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manus: a very good morning. this is daybreak europe. hsbc profit crushes the estimates as the bank says it will repurchase as much as $2 billion of stock. the ceo noel quinn tells bloomberg there may be more to come. >> i think going forward we see continued sustainable profits and therefore, the potential for a series of buybacks. iwe have always said that buybacks have a place alongside dividends to distribute excess capital. manus: jp morgan agrees to acquire first republic in a government led deal for the failed lender. the takeover comes as morgan stanley is said to be planning 3000 more job cuts as dealmaking slumps. plus, president biden calls a meeting of congressional leaders on the debt limit after treasury

secretary janet yellen says the u.s. risks running out of cash as soon as june the first. a very good morning. what is going on the market? shock on the rba. another 25 basis points. they have one mission, re-anchor inflation. that has had a pervasive effect at the short and long end of the curve with the currency. you are looking at stocks in the first instance, which are reacting to a stronger than expected growth number in hong kong. there is your cross assets. a reverberation of over 1% on the aussie dollar. pmi's yesterday on the manufacturing in china. that was a bit of a pressure on the market. this morning, you had this three standard deviation move on the short end of the curve by the three years. you are looking at yields repricing. 2-year yields popped higher.

higher eci on friday. prices paid in the u.s. came in higher than expected. that shifted the short end of the curve by 15 basis points on the two-year paper in the u.s.. meta came in and taint long and with a $.5 billion bond -- $8.5 billion bond. it is dangerous and yields can move higher very quickly. they are cautious about being at short end of the curve. bitcoin is trying to claw back losses. it taint i 5.5% yesterday after a four month run of where was up 75%. a quick snapshot of equities. i went in reverse order. dani burger is out for the day. she should have been the voice of reason on the equity board. trepidation ahead of the ecb and federal reserve. the nasdaq, meta came with a thundering bond offering

yesterday of $8.5 billion. the earnings apocalypse has not arrived thus far. francis chan joins me from hong kong on hsbc earnings. garfield reynolds will hit us with a surprise rba decision. we will touch on u.s. debt drama with bruce einhorn. to the hsbc numbers, to billion-dollar buyback -- $2 billion buyback. noel quinn praised the banks's role and rescuing the u.k. arm of svb. >> strategically, absolutely in line with everything that we are. in terms of opening up the world of opportunity for businesses, that's what we do. i am pleased with the spv acquisition for what it gives a strategically and it was a wise financial deal.

manus: let's bring in francis chan. the svb is idiosyncratic and delivered them an additional $1.5 billion on the top line but this is about setting out defensive play to ping an with the buyback in the divvy. >> obviously, the market will be very happy with the buyback and dividends payout. we are looking forward to more solid revenue earnings performance in the coming quarters, hopefully margins can stay in a more elevated level for the rest of the year. if 2023 is the topping out year as noel quinn has said. i want to highlight notable items in the first quarter revenue. it is not about to repeat in the coming quarters. that will be something to watch in the coming quarters.

manus: certainly, he was very clear in terms of the risks going forward. francis, thank you very much. the stock up over 3% in hong kong. jp morgan agreed to acquire first republic. it is the biggest, one of the biggest troubled banks in the recent turmoil in a u.s. government led deal. let's bring in finance editor defined nb&t. -- estefania yankee. >> this is something actually that officials have been trying to avoid for a long time. jp morgan already the u.s. is biggest bank and now it got bigger. like i said, this has been obviously there is little else ways to go because this makes jp morgan even stronger. we did have some reaction from

the ceo jamie dimon who said that hopefully with this takeover, this could hopefully signal the end of the turmoil that we have seen recently in u.s. making sector. we have had reaction from senators who are already saying, this means that the banking system is broken is such a big bank can take on a nether bank, then where is it going to go? there has to be rules and limits on what they can do. manus: jamie dimon says we should breathe a sigh of relief and yet has cost the fdic $13 billion. svb cost them $20 billion. the question is noel quinn played his part in it but the question is what are the reverberations? morgan stanley overnight talking about more job cuts. >> we keep talking about job cuts and slumping dealmaking. we are hearing from sources that morgan stanley is planning 3000

job cuts and that is likely to hit the banking and trading group. at the same time, you have citigroup ceo jane fraser also hinting that perhaps they might see some job cuts if the dealmaking slump does not pick up. let's see what happens there. manus: noel quinn was just with us and he did not tag onto jane fraser and morgan stanley. he said they have been diligent in terms of cost being under control for the past number of years and going to restructuring. stefania bianchi, our team leader for finance in dubai. the aussie dollar is surging. the price hike hit the market hard. garfield reynolds in sydney. the message is clear and loud. the rba it will not be left behind. they want to re-anchor inflation. your first take? >> this is a real shock for the market, which i struggle to require -- recall land a

occasion when the market was this unprepared for an rba move for any central bank move. the market was unprepared and so certain they would hold because they were convinced that the softer inflation numbers than expected for the quarterly cpi report meant to rba having paused last month would pause again this month. instead, what got is another in a series of got punches to bond markets in particular but also equities. when investors get too complacent about the idea that central banks are close to the end of hiking rates. what rba has definitely done here is pushback any thought they are close to the end that they have just about done with hiking rates. we have swaps traders pricing for now a more than 4% peak rate for the rba, probably very much what policymakers were looking for and it stands as a warning

for investors going into the fed and ecb matings -- meetings later that powell may want to see swaps traders loser complacent and bond traders and equity traders loser complacent see that the fed is just about done. that would be the end. we already had a move towards a potential june hike that might grow and the big story for this year very much as central bankers pushing back against the pivot narrative. this is just the latest in a series of hits on that front. we are likely to go on getting them because once they get over there shock, bond traders, equity traders will say is not going to take too much in here, a little bit more in the way of economic softness for the rba to pull back and start thinking about when it has to cut rates. that is because of the economic damage it will do. we will get a rinse and repeat

this and we already have. yet again, a central bank is shocking markets by extending its rate hike cycle both in length and the scope of how high it will go. i don't think rba will be the last central bank that even this week. manus: we could be in for a few more trackers. it could be a hawkish hike from the fed and rba. further tightening in monetary policy may be needed. garfield reynolds in sydney. to the president of the united states, joe biden has called a top congressional leaders meeting inviting them to the white house on may 9. that is to discuss the debt standoff. >> these actions will make sure the banking system is safe and sound and that includes protecting small businesses across the country who need to make payroll, for workers, and small businesses. let me be clear.

all depositors are being protected. shareholders are losing investments. critically, taxpayers are not the ones that are on the hook. manus: let's bring in bruce einhorn. treasury secretary janet yellen saying the u.s. could run out of money by june 1. this is rhetoric and screw turning but should we take hope there is at least a meeting? >> that is some sign of progress. it is not just janet yellen. yesterday, the congressional budget office which is nonpartisan also said that it is likely that the u.s. would hit the debt ceiling and no longer be able to satisfy it through the special accounting maneuvers that treasury has been using for the past few months. the congressional budget office reiterated what janet yellen said that it could be as early as next month. the problem that they are going to have now is that while it's

in biden has invited kevin mccarthy, the other congressional leaders to a meeting in the white house next week, there's not a lot of time left, especially when you consider that between now and the beginning of june, congress is going to be going on recess or a week and the president will be traveling. he will be in australia, japan for the g7 meeting. when you look at all that, you think there may not be enough time for them really to work all this out. there is now talk about the possibility of maybe being a temporary extension of the debt ceiling into the fall which would put it in line with negotiations over the budget. president biden and the democrats have said repeatedly that while they are not willing to negotiate over the debt ceiling, they are willing to negotiate over the budget. they don't want to conflate two things by moving the debt ceiling deadline to the fall. that could solve that problem for them because they would have the budget negotiations taking place at the same time it would not have to pretend they are doing two different things.

manus: bruce, thank you very much. this is going to be a tight rope walk. bruce einhorn in hong kong. coming up, the rba has surprised market with a rate hike there may be more on the way. we will discuss that as we build up to the fed and ecb. plus, interesting earnings season for the u.s. and european banks. we take stock of the impact of the banking turmoil this year on bloomberg. ♪

manus: it is daybreak europe from dubai with manus cranny. the rba has delivered a gut punch to the market. they have raise rates for the 11th time in 12 months, taking the rate to 3.85%, the highest in 10 years. it was only projected by nine of the 30 economists that we had surveyed. the aussie dollar moved by 1.18%. the s&p in australia has just dropped by 1.13% -- 1.18%. it could be that the scale of the long variable out from a strong a sense the aussie economy into a tepid growth scenario. aussie yields explode at the shore and. this is the long end.

forgive me. you are seeing extreme moves at short and of the curve but -- short end of the curve but the short end of the curve is moved by three standard deviations. is it a gut punch or a shock? let's speak to our guest from northern trust. we just had our field reynolds we have seen the most unprepared markets ever for a rate hike. your first take on this stock move by the rba? >> for us, it is not so much a shock as a reflection of the fact that we are in this world where growth is coming in at stall speed which means you have headwinds from lambda economic headwinds perspective. we have seen that in the data but from the inflation perspective, if you don't have enough headwind to bring inflation down especially core inflation.

we have not seen the data either on core inflation yet for central banks to lean back and pause. for the rba to lean into that trend and say we are not happy with the way inflation has been coming down, is not quick enough for us. so we are going to keep hiking on a modest scale here does make sense to us. it's a great set up for the week to come because other central banks we think will follow a roughly similar script. manus: how brutal will the fed be? wouter: we think the fed will hike 25 like the rest of the market does but in terms of the guidance, it's all about maintaining the freedom to really keep pushing if necessary while also giving itself room for maneuver when credit growth does come down more than expected. that's an important indicator for the fed at this juncture. when those numbers deteriorate be honest rotations they can pull back again. for now, with data still lagging they should keep pushing rates

higher. manus: you believe they won't make anything in the u.s. because you are pushing deeper into high-yield as it stands. why such a strident overweight? wouter: well, it's all about the balance here. when you are in a stall speed economy where growth is coming down and you have earnings headwind and yes, earnings overall have been strong but underneath the surface, we have seen a transportation sector that has headwinds coming through from a weaker economy. when you have that varmints, you want to be careful how you take the risk. we are underweight equities in u.s. and emerging markets and taking that money and putting it in high-yield because we don't think there are economic dislocations big enough to drive a big recession but fundamental headwind. the headwind from a growth perspective is what it's all about for us here. manus: what is stagflation?

define stagflation 2023. wouter: an environment like that would be gdp growth roughly where it is now and maybe a smidge lower. core inflation hanging around 4.5-5 percent. that would be a difficult environment for the fed and ecb and other central banks to navigate. we know from underlying drivers especially housing, there is a second disinflation impulse coming but it's a much more slow moving one land -- then the first one that we saw over the last six months. that environment is what we need to overcome and we think we will. we don't want to be risk off here but measured and underweight duration and overweight high-yield versus equities. manus: geography, one or two people have said get long in

euro because the differential the best-performing g10 this year based more so on the view of the ecb and bank of england will out hike the fed. does that narrative work for you and what is the reverberation of that? wouter: that narrative only works with certain extent to us. we agree the ecb probably has one more rate hike beyond the fed rate hike so tomorrow as opposed to one. there is a differential they are but at the same time, we don't agree with the market facing and rate cuts for the fed. that is where there could be support for a dollar coming through. if you look at the valuations on the currency side, the euro is still attractively valued and we had a strong dollar run last year. seeing that reversed make sense especially because some the worst headwinds for economic growth in europe from the energy perspective have not come to pass and improved so much.

we still like the euro, but it's more from that second part of the your perspective as opposed to a rate hike perspective here at the front and the curve. -- front end of the curve. manus: what will save us? we are going into the stagflation world where growth some people assume will collapse , not collapse but mildly drop. we find it tougher to get from four to two then we did from nine to four. what gives you a spirit of hope? you want to be longer with high-yield on a yield differential. where is the most dirty equity short so to speak? wouter: we definitely think that on the em side of things the risks are the greatest. we do like the fact that china is recovering and reopening but we don't think it will surprise to the upside. from the equity market perspective, a real challenge from the way the government is

asserting itself in corporate management. that part of the equity market specter we are cautious on. when we look beyond the equity market outlook, for us it's all about seeing an economic picture that even though there are headwinds in place isn't fundamentally broken. there is still a strong labor market out there which does not mean there is a fair amount of payroll out there and in the absence of a big economic this location, the slowdown should not push us into a deep recession. that means the overall environment for risk is not all that bad. manus: ok, wouter sturkenboom, chief investment strategist for northern trust asset management. ♪

first word news. i'm samuel etienne. president biden has called on top congressional leaders inviting them to a may 9th meeting to discuss the debt limit standoff, which came just hours after treasury secretary janet yellen warned the u.s. risks running out of cash as early as june. since hitting the current limit of $31.4 trillion in january, the u.s. has been using special accounting measures to stave off a possible default. anger over president emmanuel macron's pension reforms spilled out into the streets. the government says more than 780,000 people took part in nationwide demonstrations, while the labor union says the turnout may have totaled 2.3 million. macron pushed through plans to raise the french retirement age to 64 last month despite widespread protests. the u.s. says russia has suffered more than 100,000 casualties, including 20,000 deaths in the bloody standoff over the back but region in

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manus: a very good morning, it is daybreak europe. hsbc profit crushes the estimates as the bank says it will approach at least $2 billion of stock. the ceo tells bloomberg there may be more to come. >> what i think we see going forward is continued sustainable profits. therefore, the potential for a series of buybacks. we have always said that the buybacks have a place alongside dividends to distribute excess capital. manus: jp morgan agrees to acquire first republic in a government led deal for the lender. the takeover comes as morgan stanley is said to be planning 3000 more job cuts as dealmaking slumps. plus, president biden calls a meeting of congressional leaders on the debt limit after treasury

secretary yellen says the risks are for the u.s. to run out of cash as soon as june 1. a very good morning, the rba shock the market by raising by 25 basis points, we weren't expecting that. does that do to the trajectory for rates and the equity narrative? to the cross assets, the reverberations have been quite profound on the aussie dollar up . rates moving at the longer end and the shorter and of the curve. a three standard deviation move, you are looking at the explosion on rates. the rba want to anchor inflation. they had missed a hike in the last meeting, went for 25 basis points here. we were unprepared for this hike. the most unprepared we have seen the market to be. our mliv team have been saying we are too complacent and need

to push back on at the pivot narrative that the market is obsessed about. short and rates in the united states just dipped ever so slightly in terms of yields. they were higher yesterday, really by the prices paid number and that carries through from the date on friday which showed a propulsion for stickier inflation at the longer end. the treasury came in with some sales of their own. bitcoin comes back by 1% after dropping by five-and-a-half percent. -- 5.5%. hsbc will buy back as much as $2 billion of stock after a reported first-quarter results that smash the estimates. the ceo spoke to me exclusively earlier on the outlook of the bank. >> the strategy is working. i am really pleased that we have reinstalled the quarterly dividends. we announced today that

quarterly dividends of $.10 per share, that is the same level that we had pretty covid. i am pleased with that. we have also been able to announce a $2 billion buyback. i think the business is well-positioned going forward for sustainable profits, sustainable returns, and an ability to generate a lot of capital. that can be returned to shareholders. i think that is the most important thing i am focused on for all of our shareholders. manus: the $2 billion buyback that we see today, is that step one of a material series of buybacks? >> i think we were originally planning a buyback in the second half of the year, but because of the positive business performance, we were able to pull that forward. i think what we see going forward is continued sustainable profits, and therefore, the potential for a series of buybacks. have always said that buybacks have a place, and they have a

place alongside dividends to distribute excess capital. we want to retain sufficient capital to continue to grow the business. but, based on what we see at the moment, we think we have the potential for a series of capital distributions i a dividend and buyback over the coming years. manus: you said when we took the pretax and stripped out the exceptional items that you are happy that this wasn't all interest business. we want to get your sense whether we are at peak interest flow. you are at peak net interest for 2023? >> have had a good and i i performance in q1. we always said that 2023 would be the year that it tops out purely through rates. and i i can continue to grow through underlying growth in the

balance sheet and economic activity. from the rates benefit, we always said 2023 would be the peak year from a rates benefit point of view. i think that still holds true. as you go up the rate curve, you get the more diminishing returns kicking in on how much of those rate benefits you can hold onto versus the competitive pressure. manus: if the bank is cranking on gas, the strategy is working, the buyback is in place. i listened to goldman sachs, jane fraser said she is ready to adjust headcount. the previous cfo said they were just worried about costs and costs under control. are you ready to take that out of the business again? are you actively considering scaling back any of the areas? are you ready to cut headcount in investment banking? >> that has all been very focused on the transformation

program. our q1 performance at a reported level, our costs were down about 2%. if you adjust on a cost and currency target basis, we were up around 2% against the target of 3%. our cups are well-controlled. this is now embedded as a cost discipline in the organization and that is after 3.5 years of strong focus on cost. the other thing, in q1, most of that cost growth against target was all technology spend. it was digitization of the bank. that is good spend, not bad spend. manus: was no o'quinn speaking exclusively to us earlier today on the results and the way forward. octavio marenzi joining me now to talk banks. bank in transition, huge activist investor shareholders there on the roster trying to break the bank up.

a buyback and a dividend, it is interesting, ubs pause the dividend. we are waiting for a buyback from deutsche bank. first take on this move by hsbc? octavio: i think you can look at the results, they have been impressive. i think you have to look at it and come to the conclusion that this was driven more by interest margins than anything else. very strong performance, the net interest income bright across all businesses went through the roof and that is what pulled the bank along. the real question becomes is, what happens later in this year? will we see a peak in net interest margin? i believe we will be. the banks -- people are putting money into larger banks, that is really benefiting the largest institutions. that is really the game at hsbc at the moment. i expect later this year, we will expect them to pay more on deposits.

the net interest margin will go up, and it will be more exciting than it is currently. manus: the u.s. in just a moment. i have been on this european tour trying to track the flow from credit suisse. ubs got some, deutsche bank got a little. what is the biggest consequence of ubs, credit suisse, the goliath it will become? octavio: the biggest consequence will be seen in the swiss market. we have an enormous overlap between credit suisse and ubs in terms of branch network and the coverage they have. i expect to see ubs do something, either fold that in to ubs or spin that off. that seems to be largely undecided. i think ubs will try to cut as much cost as they can and that means a whole round of layoffs and redundancies within the swiss market. i think that is the direct consequence. i think that will be the biggest

impact, that is where the two banks have the biggest overlap, in switzerland. that is where the costs will have to come out and that will have to be taken care of. i think that is what the major consequence will be. manus: jp morgan swoops in, they got the deal, they got first republic, let's listen to the ceo on his take on how we can all the little bit easier. >> no crystal ball is perfect, but i think the banking system is very stable. it wasn't because people were having runs. there are only -- i think there may be another smaller one, but this pretty much involves them all. this crisis is over. manus: are you breathing as easily as jamie dimon? only a few more shoes to drop? octavio: i think it is very bold optimistic call.

when you see what is happening with the stocks in the major regional banks in the u.s., pac west for example, they stopped prices down 70% from where it was a few months ago. i don't think this crisis is over by a longshot. it is very hard for a bank to recover from a 70% fall in its equity. i don't think fundamentally things have much. what we are seeing is, interest rates have, very substantially, that has put a lot of pressure on the assets that many of these banks are holding. we talked about the investing security, a direct impact on the bond prices, and the value of their own portfolio. if any of these banks had to turn around and liquidate the loan portfolios, they will get a lot lower price than they originally paid. fundamentally, i don't think much has changed. this acquisition isn't certainly good for the depositors.

that has not said anything about what happens to the shareholders, though i assume they get wiped out. it is not fantastic news for the shareholders and investors and banks. manus: does american banking still remain competitive if jp morgan has -- i would need to fact check, 16% of deposits as a result of this deal, they had to get an exemption to be allowed to do this deed, because of this size. how competitive or uncompetitive is u.s. banking landscape? octavio: i think 15 or 16% is not a terrible concentration. it is interesting is the regulators have blocked some mergers of banks not so far ago over the course of the past year, inc. of montréal have been looking to expand by buying first horizon, that got blocked.

state street was looking to buy another bank and that got blocked as well. these are much smaller institutions than jp morgan, so it is hard to see how they could block those acquisitions but let this one go through. i guess this was a bit of a desperation play. even 20% concentration, still have a highly competitive market, lots of banks that depositors can choose from. there are other alternatives to the banking sector. you have the whole investment side, you can put your money in mutual funds. i wouldn't be too concerned about not being enough competition in the u.s.. lots of competition from other banks and from nonbanks. i would not be concerned about that at all. manus: all right, thank you so much for being with me this morning. octavio marenzi rolling with the punches. coming up on the show, breaks grind on a new chip factory. the biggest ever investment in

the company's history. we are live to dresden and we will be speaking to the ceo at 10:30 a.m. right here on bloomberg. ♪

manus: let's get to london hq to sam at 10. samuel: tech giant ibm says it will cause hiring. 26,000 customer facing roles, ceo says 30% could be covered by ai and automation over the next five years. ibm currently employs about a quarter of a million staff. this airways has named vanessaa hudson as its next ceo making her the first woman to lead the

airline. currently cfo, she will take the top job in november as they are delivering record profits but also facing strained relations with customers and unions. >> we are in an incredible strong position. we have many things in the pipeline. that is not to say that the past three years haven't been challenging. they have. there will be many challenges ensure ahead. my focus when i step into the role will be focused on delivering for our customers, delivering for our people, and also our shareholders in the communities. samuel: meta platforms has arrived as the first mega cap tech company to tap u.s. investment grade bond markets after the recent turmoil in the banking sector. we understands that meta raised $8.5 billion. we are told the longest portion of the offering has yields close to 2% over u.s. treasuries.

that is your bloomberg business flash. manus: you very much. the eu is aiming to boost 20% of the worlds chips. right now it makes about 10%. right now, they break ground in a new chip factory. the biggest investment in the company's history. all of our is on location. you go from the glamour of the bank holes to the real economy on the road. talk me through the significance of this project. oliver: i is right. i won't try to tie the line, but we are here in dresden. they have three fabrication semiconductor factories here already. they are breaking ground on the fourth. the biggest investment to date, $5 billion coming in, hoping to get another billion dollars.

this is all about strategic autonomy. this is all about what europe needs in order to be able to thrive as an economy going forward which is why dresden is attracting the president of the eu commission, the chancellor of germany. europe already consumed 21% of the worlds chips. they only produced 10%. the research paper on this set in 2020, they made one trillion chips globally. by 2030, it will be 2 trillion. that is what they are trying to produce here and breaking ground on today. they won't get them off the assembly line until 2026. that shows you how much lag time is happening. these will go into electric vehicles and infrastructure. at the heart of the two main industrial stories in germany and in the world. manus: a hell of a lot could go wrong.

in terms of the supply chain, which just reinforces this on shoring chips act in the u.s. and the drive in europe. oliver, you are throwing numbers at me there and i am dizzy at this stage. can they produce -- i know, it doesn't take much. can they produce the kind of numbers you are saying? what is the upper limit of what they can produce? oliver: is going to be the question i will put to the ceo a little bit later to ask somebody who actually is in the business of adducing. is europe's ambition really realistic? you clearly have the political will on their side. as you say, this takes years to bring online. the money is there to a certain degree, but the money is everywhere. you have the u.s. chips act, a huge amount of money going on over there. if you think about it in the

terms of the inflation reduction act, you don't want to have a race to the bottom where everyone is competing for the same kinds of things and companies are being pulled here and there. germany is trying to pull intel here. you also have the question of jobs, skilled labor. this will add 1000 jobs, but do they have access to that kind of labor? they need very sophisticated engineers. will they have enough people to fill this? you alluded to the supply chain, you have these conflicts, trying to impede china from getting their machines to build the chips. china refines a huge amount of rare earth. where are those hiccups going to come? we will be talking about that later today. manus: good luck with the trip to dresden, tracking the chips story. i look forward to your interview later on the day. oliver will be catching up with the infineon chief executive.

at 10:40 a.m.. coming up, we will look ahead to the ecb rate decision. a big week for rates and the united states and europe. we will check in. ♪

manus: it is tough after the holiday, your day off, labor day, i know you got the king's coronation coming up, but focus now. you have a four days to make it for the rest of the quarter. today, we will kick off at 10:00. we will have the euro area cpi. then we have u.s. jobs employment data. you have u.s. ism services, one

of the prices in that. and the fed's rate decision. then the ecb stacks up on thursday and you have the u.s. jobless names ahead of nonfarm payrolls. we are looking at 175,000 that. the big one in europe, fresh inflation data from the euro area will hit this morning. it will be watched and picked apart by the european central bank and the monetary policy committee. the ecb has pledged to be data driven and focus on core inflation dynamics in its most aggressive hiking cycle to date. to preview the european numbers, maria is in brussels. you will take me through a lesson in core and super core and superduper core. but do i need to know? maria: a lot of super going on, but very good to see after a european tour which was

fantastic. to move away from this european tour, you look just into what is going on in frankfurt. all about the cpi data today. you alluded to this divergence of the european centrist -- central bank. when you look at the headline inflation, we are expecting that to come in flat at 6.9%. any deceleration would be most welcome to put the number of what you know. what they will focus on is the core inflation, that is expected at 5.6%. it is a touch softer than the month prior. the message from the european central bank has been, when it comes to inflation, they want to focus on that or metric of or inflation, the dynamics that feed into that. when you strip away the volatility, which again, as soon as energy prices go down, headline inflation will follow. that has not been the case when it comes to core. manus: we are starting to see a move on the currency, up 4%

since the start of march. what are the implications for the central bank on this one reading in isolation? or is it a cacophony of data that will drive whether they make a small or big move? maria: if you listen to the words of the head of the central bank, this will all be about the data. this is a central bank that will be data-driven and really focused on those core dynamics. the question will be 55 basis points, 25, or not? manus: we look forward to it. good to have you back on daybreak europe. our brussels correspondent. up next, bloomberg markets europe. this is bloomberg. ♪

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