>> good morning. it is "bloomberg daybreak: europe." i am manus cranny into bike. china's cpi holds near zero in may as producer prices slide, fueling calls for the pboc rates cuts. stocks push higher after the s&p 500 enters a bull market. new governor. president erdogan appoints a new head of the turkey central bank, which could signal a return to traditional monetary policy. however, the lyric continues to weaken. donald trump is said to be -- the lira continues to can. donald trump are said to be indicted for his refusal to return classified documents found at his home. he says he is innocent. a very good morning. 9:00 a.m. across the emirates, 6:00 a.m. in london, 7:00 a.m. in berlin. are you part of the bull market?

these are the questions you need to ask yourself. the equity markets flew into a flurry of bids on the back of the highest jobless claims since 2021 and a tank of oil, dropping by 4%. that imbued a spirit of relief in the equity market. the nikkei and the cash market up 1.7% -- in the cash market up on .7%. the s&p 500 -- up 1.7%. s&p 500. the russell 2000 is moving other bit higher, people are buying bank stocks and utilities. let's roll it over and have a look at the breadth narrative, which is the fang plus group up 65%, that includes nvidia, along with tesla and a number of others. that blue line is the outperformance in the fang+ group. we have the aiii up.

we are seeing a shift in the retail market. that's the index breadth, as it is outperforming. wti, along with 10 year government bond yields, you saw oil crash yesterday on the talk of a deal between iran and the united states of america. that was denied. progress on the jcpoa. the market has tanked by 2.5% over the past 10 sessions. this is a feeble oil market. yields in the u.s. going higher slightly. is there enough to let the fed skip? what is the danger that you do not end up back where the boc or rba were this week? cpi, one of the lowest readings in the world. the lira continues to trade lower. they simply do not believe at this juncture that the new central bank governors who has been appointed by erdogan will

be allowed to return to orthodox monetary policy. if you want orthodoxy, it means less intervention. i will leave you with that thought. let's get to our reporters from around the world. charlie joins me from shanghai. we will talk markets with valerie. bruce einhorn has the latest on the trump indictment. kicking it off with the data read. inflation remain close to zero in may. the economy in china, the recovery is in question, giving the central bank the scope that it needs for monetary policy easing to spur growth. let's get to charlie in shanghai. this anemic, anemic inflation scenario on the cpi, disinflation on the ppi, is it enough to spur the pboc to action? charlie: as you just noted, yes, you know, china's cpi remains close to zero. basically, there is no inflation for consumers in china.

ppi is even in worse shape, it remains in the negative territory, it remains deeply in deflation. so, that shows, you know, the world's second-largest economy, their recovery it witnessed in the first few months after the lifting of the covid lockdown has tapered off. as you know, consumer sentiment remains very weak following three years of lockdown. jobless rate, especially those among youth, young people, remains high at about 20%. small businesses are struggling. and the property market, you know, recovery, you know, is showing signs of losing steam. all of this showing china is probably, you know, calling for a new round of stimulus, at least that's the view of a certain group of analysts and economists. manus: do you think they will cut the mlf?

charlie: mlf, mlf, yes. next week, there will be mlf operation by the central bank. everyone will be watching very closely. who knows? it remains in debate. some argue china needs that because this data is pointing to -- manus: do you think the economy is bad enough to deliver the rate cuts that we saw in 2014, 2015? do you think it's at that kind of tipping point? charlie: people are still debating that. some people are arguing that if you cut interest rates at the moment or cut rr this year, it does not mean the economy will respond. if you cut rr when everybody, consumer and corporate confidence about the economy, remains weak, it's hard for the money to be directly into the real economy, you know. but of course, there are people

thinking a lower rate could do something to at least prevent it from further deteriorating. manus: charlie, thank you so much. charlie: as you know, the chinese -- manus: charlie, we are going to leave it -- go ahead. charlie: ok. chinese banks just cut their deposit rates, you know, and that is interpreted as a sign that china is planning to cut linear rates -- lending rates, because it needs to lower banks 'funding cost in order to preserve their net interest margin. manus: charlie zhu in shanghai on the latest china data. the rally in technology stocks pushed in the s&p 500 back in a bull market. let's bring in valerie tytel on the breadth debate. what do you think is fueling this optimism? good morning. valerie: good morning. yesterday, it really was the unexpected rise in jobless

claims, which got the market thinking this might be the labor market weakness we finally have been waiting for. it reversed a lot of the equity market weakness we have seen over the last two days, causing a boost to tech stocks, and pushed that s&p500 to rising 20% since the lows on october 20. breadth is really in focus. the top seven tech stocks have rallied 65% in that same timeframe. this chart shows that yellow line at the bottom, you strip out information technology from the s&p 500, it has only rallied 13%. this optimism in the equity market has also coincided with a drop in the vix. the vix plummeted yesterday and closed at a new yearly low. it is on a 13 handle. that is something we have not seen since the pre-pandemic days. manus: thank you very much. let's see whether the breadth, the expansion of the breadth

continues. valerie tytel in london. bloomberg understands that donald trump has been indicted over his alleged refusal to return classified documents found at his home in florida. it is the first time a former president is being charged with committing federal crimes. let's bring in my colleague, bruce einhorn, tracking the story. what do we know about the charges? bruce: according to several people familiar, there are several charges that the former president will be facing. they are currently under seal. it is possible that they could be unsealed today, friday in the u.s. according to a person familiar, the charges include willful retention of national defense information, corruptly concealing documents, as well as conspiracy to obstruct justice and making false statements. to give you an indication of the seriousness of these charges,

willful detention of national defense information, that has a penalty of up to 10 years in prison. corruptly concealing documents, that includes a penalty, disqualification from office. it is unclear whether that would actually hold a constitutionally when it comes to preventing someone convicted of that of serving as president. however, there is also the obstruction charge, that could include a jail term of up to 20 years. the former president has made a statement on his social media platform saying that he will be in court on tuesday in miami. his campaign has denounced the action by special counsel jack smith, calling it "an act of open legal warfare." you mentioned at the start that former president trump would be the first president, former

president, to be indicted on a federal crime. he has also been indicted at the state level. that is a case that is underway in new york involving alleged hush-money payments to the adult film star. there is also an investigation underway in atlanta involving potential interference in -- alleged interference in the election in 2020. special counsel jack smith, in addition to this case in florida, also has a grand jury in washington that is continuing to look at the former president's involvement with the attack on congress on january 6. former president trump's legal peril is just growing, manus. manus: i mean, look, you have very well documented those this week. the question is, of these, of these potential issues, it is the corrupting, it is on

corruptly concealing documents, i think you made this point, which is where it would disqualify him from running for president. but none of this at this juncture would stop him? bruce: that's correct. even the charge that you mentioned, corruptly concealing documents, which includes a penalty of disqualification of office, that is highly uncertain whether that would apply to president because that could apply for other people, but when it comes to president, the constitution is pretty clear about who can run for president and who cannot. it is unclear whether this would pass muster in the court. but of course, that's far down the road. manus: ok. i am sure we will talk about it endlessly between now and the early autumn. if you are going to be kept working hard, don't worry, there is plenty to do and plenty to run for and plenty to play for. bruce einhorn, our political

analyst and reporter in singapore. coming up on the show, we are going to hear white orlando bravo, the cofounder of tomah bravo, is bullish about private equity. the exclusive interview with michael hearst, dani burger -- with my cohost, dani burger. she is recovering somewhere in london after a tough week on the road. a super return on bloomberg. ♪

manus: the cofounder of thoma bravo is very bullish about private equity. orlando bravo expects to see a shakeup in venture capital. he spoke exclusively to my cohost, dani burger, in berlin. >> i am a little bit frustrated that the entire industry seems

paralyzed right now. private equity is not about predicting the macro, about making a short-term trade, about what values are going to be tomorrow, private equity is about owning a business and building and operating a really good business over a long time. i feel that our industry and our peers are really stuck on the problems of today, which by the way, many of those problems can be solved by a good business owner. dani: svb was a good example of that frothing up. do you think the damage there is done? or are you worried about the vc segment? orlando: i am very bullish about private equity. the top private equity managers, this is a time when they shine. because all those economic problems that you have been reporting on, inflation, recession, stagflation, tight labor market, decline valuations, as the owner of a

business, you can deal with all that and turn many into depositors. i am very negative on the vc world. i think that world is going to be shaken up. i do see a lot of companies that have quote unquote made it that are now 100 million plus in arr, that have worked so hard and denigrate job, but unless they turn those businesses into real businesses with high-margin, they are not worth very much right now and they may not be worth very much for a long time. i do not see that community as a whole, with seven or 10 shareholders in the room, really getting together and driving it that way. some of the greatest investors of all time are in the top vc firms, so they certainly know what they are doing and they are really good. it is such a fragmented industry that i do not think they have gotten the memo of buying growth is no longer a viable business option. you have to turn what you have into a really profitable business, and then start other business lines and continue to

grow. dani: practically, what does that look like? does it mean consolidation in vc? does it mean some companies go bust? what are the implications? orlando: it's very hard to consolidate the vc industry. this is an imprint or should business, a cottage industry were a couple -- an apprenticeship business, a cottage industry where a couple of investors can make a lot of difference. not been able to go public, not being able to sell, maybe at breakeven, not making money. the great management teams of the companies and the great boards that are able to come together have a wonderful opportunity right now. there is no better time to say we have worked so hard for seven or eight years to go from zero to 200 million in arr, let's spend the next couple years turning this into a really, really solid, profitable business. the few that do will be really rewarded. dani: the world is awash in excitement, hype whatever you want to call it about ai.

it's about the pic i shovels, the nvidia. the -- from the companies you invest in, how are you thinking about implementing ai with them? orlando: on the efficiency side, we believe that by implementing ai, we will be able to increase the margins at which we run our companies by about 10 percentage points in general, automating development, automated customer support, basically everything a software company does. on the revenue side, more importantly, on the strategic side, ai poses some threats to some businesses and some areas of software so you have to walk carefully through that. for every threat that we see which you can deal with, we see about 10x the number of opportunities. when you have a software company that runs your entire workflow or that owns a big part of your data, you can add a i and an interesting way -- add ai, especially regenerative ai, in

airway that makes your product a lot more valuable and a lot more relevant. manus: that is orlando bravo speaking exclusively to dani burger on why he thinks that the vc's are going to get a bit of a shakeup. coming up, reassessing the fed's path after surprise rate hikes from the rba and the boc this week. we discuss the challenges ahead for the fed on bloomberg. ♪

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♪ manus: john waldron says the u.s. may avoid a recession but still faces the possibility of "mini stagflation." he spoke at the bloomberg invest summit in new york.

>> there is likewise a lot of positive impulses and i think the fact that there is all this cross current, this is the best predictor recession that has not happened yet, and may not happen. we are dealing with a lot of crosscurrents. in our business, that can tend to make clients sit a little more on their hands and be a little bit more muted about their positioning and their activity levels. we obviously have tougher capital markets environment. it has not been as robust as we saw coming out of the pandemic recovery. what i am really reflecting in those comments is more about the activity levels and the crosscurrents and continued debate about, will we or will we not have a recession? will we or will we not have rates that stay higher longer, inflation that stays higher longer? until we get more resolution, i think we are going to be in a much more challenging time. i can see scenarios where the second half of the year gets a lot better. we got through the debt ceiling. we were on the precipice of getting through the debt ceiling, we have gotten through it. that definitely created, the

lead up to the debt ceiling debate, created a lot of and caution in the market for good reasons. we are through that. . that's an obstacle that's been moved aside. i think we get back to the primary debate, which is inflation. when i talk to our clients, whether they are corporate clients or investing clients, the single biggest debate i hear is, how sticky will it be? and how much is the fed or the ecb going to have to do to get it down to the 2% target in u.s. terms? or thereabouts in european terms. i think that is a very hard question to answer. i am not sure the fed understands where that has to be. i think that debate will persist and really weigh on sentiment. >> how much is the consensus that inflation will be higher for longer, and therefore, rates will be, too? >> i hear from corporate clients the persistence of inflation in the system, it has felt on the supply side, so whether it's commodity inputs or other supply-side inputs, the supply

chain imbalance has gotten a lot better. but there is still pretty positive upward bias on pricing in the suppression -- supply chain. wage pressure remains. i often ask myself late at night, can we actually have a recession with 3.5% an apartment? seems unlikely -- 3.5% unemployment? seems unlikely. the recent jobs report was stronger than expected. wage pressure still there. . if you're running a company, you've got higher wage prices, higher supply prices, you have passed along that price pressure to customers, the customers have generally absorbed. i sense at the moment more concern in corporate office and boardrooms about whether you can continue to price that way. manus: interesting insight from john waldron, chief operating officer goldman sachs. valerie tytel joins me on set in london. it's interesting, he said the

best flag recession that has not happened but he talks about this mini stagflation scenario and that's what most people are grappling with, rates at 3%, growth sluggish and inflation at 3%. stagflation, what does stagflation mean for the bond market? valerie: look, manus, i think what a lot of that comes down to is just how hot and how long the fed is willing to let inflation run. there's been a lot of talk about, would the fed to be happy with inflation at 2.5, 2.75? are they serious about the 2% target? we might get a glimpse of that in the fed meeting next week. we get there updated summary of economic projections. within that, there is some speculation that they might raise their inflation target for 2024, suddenly implying that maybe a three handle on inflation would be good enough for them for a while. we also in that summary of economic projections will get

the updated dot plot. the speculation is there will be a shift higher, following that speculation from the rba surprise hike and bank of canada surprise hike. i liked what christian at evercore isi said yesterday. he thinks this move of more fed hikes priced into the curve is a fade, saying the fed is a price setter, the others are price takers, we should not confuse the two. they are simply raising rates in part because they think the fed will hike once more, and i think that is a good message for the markets at the moment. manus: and i think the other point is to have a look at j.p. morgan's note as well where they said that there's this disconnect. the equity market is priced to perfection. bond marketability od is some think -- bond market volatility is something completely different. we will know more next week if we are off to skippy land or pause land. valerie tytel in london. one piece of information that is moving the narrative this morning is the disinflation, or

flat data from china. cpi is nascent, ppi is in disinflation territory. cpi at plus .2%, ppi down at plus .46%. the consumer goods data falling for a second month in a row. as you look into that data, you begin to understand some of the discomfort perhaps being felt at the pboc. of course, that emboldens the bond move and the drop in the yuan. we are going to talk turkey. the central bank has into governor. . what does her appointment signal for president erdogan's monetary policy plans? we discuss on bloomberg. ♪ when i was his age, we had to be inside to watch live sports. but with xfinity, we get the fastest mobile service and can stream down the street or around the block. hey, can you be less sister, more car? all right, let's get this over with.

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manus: good morning from bloomberg's headquarters in the middle east. i am manus cranny with the stories that set your agenda. deflation risk. china cpi holds near zero in may as producer prices slide, fueling the calls for the pboc to cut rates. asian stocks push higher after the s&p 500 enters the bull market. the new governor, president erdogan upends a -- appoints a new head of turkey's central bank, which may signal a return to traditional monetary policy. the liver weakens. donald trump is said to rush the lira weakens. donald trump -- the lira weakens. donald trump is said to be indicted over pacified documents found at his home. deflation risk. china cpi is holding near zero in may. producer prices slide further, fueling the calls that the pboc may need to cut rates.

that has pushed the s&p 500 higher. the issue for the markets is, of course, what actually happens to the pboc going in a different trajectory to the other central banks in terms of cutting rates relative to where they are? this is the cash market that we are showing you on the nikkei, up nearly 2%. in japan, of course, we are feasting on the flow of money going into japan. there was a great debate on the ai frenzy you have out there. there is a disconnect, j.p. morgan sank, between what's happening in the bond market and an equity market that's priced to perfection. the american individual investor association is now the most bullish since november 2021. we have moved past of those negatives. the contrarian indicator was from bank of america, where private clients were selling stocks for 10 weeks in a row.

the s&p 500 went into a bull market yesterday. can it endure that? some of the data is looking weaker in europe, but flat at the moment. this chart shows you a clear message about the outperformance of the fang+ stocks. up 65%. think about tesla, nvidia. that is the blue line. the breadth, of course, is perhaps disguising something else. the rest of the index is just that little bit lower down. the magnificent seven drive the breadth higher. oil over the past 10 sessions down 2.5%. we tanks by nearly 6% at one juncture yesterday in the oil market, a lot of that driven by the talks that iran and the usa were closer to reviving the jcpoa. it took the white house to deny that rumor to bring oil back from a 6% drop. yuan is lower, dollar is higher on the back of the nascent inflation data out of china.

what would that do to the rate cut narrative? the lira continues to trade lower. the dollar higher. you may have a possibility of return to orthodoxy in policy but the risk is this. return to orthodoxy, as i said to you, means less fx intervention, despite the new governor at the central-bank. it's pickup that story. president erdogan has named a new central bank governor ,erkan. she becomes the first female to run the monetary authority in turkey. let's get to our economist for the region. she joins me now. good to have you with us. this is a big moment, both in terms of equality, and perhaps the nature of the individual who is appointed, comes from a very orthodox, u.s. phd background. tell me a little bit more about

this lady. >> good morning. erkan's background, both in terms of her phd from princeton and experience on wall street, she was a banking executive before in the united states working at goldman sachs. working for the central bank is definitely a career change. this of course follows the minister of finance, who stated earlier that the central bank, or the policy framework in general will shift to a more rational policymaking view. and it will have to abide by international norms going forward, putting her background with this kind of statement from the minister of finance together definitely signals a pivot that has been advocated for since last year. manus: and you think about the front bench here, you're going

to have this new appointment at the central bank. we will see whether she is allowed to implement erdogan's policy. we have simsek on the front bench as well. do you think this is a signal about a shift from unorthodox to more orthodox? definitely so. -- >> definitely so. i think it is a signal that the shift will be arriving sooner than we expect. the buildup in the vulnerability in the economy, especially pronounced in the widening external financing gap, will definitely call for a shift away from these unorthodox policies that the country has been following. now, we have simsek, who is very vocal about the need for a pivot. erkan's appointment as governor will complement the two together. despite comments from the

president earlier during the campaign process for the presidential election that the interest rate will not be changing very rapidly, or changing at all, i think we are now due for a rapid change in policymaking. manus: and in terms of the markets, i mean, i showed the lira, it continues to trade lower. i think this goes back to the narrative that if you're going back to orthodoxy, or you are shifting toward orthodoxy, it may well mean, one, you have got fx reserves that are under pressure and there will be less intervention on that currency. is that how i should interpret the continued attack on the lira? selva: the fall in the lira yesterday, the large dip, it was reported to be a function of the central bank temporarily halting the currency market, intervention. that to us signals that the policy framework might be changing more rapidly than we

thought previously. we expect the central bank to hike rates first, communicate very clearly a commitment to price stability, and perhaps release an interim meeting statement close to the appointment of the governor stating that there will be a tightening cycle, indicating, hinting at a tightening cycle to begin to support the lira. these other practices in support of the lira, the heavy banking regulations, the current practices, these will all have to be unwound in the future. and it will be ideal if the central bank would also declared that through a calendar before they take on the task. manus: thank you so much. oour bloomberg economics team in turkey. let's get you up to speed with the first word news. donald trump has been indicted

over his alleged refusal to return classified documents found at his florida home. the indictment filed in miami is the first time a former has been charged with committing a federal crime. bloomberg understands he faces seven charges. trump says he is innocent of any wrongdoing and that he never thought such a thing could happen to a former president. some of the world's largest investment banks are distancing themselves from the hedge fund manager chris odey after fresh allegations of sexual assault. morgan stanley cutting ties while j.p. morgan engelman sex are said to be reviewing -- with odey asset management. a law firm represent him said he strenuously denies and disputes these allegations. odey asset management says it does not recognize the picture painted by the ft's reports. ukraine's new tanks are fighting

vehicles from western allies beginning to appear on the battlefield amid speculation of keep's long-awaited counteroffensive is getting underway. photos appear to show german-made leopard tanks and u.s. bradley fighting vehicles pushing towards a town in ukraine's occupied south. it remains unclear whether the operation, these operations are part of a counteroffensive in an effort to expose the weak spots in the russian defenses. general motors has become the latest auto giant to join tesla's electric vehicle charging network. ceo mary bowers says the deal will allow its ev's to gain access to 12,000 tesla supercharge ports starting next year. ford made a similar announcement last month, moving the industry towards a single charging standard. and that is your bloomberg first word news. coming up, the british prime minister, rishi sunak, leaves washington after a two-day visit. what did he get from the talks?

we discuss that in just a moment right here on bloomberg. ♪

♪ pres. biden: today, we are releasing a new plan to equip our economic partnership for the 21st century. it outlines how we can enhance our cooperation to accelerate the clean energy transition that must take place and is taking place, lead the development of emerging technologies that are going to shape so much of our future, and protect technologies critical to our national security. manus: president biden and u.k. p.m. rishi sunak agreeing to talks on critical minerals

pacts. joining me is roz matheson. i suppose the question is this, i mean, a great deal of theater in terms of rishi sunak going over there and drumming up that visit. what did he get from it? was it a success? >> he did get a bunch of individual agreements that they bundled up and tied a bow on and said there's a lot from this trip. he and the u.s. president do clearly have some kind of report. they've met -- rockport. they've met -- some kind of rapport. in the end, he did not come away with any kind of progress on a broader fta, and that is one thing that u.k. has really been seeking through the brexit period and beyond is a proper trade agreement with the u.s. it's very clear that the u.s. president wanted to show something from this trip, also to give the u.k. premier to come back with, but he did not get this trade deal.

the u.s. president has no great intention it seems in engaging in trade talks, especially coming into the u.s. presidential election cycle. it's not upside for him to be doing a full fta with the u.k. at this time. there is some potential benefits for british companies for subsidies under the u.s. ira, for example, but it's not the fta. manus: no, i mean, the details here, 55,000 companies will get, well, they can potentially access 115 million pounds in terms of that kind of relationship. let's broaden that conversation, because you say politically, it is not inviting' to get deeps not inviting -- it is not in biden's interest to get into a deep negotiation on fta. >> perhaps from this stage perhaps because the subsidies bridge companies may get access

to, british defense companies may get to the u.s. market. that's really part of that broader security pack you see with australia, the u.k. and u.s., allow sharing of information, access to each other's markets. that's quite a good win for british defense contractors. we may see a cross sharing of information in the tech space. the u.s. president did give a nod to rishi sunak on ai, he sort of endorsed to the push to have the u.k. have a role in regulating ai, not just in the u.k. and beyond. there were some things for rishi sunak. when you add those up, that is not a free-trade agreement. that is not the broad market access we are talking about you get further british industry and companies as a whole under an fta, so it is really piecemeal stuff that benefits certain sectors but not the entire british economy. manus: thank you very much. ros mathieson on rishi sunak's visit to the u.s. text to image ai tech is growing

fast. huge investments, many industries advertising already using it, but early scientific research has shown that tech is biased by creating images that perpetuate stereotypes, and that is the subject of today's bloomberg big tech. alex webb is with me to talk more about it. anecdotally, as well as we've heard a lot about bias, but what does research show about it? alex: it's a remarkable piece of work from our colleagues on the graphics and technology teams. what they did is they went into stable diffusion, an ai driven image generator, and they identified 14 jobs, seven generally high-paying, seven perhaps lower paned, and they said generate an image for each of these are jobs. they did 300 images for each, about 5000 in total, and tallied them against the fitzpatrick skin scale, a scientific way of

measuring skintone. the higher-paying jobs, more often than not, created images of people with a lighter skintone. the lower paying jobs more often created images of people with the darker skintone. equally, there was a gender bias. , higher-paying jobs male. lower paying jobs more likely to be female. it was not just reflecting existing stereotypes, it actually was more extreme. take the example of judges. 3% of the images of judges that were created were of women. in the u.s., 34% of judges are in fact female. i should say it is perceived as women, so they appear to be women. it is not necessarily, you have to make a judgment call on that basis. it is exacerbating stereotypes rather than just reflecting them. manus: i suppose the question is, if we begin to use ai more, we depend more on ai, we ask ai,

chatgpt, etc. to help us make decisions, what do we think the risk is or the effect of this? alex: it really is about where these images are been used. on the one hand, the advertising industry. it is already in some parts using ai generated images for ads for commercials. if it is leaning on these sort of systems, it is more likely to perpetuate bias, right, that it makes it worse. but there are actually, you know, hard use cases, such as in police stations, if someone commits a crime and you try to get a mock up of what the criminal might have looked like, if you are using an ai system, it may be more likely to create an image of someone coming from with an ethnic background which it does not necessarily reflect the reality. those are some of the difficulties here we are

increasingly going to have to encounter. manus: is the industry doing anything to tackle it? this comes down i supposed to the regulation of ai. there is a great debate about that, isn't there? alex: this image generator is crated by stability ai. they have said they are trained to open-source the way they do this in a way that will hopefully resolve some of the issues so people can identify what they are. they say any ai system is only as good as the data that feeds it, so there's always likely to be an inherent vice. in china -- inherent bias. in china, there is already regulation on a limiting bias in artificial intelligence. we are yet to see that and the rest of the world. it is very much down to the companies. the challenge is identify who is responsible. . is that the people identifying the data sets, the image generators themselves, or the people using those images?

that's a big discussion yet to happen. manus: good work. the big take is on your bloomberg terminal and across cryptic. , coming up oil heading for a second week of losses, shrugging off saudi's pledge to cut unilaterally by one million barrels a day. we discuss on bloomberg. ♪

manus: oil is on its way to its second week of losses. demand concerns top the agenda, snuffing out the gains driven by

saudi arabia's unilateral pledge to cut production. let's get to stephen stapczynski. i was in vn now on monday, there was an anemic response to the sunday unilateral one million barrel a day cut. of have overtaken us. yesterday, we tainted by nearly 6% on one report in one newspaper that iran and the u.s. were closer on a jcpoa agreement. that took 5.5% off the market. that says to me how feeble this market is. we know ran's production, don't we? >> spot on. i think it illustrates how the traders are looking for any bearishness to kind of latch onto and go from there. even that, if there were a u.s.-iran deal, it would take many weeks, months to go through, it would take longer for the oil to hit the market. still, you saw such a

reaction. i think in the context of everything, in the context of weaker china, in the context of the fed potentially doing more hikes, reducing perhaps demand and hurting the u.s. economy, all that together, people are really focusing on the negative aspects of the market, that is why you are seeing the front month down so much, even after saudi arabia did that unilateral kind of as you called it of one million barrels a day for july. manus: as the one that got away was the fact that russia did not have their quotas changed, and the saudis on sunday night in the press conference said, look, we trusted the russians. and then on tuesday morning, the news flow was talking about everybody else in the group not using their quotas properly. your take from this vienna meeting? the emirati's got an additional

200,000 barrels from the beginning of next year. do you think that was just a token gesture to them? stephen: i think there are a few ways you can interpret it. one, of course, is the token gesture. there is a desire and need within opec and opec+ for unity. they need everyone to be happy. they need everyone at the table. they need everyone to come out of the meeting agreeing that that's what they wanted to do. any sort of discord could reduce their control of the market, the narrative, everything. that's also why you have the trust but verify sort of comments coming out on russia, even though russian output has been shown to be pretty resilient in the face of all of this. manus: this is what oliver and i were saying, which is essentially the rest of opec is going to be audited independently, independently audited, so it's almost like we don't trust you. stockpiles in china at a two -year high.

how would you assess that in 30 seconds? stephen: you know, everyone was expecting chinese demand to bounceback, run rates to really go up and the economy to boom this year. it is not happening and that's why you see the glut of chinese oil in the country. that's a big focus in the market. manus: those stockpiles are at a two-year high. let's see if the drawdown begins between june and september. stephen stapczynski in singapore with the latest on the oil markets. dani will be back driving the bus for the next three weeks on "bloomberg daybreak: europe." features at the moment just a bit lighter as we have re-entered a new orbit for stocks. the bulls have it. the bull market is back in stocks. good morning. ♪

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