host: good morning. happy friday. this is "bloomberg daybreak: europe." these are the stories that set

your agenda. global stocks head for their worst week since march since investors fear that rate hikes will trigger the sessions. u.s. jobless claims climbing. janet yellen sees the risk of a u.s. recession dimming. and a tragic ending to the search for the missing vehicle. a somber note as we end the week . let's turn our attention the markets. we sell u.s. stocks and the day higher yesterday but the global sentiment seems pretty dour. it is not unusual to be consolidating in equities and do portfolio adjustments. fear of higher rates or a recessionary environment this summer that central banks will have to keep hiking rate. we saw that yesterday. the s&p over the last two days.

we did climb into the close of yesterday's trade. we are back down. the asia trade, specifically japan, is far off. japan has been such a hot market in terms of equities. trading at the highest in three decades. in a comes to the bond trade, this has been strange. we had the u.k. rate decision. what we saw from american bond markets was when we had the jobless print come out, this was around here. into the close yesterday we drifted higher. not a clear story. finally, the one trade that has been clear is the dollar. the u.s. is the only place that

has inflation under control, why not buy the dollar and why not sell sterling in that case. sterling continues to weekend. let's get to our reporters from around the world for our top stories. let's discuss central banks, inflation and the u.s. economy. japanese cpi data came in at a faster pace than expected, another point in a series of hot inflation prints from around the world. bloomberg's executive editor for asian markets, paul. is this the start of a new phase? >> this month we have seen a shift in tone for a lot of developed markets starting with

australia unexpectedly hiking. and we heard from the fed. they were pretty hawkish on the prospects for more hikes this year. and the bank of england doing that along with norway. central banks are being pretty explicit and the way they are communicating with us. we need to do more to get inflation under control which was what the boe said. although the central banks have been warming up the water for a long time, they need to ratchet things up further to create the slow down that will bring inflation back under control. host: you started out saying this, it is developed markets. emerging markets are different. mexico and brazil remained

unchanged yesterday. is this global the synchronization -- desy nchronization? >>'s similar scenario for a lot of the southeast should -- a similar scenario for a lot of south asian countries. if you had a yen funded carry trade, you i've done phenomenally particularly if you invested in latin american currencies. interest rates are high. the currencies have had appreciation. they are at a point where things are starting to turn. the strategists are looking at emerging market local currency bonds. if the economies have inflation under control and can continue

to grow along with what we are seeing so far in the rest of the world, those are opportunities that people are exploring and getting excited right now. host: that is bloomberg's paul dobson. to the u.s. where jobless claims climbed to the highest level since october 2021 suggesting the labor market may be cooling. it is a trend. janet yellen is sounding more optimistic about the chances that the u.s. can avoid a recession. maybe something different than what we are facing in the u.k. why is janet yellen optimistic? >> i think with janet yellen, there is recent economic data -- you said the jobless claims are showing an improvement to resiliency and the economy. you saw upbeat data on home

construction earlier this week suggesting homebuilding could contribute positively to gdp growth in the second quarter. we got strong retail sales recently. it also just that with everything going on in the u.s. economy and banking jitters, ultimately there is still a fair bit of resilience. janet yellen is saying that she is seeing the risk for recession going down. i will say though that she also said she sees some cooling in consumer spending which will have to happen this year and hinted at persisting fears a recession -- persisting fears of a recession being dealt with by the fed. bloomberg economics continues to see a recession possible though probably later than expected. host: i have heard a lot of

arguments about trying to hang onto the recessionary call. we also have the powell testimony yesterday. he repeated one or two hikes. he discussed capital requirements for banks. what are we looking at here? >> this is a long-standing issue that has been in the works since the financial crisis. there has been an international conversation about capital controls for banks. this is an issue in the u.s. that picked up in earnest earlier this year especially as you dealt with the banking collapses. we got a little clarity from powell saying it is wall street's eight biggest lender's. i want to caution but a lot of

the details are not finite. it was interesting to hear from him that he is putting that focus on the largest lenders saying a lot of this would not necessarily hit the smaller ones. we will continue to monitor this going forward. host: jill, thank you very much. in other banking news, bloomberg has been told that citi is tightening up on the return to office moves. managers will consider compliance with hybrid work rules when waging performance and pay -- when weighing performance and pay. at bloomberg tv we have been in every day of the week even during the pandemic. let's change gears and talk

about the drama and heartbreak we have seen unfolding in the atlantic ocean. the u.s. coast guard says the five crew members the missing titanic submersible has died in what appears to be a catastrophic implosion of their vehicle. debris was found a few hundred meters from the bow of the titanic wreck that the group was to explore. >> in consultation with experts from within the unified command, the debris is consistent with a catastrophic loss of the pressure chamber. upon this determination, we immediately notified the families. on behalf of the united states coast guard and the entire unified command, i offer i deepest condolences to the families. host: a statement from ocean gate which ran the submersible

vessel said the men were true explorers who had a deep passion for exploring and protecting the world's oceans. let's get you set up for the rest of the week, friday. let's get through some of the friday data. we will get u.k. may retail sales and about an hour. considering the data we have seen, it is data that the boe has had to react to with a 50 basis point hike. we are also going to get france, germany, and u.k. data figures as well as the u.s. finally, at -- later today at two different times around 11:00 we will get some ecb information

from vujcic and de cos. coming up in the program we will continue the central bank conversation as banks step up there inflation fight. we will take a closer look at the global battle to tame prices. that is next. this is bloomberg. ♪

how can you sleep on such a firm setting? gab, mine is almost the same as yours. almost is just another word for not as good as mine. the queen sleep number 360 c2 smart bed is now only $899. plus, 48-month financing on all smart beds. shop now only at sleep number

>> we came to the conclusion but an increase of 25 basis rings is better at this moment. it also clearly indicated that there likely could be more hikes.

we have a kind of approach and from a risk perspective it was considered better to only increase by 25 basis points rather than 50. >> we have to have price stability and we have raised interest rates to do that. we have seen strength in the economy. the economy has been more resilient and it is stronger and we have lower unemployment. but inflation is looking more persistent. there are signs of it being more persistent. i thought it was right that we took this decisive action today. dani: that was the swiss national bank's thomas jordan and andrew bailey is after each central bank rate hike yesterday. bailey's was doubles what the snb's was. joining us to talk about the

central bank story is sunaina sinha haldea, global head of capital advisory at raymond james financial. i wanted to show you some of the editorial sections. the daily mail this morning writing that bank of england's humbling governor is badly failing britain. the telegraph saying that people will be hurt by the bank of england's chest thumping blunder and for no good reason and the ft saying the credibility of the bank of england is still on the line. where is the bank of england's credibility? sunaina: very much on the line. over the last year or so the messaging has been slightly too dovish and the market has responded to by saying the inflation problem and the u.k. is not in corrective action and we have the story that we

have today. there is a communications problem at the boe. dani: i have another screen i want to show you. it was in that interview and he said this line about wages. basically saying to get this under control, we need to have the current level -- we cannot continue to have the current level on wage increases and we cannot have companies seeking to rebuild profit margins. wage increases -- is it fair that members are -- sunaina: that should not have come across that way. i think he should rephrase that. it is not the only problem. you can tell people to not ask for wage increases but on a real basis wages are not increasing. the government has to increase

productivity. we are looking at labor force participation issues and we have supply-side issues keeping inflation persistent. where is the call to action there? he can ask them to do that, look at supply-side issues and boosting productivity. asking people to keep their wages low does not go down very well. dani: there should be more of a conversation on the fiscal side. sunaina: there are millions of britons not in the workforce today which will help relieve some of the wage pressures on companies. the job of companies is to increase shareholder value. dani: what have you been seeing on the corporate side and the u.k. specifically? are they able to keep profit margins even? sunaina: the way the markets are

pricing the action from yesterday, it looks like there will be pain at the end of this year and beginning of the next year. i think we all think a recession is quite likely. right now, it is steady yeti. any price increases have been passed through and companies are feeling like they are navigating 2023 fine. the guidance is roughly flat. it is not an armageddon scenario. now with rates on a path to 6%, not so sure. dani: floating no debt especially from private capital. when will we see a pickup in default? sunaina: it is all about asset selection and where the credit has been provided and at what level. if there is a recession and a hit to growth on the demand-side

you will see defaults starting at the top. i think it is a question of at what point and when. the providers will say -- if we are doing gp backed and sponsor backed loans, then we are going to be ok and we will get through to the other side of it. they will be more cautious underwriting. dani: you mentioned and the u.s. that earnings expectations are holding up. does that surprise you? we have mike wilson at morgan stanley who has been bearish for some time. he said at some point we will have an earnings recession. will we get that? sunaina: it was a surprise that the first quarter was better than feared. if you look at guidance, it is essentially flat for the rest of the gear. one cannot help but think that is not the worst of it. the problem with some of the

overall numbers is that the u.s. market is held up by the big seven tech names. that skews things. you have to think about those seven aside and the rest of the market. another shoe to drop when it comes to earnings guidance. especially when you think about the choque on growth as the rate hikes continue. dani: one thing that confuses me is homebuilders have done well. they were trading at new highs. it feels like there are conflicting signals. sunaina: there is no hit to the demand-side in a meaningful way. yes, we are towards the end of the rate hiking cycle but are we hiking our way to normal or to a recession? we still do not know. it depends on the week we are having and we are taking guesses. are we going to be able to muddle through? dani: one thing yesterday that

maybe would give us some hope, not good news but jobless claims did take up -- did tick up. are we starting to see signs that some of the cooling is coming? sunaina: an interesting statistic is in the u.s., labor force participation rates and jobless numbers in the summer season tick up. why? usually because of female participation goes down in the summer because of summer school holidays and the availability of child care. a fascinating phenomena and they have tracked it back 30 years and it happens every summer. when i see it tick back up, we are halfway through the summer holidays. dani: such a good point and

fascinating. thank you for joining this morning. that is sunaina sinha haldea. coming up, the u.s. coast guard finds debris of the lost titan submarine. and the five passengers are now presumed dead. we will have the details next. this is bloomberg. ♪

dani: the u.s. coast guard says the five crewmembers aboard the missing titan submersible have died from what appears to be a catastrophic implosion of their vessel. for more on this, let's get to katrina nichols. >> the latest that was heard is that the u.s. navy had already detected an implosion on sunday

at the site. it was not made public until this time. information was shared with the u.s. coast guard and a decision was made to continue the mission as a search-and-rescue to make sure that every effort was made to save the lives on board. that is according to a senior navy official speaking under the condition of anonymity. the coast guard said on thursday that the five crewmembers had died from a catastrophic implosion of their vessel. after examining some debris found underwater by a remotely operated vehicle. the nosecone of the ship was discovered along with other pieces of debris including portions of the ship's pressure hull. that is where we stand at the moment. dani: we know there were five men on board. what has been the reaction of those that knew them? >> obviously a very sad ending

for a group of men that were quite simply bound i a love of exploration. -- by a love of exploration. the company that ran the adventure said the men shared a deep passion for exploring. the president of the explorers club said their hearts are broken but memories will be uplifting and the men will continue to inspire in the name of science and exploration. at this stage we don't know when the operations on the floor of the ocean will end but teams are expected to continue to gather information to determine the cause of the implosion. dani: it is difficult with debris at 1600 feet from the bow of the titanic.

a difficult undertaking. coming up, we will talk deal politics. joe biden gives india's prime minister the full treatment at the white house as they announce a string of deals. we will have some comments from joe biden and we will discuss all of that next. this is bloomberg. ♪

dani: good morning and welcome back to "bloomberg daybreak: europe." we have the strays to set your

agenda. global stocks head to their worst week since march while investors worry the rate hikes will trigger the sessions. jobless claims in the u.s. suggest a cooling job market. janet yellen sees the risk of a u.s. recession diminishing. and a tragic ending to the search for the missing submersible with the crew declared dead after an implosion of their vessel. it is friday, the end of the week. a difficult and tragic we. let's turn our attention to the market. we are looking at equities ending the week lower especially in asia. a large selloff underway in japanese stocks. hong kong, taiwan and china are closed. we had hot japanese data coming in. but really it is the hot inflation data everywhere bad for markets. u.s. stocks ended the day

higher. we are heading to the end of the quarter. it is a short week in the u.s. not unusual to see portfolio adjustments. the asset that has continued to shine is the dollar. the dollar against most things but especially versus sterling. a toxic dynamic of having higher rates but a weaker currency. the usual gut punch reaction with higher rates is to go into assets of the higher rates but that is not what we are getting in the u.k. suggesting folks are worried about growth. in that case you're not going to be buying u.k. assets. we have had sterling fall over the last two days about half a percent. a surprising mover -- this is a four day price chart of nymex crude.

look at the selloff. the only thing you could subscribe it too is the higher rates we have seen and the concerns of what that will mean for recession and global growth. a painful one. maybe the u.s. doing some things with their svr. a 2.5 percent drop in nymex crude. from the market story to the geopolitics story. the ukrainian prime minister instead has countries nato membership would be a mutually beneficial situation. he spoke exclusively to maria tadeo on the sidelines of a conference in london. >> we have very sustainable, strong support from our partners as there is no dependence from results on the battlefield. >> they are entirely different. >> absolutely.

we have strong messages. ukraine is a future member of the you. -- of eu. russia must pay because of the consequences of this terrible war and aggression on the side of russia. these messages from partners are promising. we continue our counteroffensive. this is not using work or like a hollywood movie. >> yesterday he seemed exasperated. >> every life is very important for us. we are not russia. we are not soviet style army. when they bring their lives to the fight of the ward. we are careful and smart and we use nato standards and the work because we are fighting

according to nato standards. we are fighting with the weaponry of nato countries. it is offensive and defensive operations so it will take time. >> it is too early to make an assessment. >> we have the first results of our counteroffensive. eight villages have been liberated. seven kilometers go from the front line. those are important results from the first two weeks. dani: that was the ukrainian prime minister speaking to maria tadeo who joins us now to tell us more about that exclusive interview. always a treat to have you here in london. the link does not exist between funding and the counteroffensive he said. is that true? >> he told me this is real life,

a counteroffensive that is a difficult operation. he also said we are not going to fight the way russia is witches if you have to do a massacre and that is what it takes, that is what you do but the ukrainians tell me they will not do that and they move in a different way. i think there is some disappointment. people wanted to see big gains quickly. that is not happening. it is not as successful as some were hoping but he insisted it was not connected to the money or funding for ukraine. but they are very aware that they need to show that they can win on the battlefield or the supply of money and weapons. do they feel pressure? no. do they feel they have to show something? yes. that is why it was complicated for them. dani: what has been the tone around the package that has been discussed? >> the european union said we

will stand with ukraine and we will provide funding. the ukrainians have said there is a lot of tension in the market because they do not have the versatility on when they cash in the payments. more money was put forward by the u.k. and the u.s. it is clear that will continue. the funding and the war are connected but he was very decisive on this. we are going to continue to fight and the counteroffensive continues and we do not predict any scenario in that we would sit down with putin. dani: a fantastic interview. could you please do them all in london? thank you. in other geopolitical news, joe biden and the indian prime minister announced a series of defense and commercial deals

aimed at improving ties between the nations. what are some of the takeaways of the visit? >> these are two leaders playing a long game for both of their countries. for the u.s. there is no more important ally to cultivate in greater asia than india. the u.s. sees india as a key bulwark against china. they want to do all they can to promote the relationship. from the indian prime minister's perspective, he wants to diversify his country away from russia. he would like a new security partner to help with some of the disagreements he has had with china. the u.s. and india do not agree on everything. they call themselves partners. they were not going to talk about their disagreements. this was all about focusing on what they could do together.

there were a number of deals in the semiconductor sector that will be long-term agreements. dani: we also had joe biden defending calling president xi, a dictator. i'm trying to see if this will impact u.s.-china relations or if it just makes for a good headline. how important is that language? >> i don't think we will know the repercussions of this perhaps for a little while. the chinese were upset about it calling it a provocation. they said the president's comments were irresponsible. u.s.-china relationship is so fragile that even something like this could disrupt it sending it back a few weeks or months ago. there is nothing on the calendar though that could get canceled.

it will take a little while to see if the u.s. -- if a u.s. senior official following antony blinken will travel in the next few months. and also whether xi's plans will be affected to go to san francisco to attend the aipac conference later this year. we will see what happens when china is back from its holiday and the two sides talk about this further in the coming weeks. dani: bill, thank you. i quickly want to check in on hong kong markets. anthony, a long time viewer pointed out that i said that it is closed but that was a boldfaced lie. is this off the back of hot japan inflation triggering

things? generally hot to inflation everywhere. we are also looking at the aussie getting crushed today down versus the dollar or weaker versus the dollar by about .9%. coming up on the program, he cofounded one of europe's biggest private capital firms. we will be talking to take out capital advisors -- tikehau's chairman. ♪

i need it cool at night. you trying to ice me out of the bed? baby, only on game nights. you know you are retired right? am i? ya! the queen sleep number 360 c2 smart bed is now only $899. plus, 48-month financing on all smart beds. shop now only at sleep number dani: kenya's president says the country plans to repurchase at least half of its eurobond before the end of the year.

the president issued a warning to speculators. >> the people who are looking for how to make a killing from this, they think they can scare us. i want to promise them that we are going to redeem heavily before the end of the year and we will spread it out by the time left by june of next year. dani: the kenyan president speaking to us on the sideline of a summit in paris. zambia has reached an agreement in principle to restructure $6.3 billion in debt with bilateral lenders setting a precedent for a growing list of countries struggling to service their debts. both of those african leaders speaking at the paris summit.

also at the paris summit being discussed is that the world of private finance and their job and their role in restructuring the climate. antoine flamarion, the cofounder of tikehau, was at the summit. great to speak with you and wonderful to have you on the program. let's start with the summit, what is tikehau's role in what is being discussed their? antoine: thank you for having me. this was started a few years ago and the general idea is to provide private capital provider helping on climate issues. i think it is critical because as everyone knows countries have more debt. in private initiative and in the last few days there was 47

trillion in private capital and everyone is in line and helping the climate issues. i think it is a great tool with large institutions including blackrock or tikehau and the general idea is putting private capital into this climate theme. hydrogen from energy storage and so on. dani: some of the more bigger picture issues the industry is facing, things like difficulty fundraising, difficulties in getting leveraged debt, do those issues still apply when trying to get climate deals done or is it easier to fund raise for? antoine: you really are at the critical question. we know that with interest rates going through the roof, central

bangs retrenching, the credit crunch is there. when it comes to climate and environment, are we coping with the same issues? everyone realizes that climate is the key now and i think there is a lot of capital available for climate which is the good news. but there is no doubt that the economy will retrench because liquidity is drying up and a credit conch -- credit crunch is coming in the u.s. that is why we have to stay optimistic. we see people still allocating money to climate. dani: how bad will it get if there is a credit crunch coming? if there is an economic retrenchment on its way --what will that look like? antoine: unfortunately, people are discussing a possible recession. for quite some time we did not

have to cope with a large credit crunch. i think it is coming. that means there will be more default and bankruptcy coming. unless central banks are retrenching. everyone is looking and talking about inflation. the inflation will be the base for acceleration. there is no doubt that inflation is still there and interest rates are still high and more important, central banks are retrenching. 500 billion has to be repaid to the ecb. there is that much less and the system. more bankruptcies then and more defaults. dani: we have seen defaults already start to pick up in terms of the public markets. we have seen chapter 12 filings in the u.s., they have picked up

but in private debt we have not heard too much. is that because it is coming or is that the nature of the beast? antoine: i think it takes time. when you borrow money from a private debt provider, you have a 2028 maturity, there is nothing going on until 2028. there is no doubt it is calming and private debt is a unique tool. -- there is no doubt it is coming and private debt is a unique tool. we can say that until now it has remained safe. but there is no doubt that there will be defaults on the private debt side as well. no doubt. dani: of course, something like

a 12% yield is fantastic news for investors in private debt. being able to get double digits is remarkable. but if you are the company that has to pay that, that is not great. at what point do you have to look at the boe or ecb raising rates? are we at those levels? antoine: it is a balance. when interest rates are increasing and so quickly, a company that will have more difficulty and it will cost more, no doubt. the last time we were in this situation was during the global crisis in 2007. companies are used to that especially if you are a younger generation of cfos. i think we are reaching a level, 5%, 6% and more complex.

the cost of borrowing increases rapidly and it will create a situation where companies will probably borrow less money and as a consequence, invest less in new factories and projects and also less hiring. we are probably entering a vicious circle. that is why central banks have to put a pause. we are not there yet, not there in europe, in the u.s. and the u.k. dani: what do you do in the meantime with your portfolio companies, do you need to be more lenient? antoine: we are starting to see a different situation. on our side we have been more calm in the last 24 months trying to raise more money. we have an offensive strategy

and climate is one and cybersecurity is another. we try to make sure that we invest in the right sector and we also have a defensive strategy whereby we do stress and destress credits. we make sure the firm is well-positioned for a changing cycle. dani: i'm afraid that is all we have time for. thank you for joining us at the summit. enjoy the rest of your time. always a pleasure. as we head to break i want to leave you with some images of high-level guests are arriving for the final day of the paris summit. we have seen lagarde arrive and the wto head arrive as well. coming up, we will take a look at markets. this is bloomberg. ♪

dani: 7:00 a.m. here in london and we are seeing risk off tones picking up speed. s&p futures falling .4%. everyone fleeing to the haven of the dollar and some bond buying. let's get to our markets reporter. it has been a strange week for markets. to that point, when you first came in this morning i asked, what has happened to gilts? >> yesterday was a funny session. a decent weakness in global fixed income apart from gilts. yields in treasuries rose 8-10 basis points. some say it is because we are having a hawkish ramp out.

a lot of the move was in the five year sector. we are beginning to believe that rates will be held higher for longer and cuts are not in the cards it would mostly impact the five year sector. dani: what does make sense? >> the dollar had one of its best sessions in a month yesterday. a lot of that was driven by the weakness in sterling. we have had this point and the u.k. where higher yields are not boding well in terms of interest rate differentials and supporting the sterling currency. everyone is more focused on the recession trade. the terminal rate the market is pricing won't bode well for the u.k. economy so they would rather sell sterling and by other assets. dani: it is worth mentioning. >> we had two big policy decisions from mexico and brazil , both on hold.

as though has been on hold for almost an entire year. they were there first out of the gates to hike rates and they may be the first to catch. attractive carry in these latin american economies. dani: is this the glimmer of hope? if they were the perp -- if they were the first to hike and now they are pausing. valerie, thank you for joining on this friday. thank you, all, for watching. that is offered daybreak and markets europe is up next. this is bloomberg. ♪

hi, i'm lauren, i lost 67 pounds in 12 months on golo. golo and the release has been phenomenal in my life. it's all natural. it's not something that gives you the jitters. it makes you go through your days with energy, and you're not tired anymore, and your anxiety, everything is gone. it's definitely worth trying. it is an amazing product.

tom: good morning and welcome to "bloomberg markets: europe." i am tom mackenzie