it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

host: good morning. this is "bloomberg daybreak: europe." the story is to set your agenda. global stocks head for their best week this year. the fed is expected to raise rates at least twice in the next four meetings. a hawk takes flight. james bullard has resigned. and australia's central bank names the first ever female governor and wall street banks kickoff the earning season. a warm welcome to the show. another company heading to the tape is erickson. adjusted ebit ahead of the estimates. they had said there would be a

choppy set of numbers. adjusted ebit, 2.8 billion. they benefited from the early impact of cost out execution. cost cuts are helping them. they see a similar third-quarter in terms of market mess and the trends they have seen in the second quarter. sales comfortably ahead. the market penciled it in as lowered. the trajectory is better but the stock is maligned down 20% at the moment. let's see how that comes in. much maligned has been the concept of disinflation however this. has been invoked. -- however that has been invoked.

a couple weeks ago we were talking about 5% rates. you can see there is a new trajectory and language. a full pivot from rabid inflation to deflation. the beneficiary has been the yen. the dollar has imploded. is that run overdone to the downside? the momentum within the fx market is for the yen to continue that trajectory. the risk is that you may get a little interference because of another quarter of a percent hike which is what waller is saying but the more powerful combination, the move in dollar-yen, sub 140 is more powerful than it was in january. the dollar is officially wounded. each week in the ycc by the bank

of japan is more real which has invoked a golden rally for everyone. we are risk on solidly. let's get to asia as part of the protagonist. stimulus is going to be powerful. it is going to be meaningful. like this conversation, can you chen -- tania chen, good morning. >> optimism has spilled over into the asian market with stocks pushing higher for a fourth day. honk kong -- hong kong getting a boost. they are reviving the animal spirits in the market. they are trying to balance your term challenges in the economy. long-term structural problems. and dealing with the prospect of looming deflation.

they're looking at targeted monetary policy towards things like cutting the ratio. is there a benchmark policy? also looking at the yuan. close to 7.3. remarkably different from where it was last week. and the officials not too concerned about the currency swings. they mentioned at a presser that they have reserves and another thing they said is they do not see any rocket dials in the markets which is their term for the bulls and bears. no speculators. and a quick mentioned that the yen is a beneficiary of the broader dollar weakness. we expect the yen and the yuan will continue gaining on the possibility of the ycc week.

host: what do the speculators call them? crocodiles? >> are you a crocodile? host: no. great to see you. let's see what the pboc delivers on monday. let's hear if there is any action. let's get into a roundtable discussion. we have run through the data. the ppi, the lowest since 2020 which backs the case for markets to say there is one more hike to be done. but christopher wallace says he expects the u.s. central bank to raise rates twice this year. >> i see two more 25 basis point hikes. they are necessary to keep

inflation moving down towards our target. manus: let's take that to valerie. the market seems to think we are firmly in this deflation camp. wallace keeping the two-way trade alive for are the -- or the fed. >> i think it will keep the threat of the additional rate hike to come later in the fall. he has just reflecting what was in the released dot plot. i don't expect them to change language. powell already got burned in february for calling -- disinflation is here, too early. i expect them to be more tentative in claiming success. it is fine for them to keep threatening an additional rate hike. it goes to show at the market

probably is not going to believe the threat because inflation is falling and the labor market is staying in just fine. the jobless claims numbers yesterday showed again a drop in the author week average. another thing that caught my eye yesterday was this monthly treasury release where it detailed how punitive the cost of interest rate payments are becoming for the u.s. government. it has now raised 25% year on year the cost of debt servicing the u.s. government has to deal with and these interest rates are higher. >> i think you are seeing some signs of consumer slowing as the debt you have to take out for big purchases is declining. nonroad all been credit was the stuff but -- non-revolving credit is down for the first time in a little while.

on the other site, and i have mentioned on this program before, the political weight does some of these decisions are having. politicians are biting back. elizabeth warren was on our air earlier this week saying that jay powell needs to take yes for an answer and stop the cycle. you are going to get pressure that way. if you are looking at the signs that big spending is down, big borrowing is starting to go down. manus: one guest earlier this week warned that if there were any more rate hikes to come from the federal reserve it would be monetary malpractice. one of the protagonists of that fairly aggressive hiking cycle, as we all know it is been the st. louis president james bullock who has resigned after 15 years. he is off to be the dean of a university. and on the others you have rba taking in michelle bolick.

i think it is interesting when you look at kashkari who pivoted from arch dove to protagonist hawk but bullard going out the door at the end of august is perhaps removing one of the most vera lynch hawks vocally and on -- virulent hawks vocally and on tv. >> his doctor was one of the highest on the dot plot that we get from the fed once a quarter. we were surprised about the rba replacing governor lowe. the rba has gone through a lot of changes recently. some coming from criticism of his communication style. they had an independent review

that moved their meetings from 11 to eight and now they will have press conferences after every meeting. perhaps this new governor will lead a new communication style for the rba. >> you are right. i'm not supposed to pick favorites but i do like watching the rba and its sister the rbnz. it is a canary in the coal mine. it paused for the first time in nearly two years. the rba is a political flashpoint in australia. remember the home prices were tightly tied to the rates. lowe's presence on the front page of newspapers across australia. bullock is a fresh start. more dovish around the margins. seen largely as a continuity candidate. but there is so much potential

change coming to the rba that she will quickly have a chance to make her own stamp on the rba and we will be fascinated to see where that goes. i think that could be a bit of a leadership fix so watch that space there. manus: ok, great discussion. those are the top stories that will ultimately drive risk for us. valerie, thank you very much. and derek wallbank. in terms of everything else that we are going to cover through the show, we will talk about commodities and the bond market moves and where they can drive risk. one of the biggest moves of all is the yen. heading for its longest rally since 2018. the next move for the boj could be a tweaking of yield curve control or movement on currency

trends. right here on "bloomberg daybreak: europe." this is bloomberg. ♪

manus: the yen is on a ripper. a seven-day winning streak. it is on course to have its best performance since 2018 driving the speculation that the boj will adjust its ycc program. the central bank does not tweak, it would not make any sense according to a former official. let's get to our mliv team. the momentum in the yen is being driven how much by dollar

weakness and how much by the presumption that there will be something of substance shifting in the yield curve? is the inflation narrative enough in japan to warn to a discussion about changes and -- in yield curve? >> we had a report just before the markets opened that got everyone excited because it said the boj would change their inflation forecast to above 2% when they meet again. this is the threshold they have been talking about for some time. they wanted to see 2% sustained inflation before they would be ready to make any policy changes. the market is going into overdrive expecting this to translate into something happening. and as you mentioned, a previous bank of japan executive talking about the need for a change in policy.

and we have seen evidence in the yield curve this week where there has been a lot of trader top. if they do make the tweak they will shift the pivot point to the five year sector from the 10 year sector and we have seen a lot of curve steepening in that way where the five-year is anchored and the 10-year gilts have been rising. that is a sign that traders are putting their money where their mouth is and the end is having a great week and japanese bonds are starting off pretty hot. there is a lot of smoke. maybe there is no fire but if there is not we will have two more weeks of busy trading because people are convinced that something is going to happen on july 20. manus: a lot is happening in the u.s. you have had cpi and ppi and we have chris pollick who expects the fed to hike twice more this year. there is a divorce between fed

speak and where the market actually sees rates. wallace says september is live given the data sweeps this week. is the disconnect valid? >> you have to take into context the july meeting. because they paused at the previous meeting and now the fed has made it clear they want to raise 25 basis points in july. they don't want any chance of the market backtracking on july. from the data we have seen, the cpi and ppi data questioning whether the fed needs to go 25 this month at all. the fed speakers have been consistent to make sure that traders get the idea they are going to hike this month. what happens after that is anybody's guess because you have two months between july and september. there will be more inflation

data and more jobs reports and a lot more suggestions, as your previous guest was saying, the signs are accruing in the u.s. economy and in september it could be difficult to convince the market that they need any more hikes. manus: here is the best one yet, td -- this was a shocking point. 300 basis points of cuts taking you back to 2.25. that all has implications for risk. we are full risk on this morning. s&p 500 index, goldman is reckoning another record high. what could stand in the way of that? >> the rate cuts. it is hard to believe that the fed is going to aggressively cut rates unless the u.s. suddenly tips into recession.

you have to take at their word that once they get rates to 5.25 or 5.5 they intend to hold those rates for quite some time most likely through the rest of the year and into the first quarter of next year. they are not going to give away any signal that they will be cutting rates quickly. that is probably the reason why the s&p rally will run out of steam. it would need the idea that rate cuts are coming to keep the euphoria going in the s&p market. it is doing well. the top sector of companies, the big ones are making good profits. we had a piece yesterday saying that top 1% of companies having 18% of the profits to the s&p. if they can continue, there is reason for people to stay bullish. without the caret of rate cuts down the road it will be hard for the s&p to make a record high. manus: ok.

let's see how that comes out. 4800. it looked delusional earlier this year and i have to admit it has worked out well. it is 2020 vision in hindsight. i suffer from that all the time. [laughter] thank you, mark ran field. keeping it real across the assets. coming up, you may have to think twice the next time you sip on that diet soda. we are bringing the latest worry from the world health organization on your diet coke right here on bloomberg. ♪

manus: this is "bloomberg daybreak: europe." 23 and me is biotechnology

company that offers dna testing and and send straight right -- ancestry break down. the owners says customers are using it to improve their health care. she spoke to ed ludlow. >> i have 14 million people that have 23 and me and if they have questions and want better information on how to integrate this into their health care and stay healthy, we have access to positions specifically trained on genomic medicine and specifically preventative genomic medicine on how to take that result and your higher risk for kidney disease, suffering from depression, what is the right medication and i have a clinical team that knows how to do that and the brilliance of lemonade is it has a pharmacy.

specifically on areas like mental health where people are struggling to find the right medication i have a clinical team that understands genomics and your genetic variant and the medication that might be best for you to start on. >> as a piece of business, is it making money? >> lemonade when we bought it was largely focused on more of the consumer areas like hair loss, erectile dysfunction. that is a core business. and it exists and is exciting and it is something that we see -- similar to 23 and me, there is a consumer component of health care. you see that with weight loss. people want to be more in control of their health. whether it is something like erectile dysfunction, hair loss,

weight loss or how do you stay healthier longer, there is a great synergy. the business continues to do well. we will be adding on 14 million customers from 203i made and how do they get access to lemonade services. >> is there anything you think you could go out and acquire that would further increase the value proposition? or give 23 and me customers access to use the test they told? >> the exciting aspect to me is post-pandemic. people are used to telemedicine and they are more used to being on their own for health. people struggle at understanding the payment and doctor's appointments and now they are more on their own so there is a huge opportunity for us to offer a vertically integrated system. how do i help you?

i have the pharmacy and a phenomenal team that can ship products you want. how can we be the leader in keeping you healthy as long as possible? manus: i may need to do a little bit of checking in on my own heritage to keep me alive little longer. aspartame, the artificial sweetener found in everything from your diet drinks to candy could be carcinogenic according to the latest world health organization study from two assessments discussing the company sales. the chemical is safe according to the cfo. >> over 100 studies it has been deemed as save and over 90 regulatory bodies including the fda have all concluded that it is safe and even the w.h.o.

itself has said aspartame is safe as an ingredient. manus: the cfo reassuring you that your diet coke is good. on to the commodities. a dollar imploding. that will help everything in the commodity world. look at the my ditty index -- look at the commodity index. iron ore up 2%. there will implementing targeted policy according to the fed. copper rallies. there is momentum. we will talk about the 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.

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manus: a very good morning. it is "bloomberg daybreak: europe." the stories that set your agenda. a stocks head for the best week this year on the back of the u.s. hiking cycle nearing an end but christopher waller expects the fed to raise rates twice in the next four meetings. the hawk takes flight. james bullard has resigned. australia's central bank names shall bow look as a first ever female governor. and washed -- and kicking off the earnings season. the results come hard and fast. a very good morning. did we break anything this week? the fact that i am back and my cohosts are offer the day might suggest that something malevolent is happening and it certainly is in the bond market.

rogue is the narrative that the fed would have miles to go before more rate hikes. the cpi showed a break out of trend but in terms of momentum. looking at significant drops of cpi and ppi. to the lowest since 2020. over a week ago we were looking at 5%. president waller has come into spoil the party. september is still live what are the real rates high enough to break the economy and slow it down? that is what you need to move the debate on two. they reckon you will get 300 basis points of cuts on a recession. are we really going to have a recession? it is earnings day today. the boom came for commodities in part because of the implosion of the dollar which gave double

alpha to the yen propelled by the view that control will be tweaked. dollar-yen, sub 140. it is different this time. i'm talking about the different rancho between now and january -- i'm talking about the differential between now and january. tweaked -- you also have a stimulus narrative coming from the pboc as well. we have a powerful combination which is a much wounded dollar and the possibility of some kind of an adjustment from the boj. , chan is standing by with a wrapup from -- tania chan is standing by with a wrapup from the asian market. >> the markets seem to feel the animal spirits coming back from

china and you are seeing the broader asian stocks gaining for a fourth day. the chinese policymakers were speaking today trying to juggle the problems with the near-term challenges and structural challenges trying to shift away from the property engine. they are looking at targeted fiscal and monetary policy tools. they may look to lower the benchmark interest rate and that would help boost the lending demand or credit demand they are trying to used to fuel the economy and economic recovery. look at the yuan. it is remarkably different from last week. it is at 7.13. officials are saying they have ample forex reserves to manage the wild swings. they are not concerned.

they don't see speculators. they call them aunties and crocodiles. manus: run me through cathay pacific. they are like every airline. but they are nowhere near their full capacity in terms of what they are sending out of hong kong. the main flag carrier. >> exactly. they just announced their first have consolidated profit numbers. there has been an industrywide rebound. this first-half profit, the first time they are reporting since 2019 and what is notable is they are still operating at half plandemic -- pre-pandemic passenger numbers. ticket prices are killing me. we will see the cathay pacific

share numbers celebrating the numbers. manus: i am about to remortgage myself. six flights total purine airline prices in the cpi, not much sticks in the brain of mine but they came down 8%. let's hope that what happens in the u.s. translates for the rest of us. good to see you on the latest stories from asia. we broke ericsson earlier on. nokia, saying full-year net sales is the guidance. 23.2. the full estimate was 25.54. softening in the guidance. actual sales coming in softer. margins trimming the corid ridor.

they are trimming back on the upper end of the bullishness for the margins. and they are saying they are lowering their sales and operating margins. i did that verbally before i got to the headline. we are ahead of the curve. it is the state of play in nokia. we will see how those gear makers and telco names start the trading day later on. he was there who were hawk, the st. louis president james bullock and he is resigning after 15 years to become the dean of a university business school. he was an influential voice when he was calling for the jumbo rate hikes in the fight against inflation. flip to australia and you have michelle bullock stepping in as the new reserve bank governor. she becomes the first woman to

take the top job. >> it will be tricky especially when you are getting close to the crucial point where you're fighting inflation, you have not won yet or gotten back down to your target but there is a risk looming of economic weakness. it is a delicate time for central-bank leadership. manus: let's have it to today's -- let's pivot to today's action. how punishing a first half has it been or are they largely unscathed, wall street banks? over the next few days we will get the answers to many unknowns with jp morgan, citigroup and wells fargo kicking off. joining me now is jan patrick in frankfurt. good to have you with us.

what is running through my mind is so much of the bullish narrative was interest income but now you have to pay to fund this situation. how important is today on nii? >> absolutely important. it always is but it comes with a double-edged sword for bengs because the benefits of having higher interest income is feeding into the other side of things and that is higher expenses on the interest side. especially with the situation we had in march regarding the deposit outflows an increase in competition around the retail money and in keeping deposits in their place. it is going to be interesting to hear from executives rather than the numbers how deposits are behaving and how the interest rates fight with competitors are

going along. are they over or do they expect them to go further and lean into the earnings for the banks. manus: i think there are two other big areas, one is about the capital that is needed to be set aside. michael bar has made much of that. i just wonder, there has been a silent assassination in nonbanks of various strands of investment banking and some banks like goldman-s have done big cuts. do you think provisioning per job cuts and restructuring will be a big element? or should i be more worried about guidance on capital retention? >> i would say you should be worried about both because they are both issues alongside the other stuff that banks have to deal with. most banks have sufficient capital but there will be outliers. and it is still a fluid situation. we are not 100 percent clear how

the regime will look and the other regulations. it will be interesting to see the thoughts of the ceos. everything when it comes to expenses, headcount, that will also be interesting and how is inflation eating into your payroll? how are banks managing that? we had some pretty bleak numbers from goldman already, not numbers but indications about a slump in trade revenue. dealmaking is not great. how do they expect the business to behave the rest of the year and what will they do about that in the area? manus: they are getting on airplanes and coming to the middle east to pick up mandates from every sovereign wealth fund but i don't know if that will save the day for them but this is the holy grail of fees and revenue for banks around the world. thank you from frankfurt. coming up we will be speaking to

mike. he is the wells fargo cfo and when the numbers hit the street today for wells fargo. here is a look at what i am focused on. 3:00 p.m., i will be checking in with the university of michigan to check the sentiment data and inflation indications will be key. at 4:00 the french president and the indian prime minister will meet. that is afterwords they are expected to announce a deal. and later they will meet with french and indian ceos. and several banks will hit the tape. coming up on the show we will bring you some of our top stories for the week including the carlyle group, planning a $4 billion mcdonald's china and hong kong exit. that is all next on bloomberg. ♪

manus: deals might be back with a bang but microsoft is with me. it looks like we had a development happening. there was a court ruling and the brits are reviewing the microsoft bid for activision. do you think a deal will get done? >> that is the million dollar question. i think the next few days are going to be critical. as you mentioned the latest development. the fcc in the u.s. seems to try to gain more time by appealing the decision by the court. we will see.

july 18 is the deadline. some people seem optimistic it will get done. others not so. we will see such a major deal, $69 billion. definitely a big one for the industry. manus: i suppose the question that goes through my mind is what assets might get sold to get this across the line. >> we are seeing some potential minor assets potentially on the block like the ones that have been reported out in the u.k., cloud-based gaining rights. that is typical playbook in such major deals. such blockbuster the deals that we have seen globally over the years. they may have to sell off some assets. those ones in the u.k. i'm

mentioned are under consideration and there could be others down the road to clear any hurdles that may pop up. but again those would be like trimming some of the assets in the wide-ranging portfolio they have. we may see some of that. that will be interesting for players in the industry as well as some private funds. we are likely to see some of those, yes. manus: talk to me about another m&a story. we have a billionaire and hollywood, i can feel a movie coming out of this but run me through the details of this. >> it is an interesting one. we have a billionaire and then on the other hand we have a private equity owned asset in the u.s. it is rare.

this year m&a activity particularly that involving pe's has been subdued so it is encouraging to see something of this caliber around $7 billion. it is a sizable deal. it will be a boost potentially for the industry in hollywood which is fazed by its own challenges. and there we go with a billionaire that wants to potentially snatch another assets. we have seen this in the past. we are likely to see more particularly in the down cycle in which m&a is so difficult to get across the line. we are likely to see more of this type of deals where a specific billionaire or fund that is this type of deals potentially. manus: ok, manwell, always good

to get you on board and see what is kicking in the deal space. the latest from hong kong. coming up, sports go lori. guess what? the saudi public investment fund is said to be considering purchasing another european football club. details to come with greg tanner right here on bloomberg. ♪

manus: it is "bloomberg daybreak: europe." saudi arabia has been making headlines for its big spending on sports. bloomberg has also learned that another football acquisition could be on the way. executive producer greg tanner is following the story and joins us. great to see you.

this is about uefa loosening the rules opening the playing field especially for the saudis to pick up more trophies. greg: saudi arabia, their sovereign wealth fund led the takeover of an english premier league club in 2021. a source has now told us that they are potentially looking at buying a clove from another one of the big european club leaks. until recently that had not been on the table. the reason why is because uefa would not allow clubs with the same ownership to compete in the same leaks. within the last week they have allowed one french team and to british teams play in the same tournament and that changes the calculus because they can now own another big team and have them in the same league. manus: we are showing pictures

of newcastle. she and her husband got up -- got involved in this trade and it has transformed if you look at how the saudi money has transformed united and newcastle. what is the transformation story? greg: just an injection of cash. manchester city is middle east money. newcastle united -- that is middle east money. we have the qatari's, abu dhabi, sovereign wealth funds from across this region pumping in money and if you look at the turnaround in fortunes of newcastle united they are going to play in the champions league next season which is the pinnacle of intra-club football for the first time in 20 years. just a few years after being

taken over by the saudi's and the money they have pumped in they have made it into the league says everything you need to know about the impact that the middle east money can have on a team. manus: it begs the bigger question of sports washing towards saudi arabia. you look at the team and you look at the fans and they get to play at the highest possible level. is there an even keel to be had in the story? the saudi's are not going to stop buying, are they? greg: they are not to. as we have been on a spree. they have rinaldo playing in their local league. manus: they did not get messi. greg: the contract they would've offered him would be one point $6 billion reportedly.

they are reportedly paying rinaldo $200 million a year. last month they announced a tie up with saudi liv golf. manus: roy mcelroy is kicking his shins. greg: it caused a lot of friction in the golfing world. they have their own formula one race in jeddah. they are putting on boxing matches. manus: i have seen your future. you will be a tv commentator for formula one. greg: they need a basketball team. manus: you have greg tanner offering his services on basketball. that is the other part of it, will they go for an nba team? you keep saying that you think there will be saudi money going into the mba. manus: i would dummy -- taboo

dobby money -- abu dhabi money? greg: if saudi arabia was looking around the world to where they could have the most impact in sport the nba is one of the most popular leagues in the world. manus: would you like that job? greg: i am very happy with my bloomberg job. manus: that is greg reaffirming his commitment to bloomberg. greg tanner on the latest on the sports narrative coming from saudi arabia. what shall we give you next? metals and minors? yields? yields is the big story. transforming the risk narrative. it is almost like a double pronged issue. yields are collapsing. you are repricing with a terminal rate of the fed. one of the uber dots is gone,

one of the most aggressive dot plotter is gone, bullard is gone from the feds. will there be a restructuring? the cpi and ppi continue lower invoking that the fed is done. let's see what michigan delivers later on. it will be important in terms of sentiment and inflation expectations. a couple different houses saying you want to be longer of benchmarks and bank of america saying that rather than steeper. an interesting take on where you should be. that is it for "bloomberg daybreak: europe." bloomberg markets europe is up next. ♪

it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. anna: thi