully, they can resolve that. and figure out how to move forward. dani: allison, thank you for staying up late for us. alison williams from bloomberg intelligence. don't forget, we will hear from ubs ceo sergio ermotti at 7:00 a.m. london time. let me take you to what markets are doing. it is a selloff in equities led by tech specifically. hong kong tech having a rough go

of it. investors are unconvinced about the china outlook. discounting it and not buying into any of the good data coming out. nasdaq futures look more poorly. we have microsoft kicking off big tech earnings. swissie hits a four-decade high versus the yen. it is the battle of the havens. it was expected given definitely which out of ueda. on the treasurers front, a lack of direction ahead of a heavy week of data later in the week. european earnings will be continuing. we will get numbers from the world's biggest food group. nestle, they report in a few minutes. this is bloomberg. ♪

dani: happy earnings season. we are getting nestle numbers right now. it is a story of stronger pricing power. revenue beat, more than 9%, the estimate was 7.25%. there pricing was up nearly 10%, when the estimate was 9.5%. it has been a relatively strong earnings season for the start.

let's get into all of it with the cio of coutts & co.. alan, we have a very consumer-facing company, we had been concerned about the consumer but nestle is still able to raise prices. >> very interesting, isn't it? we have seen similar from procter & gamble in the states, also strong numbers and able to raise prices. we have seen it on a micro level amid all the politics of higher food prices. it is not just your food, i know. but it is an incredibly strong company, and it shows that at least certain equities are -- i wouldn't say completely inflation resistant -- but can embrace higher inflation. dani: we were talking about morgan stanley calling an earnings recession to start the year. so far, we haven't seen it. do you expect at some point, maybe this year, we see some

weakness come through corporate results? >> to a certain extent. it is hard to go against morgan stanley. i was reading his report and he is looking for weakness qe3 and q4 now. i get that with earnings. we would say that yes, you have earnings weakness, college recession or weak growth, but you are also getting closer to the last cut. normally, in the last five times, six-month after the last cut, the market has risen 13%. dani: last hike? alan: i have rate cuts on the brain because we are looking for cuts prayed last hike this may. should be the last hike. normally markets do well after that. mike will say, it is all about earnings, and they will suffer in q3 and q4.

maybe they will but fair enough. certain companies like nestle, procter & gamble, can absorb these inflationary pressures. dani: to that point about seeing cuts, this is something the market is pricing at the moment. we have a chart of 150 basis points through june of next year. there has been plenty of commentary from the fed too but the market is wrong, why is the market right, alan? alan: you asked to do i have a contrarian view? the contrarian view is to agree with the market. no one believes it. dani: it is a strange time when that is the view. alan: people like jamie dimon, amazing people say this is rubbish. but why? two things. when rates are cut, they are cut a lot, so you have to price that in. secondly, the fed could change quickly.

they didn't raise rates until inflation got to 7%, they were saying no is transitory, then big change. so it can change. exact timing is difficult, but we go with rate cuts because all the evidence is that inflation will fall. it is that we will see some kind of recession. we are very worried about the impact on regional banks. 4000 to 5000 regional banks in the states. and it is going to be tough. and the fed will change, in our view, but i agree, no one seems to believe it. dani: can you play that yet? alan: the simple way of playing that is bonds. i was interested in an article you had about shorts in u.s. 10-years, hedge fund shorts. that could be efficient, to go 10 years just to short the

future. the classic would be too long to -- 2's and short tens. otherwise it is straightforward long bonds. the analogy is lock in income streams now. it looks like missing out on 5% cash, but that will be there that long. dani: this goes back to the equity story, too. if we have an environment where there are rate cuts, surely, that is because the economy does not look good. in equity still up for or -- outperform? alan: rate cuts, it is like a boxing match, versus recession and earnings difficulties. we go for rate cuts, because if you like the model of april 2020, in a big recession, april 2020, rate cuts were dominant. why?

because the market switches from earnings are poor today to longer-term. i see it many times, okay the focus is on earnings are not going up, so we think rate cuts will win out. we are conservative right now because it is tough times, but not outright bearish, because rate cuts can win this. to what i said before, when the said -- fed stops, that is enough. dani: alan, really great to catch up with you this morning. alan higgins, cio of coutts & co.. coming up, a falling out at fox. one of america's biggest primetime tv host is leaving the the news network, we will talk about that next on bloomberg. ♪

>> let's get to the first word news, i'm sam etienne. china is distancing itself from remarks by its french envoy who stand the independence -- questioned the independence of former soviet states. the comments were a personal point of view. a spokesman said beijing respects the status of exit soviet republics in sovereign countries. the u.s. says sue don's -- sudan's two warring factions have agreed to a two-day ceasefire. leaders of rival forces halted fighting after intense negotiations over the last two days. foreign governments have accelerated efforts to repatriate staff amid a full-blown lateral -- battle for control of the north african nation. president biden and house speaker kevin mccarthy are set to enter the next stage of the debt ceiling standoff. the treasury department will release an updated estimate of the default deadline by the end

of next week based on fresh revenue tax data. biden is demanding more concrete proposals and has rejected the spending cuts put forward by republicans. that's global news powered by more than 2700 journalists and analysts in more than 120 countries. dani: sam, thank you very much. let's get to one of the most read stories today. fox lost more than $500 million in market value after announcing it would part ways with its most popular primetime tv host, tucker carlson. let's bring in bloomberg's bruce einhorn. what do we know about this? that felt sudden. it seemed like carlsen himself did not even know. >> we don't know. fox has not said anything beyond the fact that they have parted ways. they have not given any explanation on why.

we do know that tucker carlson was a central figure in the defamatioominion voting systems brought against fox. that was recently settled in the discovery process. text messages from tucker carlson came out that not only talked about the election, and efforts by the trump people to say that it was stolen. but also, there were messages and comments from tucker carlson according to people familiar, about fox management and colleagues. according to the person familiar, fox ceo lachlan murdoch along with suzanne scott, the ceo of fox news, made the decision friday evening. monday morning, they announced that tucker carlson was gone. dani: just about a minute here, bruce. given his influence and popularity, one of the most-watched shows, what does this mean for the political

landscape in the u.s.? >> it's a good point. the tucker carlson show was extremely popular, the most popular show on cable other than sports, in primetime. former president trump recently gave an interview to tucker ralston. -- carlsen. the house speaker recently gave footage from the january 6 insurrection to tucker carlson, which he then put on to show that it was not what everyone else had decided was. -- said it was. it is unclear where he will end up. dani: we will have to end it there. thank you so much, bloomberg's bruce we moved out of the city so our little sophie could appreciate nature. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams)

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dani: good morning, this is "bloomberg daybreak: europe". i'm dani burger in london with the stories that set your agenda. ubs reports net new fee generating assets for wealth management battop estimates -- that topped estimates. ceo sergio ermatti joins us in the next hour. spain's santander beats on first quarter profit despite booking 200 billion euros in windfall taxes. plus, first republic shares plunged 22% in late trading after ordering worse than expect -- reporting worse than expected deposit outflows. it is all about the banking sector today, otherwise it is pretty quiet on the map. we have the fed blackout period, but maybe we will get a shakeup thursday and friday when we get more economic data. in the meantime, it is earnings and a selloff in tech.

we get microsoft reporting today. what will that mean for the big tech sector? seven of those make a cap stocks account or nearly -- for nearly 80% of the s&p gains. folks are worried about that. hang seng tech not doing well today either. there is concerns on the geopolitical front. down 2% for the hang seng tech index. bank of america says clients and investors are skeptical on the china rally. swissie is a four-day high versus the yen, this is the haven of choice, as japan looks to continue with ycc. we will know if that is for certain when we get a press conference and decision from the boj on friday. finally, 10-year yields down two basis points. let's talk about banks because this is big today. ubs attracted $28 billion from wealthy clients in the month

leading up to its takeover of credit suisse. it comes as the bank reports net new fee generating assets for wealth management for the first quarter that were ahead of estimates. joining us is johann scholtz, equity research analyst at morningstar. given these results, does this look like a bank that is capable to absorb credit suisse? johann: definitely, the contrast between the results ubs reported today, and the results from credit suisse yesterday, could be more stark. we saw big outflows from credit suisse. it is up for debate how many of those actually ended up with ubs. they are well placed to execute on the deal. it is going to be very challenging. they have given us a little timeframe when they will be

disclosing what details, but it is going to be a challenging period for the bank, with an overhang from the credit suisse situation. dani: an ft opinion column had a brutal line, saying that boa constrictors are adapted to swallow large prey, banks are not. we did not get much details in this earnings release about the swallowing of one bank by the other, so what are you listening out for when it comes to executive commentary? what do you want to hear for the plan of absorbing credit suisse? johann: something unfortunate, we will probably not hear what we are looking for. what all analysts are looking for is more guidance in terms of exactly where they plan the cop

size to happen. and guidance on what the revenue attrition and revenue outlook for the combined will be. we believe that will be the key challenge for ubs, is to hang on to the much depressed revenue by now, that credit suisse generated. dani: to get back to that flows question, the fact that ubs attracted more inflows than expected. how much of that looks like it came from credit suisse? does that alleviate concerns that money is otherwise going elsewhere? johann: that is a good point. that will be a question that will come up at analysts call. it will be difficult to ascertain what the source of it will be. we will have more of a better idea when ubs's other

competitors in switzerland also have reported results, and get more of a feel for the flows of the industry as a whole. but that is definitely going to be something that will crop up in the call. dani: the other component of this is investment banking that was weak at both banks. weaker than expected and ubs. credit suisse had a big decline in investment banking fees. advisory revenues had a 63% slide. what does the future of a ubs investment bank look like? johann: they are probably going to wind down most of the credit suisse global markets portion. the securities trading portion. they will keep some of the primary markets and advisory

businesses. but you can already see in credit suisse's results, they started with their previously announced restructuring of the investment bank, where they released -- ring fenced half of the banking assets. i think the contribution of the credit suisse portion of investment banking to an enlarged group investment banking business will be quite small. dani: just to put a bow around this entire conversation. are you confident in ubs's future? confident that it can come out of this maybe stronger than it was when it had its crosstown rival working at operating? johann: it is going to be a long and winding path.

you will end up with a situation, unfortunately, where the financial statements will be quite distorted for the next few years. but i think the core business is going to benefit in a lot of different areas from the credit suisse business. you have to cast your mind back a while, credit suisse in itself has had some pretty decent franchises that were unfortunately, quite damaged in the turmoil we have seen over the last couple of years. but there is still some decent quality businesses within credit suisse. dani: what is going to be the pitch from ubs to its staff and clients? making sure that they can keep those on board from credit suisse, and the resulting combined entity, what needs to be the pitch from ubs to keep confidence, and in some areas,

restore confidence? johann: it is all going to be around clarity of communication. that was one area where credit suisse heard there was always this uncertainty around exactly what their plans are. they were sometimes reticent to provide full disclosure. the investment community created unnecessary uncertainty. to keep things relatively simple, credit suisse had a very complex restructuring plan which added to the uncertainty. any restructuring merger where there is a lot of uncertainty. so the key is really to cut through the uncertainty and come out with a clear message to all stakeholders. dani: before we let you go,

johann, when you look at prior instances we can compare this to, there aren't a lot. but if you think about jp morgan buying bear stearns, in 2005, dimon said 70% of lawsuits against jp morgan were related to bear stearns. when you look at the years to come, how much of this will continue to weigh on ubs? is it so clear-cut that they absorbed the bank or will this continue to be a thorn in the side of ubs, given all the concern surrounding credit suisse? johann: that definitely is a concern. one of my colleagues said credit suisse was a car that manages to eat every pothole on the road.

there was some crisis or scandal, credit suisse would be there. ubs would be concerned about that. two differences maybe, compared to previous cycles, obviously, at the moment, we are not within a great financial crisis. so the macro economic environment is a bit different. secondly, ubs managed to negotiate quite a sizable prediction in the form of the at1 debt, and the guarantee from the swiss authorities to provide them with a buffer to absorb the potential pitfalls further down the line. dani: really wonderful to speak with you today. have a car that -- a car that

he's every pothole, i am using that one. johann scholtz, equity analyst at morningstar. european banks earnings season is in full swing. come here on bloomberg tv, lots of conversations today. you don't want to miss this one, the newly reinstated ubs ceo, sergio ermotti. you will hear from the santander cfo, jose cantera, this morning at 7:00 a.m. u.k. time. and a slew of other c-suite leaders, including the deutsche bank cfo, and the natwest ceo alison rose later in the week. beefing up tech regulation as the u.k. unveils tougher rules on the sector. we discuss what it means for the industry. this is bloomberg. ♪

dani: let's get your bloomberg business flash. >> the president of the confederation of british industry says the lobby group a not -- may not survive scandal triggered -- first republic bank plunged in late trading after quarterly earnings ignited investor concern about its business. results included worse than excited drop in deposits, tumbling 41%. first republic will cut as much as 25% of its workforce. lower outstanding loan balances and curb nonessential activities. the number of people looking for work in the city of london increased in the first quarter.

the data from morgan mckinley unwraps a tough job market for bankers. for those in finance to switch jobs, the average salary bump was 18%, the lowest uplift in nearly two years. now for that cbi story. the president of the confederation of british industry says the lobby group may not survive a scandal triggered by multiple allegations of sexual assault and harassment amongst staff. in an open letter to members, he said he hoped the biggest business group could return as a performed organization, quote whether or not that is possible. dani: sam at the end -- etienne there. in the u.k., big tech firms are facing beefed up oversight and potential fines of as much as

10% of global sales for violating consumer saws in -- laws in the u.k. that is under sweeping new legislation that will be unveiled by the government today. for more, let's bring in lizzy burden. what exactly do these proposals mean? >> the point is to beef up, as you say. the regulator is giving a new unit that will take on the big tech giant. the definition is firms that have global revenue over 25 billion pounds, or u.k. revenue over one billion pounds. for example, these powers would allow this new unit to hold senior managers at tech firms responsible for meeting information requests. for these firms could have to open up their data to rival search engines. or there would be bigger fines, up to 10% of global revenue. these were first laid out in

2019. at that point, the u.k. was the frontrunner in trying to rein in the power of big tech. but there have been delays since then the eu has brought in its own digital markets act. at this point the u.k. is having to play catch-up. dani: the cbi is having a rough go of it. it seems like scandal after scandal. it was once britain's biggest lobbying group, where they stand? >> it is a difficult moment for cbi. the chancellor jeremy hunt said there is no point engaging with the cbi now. members have been deserting it in droves. you have multiple allegations of sexual assault, including two of rape. the cbi was the go to between business and government. speaking to other ministers, they are engaging with other lobby groups, but the cbi itself has a that it failed -- admitted

that it failed to protect staff. the president mentioned the reason that they were too slow to get rid of staff, they were trying to resolve issues that were ongoing. it is an opportunity for the new director general to step up and lead out of this crisis. dani: lizzy, thank you, a lot going on with british industry. the boj 60 monetary easing with its yield -- sticks to monetary easing with its yield curve control. the decision is at the end of this week. this is bloomberg. ♪

dani: the new bank of japan governor, kazuo ueda, is

expected to avoid making a big splash at his first meeting in charge. the boj is forecast to keep rates and asset purchase settings unchanged on friday. let's get to paul jackson in tokyo. kuroda has been speaking the past two days in front of parliament in japan. he can't speak like powell, because of the nature of ycc, he has to communicate differently. what sense are we getting from ueda of what we might here on friday from him? >> it is going to be a big contrast in styles between ueda and kuroda. kuroda was a man of action from day one. ueda will be more a man of caution to start off with. if you listen to comments he has been making since he took the helm, it is all sounding very

cautious. just today he was in parliament saying easing is appropriate now. and it should incurred -- include yield curve control. he said if the boj tighten policy now, it could have serious consequences for the economy. this does not sound like a man who was about to unleash fireworks on friday at his first meeting. dani: having serious consequences does not sound like something you want to pursue. does the data back that up in japan? >> we are seeing inflation starting to cool. some of the underlying measures are still going up, if you exclude energy, we are at about 3.8%. we have government subsidies holding down the figure. inflation is there, is it strong enough, and will it last? we get the impression he will

wait a little longer before acting. there is some factors that explain his caution. we have had financial sector jitters. people familiar with the metal have -- matter have told us boj officials are worried about moving too soon after those jitters. also, prime minister kishida may consider an earlier election. he does not want the man he is just brought onto the geo j -- onto the boj to a full market. -- ruffle markets. dani: up next, "bloomberg markets: europe", we will speak exclusively with ubs and santander. this is bloomberg. ♪

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anna: good morning. welcome to "bloomberg markets europe." i am anna edwards. mark cudmore joins us from singapore to take us through the market action this hour. cash trade is less than an hour away and here are your top headlines. ubs takes in $28 billion in the month before its takeover of spirit that deal is expected to close in the second quarter. we speak with the ceo. santander profit beats as income growth outpaces cost at the spanish retail banking giant. the lenders cfo joins us shortly. lvmh closes in on tesla as the world's ninth biggest listed company after luxury goods maker market cap surpassed $500 billion. welcome to "bloomberg markets europe." everybody. it has just gone 7:00 here in london. mark, what are the markets saying to you? mark: is another slightly negative slide gate -- soggy

session. in april it was promising to return positivity to markets. the past week has turned more negative and a lot of the negativity has stemmed from a changing perspective around greater china stocks and perhaps that hong kong is not as positive as it was looking only a few weeks ago. anna: more on the china theme later. let's get to the futures pictures in europe and the united states. yesterday it was flat, mixed across european and u.s. markets broadly. u.s. futures and european look negative this morning. the european down by .2% is the move going to be set by the earnings stories? is it going to be about better news flow, better guidance coming through nestlé and novartis? we will see. what do you see on the gmm? mark: there is negativity and we are seeing the fx column, you on leading losses and chinese stocks also weighing on its generally.

hong kong is not in this because it is a g20 but that is where the acute losses are. yields in the u.s. coming back lower yesterday and we are seeing five-year particular heading lower in the session. that is about risk aversion and general negativity coming out of china. anna: that something will pick up on later. we need to focus on the ubs story. we have earnings this morning from ubs, the swiss banking giant, the one remaining after the deal with credit suisse. first quarter they attracted wealth management dollars, massive inflows, and $7 billion of those inflows in the 10 days after the takeover of credit suisse was announced. the next line was a mess in terms of net profit. if you warnings around geopolitics. manus cranny sat down with the ceo of ubs sergio ermotti. >> were very pleased with the fact that at times of distress and the market generally the first quarter it very challenging. we still saw clients looking