dani: good morning, happy friday, this is bloomberg "daybreak: europe". i'm dani burger in london with the stories that set your agenda. that talks in d.c. inch towards agreement, said to include lifting but cap for two years. moody's warns missing a june interest payment could spark downgrade. tech stocks push asian markets higher as u.s. futures stall before key u.s. inflation data. two-year treasury yields snapped 10 days of gains. turkey prepares to vote in the runoff after erdogan and his main rival failed to scare -- failed to secure a majority in the first round. it is a story of pricing in tech, of pricing a more aggressive said, of pricing in china which the growth is not as strong as we thought at the start of the year.

two-year yields got smoked yesterday. yields jumped 16 basis points as we sold off the front end. here is the past two days. jumping above 4.5%. it has come in slightly this morning but it was those jobless claims. coming in lower than expected. we also had a big revision, about 14,000 jobs a week from massachusetts due to fraud that are taken out of the picture. so this is a strong u.s. economy. u.k. yesterday also had another big jump, about 18 basis points, trading inches from the top of the budget drama during liz truss's premiership. that is the view on the two-year yield. let me show you what the yen has done. hours earlier it hit 140 per dollar. this is largely a dollars story if we are talking about stronger data out of the u.s. we get this pickup, and we do go

above 140. that's the story in currency markets. when it comes to tech, it was the ai trade based off of those nvidia earnings. you can tell on this five-day chart of futures where it is. shares rallied about 25% yesterday. $180 billion of market cap added one of the biggest showings for a single day stock turnaround. only apple and amazon have rivaled that sort of level. the hype may be israel. tech is proving to be the one strong bullish trend in this market. let's get to other top stories this morning with markets focused on washington. bill faries and valerie tytel are waiting to get to debt ceiling and some of the data. kevin mccarthy says negotiations still have ground to cover

before reaching agreement to avert u.s. default. the amount of government money to pay bills is the lowest since 2021. are we closer to a deal today than we are 24 hours ago? bill: we have been talking about this for a couple of weeks now, but it seems from what we're hearing from the people let fault, that includes kevin mccarthy and sources close to those stocks that they are narrowing differences. it sounds like they are talking about spending caps that might last two years. some of the other details are starting to emerge. it is possible that there will be an agreement at some point on friday, if those final points can be worked out. that would most likely set a deal for early next week in terms of votes in the house. that would still get to the president's desk by this june 1 ex-date.

dani: if we do get spending caps included in this budget, what would be the implication on the u.s. economy? bill: the details will be important. it is something economists and the markets will be parsing through very carefully. the big question will become does this push the u.s. into possible recession? how does it affect the next fed rate decision? what will be the longer-term outcome from limiting spending to below inflation levels for the next couple years? dani: we are trying to figure out what the date is to be worried about. janet says as soon as june 1, how close is the treasury to running out of cash to pay its bills? bill: treasury's cash balance fell below $50 billion on wednesday. the lowest level since 2020 one.

for comparison, about a year ago that was near $1 trillion. so we are down to $50 billion. it was higher even earlier in the week. we don't know what it was on thursday. that data is yet to come in. but the amount of wiggle room treasury has to keep paying bills is getting very narrow. dani: they have to pay about $2 billion in interest on june 15, and a miss could be the thing that serves as a downgrade. great to talk with you. bill faries they are elsewhere in the u.s., initial jobless claims may 13 have been revised down significantly after massachusetts detected a surge in fraud. the two-year treasury yield rising 15 basis points yesterday alone, now above 4.5%. let's get to valerie tytel.

is this the market going back to worrying that the labor market is too strong? valerie: if you look at the impact of these massachusetts revisions have made, it is substantial. the initial update that the market got excited about is that the first sign of weakness has now been revised away. what powell calls the extraordinarily strong labor market is showing signs that it was even stronger than we thought. yesterday the market reaction was quite sizable after this initial jobless claims number. two-year yields rose and we are now fully pricing a fed hike by july. we continue to price cuts later in the year. it is having reverberations across markets. the market now has to take into account this tale risk that the fed could have to hike to 6%. those were things we thought were off the table.

now we have moved on, deflation was here and the fed was going to cut but these numbers keep coming in strong. this tale risk that the fed goes to 6% might become a real one. dani: the fall in jobless claims was the think we were pointing to as the labor market cooling off. we also get pce today, what is expected? valerie: with this print today, the pressure is on. if this doesn't show moderation in the month on month numbers, this real worry about fed having to do a bit more before pausing his tightening cycle could be a real one. for the core pce number it is expected to come in line with the prior month, 4.6%. last month was a 0.3% rise, for the print today, we're expecting the same, 0.3%.

i should note that yesterday within the gdp data out of the u.s., there is also the quarterly print of core pce, that was revised higher. really the direction if you look at the last four weeks is not headed in the fed's direction. dani: right as they brought the word escape into the -- skip into the dialogue. valerie: next friday is when the blackout period starts for the fed. let's see if we hear more hawkish language with the market headed in the direction they don't want to see. dani: this is certainly something that would cause a tone change. let's get you set up for the trading day, that includes the data valerie was discussing. 7:00 a.m. retail sales. they are under pressure given the squeeze on income and borrowing costs, they doubled

this week with the rise in gilt yields. at 8:30 a.m. u.k. time, the ecb will speak at a conference. it is u.s. pce, durable goods and wholesale inventories, will that show a hot u.s. economy but the fed will have to change to a more hawkish tilt on? 3:00 p.m. we get university of michigan consumer sentiment. last time it showed a surprise in terms of how strong inflation expectations were for the consumer. should that continue, it is another red flag for the fed. coming up, one thing we have to be bullish about, chipmaker nvidia has been superpowered by ai. the wider market getting a boost off the back of it. plus u.k. gilt yields extend this week's losses, the yields are decisively up, as traders bet on more be a to curb -- on

more boe rate hikes to curb inflation. this is bloomberg. ♪

dani: nvidia's forecast for searching revenue surprised even the most bullish analyst on wall street, pushing the chipmaker to the cusp of a $1 trillion market

cap. ai stocks worldwide have seen a jump in the wake of that bumper forecast. more let's go to alex webb. what we make of this massive rally? alex: it is impressive for one. this was a huge beat. the forecast, the 11 billion expectation was 53% above consensus. we saw this massive stock pop as a consequence. there is a question is it overplayed? when it comes to nvidia, if you look at forward price to earnings ratio, that actually came down yesterday because analysts revised their forecasts upwards. it suggests if you take a two-year view and compare to tech stocks like amazon, it actually doesn't look quite as wild as people might interpret right now. when you look at the broader market, there is a lot of

companies writing on the coattails of this, the question is can the whole chip industry benefit? or is it just a few street stocks that have good exposure to ai-specific chips. at the moment, they appear to be spreading their chips. we don't fully know whether they have the necessary exposure. dani: sometimes cathie wood takes heat, but this time ouch. cathie wood dumping nvidia, or at least missing out on this rally, why did she capture this? she was really bullish nvidia at one point. alex: sheet benefited from it a bit. she actually got out before they had the big wave up a few years ago. in a since, nvidia is not comparable to a lot of her other investments. it is deep attack. it is a few layers back from

ends up in a consumer's hand. a lot of her investments are very consumer facing. there is a gentlemen who said i am not interested at all in consumer stocks. he is a fund manager. he is interested in what is the underlying technology? that is what nvidia is. that is not on the whole what she does. she does mega consumer trends, things people interact with hands-on. perhaps that is why she missed out but not a good luck. dani: tesla is the poster child. something you can hold and drive. joining us now is stephen yiu, cio of hedge fund blue whale capital. and nvidia is their largest holding. you must be feeling good today. what do you do after a day like yesterday when you see your biggest holding add $180 billion in market cap?

do you add more? stephen: thank you, dani. that morning. we are feeling a lot better than six months ago. there was talk of nvidia going to a trillion dollar company but it troughed in october last year. if you look at the fundamentals, our forecast remain significantly ahead of consensus so we're not selling but it is our largest position and we cannot go more than 10%, but we think there is more upside to go from here. dani: at some point you have to hit concentration constraints. the market was behind on this. analysts 53% behind in terms of where the revenue forecast went. what is your call on this stock? stephen: we take a view over the next three to five years.

we didn't expect that this took place the day they announced sales. when you look at 20 to 5, 2026 our numbers remain ahead of consensus. it didn't surprise us. what surprised us was the timing of the announcement. dani: what have we missed? why are we only now catching on to this? stephen: it is probably misconception about what nvidia is today versus previously. if you look at nvidia's history, before the last couple of years, it was mostly down to gaming and crypto mining. quite cyclical, if we buy a few more iphones or gadget you get a media component trade what has changed is artificial intelligence, automation and robotics. previously everyone had been talking about this as a concept.

we hadn't actually got our hands on to ai until recently when chatgpt arrived. now many companies are rushing to go into this space, and nvidia being the market leader for high-end gpu, you can see why nvidia is no longer a cyclical company. this let's prolong for the next couple of years at least. dani: because you are looking 3, 4, 5 years out. we are already up 150% this year on nvidia. in your forecast, can you see that more than doubling in price ? stephen: this is difficult. there was always a valuation, even for the likes of nvidia. nvidia shot up 25% yesterday, as alex pointed out earlier, the

consensus upgrade was even higher than 25%. so the valuation has become more undervalued than before. we think it will go above $1 trillion, once it gets over that, maybe we revisit our thesis. it depends how quickly the shares react. dani: it is so hard to be negative on this stock. something like 70% gross margin next quarter is remarkable. when you look at the wider space, a lot of ai type companies are also rallying off the back of this. do you want to be involved in smaller names? or do you stick to the giants like nvidia or microsoft, which is one of your top 10 holdings, too. stephen: the strategy is focused on large mega cap companies. that's a limitation on what we

can do. on the other hand, while we are positive about chatgpt, it is a private company, but it is all about penetration of ai, it wasn't about chatgpt per se. it's a likelihood in five years time that we might forget about chatgpt just like google was the eighth search engine and back then we couldn't remember the other seven before google arrived. so it could be something similar. what we like about nvidia is because it is the pitch and shuffle play in the space providing the infrastructure in terms of gpu to power the learnings of ai applications, it doesn't really matter who wins. it could be chatgpt or something else. we would expect as more ai applications or leg with models come to the market in the next couple of quarters. dani: as you say, this stuff

isn't new in the past month, even though the market has treated it like it. ai applications being used in companies which are more public facing like chatgpt. the rally is in, if nvidia hits 10% you can't keep buying, but in terms of how dominant this trade has been this year, at what point do you get nervous? you and i talked about what happened with jack last year when you get really concentrated on it. interest rates move higher and all of a sudden it is decimated, how are you thinking about that this year, and the risks of getting over concentrated in tech? stephen: this is a very important point we have been making since last year. previously, we exited major positions in amazon, apple, paypal and facebook before the summer last year.

what we have been saying is we are going into this new regime that you need to be highly selective of what you on. you mentioned earlier about cathie wood's portfolio. looking at her top 10, she has names we would not even go near because the quality of those businesses in this new regime will face more headwind than tailwinds. even within the tech space -- if you look at our top 10, you see we have nvidia and microsoft, asml, but it is a very selective subset of the tech market. and we do not believe that everything else within the tech space is going back to where they were, just like before the interest rate hike last year. so i think going forward, this is what we expected yesterday. you have nvidia going up so much for the most -- but the rest of the market has not reacted as

much. dani: the producer is yelling we are out of time. what are those names you wouldn't touch? stephen: i need to be careful of that, i'm just looking at her top five holdings like zoom or tesla. we considered owning them and i don't see us owning them in the near future. dani: ok, thank you so much. congratulations on i'm sure on what i'm sure is a very solid performance for you and blue whale. coming up later, turkey will be heading back to the polls this week and for the second round of the country's presidential elections. we will have details for you. ♪

dani: let's get your first word news.

with that is adrian wong. adrian: ubs and the swiss government have an agreement on state guarantee is for the emergency takeover of credit suisse. the deal's completion could be pushed back to june instead of late may. ubs and the government are still haggling over the regulatory implications of the takeover, including capital requirements and liquidity roles. turkeys central bank has kept its benchmark rate on hold at 8.5% in a bid to stabilize the lira. the decision comes ahead of sunday's runoff election. president erdogan is looking to extend his rule, after leaving the first round of voting but failing to take 50% earlier this month. an energy company is experiencing a surge in demand for green transition technologies as governments move away from possible fuels. speaking in frankfurt, the cfo

says after years of supply chain holdups, the company has an overflowing order book. >> when it comes to certain parts of my business, i am booking orders for 2028, 2029 and 2030. this is a long-term plan. we need to think about the transition and it is not something that causes a knee-jerk reaction on conditions today. adrian: global news powered by more than 2700 journalists and analysts in more than 120 countries. i'm adrian wong, this is bloomberg. dani: if you very much. coming up, the fed's susan collins says the central bank may have reached or be approaching a paws on rate hikes. what does this market do? bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright.

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♪

dani: good morning and a happy friday. this is "bloomberg daybreak: europe." i am dani burger in london. closer, still no deal. debt talks in d.c. edge toward an agreement. moody's warns missing age june interest payment would spark a downgrade. mixed markets, tech stocks push asia markets higher, even as u.s. futures star before key u.s. inflation data today. turks prepared to vote in the presidential runoff after erdogan and his main rival failed to secure an outright majority in the first round. two-year yields might be coming in this morning but boy have they had a week. yesterday, we pushed higher by about 15 basis points. it was jobless claims data, that came in hotter than expected. we had this big revision due to fraud in massachusetts, about

14,000 worth of jobless claims wiped off per week. what did we get in the two-year? it's come in a little bit this morning but the trend overall for the entirety of the week remains. it is a push higher, a market pricing in at least one fed rate hike by july, despite the fact we had susan collins saying that may be a pause is appropriate. we had people putting skip into the dialogue. maybe it's time we skip over that one. the other big theme is tech. it has been a really strong day for tech. we are just talking to stephen yiu running blue whale capital, who is a happy man because nvidia is his biggest holding. it is bumping up against that 10% capacity constraint in their portfolio. here's the nvidia move. this straight-line is because of those really strong earnings.

revenue coming in 53% higher than what analysts thought it would be for their forecast. gross margins looking something like 70% next quarter. it's hard to be bearish. even its valuation has come down, if you look at price-to-earnings, because of their expectations moving forward. because of the first chart i showed you, those two year yields, we had more drama in the gilt market yesterday. and started with the inflation report, that inflation report earlier in the week that was hotter than basically every analyst assumed. then you get that jobless claims data in the u.s. yesterday and you get yields at the front end of the gilt curve that takeoff. you can see this big jump up. wuzhou muster back at the tops of though this trust mini budget selloff in the gilt market. let's get into both those things with althea spinozzi, saxo bank senior fixed-income strategist. just about nine basis points away from the mnin budget high -- mini budget high, how were

we to do you get? althea: i get quite word. i believe there is plenty of upside for gilt yields at the moment and that should worry the bank of england as well. the bank of england needs desperately to bring the benchmark rate into positive real terms and they are very far away from that. we believe that they would need to hike by around 100 basis points. but bailey might not be able to hike that much because once that mini budget peak is broken over, then we might get into trouble. last september, we had problems with pension funds, they could not put up collateral for their positions. that problem could present itself again.

but also, i am not sure that the u.k. financial system is that immune, concerning the deposit flight that we have seen in the u.s. i believe that -- dani: i was just going to say, that is a really good point because it was not that long ago that we had this fear over ldi over the pensions. are we in a different place at all that we are a little bit more resilient to a doubling in borrowing costs? or is this still a very fragile financial system in the u.k. when debt does what it's doing currently? althea: well, we should be a little bit more resilient. because hopefully, what happened in september showed that there were some steps that needed to be taken and hopefully the financial system did that. of course, we have to think that the banks, pension funds all the

financial system is very much reliant on very low interest rates and they are rising. once we break that level that we have seen in september, u.k. yields will find support only in the peak that we have seen in 2008, that we are talking about 15 years ago. the financial markets has taken bets and risks based on very low rates the last 15 years. dani: what do you suggest to clients who are in this gilt market? what do you say to them in terms of some of the absolute usual losses we have seen just in the past two days? althea: well, we believe that realistically the bank of england will need to come in as gilt yields will arrive to 5%. i think that there is a natural cap around the 5% level, as volatility and prices might --

in the financial sector. but it's very sad if you look at it that way. but the bank of england might have to choose between financial stability or pushing the economy into recession in order to fight inflation. so basically, it is either a recession to get inflation under control,, or otherwise a very deep recession. dani: we were talking about how this coincided with the move in u.s. rates yesterday. i want to quickly play some sound from susan collins yesterday in terms of where she sees this interest rate regime. >> while inflation is still too high, there are some promising signs of moderation. and i believe that we may be at or near the point where monetary policy can cause raising interest -- pause raising interest rates and this will provide an opportunity to more fully assess the impact of the actions we have taken to date.

dani: susan collins, the boston fed president. fed officials have been saying this for a few weeks, pause, skip, what have you, when you look at a day like yesterday with hotter jobless claims, we are going to get pce, we are going to get umich survey data, yields push higher, are we going to stop hearing the cause, skip talk and -- pause, skip talk and hear about more rate hikes from the fed? althea: i think if we are talking about more rate hikes, we are talking about one more rate hike, which will be delivered in summer, be in june or july. regarding fed member speakers, senator bullard is the closest to jerome powell and he was saying that the federal reserve is very much data-driven, they, are looking at data and they will act once they have this data. right now, data shows that the labor market is very tight,

inflation might still be a problem and we are closely watching the pce index that is coming up today -- coming out today. if the pce index comes hotter, it's a question of whether the federal reserve is going to hike in june or july. now, the market is betting for a july rate hike. but realistically, if you have the debt ceiling saga out of the way and there is a resolution there, then we believe that a june rate hike might be in play. dani: we have not even talked about the debt ceiling. we are almost out of time. so unfortunately, this one has to be quick. how are you thinking about the debt ceiling and how it might alter some of what we have seen in this bond marke? in some of the tighter duration type assets, it has been reacting to the fed at this

point. althea: i think it's easy to di think about it this way. y. there is two options, default or downgrade. if either of these rises, the best play would to stay in 10 year u.s. treasuries, the same thing that happened in 2011 when we saw 10 year u.s. yields dropping below 100 basis points after the standard & poor's rating downgrade. dani: great to catch up with you. enjoy the rest of your friday and your weekend. althea spinozzi, saxo bank senior fixed income strategist. let's get you your bloomberg business with adrian wong. adrian: thanks. alibaba says it plans to hire 15,000 people this year, pushing back on reports that the firm is laying off employees. the chinese e-commerce dragon described reports of layoffs as rumors and said employee departures are part of their normal flow of the business.

cathie wood's flagship etf closed out its nvidia stake in january, missing out on the stock's most recent powerful rally. the chipmaker, the world's most valuable, has added more than half $1 trillion in market cap since wood dumped the shares. wood holds nvidia across several of her smaller firms but investors in the ark innovation etf have missed out on the blistering rally. tsmc is in talks to receive german government subsidies for up to 50% of the cost of a new factory. sources say the negotiations involve a plant in dresden to be built at an estimated cost close to $11 billion. the top end of the subsidies being discussed are similar to what japan has offered tsmc. and that is your bloomberg business flash. dani: thank. adrian wong there. turkey will be headed back to the polls this weekend for the presidential election. details and a preview of that runoff vote, next. this is bloomberg. ♪

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♪ dani: turkey's central bank has extended its interest rate pause for a third month as it tries to keep the lira stable. the policy decision comes just ahead of the country's presidential runoff this weekend. yousef gamal el-din joins us now. why is this important? yousef: the rate stays at 8.5% and they hold for a third consecutive month. you would expect about from the central bank of turkey because we are getting into this runoff on sunday. it's a sensitive time, they don't want to be seen as taking sides, and the turkish lira is already at a record low, the central bank has been intervening. what happens after sunday, regardless of who comes out

winning? in round one, erdogan got 41.5% of the. the person who came in third, he has endorsed formally the incumbent president erdogan. those are the stakes. but then, you have the sustainability question. bloomberg economics has made it clear that even though the incoming president has made a name for himself around unorthodox monetary policy, you can no longer just drag this out, you can no longer, with 44% inflation, continued to keep rates low. there is going to be a reckoning that is going to come to the fore in the coming weeks and months. dani: we also saw some data on turkey net reserves falling below zero. talk me through that data and what exactly that means for it to fall below zero. yousef: that is something we do not see very often.

in fact, in turkey, we have not seen this since 2002. so it's been 21 years. i had to go to the imf definition of what constitutes a negative net international reserves position. difference between reserve assets and liabilities, but what does that mean in practice? it means there's a struggle and there is a thirst and a lack of foreign currency availability. the turkish lira trade has always been a bit of a better representation of what is actually going on because it is micromanaged liquidity, and is a little bit drier. the currency has lost 6% this year but is lost even more in 2022, so about 30%. the thinking on behalf of turkish citizens as well, if my money continues to get burnt up by inflation, where do i put it? initially, the thinking was stocks. year to date, the turkish stock

market is down about 18%. there's frustration and anxiety as we count down to the big runoff. dani: i know you're traveling to turkey for it so safe travels. looking forward to your coverage. be careful with the traffic. europe' economic engine iss having its resilience tested and as that risk of a long, slow decline with consequences for the whole of the eu, that's the subject of today's big take. let's talk about it with all of their cree -- oliver crook. we have the data come out yesterday, it's for the winter but longer-term, it is not just a backwards looking thing, is it? it is this long-standing list of issues that are threatening the economy. oliver: that's right. getting away with a mild recession, from what was considered in his actual strength -- xslt right to the german economy -- an existential

threat to the german economy, is getting off a little bit easier. the picture looks a lot less positive. you have a huge industrial base. the question is energy. energy prices going forward. are there a lot of businesses that can cope with permanently structurally more expensive energy prices going forward? in terms of labor, you have an issue. more than 300,000 people in the german economy this year alone will reach retirement age them become adults. you have a shortage of skilled laborers as well. ev's, the single biggest part of the german economy, the auto industry, they are playing catch-up on ev's. they are dumping a lot of money into it but they are not ahead of the game. longer-term, ev's are less complicated. there are fewer jobs potentially associated with the future of this industry. this week, i spoke with the first chief economist of the ecb, probably one of the longest standing and deepest students of the german economy. and i have to say, i was struck by how pessimistic he was about the future of this economy. dani: oliver, with this question

i am going to sound alarmingly close to sounding like i am sinking from the sound of music, but how do you solve a problem like a germany? how do you fix europe's growth engine here? oliver: perhaps we have to start calling it not a growth engine but a growth motor. part of the problem is going to have to be a political solution. . you have a three-way coalition that is looking less and less coalescive, if that's a word we can use. these problems need a sustained strategic push over a long time. when you have disagreements within the government over how to do that, that is obvious a going to slow things down substantially. . you need to match these huge programs you have in china, and the united states, the inflation reduction act, to deal with the future of manufacturing and semiconductors. dealing with bureaucracy is another piece of low hanging fruit in germany. if you're able to create those conditions, you have a huge amount of industrial know-how,

you have these massive companies that have dealt with change in the past. the ev question on volkswagen and the other german carmakers, they are dumping hundreds of billions of dollars into catching up. you look at the smaller businesses, you have more than 8000 companies and germany that are the best at one thing, and might be a small thing like glass perfume bottles, retractable dog leashes, germany has the biggest company that builds tunnels on the ground, so all of these things are kind of a recipe for positivity. however, the problem is necessity is the mother of invention. however, when things feel ok, as they sort of do in germany, the question is, do you have the required urgency to make the huge shifts that you have to make over the coming period of time? dani: that is oliver crook on the big take. read it on the terminal or bloomberg website. coming up, bloomberg has learned that the completion of that ubs- credit suisse deal looks likely

to slip further and take longer. we are going to discuss why, next. this is bloomberg. ♪

♪ dani: almost 40% of american adults are struggling to pay for usual home expenses. that's a stark headline from the census bureau data. many are turning to credit cards to make ends meet, lisa mateo reports. >> inflation is pushing more americans to feel financially strapped. and recent data from the census bureau's survey, over 38% of u.s. adults, or nearly 90 many people, had a tough time paying for usual home expenses for a seven-day stretch toward the end of the month. that's up from almost 35% from the same timeframe a year ago. not everyone is feeling the same pressure. people ages 40-54 are under the

biggest economic pinch. hispanics are facing the largest budget problems and states in the south with lower median incomes, like louisiana, mississippi appeared to be struggling the most. even more than 10% of those making $200,000 a year having trouble paying their bills. how are they getting by? more than 25 million households say they are turning to credit cards and even lungs to make ends meet. almost 2.7 million more than the previous year and that means even more budget worries i had as average interest rate for those lines of credit now exceeds 20%. dani: lisa mateo ahead of today's u.s. pce data release. let's talk about some european corporate news. bloomberg has learned that ubs and the swiss government have an -- have not reached consensus on the exact terms of a state guarantee for the takeover. this may delay ubs' takeover credit suisse -- takeover of credit suisse.

what are the details being debated here? >> well, the state has said that it will cover up to 9 billion francs, that's a little more than $10 billion, of losses which ubs might in curve from winding down parts of credit suisse's business. the law's protection agreement has not been signed so far. the negotiations about that are ongoing but looks like we have not seen a signature and the government has said that there needs to be clearly about the terms of this agreement before the deal can officially close and we see these talks drag. dani: what is the timeline for this? >> the government did not give a timeline at all. they said we are negotiating, we are not saying any deadlines, it is just ongoing. they are not giving any sort of indication when this deal will

close. ubs has said the they want to close the deal possibly a as early as the end of this month but what bloomberg has learned from sources internally is that senior bankers are told that in early june date which has been circulating is seen to be in danger again. dani: just about a minute here but the -- is still playing out in the swiss courts how likely are we to see some resolution we will see some resolution at some point but the question is when. the swiss courts are not known for being quick. we are seeing hundreds of suits, hundreds of lawsuits with 2500 claimants in total. the swiss administrators court is going to rule on these at some point in time but it is just not clear when this will happen. dani: in other news, basically

might take away from this is expect to see some ubs-credit suisse headlines to come, even pimco, they joined yesterday that investor lawsuit over the credit suisse wipeout. thanks for joining us. just a quick check on your markets. it's a bit of a reversal of some of the trends this week. one thing that is resuming is a gain in japanese stocks. those at one point trading at the highest since the 1990's. hong kong equity markets are closed but japan shines. the yen able to post some strength after yesterday weakening to 140 per dollar. aluminum, a big move after sinking lower over some china concerns. it is up more than 2% this morning. that is it for "daybreak." ♪

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