dani: this is bloomberg daybreak: europe. i'm dani burger in london. manus cranny is in dubai. manus: data doldrums. china consumer spending and industrial activity disappointed in april, calling into question the strength of economic activity. treasury secretary yellen says the u.s. is already paying for the debt limit stalemate. house speaker mccarthy says leaders are nowhere near a deal. oil gains a second day as the u.s. says it will buy 3 million barrels of crude to refill is depleted strategic reserve. very good morning. the death knell's are being banged into the risk-taking this morning, but my favorite quote of the day goes to jordan bruce at atq >> the macro environment

is exceptionally high right now, and the best defense against that endurance is diversification. good morning, risk. dani: i am not free of risk, thank you very much. these have a special place in my heart. it is telling of this market. did you know, according to deutsche bank, discretionary allocation to this equity market is at a one-year low. there is so much uncertainty, only the euros and aqrs of the world are currently participating in the stock market. manus: the tightest ranges since 1988, and if there is not 10% upside why would you have your cash in? we just have to thump it up to

the pension fund. dani: bank of america said bowls are an extinct species. can i tell you what is not extinct, in tokyo, in japan the topix is headed for its highest level since 19 90. sure, only 0.5% gain at the moment, but this is a mixture between the warren buffett's of the world who have said we are making a new that on japan. and a lot of corporate buybacks. we are talking about this tight range because of euro stoxx 50 futures are doing nothing. the s&p down 0.2%. jp morgan blames zero date six. options for this range. -- expiry options. there are a lot of disagreement about that. i want to point out, it is one of the biggest movers in the

asian trade. jd.com, michael burry showing he has that big bet on not just jd but alibaba, too. manus: and he is all in on regional banks. i was a trainee stockbroker in 1990, i'll have you know. didn't get my first bloomberg until 1992 at wilson phillips was number one. you were two years old. -2. let's talk about the cross asset allocation this morning, diversification is the key. maybe you want some 2's, they have come lower this morning. for me it is about the manufacturing index plunging the most since april 2020, the short end dips ever so slightly. nymex crude, the yankees are coming to refill the spr. they have bids for 3 million barrels, while that put a floor under oil? iron ore drifts as the china

reopening narrative is somewhat discombobulated with retail sales and fixed asset investment. bitcoin, why not? it's laid under 20,000 yesterday, so maybe it will base around this level before it accelerates again. that is your theoretical inflation and debt ceiling hedge challenged, dani. dani: maybe gold will resu rge as the debt ceiling hedge. let's get to it reporters around the world. jill disis on china's economic recovery. michelle jamrisko on the debt ceiling talks and valerie tytel has those 13-f filings for us. manus: chinese industrial activity grew at a slower pace than expected in april, adding to concerns that growth in the second largest economy is losing momentum. jill disis will define whether

it is a moment of stalled in the reopening velocity. jill: at this point, this data was much worse than what economists were expecting. you especially look at industrial output figures, 5.6% growth is about half of what we were seeing. remember, this data was heavily distorted by the fact that it compares to april 2022 when shanghai was in lockdown. activity was depressed last year. we were hoping for have pretty aggressive uptick. retail sales up 19%, but still trickling in under economists' expectations. i want to draw your attention to the youth unemployment rate in april which hit a record high of more than 20% last month. that will get worse as we head into the summer months because

that's what we're expecting more graduates from around the country to come onto the job market. it's not clear that this labor market can absorb all these people coming in. there is a lot of headwinds the chinese economy has to face. it seems like economic momentum is leading up. what this ultimately means is there has been rising speculation from a lot of economists on whether or not this means the central bank will adjust additional policies, rate cuts in the coming months. remember yesterday they had a chance to adjust policy, didn't adjust anything mainly because they are in that wait and see approach for now. analysts are saying that for let -- that could let up in the coming weeks, especially now that the fed has decided to likely pause there rate hike cycle at their next meeting. dani: it is another strike

against this narrative that china will save global growth. jill disis in hong kong. another day of chicken when it comes to the debt ceiling standoff. this time, house speaker kevin mccarthy says talks to avoid historic u.s. default are quote, nowhere near conclusion. at the same time the treasury secretary is warning the government is already paying a price. let's get to michelle jamrisko. buy-in, for his part -- fighting, for his part, has projected optimism but mccarthy says these talks have not been productive. michelle: the game of chicken does continue. a lot of politicking around the expectations. each side is lecturing the other about timing and risk. you had mccarthy setting the bar low on tuesday talking about how

they made no progress. he is striking this very dark tone about what we can expect out of the meeting this week. on the other hand, we had a good feelings last week where the aids were making progress on energy and fossil fuel. we have that makes getting in there. another wrinkle is biden is set to leave wednesday for a trip to japan come up of who in new guinea and australia. those plans have not changed. that might be one reason he wants to sound more optimistic and get it done before he can accomplish that trip. the stakes keep getting higher, we keep hearing treasury secretary yellen talking about treasury securities maturing in early june. the borrowing costs substantially increasing as of now she is telling congress in a letter. investors are caught in the middle.

equities are trading in a tight range. people are unsure how to read these vibes out of this meeting that will happen tuesday of the big five leaders. bond investors remain on edge about the outlook for u.s. treasuries, and in between we have every day americans looking at the options, and what might happen in the event of default as we get closer to that ex-date. a lot of stress around social security payments, federal salaries, and critical agencies like the federal aviation administration and customs and border patrol. no one is downplaying the risk. we hear time and again about the economic and financial catastrophe we could be in for, as yellen put it, if we go past the six date of june 1. manus: you will see the

headlines, biden goes to g7 and they go down to the wire on this, it has all the political hallmarks of hell all over it. michelle jim briscoe on the facts of the debt ceiling. stanley druckenmiller and david tepper loaded up on all things ai in q1. valerie tytel is at the data investigation. what does it tell you about the ai trade? valerie: good morning, everybody seems to be chasing this ai tech trade. some of the two most notable family offices run by stanley druckenmiller and david tepper both dipped their feet in some of these ai stocks. both of them increasing holdings of a company called nuvidia.

that nvidia stock is up almost 100% this year. it is one of the top performers in the s&p 500. they loaded up on other tech stocks. druckenmiller's fund initiated a position in microsoft, the holder of chatgpt. when it came to appaloosa, they initiated a position in cathie wood's arc innovation etf, and also with tesla. these filings are from the end of q1, so it is unclear whether they have already profited from this trade. dani: it is interesting seeing someone looking at a construction company that set it is ai. the hype is alive and well. i started off talking about how berkshire hathaway said he liked japan stocks and the entirety of the market move. what did we learn about their positioning? >> he has been clearly cooling

on u.s. regional bank stocks. of the four exited holdings, two were regional banks, bny mellon and -- i don't find this surprising after he had been publicly scathing of management of regional banks, saying he is exiting positions because the ceos are prioritizing earnings over basic banking principles, he said that at his agm last week. but he has been trimming holdings since third quarter of last year, probably accelerated the exit given banking turmoil in march. he has initiated holding of capital one. when it comes to big banks, he is a large folder of bank of america, it remains one of their top holdings. dani: valerie tytel breaking it down for us. we will speak to plurimi wealt , 's chief investment officer who

says the firm is betting against rate cuts priced into the fourth quarter. that conversation with patrick armstrong next. this is bloomberg. ♪ you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

>> in today's environment where there is so much uncertainty in the economy, we can't rule out anything. if i voted right now, i would

probably vote to hold but we have two more inflation readings, a jobs report that has to come out, there is a lot more information we will have as to what's going on. >> we at the federal reserve probably have more work to do to bring inflation back down. most importantly, we should not be fooled by a few months of positive data. we still are well in excess of our 2% inflation target and need to finish the job. dani: the atlanta and minneapolis fed president on the central bank's next move to tackle inflation. joining us is patrick armstrong, chief investment officer at fleury me -- plurimi wealth. they are kind of both saying we don't exactly know what we will do. maybe neel kashkari more strong in terms of bring down inflation, but plastic saying there is more data to wait for.

what sort of macro conviction trades can you put on right now? patrick: the trade i have on the fed is not necessarily conviction, or which way the fed or economy will go, it is a bet against the certainty that there will be a wave of cuts over the next nine months. four cuts happening by january next year could happen, if we fall into recession, the fed will be cutting. but if we don't, they are not going to be cutting unless that recession happens. the way the market is pricing things, there is almost a certainty that the recession is happening. again, it's not impossible. but it is not certain in my opinion. manus: patrick, good morning to you. we started talking about jordan brooks at aqr, i want your sentence terms of how markets are positioned. he says there is collective ignorance on the future macro environment, it is exceptionally

high. and the best defense of ignorance is diversification. have we suffered in the equity market collective ignorance on the future of the equity market, and is that the reason to be lighter in touch on risk and equity? patrick: there is risk on equity. the stocks you feel safest in our the most expensive now. everyone is hurting into the big cap companies. you get more secular growth, they are up 30-100% on mega this year. where you are not seeing anxiety is in the vix index. there is a lot of detail risk events -- tail risk events you can't foresee, but with the debt ceiling risk, the fix below 20 and longer-dated future contracts are not that expensive. i have kept my equities positions on, i am marginally underweight but i have started picking up vix contracts

where i am buying the august and selling the december. if there is a tail risk event. buy more longer-dated futures. dani: the fact that we are talking about these risks and we are caught in this range. patrick: i don't find it incredibly frustrating. whenever i am long vix, i don't expect to make money, but when i do, it is outsize money that i make. it is a uncomfortable feeling to be in equities, there is very narrow breadth. if your item five big companies, you have done well. dani: if you own apple. patrick: i only have a small percent of my portfolio in those two companies. i am actually underway to those mega cap tech companies even if you look at it that way. it is a strange market. where there is very narrow breadth. the companies are very expensive

right now. when i bought lvmh in september, it was two times earnings. apple and alphabet haven't gotten to 30 times earnings, but those will be the levels to get out of those companies. i cents a trend, no one was to a big risk on what is happening in the economy, because it is on player and they are piling into safe companies but they are getting expensive. usually that is a risk, not just the underlying fundamentals but what you pay for it, that is what people are ignoring right now. manus: that makes eminently good sense, until you have clarity in terms of the debt ceiling. clarity in terms of scale and size of downturns. so you want to avoid concentration risk, that's what i take away. you don't want to be in mega caps, and you have paid up for luxury. i am curious about the dividend stream you're drawn to within energy as we try to put a floor in this energy market.

you own some of these big energy winners, why are you still committed? patrick: they are incredibly cheap. if wealth stays -- oil stays anywhere around $64 a barrel, these companies are audibly cash -- incredibly cash flow generative. in the boom bust cycle, whenever oil hits $100 a barrel, oil, spend, capex is huge, in this last cycle they have unambiguously paid down debt, increased dividend and blockfi shares. you are not having natural response after a spike in oil prices this time. the economy is slowing on reduced oil demand, but where it is not slowing as much is in asia, and that has much higher oil intensity. i think oil prices will remain sticky around the 60-70 dollar level, but as a member of all -- incredible tailwind, the market

is not pricing recession in the overall global equity market. manus: some nice calls, patrick armstrong, chief investment officer at plurimi wealth. coming up on the show, dani and i dig into the oil story. as the u.s. is set to buy to boost its strategic petroleum reserve, currently at the lowest level since the 1980's. we break the story down on bloomberg. ♪

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dani: let's get your first word news with adrian wong in hong kong. adrian: treasury secretary janet yellen says the u.s. is already paying a price for its failure to raise the debt limit. in a letter, she cited rising borrowing costs for government

securities maturing in early june. the treasury could run of cash as soon as june 1. house speaker kevin mccarthy says the two sides are nowhere near a deal on the debt ceiling. turkey is set for a runoff election with resident erdogan falling short of the vote for a first-round victory. the main opposition challenger came to just under 45 percent. the runoff election suggesting more divided electorates than in 2018, when erdogan won in the first round. elon musk responded to a subpoena by the u.s. virgin islands in the jp morgan epstein lawsuit. it had reason to believe epstein attempted to refer musk to jp morgan as a client. musk says the notion that he would listen to financial advice from epstein was observed, and that he never advised him on

anything. global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: adrian, thank you. dani, you found the chart, i didn't read enough pages this morning. it is about bankruptcy, it is a monster fact of the day. i will give it back to you, go on. dani: here is the fact. in the past 48 hours, seven large companies in the u.s. filed for chapter 11 bankruptcy. just to put that in context, that's the most in a two-day period since data going back to 2008. it is these credit crunch for vibes emanating from this economy. patrick armstrong of plurimi says i want to be in safety trays. manus: heat has bought front end

vix and his front to get. we spoke to his competitor who said, we never took a breath. we haven't taken a breath. let's see what 500 basis points does to credit in the economy. economic supplies are dipping just slightly into the negative. next, it is all about china. dani: china is not going to save us, the data shows that the country's post-pandemic recovery is losing momentum. another notch in the belt against that china reopening narrative. we take a deeper dive into it. this is bloo hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement, i said, "yeah, whatever. there's no way this works like this." and threw it to the side. a couple weeks later, i seen it again after getting not so pleasant news from my physician. i was 424 pounds, and my doctor was recommending weight loss surgery.

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manus: this is "bloomberg

daybreak: europe". i'm manus cranny in dubai with dani burger in london on the stories setting your agenda. dani: chinese consumer spending and industrial activity disappointed in april, calling into russian the strength of economic recovery. treasury secretary yellen says u.s. is already paying for the debt limit stalemate. house speaker kevin mccarthy says leaders are nowhere near a deal before talks today. oil gains a second day, as the u.s. says it buy 3 million barrels of crude to refill its depleted strategic petroleum reserve. we have breaking news when it comes to investment banking. manus: morgan stanley, a couple months ago they said they would lay off 3000 people around the business. now we have more detail. expecting to cut 7% of their asian investment banking jobs, this is a bloomberg scoop.

that will be probably 40 bankers in the region mostly focused on china. no shock here, the deal flow is not coming through. if anything, these banks are all arriving on our doorstep here in the middle east, searching the ipo mandate and investment banking business, because there is very little. it is going down elsewhere. this is another nail in the job cutting cycle for investment banking. dani: that's a good point in terms of moving to that region. look at goldman sachs opening that new abu dhabi office. late last year, they announced they were cutting 25 bankers in asia. jp morgan have cut 30 investment banking jobs in the asia-pacific region. manus: these are not monster numbers in themselves, but if you think this is about the real rainmakers within these organizations, you have to compound on top of that what is her bod -- ermotti going to do

to the credit suisse franchise all over asia where the investment banking has been hit hard and heavy. in terms of remuneration, we caught up with a multiple of ceos. noel quinn has a huge footprint in asia and was satisfied that costs are under control. he did lean into the idea that he was ready to cut more jobs but pay is under pressure. 50% pay cuts is one of the stories we have after that drop in deals. dani: i love that you brought it back to ubs. we are never too far from the ubs story. manus: my future six career as a communications advisor, i leave you with that thought. dani: while we talk about china, the lower deal flows perhaps symptomatic of a struggling economy, or an economy that is not rebounding as strongly. with consumer spending and industrial activity throughout a

-- growing at a slower pace in april. the economy seems to be losing momentum. let's bring in jill disis from hong kong on this. walk us through the data. it continues to be another piece of a reading from china where the strength isn't there. jill: here's the thing, we have known for quite some time, at least a few weeks that this data out of china was getting softer and softer. look at earlier data on imports plunging in april. you saw the pmi's for manufacturing contracting in april. we just got that a few weeks ago. we have also seen slowing credit growth. there have been signs building in recent weeks showing us that the recovery we saw at the beginning of the year as they lifted covid zero restrictions is just losing steam. what we got this morning was additional signs that things are

to strong as maybe we would have hoped. all the data from today compares to data from last year. in april 22 when shanghai was in lockdown. economic activity was basically nonexistent. we're hoping to see strong growth for retail sales and industrial production, hopefully a pickup in fixed asset investment. we didn't get that. industrial output grew at half the pace economists were expecting. retail sales also came in less than expected, all of this pointing to that bigger picture saying there is still really big warning signs here. i will point you to youth unemployment among people aged 16-24 that reached more than 20% in april, that will face more pressure as we get into the summer months because more people will be graduating from universities in china. and adding additional pressure

to this labor market that can't handle a giant influx of people looking for work now. manus: the question is to what size and scale will the pboc react? the mlf was left unchanged, the median loan funding rate. a little bit of incremental liquidity. will it be rate cuts, mlf? jill: that is ultimately the question. are we going to see some major policy easing measures from the pboc? they have room to act if they need to especially as we get into june with the fed likely to pause their rate hiking cycle, so maybe there is less global pressure to deal with. some economists think maybe the mlf rate may be cut, even if it is not next month, by the second half of the year. but it is not just monetary policy easing that china has to

look at, according to people we talked to,, so saying may be additional fiscal support needs to enter. we need to look at how we will build more household and business confidence in china. is that subsidies encouraging people to buy more electric vehicles or household appliances? it seems like maybe there is some scope for china to look at more holistic approaches to get this economy humming again. manus: i didn't manage to get it out the first time, medium term lending facility, i'd garbled it, i murdered it. i could see jill's face, where or what is he talking about? jill never messes up the acronyms. you -- the u.s. will buy 3 billion barrels of oil to refill its strategic sir.

the stockpile is at the lowest level since the 1980's. let's get to stephen stapczynski in singapore. i thought they didn't need to refill the svr because of their energy independence paid somebody fish asystole -- facetiously said that to me the other day. good morning. >> they are looking to buy 3 billion barrels. but you have to remember that in the context, that 3 million barrels is nothing compared to what they released last year, which was 200 million barrels to bring stability to the market when prices jumped above $100 after russia's invasion of ukraine upended the market. now things are looking much better. when they sold that supply, prices were close to 100 dollars per barrel. now the wti benchmark for the u.s. is closer to $70. they want to buy while it is

cheaper. this is their second attempt this year to refill that supply. whether they will move forward or not is unclear. they had one in january but didn't like the offers they got, so they postponed to now and are looking to buy for august. remember, things are looking a lot weaker than they were in january. as we talked previously, the chinese data coming through is showing a weaker economic recovery that a lot of folks in the oil market thought would happen. that is pulling things down for the last few months. today we're having a bit of support in the oil market because of this purchase from the u.s. but it is unclear if they will follow through. dani: talk to me about where we stand with opec+ and potential cuts, are they coming to appease the saudi's? stephen: opec+ is one of the big question marks and is one of the

big aspects traders look at when they see the weaker chinese data and a supply overhang. when they see the curve flattening. the question of will opec+ increase cuts in their next meeting is on the top of everyone's mind. it is unclear how they will respond, but consistently, saudi arabia and other countries have said there is a bit more supply out there. part of doing that is reducing their exports. when we're looking at prices falling to the $70 level, we're seeing a lot of weakness in the market beyond just buying from the u.s., there is a chance that opec+ could respond by adding additional cuts. but right now we're not immediately sure that will be something will be watched closely in the next few weeks. dani: one acronym both stephen and manus will never forget, spr.

stephen stapczynski in singapore, thanks so much for joining us. european finance ministers gather in brussels as the euro zone's inflation outlook is raised. we bring you the latest. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe". european finance ministers gathering in brussels today as the european commission raised its inflation outlook for the euro area for this year and next. all the while pointing to a resilient economy. maria tadeo is in brussels. growth a little bit better-than-expected, inflation still a serious headache after gas collapsed in prices. that is what saved the proverbial in europe, isn't it, over the winter?

maria: remember the headache is not done because there are real questions as to what happens next winter. in terms of this report that came out yesterday, there is good as you say. the economy pulling a lot. but there is the bad, there is good and bad. when you look at inflation, this has serious implications for the economy. you see yet again another pickup in the forecast for inflation to 5.8% this year. this is a real takeaway, 2.8% next year, it means a couple revision not just of this year but also in 2024. the finance ministers we spoke to yesterday still say that jobs market is still pulling along in europe. you did not get this recession winter from hell, but inflation is becoming a real headache not just economically, but also politically, because remember, this is the start of a mega elections cycle in europe.

you will get predilections into that kicks off a whole series of elections culminating with a elections next year. they want to say that inflation number come down if they want to self those political message is across to people. dani: on the monetary policy side, the hawks keep hawking, what are the implications because presumably this will give them more ammo? maria: the ecb downshifted 25 basis points. how many hikes are left? do you keep that pace, is 25 the new normal? if you look at the words of the vice president of the european central bank, in an interview saturday, he said to me, 25 looks like the new normal but interestingly added, this may be the final stage without putting a number on it. but yesterday when i put that question to finance ministers, they said, with respect to the european central bank, we have

confidence in madame lagarde but there is now a real responsibility to tailor fiscal policy so we don't counter the effects of the central bank policy. that is what pascal donohue told me. >> there are signs the inflationary dynamic is beginning to change. from an overall level it is moderating downwards from where we were a year ago. but inside that, we are still saying -- seeing core inflation at too high a level. i believe 2023 and 2024, the ecb governments can take the steps needed to get inflation back to a level that it will not be the challenge that it is today for living standards and the ability of households and businesses to trade and live. maria: that was the head of the euro group yesterday talking exclusively to bloomberg. the other thing we picked up from a number of ministers is

that companies will now have to pitch in if the cost of making things goes down, they want that reflected in the actions they take, and not perhaps profit. a lot going on as euro group continues for day two. dani: that's our bloomberg european correspondent, maria tadeo, in brussels. let's get your business flash. adrian: china's consumer spending and industrial activity group at a slower pace than expected in april, adding to signs the nation's economic recovery is losing momentum. industrial production rose 5.6% from a year earlier, much lower than the 11% expected by economist pay china's youth on up limit rate search to a record high of 20.4%. microsoft's takeover of activision blizzard has won approval from the european union.

the eu says the $69 billion deal is procompetitive and would kickstart the date of for cloud streaming games. amgen's deal to buy horizon therapeutics will be challenged by u.s. regulators. the federal trade commission is expected to file a lawsuit to block the $27.8 billion biotech deal on fears it could hamper innovation and slow the pace of drug development. manus: adrian, they do very much. he is much famed, the movie was great, michael burry at s cion, he gorged on jd.com at the back end of 2022 but he piled in high again in the first quarter. he was a believer in the reopening trade.

alibaba and jd.com, have a look, they are now 20% of his assets under management at the fund. dani: now i can't stop thinking about christian bale, so thank you for that. jd.com on its own, 11% of his fund. the reopening trade has not been the most successful, shall we say. the other things you flagged was banking stocks. we are no when he put on those bets, but regional banking stocks have fallen. pac west is down 80%, western alliance down nearly 50%, let's hope he offloaded before those losses happened. manus: these are the positions in jd.com and alibaba, but to your point, at the end of the first quarter when there was that regional bank implosion, he picked up 2% of first republic and pacwest. this was at that very tail end of where everything went really disastrously wrong. the question is whether he has

held some of those through, and the question now will be what happens with the muted reaction in the chinese market to that tawdry data we have had. the golden dragon index rocket tom yesterday, but whether they do that today is to be seen. dani: hard to make conviction bets, instead you get a flat market. we will talk about the u.k. labor data is out, in 10 minutes time. it is unlikely to ease worry about sticky inflation. this is bloomberg. ♪

>> the circumstances of the pandemic, and what has been happening in ukraine, mean that

it is foolish to pretend that one can forecast accurately. that's far too precise. we do not know enough about the future. what we need to do is to identify risks. dani: former bank of england governor mervyn king speaking to bloomberg apparently in a library of historical books. let's speak to lizzy burden about the latest u.k. market labor data. >> i wish i had a library like that at home to be my backdrop. in terms of the labor market today, the key numbers to watch out for our unemployment. it is expected to hold steady. pedro, expect it to tick up. this will give us clues as to when the bank of england will pause. we have had 12 hikes on the trot, but the government will be watching out for how many days have been lost to industrial

action? you have seen strikes weighing on gdp, and finally inactivity, who is it that is still staying out of the labor market? you have had the work and pensions secretary mel scribe promising an income tax cut maybe if you come back to the workforce, but that will not healthy long-term sick languishing at the end of an nhs waiting list. manus: let's see what the data gives us. 12 straight hikes is a pretty brutal series. huw pill spoke yesterday, apart from his apology, did he give indication on the future redpath? -- rate path? lizzy: it was huw pill's first opportunity to publicly acknowledge. he said he regretted the choice of language around telling britons they need to accept that they are worst off in this

cost-of-living crisis. he acknowledged that it is the poorer who are suffering the brunt of it. but it is the blunt tools of interest rates needed to bring inflation down. he said he hoped the boe is nearing the end of its tightening cycle, the clearest and yet that rate hikes are going to be over, but with an ion upside risks like the labor market. he had an interesting word on ai, he said it could be a win-win situation because it could boost productivity and living standards, and help the central bank with its forecasting which he acknowledged has not been the best of light, which comes back to what mervyn king was saying, perhaps given the pandemic and war in ukraine. the bank should not be putting as much emphasis on its forecast and the accuracy of them at the moment. manus: it is tough love in terms of the war on inflation.

after that run-up in sterling, you have hedges piling on against the pound by the most since 2021. the data should be out in a couple of minutes. coming up later today, we will have the iea head of oil markets at 9:10 a.m. with the team. later on the richmond fed president tom barkin, let's see how much more divided the fed really is. you have got goolsby, kashkari being quite aggressive in terms of more to do. that is all versus bostic who said if i had to vote right now, i would vote for a hold. dani: kashkari is the only voting member among them, so maybe he is the only one to tune in to great it goes back to cuts being still priced in.

how much more does the fed need to say to change the mind of this bond market? manus: the market is so presumptive of rate cuts coming that that is perhaps a disconnect. there is a disconnect in equity markets, we have heard that from one of the quant funds this morning. but the greatest fully of all is to think that the fed is done. i'm surprise the aussie is not lower, it has been a fairly anemic response to fairly underwhelming data out of china. the velocity of that reopening stalled. dani: the exciting thing though is japan, the topix at its highest level since the 1990's so at least something is moving in this market. this is bloomberg. ♪ am i? ya! save 50% on the sleep number limited edition smart bed. plus, free home delivery when you add an adjustable base. only at sleep number.

anna: good morning and welcome

to "bloomberg markets: europe."