dani: good morning. this is bloomberg daybreak europe. i am dani burger and london with the stories that set your

agenda. dovish debut. the yen we spirit jgb's jump after because while you measures in place for calls for a long-term reveal a policy. data dependence. u.s. reports fresh inflation and consumer spending figures after yesterday's soft gdp and hot ce. across europe, we get cpi and growth readings. amazon takes the shine off big tech morning revenue growth for is cloud business is slowing sending u.s. futures lower. snap also sinks third earnings coming in now and we are looking at an adjusted ebit of 5.4 billion euros, a growth of about 2% year-over-year. trying to get some of these other headlines out for you as well. they see mobility loss in the triple digit million euro range when sales are affected. trying to look here if we can see anything in terms of their pricing. we know there is competition

from tesla lowering their prices. their adjusted car's growing at 14.8%. the estimate was for 16.4 year-over-year so that was a myth. sales coming in higher by 7.6%. some variation here. they are confirming the first according -- first quarter ebit outlook. there adjusted cars at the high end of the range of 12-14% as they feel the pinch for more expensive tesla's. of course, we will have a conversation with mercedes executives in the next hour. meanwhile, it is still a boj that this market is reacting to. we were all wound up for a change on ycc. did not happen, hence more dovish reactions. here is one the big takeaways. it is a boj that sees a light at the end of the tunnel. they have changed their cpi forecast. 2023 core goes up to 1.8%.

2024 core will be at 2%. at the same time, they are doing regular reviews of policy, something they need to do if they want to change ycc. that will take 1-1.5 years and there might be some time before we get a change. that is the direction of travel. for this review itself, they are still keeping accommodation in place and that's what we have seen the reaction that we did in markets. let me show you what the yen has done. it was like watching a game of ping-pong. it was really volatile, it yet what we have at the moment is yen weakening by .6%. meanwhile, at the same time, futures are moving higher, sharply higher this morning. bond buying is alive and well after this decision. as i've showed you, the yen fell. the bond futures reversed.

japan is maintaining the altar lose policy. let's get to kathleen hays in tokyo covering this for us. what are your takeaways? >> you ran through a number of things that they did and did not do. certainly, the fact that they changed the forward guidance was expected in number of circles. this is a mild change in forward guidance to a certain extent. the forward guidance to 2019 has been linked to 2019 covid and there was also keeping the door open to more stimulus by the government as needed. the economy has moved forward from covid in this country and many countries, and the government in the middle of may by then it going to scrap all references. no more coat -- covid apartments. this was considered a convenient way to make a shift in guidance that would not look like a big deal. significant but not market moving or suggesting a lot more

was on its way to take out that reference to covid, to take out a statement that said keep rates at these levels, low or even lower levels. that is gone now. the fact they are going to have this long-term policy review a year to a year and a half. back in early 2016 when they first went to negative rates they had a review that lasted 1.5 months. this will take time and they will think hard and look at other things. they did not change any tools including yield curve control. i don't find that surprising and a lot of people didn't because governor ueda and all of his testimonies ahead of this important meeting for him had indicated that he was worried about inflation. maybe it won't stay high but yield curve control, no change not yet. dani: has liens, -- kathleen, where the expectations considering 40 minutes late. you were waiting for every single minute of it, but is

something that may be is if i climactic for traders? kathleen: maybe traders in the u.s. are always on the verge of thinking the fed is going to cut and they got themselves talked into more like they have to do something. governor kuroda before he set down in april that in december had a famous suite -- a tweet to ycc. a lot of indications from kazuo ueda shows that there are a lot of indications for that. inflation is hot now but will it stay hot? the boj is acknowledging it is even stronger inflation than expected but they are concerned if it will stay strong. the wage negotiations and 2024 will they be as strong as the past spring of 2023? that is a big question now as you look at what happens next. some things had to be done and

some did not but they are not changing tools and not looking at negative rates. maybe he wants to come slowly out of this gate. dani: kathleen, thank you very much. bloomberg's kathleen hays and info day in tokyo. judy me now is mark malone chief economic advisor at alpha book. what do you make of it so far, kazuo yueh does first go at it so far. martin: it is what we expected from him. it to first meeting and he is just back on the imf and he has spent more time out of tokyo than in tokyo since he got the job in early april. he is an academic. he is not a kuroda market technician. corona was the king of the foreign exchange market and jgb and the nikkei in buying almost 5% of the nikkei and buying 50% of the jgb markets.

he intervened in $600 billion yen. this guy is a market tactician. kazuo ueda is the exact opposite and he will not move at speeds that dollar-yen traders or jgb traders want to see. dani: exactly why we have had this reaction here. we are really wound up looking for a more stark change. one of the changes that kathleen mentioned was cpi forecast changes. for 2024, they are seeing a target of 2%. is governor yueh that saying there is a light at the end of the tunnel? martin: there's nine board members so it will be the first forecast from him within that nine board members. japan has had 0% inflation for the last two years. they have a 2% forecast for the next three years. the upward pressure on inflation dynamics is the new game in town, and we have a new

inflation dynamic in japan. every boj meeting is in play. we expect them to change the entire ycc program on the 28th of july at the third meeting similar to what volker did in 1979. he never changed at the first two meetings. they had an emergency one in 1979 and he changed everything. we expect kazuo ueda to change everything. dani: they said they are doing a policy year and it will take 1-1.5 years but why that timeline if they are going to do it sooner? martin: that is a red herring. the review is what have we done in the last decade? japan has used all equipment and they are not scrapping them. we expect the peg would be change from zero to 1% and we expect the band to change to plus or -100. the new 10 year yield after july can flip between zero and two

and that means a boj can actually control their balance sheet and control more of the money supply and these academic issues are what governor ueda will be considering. dani: they have a public debt load of 264% of the value of gdp. we have a government who is planning to spend more to encourage more kids. they are increasing spending on defense. can they handle higher yields? martin: they have no choice. the central banks job is the inflation target and the inflation dynamics in japan we cannot overemphasize enough. they have dramatically changed. one way you can see it is the currency which is devalued in the last decade. the real effective stage rate is at the lowest level ever. this is a huge boon for japanese companies. this is why warren buffett is in

japan. japanese companies are making profits that would make any american ceo gosch and i think that's underestimated by market conditions. dani: i was just pulling up a text you sent of this morning saying japan in 2020 is a stock trade in not currency trade. you expect stocks to double. is that going to be an outperformance of the rest of the world? martin: this is japan moving from a 00 world into a two to world. 00 is zero inflation for the last 20 years. and we are moving to 2% interest rate and interest rates, nominal gdp point of view, corporate profit point of view. the dynamics to taipan -- that japan are throwing at this are bullish factors of the inbound tourism that has gone down 1% of gdp and increase defense spending can add .5% of gdp.

the potential is less than .5 and the boj forecast is for the growth level to be over 1% for the next three years. it is extreme the bullish and japan is only 5% of the world stockmarket. the u.s. is 45%. japan is the only country of any significance in the global south which is the global growth in the next 10 or 20 years so japan is actually correctly positioned in the right place and that is what warren buffett is buying. japan's largest trading companies. they are going to benefit considerably over the next couple of decades. dani: martin, stay with us. that is martin malone, chief economic advisor at alpha book. i want to give you a view of what we are watching out for today and get you set up for your trading day. ex: 30 a.m. and u.k. time transfer first quarter gdp. the economy does to have held up throughout the quarter.

also, cpi from france. spanish cpi at 8:00 a.m. and we expect countries inflation to have picked up in april. germany's first quarter gdp and cpi later today. at 10:00 a.m. euro area bp as a recession appears to have been avoided and sentiment stabilize. we will have u.s. employment cost index and pce, the one to watch out for today. coming up, speaking of u.s. data, we saw perhaps a mixed bag. gdp slightly weaker but inflation in the consumer coming in hot. markets see the glass as half-full i suppose. more on that next. this is bloomberg. ♪

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dani: data from yesterday at the u.s. economy was slowing even before the brunt of any credit crunch stemming from the recent bank failures. at the same time, it did hold up , the economy did hold up in the u.s.. inflation accelerated, the consumer is strong once again highlighting the enormous challenge faced by the fed. let's get more with bloomberg's agility says. let's start with gdp numbers.

break them down for us. what do they show? jill: we saw gdp go at 1.1% short of expectations. economists were thinking 1.9%. the big culprit is driven by a drop in inventory distorting figures here, but there was interesting data. a pickup and consumer spending is helping things out a bit, and separately there is additional jobs report data showing a drop off in weekly jobless claims. it does seem like there is sort of that mixed message on what the u.s. economy is telling us right now. dani: it seems like not a mixed message on inflation. these figures are surprising to the upside for the most part. jill: yes, the key gauge of inflation figures at the fed likes looking at was really sticky accelerating in the

month. inflation continues to be really persistent and sticky. you are looking at potential risks of stagflation coming in here, but what this tells us is that its petition for the fed to raise interest rates by 25 basis points next week seems to be coming even more solidified because you've got to concerns about inflation that just are not going away anytime soon. it seems like that is what investors are breaking in at this point. dani: jill thesis and hong kong. the market reaction was clear. yields jumped back about 4%. still with us as martin malone, chief economic advisor at alphabook. inflation is still there and corporate earnings strong. where is a recession? martin: there is no recession and the risk is if you just look at it from jay powell's point of view in the fed's point of view as the risk factors, as an example, everybody is bearish to

the dollar. if the dollar which has fallen by over 10% in the last three quarters is dovish to the client another 5% that a major headache for the fed because it is inflationary. last year, the fed delivered a 500 basis point monetary shock but also the currency went up 20%. they had to disinflationary impulses. we need patience on the disinflation trade and the fed feels there is disinflation but the flight in the ointment is we have a 3.5% unemployment rate which is a big problem for volker's as well. he doubled an employment rate from 5.5 to 11% and sought come back down. it takes a long time for macro variables to change and we need a lot more patients. dani: does the fed have patients in terms of pausing? can they afford to do that at this point or if the inflation or impulse is still there they can't. they cannot had that type of patients. martin: we had a recent dinner

with a policymaker who i will not to mention but he viewed that jay powell wants to be saint jerome just like paul volcker is revered as st. paul. the main takeaway is jay powell cannot pivot to a dovish stance because of this stickiness of inflation. we are not expecting any surprise in the third of may. he will hike to 5.25% and they will have to have every policy live dependent on if disinflation does not come through they will have to remain hawkish and sticky with the policy. they won't be able to do with the market is trying to do. dani: i have seen businessweek cover saint jerome with a halo over his head. martin, we talked about the strength of the consumer. how long can it last? doesn't last as long as unemployment is at the levels that is? martin: with wages that 5% and unemployment at 3.5%, we need to

see a very, very sharp deceleration in job growth. headline job growth is very strong but underneath the hood it's not strong. it is part time jobs, low-wage jobs, and full-time jobs in the financial sector, manufacturing, and technology sectors are getting tired. there is this twist going on, not coming through in the headline data at the speed that some of us would like to see for rate cuts. we don't think there will be at any rate cuts and we push back on them. dani: the takeaway is we all need more patients and calm and in if you will. martin, thank you very much for joining us. martin malone chief economic advisor at alphabook. amazon jolts investors as executives reveal the cloud unit is slowing. we will have those details next. this is bloomberg. ♪

>> let's get the first word news. the bank of japan said it will maintain its ultra-loose monetary policy but announced a review in its first meeting under the new governor kazuo ueda. the central bank will keep the 0.5% ceiling for 10 year government bond yields and maintain short-term policy rate at minus 0.1%. inflation in tokyo unexpectedly ticked higher this month underlying a strong underlying price trend in the world's third largest economy. consumer prices excluding fresh food rose 3.5% in the japanese capital. marking the highest level in 41 years. the surprise acceleration is attributed to rising prices of processed food. u.s. banks increased emergency going from the fed for the second week in a row underscoring ongoing stress in

the financial system. just over $155 billion of loans were outstanding through to back stop lending facilities in the week through april 25. compared with $144 billion in the previous week. resurgent volatility in the banking sector could play into next week's fed decision. new data shows u.s. economic growth slowing and inflation accelerating even before the brunt of any credit crunch stemming from recent bank failures. gdp rose and annualized 1.8% in the first quarter, notably less than the median forecast of 1.9%. meanwhile, the feds referred court gauge of prices picked up 24.9% highlighting the challenge of obtaining inflation. that is global news powered by more than 2700 journalists and analysts in over 120 countries. i'm samuel etienne and this is bloomberg. dani: i want to mention a story

breaking from reuters that the u.s. officials are urging more talks to rescue first republic. no agreement has been reached yet this is u.s. officials stepping in and trying to make something happen. that is so first republic does not go into receivership. they are speaking to banks and private equity firms, something different. bringing more private businesses to the talking table. reuters also writing it is unclear whether the u.s. government is considering participating in a private sector rescue a first republic. if that is indeed true, can the government to find buyers if they are not taking on losses. we will bring you developments that come. let's talk about tech. amazon fell in after-hours trade. let's get straight to our reporter on this. what were your takeaways? >> essentially, this was an

interesting point because amazon did pretty well all things considered this quarter but when it comes to the aws results, while having managed to do well in the cloud, there were warnings to investors that cloud growth is slowing and this is a big concern because aws for a long time was a part of amazon that led the rest of the company. while is not necessarily what people think of when they look at amazon and the online shopping experience, really aws was a core part of their business and is a core part. now the question is whether this is cloud growth that is slowing because also they are offering discounted prices to enterprise customers in exchange for longer contracts, which is how it was attributed to by the cfo in a call with investors or also, we are looking at other cloud providers like google and

microsoft, who both have said they have been doing quite well. googles clouds in the earnings earlier this week turned a profit for the first time in 15 years since it was launched. it's it's a question of amazon just saying that there is some issues with extending longer contracts, or is it actually because they are losing market share? dani:aggi, fantastic reporting. thank you so much for that. that is bloomberg's aggi cantrill. c(jennifer) sthe 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,

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dani: good this is "bloomberg daybreak: europe.". i am dani burger in london with the stories that set your

agenda. dovish debut. the yen weakens after boj governor kazuo ueda keeps measures in place while calling for a long-term review of policy. data dependence. u.s. reports fresh inflation and consumer spending figures after yesterday's soft gdp and hot pce. across europe, cpi and growth readings. amazon takes the shine off of big tech morning revenue growth for its cloud business is slowing sending u.s. futures lower. snap. i want to bring you french gdp data in line with estimates coming in at 0.2% year-over-year -- quarter over quarter. that was the estimate 0.2%. consumer spending has fallen a lot more than expected in march for .2% year-over-year. the estimate was higher. consumer spending fell 1.3% month over month and the estimate was a growth of half a percent. this is quite the different picture from the u.s. where the

consumer is strong. instead, it is weaker. consumer spending and france. we are also maybe going to get some regional data from germany for cpi but we are getting cpi data out of germany, of france, of all the european countries as the hours unfold so keep your eye out for that one. the other big story this morning comes courtesy of kazuo ueda keeping stimulus mostly unchanged. forward guidance might have been wrapped but a minor change when it comes to what will happen. here is a look through of what they are saying when it comes to cpi. the full year 2024 core inflation average forecast has been raised to 2% 1.8%. we are hitting that inflationary target and things are changing for japan. at the same time, ycc is not going anywhere yet and that is the reaction playing out in the currency market.

you saw the yen rip, dollar-yen rip, higher versus the yen. let me show you that action, immediate spike after the decision which is about 40 minutes late. there is a move when it comes to the yen. when it comes to jgb's, that was bought, a strong by their, still the same impulse waiting for may be stronger language, a change from ycc. we did not get it so futures popped. let's get to derek halpenny mufg bank from. i feel like this was a market watching ping-pong, the 40 minutes for this was released away from its normal time. were you expecting something more from the boj? >> no, not really. i think it is important to remember that governor ueda is

not governor kuroda so the expectations of a big bang decision to start off his tenure like kuroda did was always unlikely. he is an academic and he will look at things in more detail and take decisions much more slowly than governor kuroda. removing the bias to the downside made complete sense and that was linked to covid and has been removed as a risk as well. all of that makes sense but crucially, the inflation forecast for 2025 was put at 1.6% and the details of the text, the emphasized downside risks to that. while they do expect inflation to be higher and hitting 2%, the profile is certainly more weaker maybe than what the markets have been expecting for 2025. dani: what does that mean in

terms of timing for normalizing policy, for dropping ycc? we were just speaking to martin malone of alphabook and he thinks it will happen in july. derek: we should not link the assessment timeframe of 1-1.5 years necessarily with policy decisions. i think that's incorrect. policy decisions can be made before that. the policy assessment is a big picture look back at basically 25 years of mild deflation, that the date dish boj has been unable to shift. ycc we have pushed back before today's announcement but politics could come into play as well because of snap election forces that back as well. i think it will happen this year but most importantly to remember is that ycc as a policy in and of itself is going to be much, much less important in certain

circumstances global declines in yield. it was hugely important last year and will become less and less important this year as relation reverses, and that's going to be the moment i think when ycc is removed, maybe when there is less speculation and less need for ycc. dani: yeah, that's a fair point. also in terms of the changes to the band they discussed have been about market function and they don't have that pressure if yields globally have been moving the way they have been. how do you trade this then, derek? derek: i think for jgb's, you anticipate ncc, there is a very good chance for them to get a pop. i had them on the life insurance investment plans in the last couple weeks, and there was a constant theme in terms of increased appetite in terms of

buying domestic bonds. perhaps, they are sitting on the sidelines, waiting for the yields, and then come in and by. yields will come down based on our view on what will happen to global-year-olds. in terms of dollar-yen, it is more about the united date. we think we are heading for a recession, we think the rate hike is a mistake, but it would certainly be the last one. as you move through the rest of this year, the circumstances for the dollar-yen go lower, i still think they're quite convincing. dani: let me play the devils advocate. on me be clear, this is not my view. the corporate earnings have been coming in strong. i was looking at caterpillar yesterday, they considered this bellwether. just listening to their analysts, the ceo said we are monitoring global conditions.

the first quarter results lead us to expect that 2023 will be even better than we had previously anticipated. that doesn't sound like a recession to me. derek: no, but a global eye to it, it's business as well. i absolutely accept that we had a 2% gain on the s&p yesterday. some of the tech results were very good. it is more about, if we were to go to a scenario of a 20% correction in equities, along with our view, that would lead to a severe move to the downside for dollar-yen. we don't have to get a 20% further correction and to have what we think will be a relatively mild recession my but still, a recession enough to get the feds to reverse some of the tightening, and we still think there is a good chance they will

be cutting rates by the end of the year. dani: we are now pricing in just a little bit less than 70 basis points of rate cuts. is that the level you would look for to see, just above a 4.3% in terms of policy rates? derek: i think we can get one to two rate cuts in q4. we are not quite at that level. when you go into next year, there is certainly more priced. i think two rate cuts by the end of the year is certainly feasible. except on the equity markets, that perhaps the risk is a little bit less, maybe just one, more of the easing takes place in 2024. the real key here is the labor market. up until now, the hard data hasn't really shown much of a pronounced slowdown in demand for labor. a lot of the leading indicators

are suggesting that is around the corner. if that starts to emerge, then the markets willingness to price in more in terms of easing from where we are today, i think will be a lot higher. that is how it gets another leg weaker. dani: we continue to see in the numbers, both on the hard data and from corporations that the consumer is strong. is that what finally cracks the consumer? derek: yes, for sure. i would also, of course, when you look at the consumer spending data, up quarter on quarter. when was that strength? most of that was in january, month on month consumer spending declined in february, and we will see today what happens in march. it may well have declined again. all of that strength was in january, most of that strength. the momentum for the consumer is actually weakening.

i think that is why quite a lot of analysts are expecting perhaps quarter on quarter negative gdp in q2. the momentum of consumer spending is weakening. dani: really great catching up with you this morning. now let's get to your business flash with samuel. samuel: amazon has reported strong first-quarter results it range also topping estimates. it sees net sales for the second quarter up to $133 billion. but it says cloud unit growth in april is running lower than the first quarter space. amazon has been working to streaming its businesses amid slowing sales growth in shopping and web services. intel shares jumped after the chipmaker, stay recovery, leaving investors to look past a disappointing forecast for profitability in the current quarter. the company predicts a return to free cash flow in the second half and says gross margins

should begin to widen. intel also painted a more optimistic view of the broader pc industry. snap plunged in late trading following its first ever decline in quarterly revenue after making major changes to its advertising tools. sales fell 7% to just under $989 million. that missed the average analyst estimate of over $1 billion. economic pressures and the product changes are expected to also weighing on the current quarter and byd reported another stellar quarter of earnings on the back of booming electric vehicle sales. net income in the three months through march surged 411% from a year earlier to $597 million. operating revenue also rose 80% to top $17 billion. sales of its passenger electric vehicles almost doubled to 550,000 globally in the quarter.

dani: thank you so much. the u.k. government signals it will break its pledge to remove all eu laws from britain and move risks the fury of brexit supporters. this is bloomberg. ♪

dani: bloomberg understands that the u.k. government has signaled it will break its pledge to scrap legislation from britain's membership of the eu. this is a move that risks the fear he of conservative brexit supporters. joining me is lizzy burden. so, what exactly are the plans? lizzy: you remember in 2016,

those who wanted to leave the european union argued it is not just about the economy, also about ever and t and if we are free from the shackles of brussels, thousands of rules that have been copied over to the u.k. statute could be got rid of by the end of 2023. this was the government's promise. now, the business and trade secretary has reportedly told exit backing mp's that this is impossible and it will have to be not thousands but hundreds of regulations. this, reported by the brexit backing telegraph newspaper but building on what we already knew. bloomberg reported in november that officials were warning and telling the government this was an unrealistic, unredeemable target. anger those hard-liners in the conservative party who are already angry at rishi sunak about the windsor framework, this new deal in northern ireland, because they saw this as one of the biggest benefits from leaving the eu. dani: in terms of that being

untenable? the economy? changing all the rules? too much to get through? why wouldn't they be able to do it? lizzy: it is a massive legal headache. dani: labor also announce its economic plans. lizzy: really really interesting. this is all about labor's determination to bolster its economic credentials ahead of a general election. we are expecting that next year. when elections happen, the conservatives like to pro-trade the labour party as being the irresponsible party of tax and spend. in the aftermath of the many budget disaster last year, that is looking difficult. bloomberg understands that labor has a plan to change its fiscal rules where currently, they are allowed to -- day-to-day

spending is covered by taxation, but they can borrow to invest. that is less strict than the governments rules which cap spiraling at 3%. the new plan would be on a net worth basis. labor's argument is that you need to treat it like a company, you need to look at the debt and financial investments. if you are going to privatize and sell off assets, you should also take account of it. if you look at the u.k. according to other members, you can see as a net worth basis, the u.k. has one of the biggest deficits. the independent official statistics office says, this would provide a fuller picture of long-term sustainability. interesting idea. dani: thank you very much. earnings just coming through from the gas company, their operating profit for the full year, they had downgraded their outlook, it is quite a big mess when it comes to the forecast, 12 billion euros is what they see.

the estimate was 14.6 billion euros. they previously saw 13 billion. not only is this a miss from what was estimated, but it is also a downgrade for the gas company from what they saw before. perhaps that just signifies some of the lower gas prices we have seen. the less success of trading this market. the same time i teased about 10 minutes ago that we might get some at regional cpi data, we did. ever so slightly weaker than what we had thought. this is for the northwest ryland. that comes in at 0.5% cpi growth. the estimate had been for 0.6. ever so slightly less topped than what we have been expecting. other cpi data will be out throughout the next few hours. earnings season is in full swing. we will take a look at how companies are faring so far. this is bloomberg. ♪

dani: happy earnings season. we are in the thick of it. there is no one else we would rather talk to about it and tim. i gotta say, if you are to listen to the mike wilson's of the world, you would be pretty pessimistic. what did we see in europe? have they held up to expectations? tim: they are blowing expectations away. if you look so far in europe, we are about 40% of the market cap having reported. we have had a 72% beat ratio. that is actually the best it has ever been. i think expectations were muted

coming in, and companies are blowing them away. the are tracking about 2% earnings growth, it is not huge, but expectations -- the same thing is happening in the u.s.. it is about an 80% beat ratio. they always play the beat versus the guided game. but still, that is a really big number in the u.s.. dani: especially when we were expecting the economy to be much worse. i think about nestlé reporting saying we are rising prices 10%. consumers are still paying up, companies are still passing pricing power along. what has it stood out to you in the past week? tim: re-things come to mind. absolutely the consumer space. you look at nestlé yesterday, unilever, the same thing, 10% plus pricing growth, volumes being flat-ish. that is better than what we would have guessed from the standpoint have been able to

push through rising cost. with costs decreasing and the second half, maybe they back off a pricing, but that still allows margins to hold. the second thing is in industrials. really interesting there. you look at a company like skf, they make all bearings. they beat expectations, and the key thing is, why? if you look at the businesses, it is things like energy transition across ev's and electrification and lots of other related categories that are driving revenue growth. that is a key element. dani: you said a key thing to me there in terms of the second half of the year. what are expectations? i look at caterpillars earnings. saying, we are seeing things better than we anticipated for 2023. there is this concern in market at this is as good as it gets. are we seeing that with european companies as well? tim: that is the 64,000 pound

euro dollar question, whatever you want to say. i think we continue to feel that the second half of this year is going to be a challenge. it is because of some of these issues we have talked about. all of these numbers, whether at the consumer side or industrial side, are flying in the face of weak or weakening or choosing manager surveys, forecasts for a second half slowdown in terms of the economy. but, don't forget, earnings tend to move in front of these cycles. while i am cautious, you have got to take what is being reported right now as a pretty surprisingly robust set of results. dani: how much of that is about china? tim: china is huge. there are some positive signs and some negative signs. if you look at the consumer

side, think about luxury goods with what we heard from lvmh and whatnot, the china consumer is coming back. that is what we saw here last year. on the industrial side, there are certainly signs that things are picking up. there is also very clear signs that construction that plays into that problematic property market is an issue. volvo is an example, sandvik was another example. it depends on which part of the economy you are talking about. we will get autos next week. next week is personally, my favorite week, because i am a bit of a gearhead. we have porsche, bmw, volkswagen, we will see signs of the luxury side of things. china buying cars. is that playing through? all of these companies have

exposure there. we will have signs of electric vehicles. how are these companies that are all in transition competing against tesla? dani: we have run out of time, but next time around, i am asking you which of those cars you own. you will have to show off your ferraris to me. that is it for here on daybreak. we have japan shaking things up as we gear up for more earnings and data. this is bloomberg. ♪ i need it cool at night. you trying to ice me out of the bed? only on game nights. you know you are retired right? am i? ya! save $500 on our next gen sleep number smart beds. plus, special financing. only at sleep number.

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dani: good morning, welcome to "bloomberg markets europe". mark joins us from singapore to take us throue