>> this is bloomberg daybreak

europe. we have the stories that set your agenda. >> runoff ahead. turkey will likely need a second round of voting as neither president erdogan or his main rival garnered the minimum to declare victory. the negotiations appeared to gather momentum. stock futures remained flat. president zelenskyy received promises of fresh military support from italy, germany and france during the visits to the nation's capital. it is repressed and depressed, kind of a monday blues kind of thing. take me home country road i say. good morning.

>> you know i am from virginia. this is what i have my eye on. if we are not getting any pickup with the debt still going on, will inflation be the thing? a one-two punch of lower sentiment and higher inflation expectations? question 12 years. >> toxic stagflation. the bottom line is whether you believe. those two moments when janet yellen flinched during that interview. it was whether the plan had been presented. she just hesitated and then there was just two moments of hesitation. good morning. >> bonds did very well back then. when it comes to this morning, sometimes they just take them through it.

they did provide more funds. there was that, let there was an argument to be made that perhaps more teasing was necessary for china. not too much action this morning. a 20% decline to come. it is the macro concerns, credit conditions tightening. they say that will weigh on this equity market. >> that is one heck of a drop. when it comes to repressed volatility, the markets seem obsessed. they don't touch it with anything. they will -- there will be no cuts until 2024.

they want to buy steepness. gold is at a record high. this is where you hide out from hell. the debt to gdp in the u.s. is much more than it was in 2011. oil is down. bitcoin, just wanted to pop that in there. we had the first back to back weekly losses. even though bitcoin comes in ahead of yen and swiss franc's as the hedge against debt ceiling angst. that will upset the chief strategist we have. brutal. >> it is not an inflation hedge, it is a debt ceiling hedge. we have a lot of local stories to cover. this is covering the turkish election.

tracking the latest on the debt ceiling. haslinda i'm in has everything you need to know. >> let's check it out -- pick up with turkey. the president is in the lead. he has not read greek -- reached the 50% threshold for the decisive early win. where does this leave the country after the polls yesterday? >> for much of turkey, it has been a sleepless night, a divided nation. a strong showing from president erdogan. the incumbent surprising quit a few observers. the parliamentary resorts 10 to giving them strength as we look at that second round on may 28. 99% of the vote has been counted.

the key factor will be what will happen when the third contender votes? we have 5.3% of the vote. quiet and intense few hours. we got quiet a bit of heated rhetoric and accusations. ultimately, where we stand is the incumbent has more to pay for for the second round. we have a few overseas votes to count. that is an enviable amount of your part in the election and then the market reaction has been interesting going into this. the rally in turkish stocks, some of them have to get readjusted as reality kicks in. that lack of certainty prevails. the central bank has already intervened a little bit. to moderate some of the weakness currently at two months.

we will break it down with all kinds of guests and highlights. >> over in thailand, they have scored a resounding victory in the palmetto elections. let's get more for -- more from haslinda. >> possibly the most consequential election in a generation and the parties have had a stunning run. this occurred about 287 out of 500 seats available. a majority. when it comes to type politics, getting that majority does not mean you will be able to form a government. the first-time voters are

backing them. it campaigned during reform on the military and on the monarchy. going forward, what will happen? will there be in alliance between the two opposition parties? if not, what will the tie-in look like in the days and weeks ahead? there could be tens of negotiations. we have been here before. it failed to form a government. let's see what happens now. >> president biden and u.s. congressional leaders are planning to meet on tuesday. the national economic concept told cbs that they reiterate

just how serious a default would be. >> the staff is very engaged. i would characterize the engagement as serious, has constructed. when i talk to ceos and business leaders around country, they tell me things archewell going very well. their biggest concern is that congress might fail to prevent default. and that would be catastrophic. >> let's bring in our seniors economics correspondent. are we any closer to resolving this? we will have to default on something of this desolate does not get race. it doesn't seem we are at a breaking point. if anything, there is progress. >> the one velvet is that

meeting date. that was delayed in a productive matter. they wanted to get a little bit more time to get that in. a lot at stake here. pressure is out. especially among investors. morgan stanley among them over the weekend, we did have the pulse survey confirming -- we are staring down those big risks.

on the ground, a lot of jobs and questions about security. will critical agencies like federal aviation administration -- will they function in a situation where we get close to default? there was some progress on certain issues. the blame game continues. blame on both sides about getting closer. more progress on tuesday. right now we are still on that waiting time. >> thank you so much. coming up, we will take a deeper dive into the debt ceiling.

♪ >> we will catch up with christian brooke at 6:30 a.m.. ♪

>> welcome back to bloomberg a

break president biden says that ceiling talks are moving along. the global research team says there is 20 of uncertainty regarding the date but risks to the u.s. economy from a debt ceiling standoff are clearer to understand. joining us is the head of european fx research. is this that pavlovian urge to seek shelter and the dollar playing out? >> absently. attic we have seen this time and time again we get that uncertainty. the volatility potentially picks up. that really does boost the dollar from that safe haven perspective.

when you look at the broader macro backdrop and framework, we have seen that in the u.s. and this part of the world. there has been a divergence. that suggests the dollar should tart -- should start to resume. for the time being, the noise remains quit loud. it will create that environment. >> we hold on for dear life in this bumpy ride through the debt ceiling. our blog would say gold is our haven. if i fade the dollar rally, maybe that is my opportunity. do i get to pick up some and

start at cheaper levels? >> absolute. if you take the base case being that the debt cylinders get resolved, if we take that as an assumption, the growth momentum in europe and the u.k. is pretty resilient. much stronger than a lot of people have been fearing. consumer confidence in this part of the world has been picking up. this is particularly on the services side. this is key for the growth in this part of the world. you have a lot of the big supply-side pressures. those are feeding very quickly.

a lot of those effects are coming out of inflation now. that helps businesses and consumers. this is allowing them to push higher. >> sterling is so under loved. sterling is the most bearish since 2021. the argument there is that even if inflation is coming off, we are going to have a hard landing. what do you say to those critics that continue to short sterling versus the dollar? >> it is interesting. some of the mood music around sterling has been changing. analysts were getting more and more bullish on sterling as it was hitting the peak.

in some respects, i am not that concerned to see the other side. this is the same thing i have been saying since november. but we are seeing is the the data is improving. there has been an improvement relative to expectations. once the trend starts to reverse or the expectations get too strong and we start to see disappointment, the picture changes. expectations were so negative in late q3 and q4.

that is what is part of that sterling outperformance. as long as we are seeing improvements in the trend. and as long as we are seeing improvements relative to its petitions. i think that is key to seeing sterling go higher. >> she is living there in the u.k., she went to japan, she saw what he could be really like with a train that left on time. she is more traumatized than you are. we have to get one in here. we have people on the ground in thailand and turkey. volatility has been explosive. how do you begin to look at and em currency? if the dollar continues to move as you suggest? from our perspective, the right

thing to do can be hard. you look at what the fundament is are telling you. currencies need to reflect those economic fundamentals. something like turkey, the economic story is still very challenging. there are a lot of imbalances in the economy. particularly the balance on the payment side. they are really improving. ultimately, they require a weaker currency. that won't be the case under other leadership. that is what we are saying on turkey. whatever the politics is for now , it might shift the degree of that change but ultimately the currency needs to weaken. the economy requires a weaker currency. a balancing of those external accounts. until that happens, it is very hard to see the upside. some of the economic

fundamentals are really starting to improve. you going to tourism season and this part of the year. you tend to see a big improvement. that has been coming on faster than people were expecting. that is relative to what was expected. that can really drive performance. in some ways, maybe a lot of uncertainty about that political backdrop. this is just a slightly different story for the currency regard this. we're in the gold market, cementing the position as the world biggest producer, details on bloomberg, next.

>> the deal with over $19 billion consolidating the u.s. minor status as the world because to coproducer. let's bring in our banking reporter. harry, shares close by 3% of the implied deal price. what do investors reckon the price was? what are they have to do to make it a good deal? why set surprise of the upside if anything. it is fully france. that is tax-free for shareholders. they have done alright out of that.

there were a couple of? probably raised inside the tent. they had extended the due diligence process. there was just to buy them time. there were a lot of materials to get through. it did put a? over the deal. even though things had gone pretty well so far. people were wondering where it was going. there was just the extra way to get through materials. they were pretty close anyway. >> such a massive deal, what is the rationale for newmont to become so enormous? >> this is a trend.

i remember just going back to 2018 when they first made the offer in south africa. back then they had to offer a real premium. they had the balance sheet. this is the combination of all of that. having merged the number one and number six players, this made them bigger by a longshot. they are 60% bigger. this was on a market cap basis. it is not just about scale. it is about expertise. they had underground blockading where they blow up the mind and it falls down in a nice little

meat pile for everyone to grab. there is a lot on the newmont side to learn. they split apart many decades ago. quick thank you very much. there was harry bunton in sydney. >> they go from a little premium merger. you got hung up on the university of michigan. i will tell you what i am all hung up about. when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets. before golo,

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>> cluster he will need another

round of voting as neither garnered the 50% needed for victory. president biden and house speaker mccarthy plan to meet tomorrow. u.s. stock futures are little changed. plus, president zelensky receives promises of fresh military support from italy, germany and france during visits to the nation's capital. i know you were just very impressed with my dollar statistics, best run, i took it from john arthur's piece this morning. the strength will run into the debt ceiling. i just want to say that i got from the authors peace.

>> when it comes to hsbc, i thought it was interesting. they say you may get this flurry to the upside. but you will fade that move. you get that angst and spite and roll. >> it is the whole thing of the dollar. it is a haven to go to now. down for the fourth day in a row. four weeks in a row as we get ready to go to vienna. >> the drive-by in the bond market -- michigan, angst over long-term inflation expectations and a 12 year high here.

that is persistent and deep. the etf's are there. bitcoin, she rallies back to beeson row, back-to-back losses, first time we have seen that in a number of years. the first weekly back to back losses in over a year. cole takes the number one spot. treasuries number two. >> and not too sure what has happened in the past three minutes. just european and u.s. futures were unchanged? china stocks were down some 3/10 of 1%? they are now up more than half a percent. there was a decision not to cut the mlf rate. i am not too sure what has happened. likewise, we are seeing gains in some of the western hemisphere

stocks. there continues to be that warning out there. bank of america saying they expect a decline has those macro impulses force concerns about stagnation. let's get to adrian, he has your first word headlines. ? democracy parties have a resounding victory in china's parliamentary election. the move forward party is ahead in the popular vote. the party advocates changing the law that strict criticism of thailand's powerful monarchy. the result is the biggest challenge since the military seized power a decade ago. financiers have concluded that they can present a united front on more support for ukraine.

while china did not get a direct mention, there were thinly veiled plans to counter global supply chains. this comes in stark contrast with the g20 in india. that ended without this. they are kicking off negotiations for a new free-trade agreement between the two nations. the trade secretary is said to meet with the counterpart with forming a cooked at formal negotiations to begin next week. the indian prime minister has conceded a loss. the party scored a rare victory. the biggest victory against the since 2014. the winning party's campaign included promises of direct cash benefits for women and for

electricity. wilbert is probably more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you so much. turkey's presidential race will likely go into a second round of voting in two weeks as president erdogan falls short of the 50% needed for undersized -- decisive first round win. let's get over to yusuf in istanbul with a guest. >> thank you. as they try to get into a new workweek after a very long night , let's unpack some of that. joining us is the professor of economics and the economy with the federal reserve board, a lot of insights we can glean from you. where is your mind at this

morning? how stunned are you by the outcome of the last 12 hours? >> as an economist who worked at the federal reserve for five years, i am stabilizing the economy. from that perspective, i am quick concerned with the developments in the turkish economy. the central bank is eliminated from the policy as a policymaker. the link between the policy rate and the market interest rates is detached. after the result from last night's election, we still don't know. but the chance that erdogan will win is much harder. where does it take us from this point on? erdogan clearly states that he is going to continue with these policies. i think this is a confirmation

for belief in policies. if low interest rates continue, from my perspective, this is the insistence on trying to sustain the unsustainable. >> you have taken a very close look at the central banks's balance sheets. you understand some of the key variables that drive a healthy and functional balance sheet. how much time with the current policy still have? is this a matter of weeks or months? how soon could the hand before to change? >> if you look at the central banks balance sheet which is the key ingredient for the continuation of the current policies because if you have a policy rate of 8.5% and 45% inflation rate, it just increases demand for dollars.

to prevent the pre-appreciation, you have to inject into the foreign markets. this has been exhilarating in the past couple of years. right now, the central bank holdings are negative six $2 billion. budget look at this number, you could say you can't let them continue another day. somehow the central bank and the government have been finding investors from other countries. it is just a matter of how long they'll be able to maintain this. >> you are not a believer in an imminent large-scale -- large-scale depreciation of the turkish lira. you think it is in the government interest to continue to micromanage that. for investors are not going to

come in at scale at this rate. >> at think that is the key difference but the opposition was promising. the opposition argument was to return, consider student begin rate hikes and provide economic teams that are going to make sure there won't be any compromise from the target. in this way the idea was to extract from the capital. the government clearly states that is not the route they are going to choose. if the incumbent government continues, i think they're going to do a u-turn and consider a rate hike anytime soon. >> what about inflationary pressures? you think those have peaked? >> yes and no. in terms of the headline inflation, yes. i think we have seen a peak.

at the moment, they can control the foreign exchange and therefore the pressure is on the lira and the spillovers to the inflation rate that is contained. i don't think it would be possible to contain the pressures by just selling central banks. my thinking is the capital controls are going to get more strict. they won't try to maintain low interest rates through different channels. >> it would not make much of a difference as far as you're concerned if the fed reaches peak rates. >> not much. as you said, there is hardly enough for an capital right now. it will only affect the cost of borrowing for turkey. even though there is no foreign

capital here, turkey needs to borrow because we are in open economy in the sense they have exports. for that reason, we need foreign exchange. in order to borrow from international markets, the fed interest rate will determine the borrowing and turkey as well. >> thank you for making the time to join us here on this. >> thank you very much. let's see where we get to on that side. yusuf is in turkey throughout the day and will be. coming up on the show, we will catch up with this as the coming upgrade its revenue forecast for the year.

strong demand, where is it coming from? that and much more coming up on bloomberg. ♪

>> upgrading revenue expectations for the year after strong orders for the energy transition technology. that comes despite the spanish wind turbine which is continued to be problematic. the forecast a deeper loss for that division. strong orders, higher revenue and revenue growth. plus that are for us. this is a ship for january. what has been the most significant uplift for revenue being guided higher? good morning.

>> it is really interesting. they are well-positioned and the energy transition. there has been a strong push. people recognize if the use of renewable electricity, they have to put it somewhere. the demand on electricity what i say is -- i would say is enormous. we also had a very good quarter once again in services. we had a good year. respected this to actually get a little bit lower in 23. we will see continued strong demand. this is based on the capability -- we are well-positioned. you have also seen that we

secured a large offshore wind project in the u.k.. that is also a good sign. that is one of the biggest offshore wind projects that exist. >> to that point, we can talk about wind turbines without talking about some of the profitability issues there. look at these to be the biggest source of headaches when it comes to the supply chain? >> we knew we were going to work. these are some of the remaining issues. this is why we said it is going to be a volatile and bumpy ride. it is nothing new in terms of what we are working through. we want to make sure that they get more and more stable.

offshore is quiet substantial. we are hiring people, we are raising factories. we are working through this. it is not substantially no. it is just working through it and we run it. you will need some patience with that. we also have a massive offshore time. this will be on the order intake side. that is interesting as well. >> you used the word enormous. enormous grid building. who is spending the most? is that china and the americas? >> we see it starting across the

board. europe started relatively early with long-term plans. this is not coming to the realization and implantation. a big chunk of that in germany. we also see other parts of the world coming up. we see this in the u.s.. we see the middle east interestingly enough. they are having more and more discussions in terms of how to interconnect countries and regions. i would say a little bit coming later. discussions are happening at the moment everywhere globally. europe will be the stronghold for 2023 in this area for us. we continue to see changes elsewhere. obviously the ira helps to drive the element and also the u.s..

cracked the politics playing a big part in this as you mentioned with the equation reduction act. it comes to the home country of germany, how key is it for your business that there is some stability? and long-term consensus when it comes to the energy transition? >> we are a long-term business. this is also what we do each time. if you want to build a factory, plan or projects normally today, it takes years to execute. it doesn't go without a very clear plan you want to invest into. this is something more relevant than any subsidy probably. more relevant to have fast processes. this as we continue to convey that we can also have the executor and capabilities available.

this is going to be influenced by the question how fast can we implement and eggs acute? question you mentioned the inflation reduction act. what concrete steps can you tell the market today? where will you expand in the u.s.? how much is that contingent on the eye or a? >> i have to say we are blessed that the u.s. touched on other business areas that we have. also, nuclear refurbishment where we are doing this for the turbines. don't forget that we run 25 factories in the u.s. today. where we continue to invest is most likely on the offshore side.

we are discussing possibilities on the grid and transmission side. obviously we are discussing on the hydrogen side. this would also come with capabilities on the ground. >> great to have you on. >> great to see you. coming up the ukrainian president, bloomberg zelensky embarked on a european tour over the weekend. this is bloomberg. ♪

>> ukraine's president has been on a european tour over the weekend with leaders in germany, italy and france.

we have this big of a medic push from zelensky. what was he helping to get out of it and what did he? >> this was a used up a medic which of the weekend from the ukrainian president. we know it is so important for the ukrainian government to keep the country top of everyone's minds, to keep that diplomatic momentum. there is obviously a situation on the battlefield where you have the geopolitical situation. a lot of that speaks to this push from zelensky to go to italy, germany and france. the three countries are important to ukraine for a number of reasons. the real highlight was that visit to berlin. it is obvious there has been a palpable change in tone. there had been frictions in the past. there was no sign of that in berlin. both zelensky and schultz very aligned.

you can guess ukraine can rely there. 2.7 billion euros in weapons for ukraine. that is key when it comes to the counteroffensive. speaking of the counteroffensive. he gave an interesting interview on italian tv which he repeated there was nothing to talk about with president vladimir putin. ukraine is betting everything on this counteroffensive. >> yes. it was wall-to-wall coverage. a probable shift as you say between the german position practiced over six months ago. danny got obsessed about inflation. i got a bit more obsessed about credit. this is where the biggest credit position short ever by here,

this is the spread to treasuries. they reckon this will go up to around 800. they have the biggest short and credit they have ever had. >> i would say being obsessed with inflation is way more boring. we talked about this before. part of this is also just cash yields so much right now, you can take a much smaller duration risk. >> you have a whole future ahead of you. wealth managers of the stars. that is the transition. this is the boa constrictor around the u.s. economy. bank of america said that, not me. good morning. is it not

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anna: good morning and welcome to "bloomberg markets: europe