>> good morning, happy monday.

this is bloomberg daybreak: europe. i am back in london and these are the stories this your agenda. stocks and bonds get out to a muted start. the ecb, the boj and the boc. take over complete. the ubs takeover of credit suisse has been finalized. boris johnson and two allies and a turbulent we can for u.k. politics resulting in another challenge for his successor. we finally have it, let's talk about that second headline. the takeover completed. this according to swiss paper. ubs writing in an open letter they expected this to come considering comments we have from ubs, also from credit suisse. dickie heard it was on wednesday. this was government providing

$10 million to protect losses from this acquisition. let's go over here with what the future looks like. let's bring in our breaking news. it is completed according to this letter. what now? >> it was quiet surprise. i read it german. it would make no compromises. they also said they had no doubt. a lot of the issues came from risk-taking. the ft reported they have drawn

a couple of redlines. it will be about whether they can extend certain loans. they are definitely trying to avoid this culture as ubs shares have reported. >> exactly. the red line, is that from today? class exactly. so it is about high-risk companies? compost financial products? how big of a shift is that? >> it is hard to say what will happen in the next weeks and months. there are reports they will be possibly thousands of job cuts.

we will have more clarity on that in the next coming months. >> this is a for a few months. there are fears about what sort of spillover effects they might be. quickset into implications. there was a giant before the deal. the competitors are watching their backs really. swiss corporate has fewer choices now on raising financing. that is another issue there. quick thank you so much for joining. i know how to cook -- the quick turnaround there with that open letter. some other breaking news to

bring you. a small deal in the ubs credit suisse. the total ev of the company is putting it -- they will be by 43.2 billion. this is to boost their innovative business strategy. let's look at the overall market. it is a market back in bull market territory. are we now just gearing up for a fed pause? history tells us it is hard to pause and they continue to rate -- hike rates afterwards. goldman sachs the s&p 500 will be going to 4500. by the end of the rally, it will be broader.

bitcoin continues to fall under $26,000. it is the continued fallout from the action being taken. we continue to look into your yields. is that how you want to position ? they are at a three month high. the dollar continues to strengthen even if the fed is pausing. the dollar could be the least dirty shirt. maybe not too much. boil tumbling more than 130% this morning. they have downgraded their outlook. let's get to today's top story. it is a central bank bonanza.

first up, we will get the fed followed by the ecb, pboc and the bank of japan. let's get straight to michelle. what are you expecting? walk us through this decision. quick speculation is growing that we could see a crack in this harmonious fomc that they have presided over for the term. as our own kathleen hays pointed out this morning, it was almost a month ago that powell mentioned it might be an opportunity to afford to take some time for a more careful assessment of where they're at, where they need to go in terms of hiking.

this sort of skip mentality has commendably about continuing the hikes at some point but maybe pausing this week. we heard from other fed speakers about supporting this idea of a potential pause this week. others like lori logan are still harping on inflation being very high. too hard to do this sort of skip this week. there is a real debate going on. there could be some dissent here that would be a huge outlier. we do get cpi as well on tuesdays. we are expecting cpi to be fairly strong. over 4%. >> that is exactly what i wanted to ask you about. cpi. even if it is strong, does it make a difference? will its way the fed one way or another?

>> as we have seen so many times before, this inflation data, even when we are expecting moderation, you still here chair powell say we are not done. it is a complicated interview time to decide policy. you have those growth risks. you have labor markets slowing. there is that fierce debate going on. it is anyone's guess. it is going to be an exciting day. course it is. let me bring you into the conversation. the ecb has made it clear they don't want a pause. >> yes. monetary policy decision from the ecb this week. the bank has already downshifted. this is a journey to a

destination that is brewing inflation back to target. when you look at the market, that is exactly what they are expecting to come on thursday. another high, another 25 basis points. see your point, the crucial thing will be the future pets. in particular, if you believe the european central bank has also entered the final stretch of monetary policy at this point. look at these words before it kicks in. there is no clear evidence that inflationary pressures have peaked and are now fully subsided. that will be the key. we don't just get the monetary policy decision is out. there will be an object the economic projections.

going back to the medium-term horizon at gdp. all of this happening on frankfurt on thursday. >> while we are talking about central-bank policy decisions, we have to wrap it up, the bank of japan. they also have a meeting this week. >> our reporters are saying there is no reason to think they would be a tweak to control policy at this time. he has reasons to remain on hold. he things steady. the bond market is less distorted now. you have to think that he does not want to rock the boat is the man who picked him looks to call an early election -- an early

election there. wages data shows they are not where the boj want them to be. maybe they are ok with where things are right now in terms of not needing to tweak their policies. >> i hope you have no days off this week. mostly for her. coming up. coleman said they are downgrading their outlook. we will have more on that next. this is bloomberg. ♪

>> a huge week for central-bank decisions. all of this even as the central banks are trying to figure out what this economy is going to look like. this is a deeply divided market with stocks continuing to rally. let me bring you the quote from one bond investor.

our base case is for moderate to deep recession and potential crises. he said that the bloomberg. let's bring out our guest. great to speak to you this morning. are you going to start positioning for an aging recession? >> that is definitely the direction we have been posted. we just heard from jeffrey rosenberg of the labor market is kept on trucking. that has been the predominant reason for the markets to fantasize about these no lending outcomes.

we just have to wait it out. we were having this discussion last week. if all the major central-bank hydrates at their january or february meeting, with the economic data that we see today look any different? no. you have to think about the difficulty in calibrating policy finally. the tightening that happened in 2020 was extreme by any measure. certainly by recent history. it is a plate of fantasy to

think they could have any meaningful effect on the economy. as input we are going to get a recession. is it possible to have conviction in this market? quickly so to the non-core central banks in recent weeks. history says when you go on pause, there is likely to be cut.

we have been beaten into retreat on a couple of occasions. that is relative to our medium-term base case. there brother speaking means a steeper yield curve. under stronger dollar. >> 4.6% right now on the two year yield. what does the fair value look life on that? >> that is a tougher one. i didn't necessarily think it looked extreme in the dramatic moments of march. there was a decay on it. as time goes by, it is more and more difficult see cuts.

we have significant cuts. we don't have a huge amount of cuts priced for 2024. i think it is a very very narrow path. i always had that late everything is up for grabs. >> you mentioned the rba, the bank of canada. they are not the ones we usually

concentrate on. doesn't it give any sort of signal about the fed? with potentially yes. we know from the expenses in the 70's and 80's that the costs are getting up. that bias has softened. there is still a nervousness that if the data does not crack, their confidence about the

policy to be able to say with certainty we can just sit here and it will do its job. they do not know enough. this is very much art, not science. this could potentially bring them back to the table late in the game. >> given all this, how frustrated is it is a gravity does not apply to this one asset class? >> it is frustrating as i come onto your show and they say it is overvalued. two weeks later i have to say

the rally five, 10% and then you look like an idiot. increasingly i don't see equity markets performing this rational capital allocation. i do think we have seen significant damage done for the functioning of markets. this easy money environment that dominated postcrisis. this caused the ecosystem to evolve in the ways that we see today. that would be my main concern. beyond that, we all know the markets are irrational. they really only play out in the longer term.

the price is what you pay, value is what you get. it is important to remember. i think it is very difficult for you to make money that way. >> you are one of our favorites on there. go wash your mouth that was so. thank you so much. coming up, we will talk oil. this is bloomberg. ♪

>> our units will see substantial physical inventory drugs because of these opec production cuts. that will push this up into the low 90's.

>> oil backing off a bit. the head of commodity research. although we are down now on oil. it is still far below goldman's. $85 a barrel. what is golden state? why did they lower their outlook? >> that does not like it is anywhere close. they are seeing higher supply chiefly from russia. also, from countries like iran.

goldman did cite demand weakness. they think supplies are a big issue at the moment. >> we're looking at a fall here. we would have began to get to goldman-s target. coming up, we have another day from a different part of goldman. this time, some bullishness for u.s. stocks raising the s&p year and target. the equity rally is not just tech, it will expand, that is what history tells us. this is bloomberg. when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets.

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>> good morning, happy monday,

welcome back to bloomberg daybreak: europe. i am dani burger in london. here are the stories setting up your agenda. decisions from the fed, ecb, boj and they complete the takeover of credit suisse. it seals the biggest merger in banking since the 2008 financial crisis. plus boris johnson and two allies have a turbulent we can for u.k. politics. presenting another challenge for the prime minister. it finally happened. we expect that to happen today. ubs declaring the takeover of credit suisse finished and finalized. the final thing that allowed this to happen was last week on wednesday. they provided the bank $10 billion to protect from losses on this rescue. that needed to happen to really

finish this. there will be a lot more restrictions. we are looking at asian stocks attempting to continue with the gains. we are back in a bull market in the u.s.. we are just talking to james at the -- about the frustration. u.s. stocks are not at fair value. traders seat -- the upside potential. bitcoin fallen below $26,000.

actions have really soured sentiment. u.s. to a yield, this continued to climb ahead of the fed decision. they will devote more hawkishness to come. as we are just discussing, goldman sachs downgrading their oil outlook. we have some ground to make up for that. i have a different goldman sachs story to bring us. this one is significant. they have raised their s&p and target. they now say it will be at 4500. and that the rally in u.s. equities will broaden, stoking greater gains for the gauge. what do you make of this call? it has just been tech but it

will be broader and more consistent a rally in u.s. equities. >> great to be back. it certainly involves this kind of call. i am more undecidable james was saying earlier. the u.s. does not look overly compelling. but there are some things we need to keep in mind. one of those things is the resilience. there are more corners of resilience. there is some upside to be seen in certain corners here. >> if we have seen credit cards

start to pick up, what signals are you looking toward to see some of the strength of that consumer? >> precisely. i think it is pretty universally acknowledged that we are going to be looking at a slow down. the problem is who in this area of markets at the -- markers that does not have a roadmap. we know it is coming. we need to see that rising before we see anything more dramatic coming. it has not been a session previously with them sitting where they are now. that is what needs to change.

>> let's go away from the world of macro. let's talk about what has been the driver in this equity market. the micro of ai. it is nvidia. i like what you read in your notes. how do you sort those two opposing ideas? >> precisely. there is opportunity to be had here. in terms of trying to break it down on a granular level. ai surging on the back. in terms of how i would separate this out, it is great old school.

as it was more compelling at the moment are the pigs and shovels approach. you are essentially betting rather than looking at anything on a fundamental side. that is what is really important and how i will separate this from opportunity, long-term opportunity. >> you say it sounds exciting but it is true. we see the pick and shovel plays like nvidia. have we missed the rally? >> we were released pretty substantially.

there is a debate to be had. if you believe that then absolutely. i do think there is going to be quiet a lot of movement. we have a lot of disconnect in the markets. there is a bit of a disconnect going on with the markets. that is increasing massively the risk of the ups and downs. >> how important for the tech rally continuation is it that we get not just a pause from the fed but the end of the rate hike cycle? >> i think it is quiet important. the market is expecting this pause at least. the fed have been very open

about the fact that that is probably not going to be what happens. you are looking at higher interest rates. i think that is a problem protect. this was based on that lack of fundamental strength. that level of movement, economic disappointment is going to have an effect. >> fair enough. it is more vulnerable now. if the tax rate is harmed by more bullishness, hawkishness from the fed, the economic

realities, what takes its place as leadership in this equity market? what sector do you like if tech is no longer at the helm? >> trip. there are a few different ways to play this. i still think there is an urgent -- alternative to pure play i. i think software-as-a-service type models will be attractive. there are some names and hospitality that are doing incredibly well. they have seen a bit of respect return for the market. there are some names in this vase that had not had the full bounce yet. that is also something i think could be worth some attention.

>> everyone is happy to keep spending. so great to catch up with you this morning. that was the lead equity analyst. we were talking to sophie about ai. we are going to continue it today. we will be speaking to the man leaving googles at effort. let's get some of our other top stories with the bloomberg business flash. bungee is said to be nearing a deal to acquire this winter. they will hold a significant majority. weston and hedge fund will be in by the comanager freddie need following the ouster.

eu funds managed by the firm are discussing restrictions on withdrawals. the board has accepted the resignation -- resignation of the ceo. handing a victory to carl icahn who had been seeking his removal. he was one of eight directors reelected this month. his dad was named interim ceo while the san diego-based genentech company seeks a replacement. that is your bloomberg business flash. coming up on the program, boris johnson quits parliament, created a headache. we will discuss all the latest political drama next. this is bloomberg. ♪

>> this pie minister faces a new

challenge after boris johnson's resignation. let's get to our u.k. correspondent who joins us in london studio now. what a busy weekend. did you have any time to have any personal life this weekend? >> i was good to twitter the entire weekend. a comeback is in the pipeline.

trump seems to only be boosted within the republican party. this is a distraction. if there is an election, you have the labor colleague -- labour party calling for an election. even if it is only the ocean, the former first minister of scotland is arrested and they released later by several hours.

but it has to the sense that her party is imploding. there will be much to the benefit of labor. we will be very closely watching what happens north of the border. >> this lends itself to both of the stories of just all the turmoil in u.k. politics. there is one thing that business hates, it is uncertainty. there has been a lot of complaints from the u.k. investing community. >> there is a fantastic piece in the terminal. it says britain is adrift because you have a business leader after business leader complaining that not enough has been done post-brexit to make up for the economic consequences to address the political instability. the government would argue that having inflation by the end of the year is been nepal plan to create the platform for growth. they are trying to shore up economic ties there.

that pales in comparison to what the u.s. is pumping into the economy through the inflation reduction act. it leaves the hate -- the u.k. heavily allied along the supply chain. last week, you had a thousand tech companies including apple, alphabet warning that the u.k. is behind is sectors like semiconductors. it is this constant drumbeat of complaint from business leaders. it britain adrift? you can listen to that on the u.k. politics podcast on bloomberg radio at 12:00 on friday. >> you always have to end with the plug. thank you so much. that is our u.k. correspondent. we have a lot of u.k. interviews.

they have been trying to push themselves as maybe the labour party of business. is bloomberg. ♪

there are a whole lot of central-bank decisions on deck. that includes the boj. the former deputy governor says he does not expect any substantial policy changes. he also told us that he sees some revision of the inflation outlook in july. >> i think it is more

sustainable and stable. the boj would say not yet. you know that is the data coming in. many people who would like to know the timing that the boj would take for next week. >> what about raising inflation? typically there is a change in economic outlook from the boj. every three meetings, that would mean july. can they raise the inflation outlook. and they acknowledge how high above it is and may be getting some progress made on getting sustainable 2% inflation. >> it is the outlook that will be due next july.

i expect some sort. the question is still about the governor and the other members. they are saying that they haven't yet changed the prospect or the predictions of these dynamics. that is for the next half of the year or so. we will see some sort of decrease toward the end of the year. the governor said he is not yet confident about the taking apart. the overlooked picture may not

change. we are not sure that the boj will change the policy in july. >> that was the deputy governor speaking to kathleen hays. china is going to be in focus this week. the bank of china is expected to cut it when you're right. they have one that the china property market expects an l-shaped recovery. as get the bloomberg economist for this. what are you expected from the pob -- pboc decision? >> because of the week economy and week inflation, we have seen it last week. >> at the same time as i mentioned, we have this warning

about the property market. how does that tie into this? what sort of support might we expect if things worsen in the property sector? >> many people are expecting authorities to give further support to the property sector. it is not enough to support the whole property sector. we need to help the developers get out of financially stressful conditions. there was a boy or a soft landing in the property market. >> from a global view, the

geopolitics, all of that has translated into a you want that hit its weakest this year versus the dollar. is that the likely trend to continue? is there anything that can make us change and pivot momentum? >> i think the conditions are still looking at further weakness in the you want. the next step of the fed could change this because now people are expecting the fed to stop the pause. this could -- if china can give more positive support of a

policy package to the economy, that would also be a sentiment. >> thank you very much. a quick check on oil as we of the close of the hour. i want to review this line from jeff curry speaking on bloomberg tv. they said we have never been this wrong for this long without seeing evidence to change our views. they downgraded their oil outlook. they have both followed by more than 1% this morning. there is concerns about global demand but at the same time, some of these sentient barrels of oil are finding their way to market so that supply concern is not as acute as it might be. that is for daybreak. bloomberg markets europe up nex.

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