>> good morning, this is "bloomberg daybreak: europe." asian stocks mixed ahead of q. week for central banks but the

fed and cb expected the hike. yield curve control and focus for the boj. pedro sanchez and his right-wing opponent claim victory after elections of the aft them struggling to build a majority. we are live in madrid. as earning season kicks off, we will bring you results. plus, a twitter shakeup as elon musk says the blue bird may fly the nest. happy monday and welcome to the week. a big week for earnings and central banks. the stoxx 600, 200 companies reporting, and by both metrics the busiest week for earnings. last week came to a disappointing end for the nasdaq. we look get the index reshuffle later today.

but goldman says it is not likely to solve the challenges posed by the high concentration of tech shares. other central banks, the main focus will be decisions from the fed and say and the ecb thursday, quarter-point hikes expected from both. we keep a firm i on clues ahead. as we reported last week, bloomberg understands the boj will not be making changes to its yield curve control program. as we look at the short end yields across europe and the u.s., they are starting to look attractive as the end of the hiking cycle offers some stability. let's get to our breaking lines across the terminal. we have results from ryanair, quarter profit at 663 million euros, the estimate was 648 million euros. we have ryanair trimming its 2020 for traffic or cast to

183.5 million because of the boeing delays. ryanair customers are coming in at 50.4 million, the estimate was 50.1 million. ryanair first quarter revenue coming in at 3.65 ilya and euros and the estimate was for 3.5 6 billion euros. we also have ryanair expecting second-quarter fares to be higher than a year ago. it's worth noting that easyjet reported last week, and it estimates. bloomberg intelligence says only wizz air has the potential to compete closely with ryanair given its balance sheet. it has been benefiting from people switching to cheaper flights amid higher inflation. the flipside is industry costs driving pricing higher among albeit with light relief on fuel. shares up early percent

year-to-date and we will get more on those results with the seat -- the cfo later in the program. we also have a breaking line from phillips, seeing four year composite sale growth. they are rising their outlook. the adjusted ebit at 453 million euros into the estimate was 496.3. phillips said it is restructuring plans on track. we've seen shares up 55% year-to-date and it has benefited from the easing of supply chain constraints, into the restructure that slashed thousands of jobs. crucially, investors waiting for updates on the investigation by the u.s. justice department over medical devices for sleep at the

as well as the ongoing discussions with the fda over a consent decree. we will be discussing that progress on the consent decree the ceo later in the program. don't miss that interview at 6:40 london time. the final one i will break for you right now, they are coming in thick and fast this morning, julius baer. first half adjusted cost to income ratio is 65.3% and the estimate was 66.5%. julius baer meaning comfortably above its own capital ratio floors. the question is how much they have benefited in the first half of from the demise of credit squeeze and how much it expects that to continue and how much the market share shakes out, especially across asia. investors also on the lookout for gentle share buybacks and m&a plans. i am sure anna edwards and mark

cut will -- mark cudmore will be asking the ceo about that just after 7:00 a.m. that is in the next couple of hours. let's get over to asia with tonya chen. how are equities looking? tonya: asian shares today broadly higher, but a really big week for central bank meetings. let's start with the laggards. china more on the downbeat today, looking -- investors looking for more later this week. most economists are expecting a disappointment although they seem may be signals of progrowth, maybe suggestions of moderation around it for straight -- around interest rates.

in drc is rolling out private sector projects. clearly officials are trying to take smaller steps to restore investor confidence but china bulls may have to be patient for longer. also a mention of the property shares today. they are also a little under pressure. the property sector has been scrutinized around liquidity concerns. the wanda group potentially able to meet one of the bills that are due. on bank of japan, they are not expected to make any changes around why cc this week, they are seen as the outlier. however, we expect why cc will be discussed and the yen and assets are doing much better today. the yen around the 141 handle. lizzy: we keep a close run on that print.

time for our roundtable with as always valerie and maria. the fed and the ecb expected to hike by 25 basis points this week, and or than 80% of analysts expect the boj to keep upping support into the japanese economy, even with inflation above target. what will you be watching and terms of clues for the path ahead? valerie: i think the most interesting meeting this week will be the ecb, that's because the last time they met, we got excited lagarde might hit that the interest rate cycle near an end, but she was undoubtably hawkish in the previous meeting. maybe we get the shift in this meeting. the data has been weak in europe and we also get pmi's today, watch out for that. we've had some quite hawkish ecb members making dovish comments, maybe it is foreshadowing what madame lagarde will tell us thursday. i think for the fed, powell will

try to keep that meeting as boring as possible. they will hike 25 but i don't think he wants to give any hints on whether a hike is to come september or later in the year. he wants to keep the tone to mere -- demure and maybe not give too much congratulations or celebration, inflation falling rapidly, i think he wants to leave that for later in the year for he claims a big win on inflation. lizzy: no one in the news industry wanted to be boring. let's turn to european politics, because ever the political survivor, prime minister pedro sanchez lives to fight another day although spain looks on course for gridlock after income was of election results left parties on both ends of the spectrum without a clear path to forming a new government. let's go to you, maria. i hope you've not been up all night. breakdown the results for us. maria: not all night but almost. in spain, you count both very

fast so by midnight you know what is going on. the reality is, on monday morning we still have a lot of questions, more questions than answers. if you look at the election result, yesterday, the winner in seats and votes would be the conservative party, they would lead in polls but the problem the election is so tight that they are short of a majority. if you look to the flipside, the spanish socialist, they came in on a second position but could also try to form a different majority. you have a winner that doesn't have an overall majority and the head of an opposition that could gather a majority. there are many scenarios that are now open in spanish politics. there's the idea that none of them would be able to form a government in the next few weeks or months. that brings up the idea of a repeat election in the fall. i've had a number of contacts yesterday who suggested at this

point the readthrough on the selection is the far right did worse than expected and it shows there is rejection from spanish voters on the far right entering the government. you see people who show up in vote in big numbers. second, it is deadlock. there is a strong chance that in a few months from now i will be sitting where i am looking at another election in spain. lizzy: maria, thank you for that update from her dread. val, we've got the result j.p. morgan said would be the worst outcome for investors, inconclusive. valerie: and what maria pointed out, there could be this extended period of gridlock. that's probably the negative when it comes to spanish bonds and risk assets. an extended period of gridlock in the government could perhaps derail the implementation of the second round of funds, which aren't as big as the first wave

but still decent, 80 billion, around 7% of gdp viewed the election process -- gdp. the election process has held up the process to release those funds. if we have an extended gridlock, watch out for those eu funds. lizzy: you know i don't like change so bad news for me, elon musk says he plans to change the twitter logo from the bloomberg to an x. the relevance is he has merged twitter into an entity called x corp. is this really the way to take on threads? valerie: what are you going to say when you tweet something? elon musk has been at the helm for six months, the company has yet to break on cash flow. i am still addicted but i don't see the appeal of renaming it, i can't imagine googling x.com

will get you what you are after. lizzy: let's look at some of the other things you should watch today. 9:00 a.m., the euro/composite pmi for july. what are you expecting? valerie: a rehash of the last print, the headline fell into contraction for the euro zone and the services number unexpectedly declined. it remained in expansionary territory but services is the one thing that has really been holding up in the euro area and globally after months of holding up to manufacturing thinking. do we see this extended theme continuing where the services number decline unexpectedly? we've gotten so much week data out of your up-to-date, the ecb will take that into account, perhaps another week round of pmi will put a pause narrative more in the cards for lagarde on thursday. lizzy: speaking of, we have the

u.k. flash composite pmi that is expected to continue a downward trend in july as rate hikes way on momentum. it will be interesting to see if the economy is more resilient than expected. valerie: the u.k. we've had the opposite, a lot of upward surprises versus the euro zone where there's been downward surprises. do we see this trend extending? lizzy: exactly, with retail sales on friday. finally, were you at the cinema this weekend? valerie: i was not. lizzy: i went to see barbie and i have to say, i could have stuck with the trailer. it does turn out barbie was the top picture in the u.s. and canadian cinemas, the highest grossing debut of the year. you had an estimated 200,000 plus people going for the back to back double whammy of rb and oppenheimer -- barbie and oppenheimer. valerie: one thing i found funny

when i was looking at the box office records is they seem to not be adjusted for inflation, so twilight was the second one, they made $147 million in 2008, adjusted for inflation it would have beat barbie. might have to have an economic conversation with those figures. lizzy: glad you have your eye on it. coming up, we will speak to the ryanair cfo after the airline's fiscal first-quarter earnings beat. that is next. this is bloomberg. ♪

lizzy: ryanair has posted a fiscal first-quarter profit beating estimates, but europe's largest discount airline is cautioning that delivery delays from boeing will weigh on traffic growth in the coming

year. joining me to discuss is the ryanair cfo. great to have you with me in the studio. ryanair has gained market share since the pandemic but if you are gaining, who do you see pulling back? >> seen in the last three years a number of airlines without business. we are only operating at about 93 percent of pre-covert capacity in europe at the moment. a lot of air growth is just restoring traffic that was taken out during the pandemic. we have grown strongly in places where we are just under 40% market share. we are big in central and eastern europe, just under 40% in poland at the moment. ireland and the u.k. very strong. growing across europe. more consolidation is happening at the moment as well and that will likely lead to even more capacity the next two or three years, which again, gives us opportunities for traffic growth. lizzy: we are using the competition? neil: because we have the lowest

cost space, significantly lower than everybody else, we find people don't necessarily want to go head-to-head in many of the markets. we can go in and execute a strong balance sheet and low unit cost and give both fares, which is difficult for competitors to provide. we are willing to compete with anybody in any market, and like what we saw in italy last year with wizz and they have pretty much pulled off. lizzy: you had oil helping you last year, but spot prices have fallen about 50% since you hedged at the end of march. how hard is that going to hit profits if oil prices continue to fall and will it affect how much you can press your rivals on ticket prices? neil: we are about 85% hedged. if you look at where we are

heading into next year, the forward curve is such we are probably hedging about $10 a barrel cheaper than this year. your potentially looking at some kind of unit savings into fy 25, we expect, despite that we have an extra billion on our fuel bill this year. we still have modest growth year on year because of the revenue opportunities in the market. lizzy: i've got to talk about the weather, wildfires in greece, hailstones in italy, passengers of fainting as a delayed on hot tarmac because there is no air conditioning. this is just the past week. how are you working with airports to minimize those situations? neil: we operate at over 200 airports across europe and we are working with every one of them. there have been some issues, the weather has been unseasonably warm and parts of europe. that said, we are still operating for schedules, eating

people in and out and people are booking in high numbers. we just continue to monitor the situations. we are letting people who want to book other flights do so. lizzy: are you seeing people go for cooler reservations? neil: no, we see no discernible trend in booking. a 95% load factor, it continues to be strong and people are booking traditional routes they always did and we are fully booked on all of our routes. 600,000 people per day flying with us and doing so in numbers. lizzy: this is unseasonable but these are long-term issues, we are talking about climate change, how are you changing your strategy to accommodate for that. neil: you've probably seen in the last month we ordered 300 next in aircraft, they are 20%

more fuel efficient and 50% quieter. we've been taking the livery of the a200, more fuel-efficient. we're also doing partnerships with aviation fuels. we set a target to sustain aviation fuel that is well ahead of the mandeb by europe and we've locked in .5% of that already so we are making great strides in that area. lizzy: your ceo was in ukraine last week promising to invest more than $3 billion rebuild the country's aviation industry when the war ends. why now? neil: it's important to show solidarity with ukraine. it was a very big market for us before the war and we had about a million passengers a year and plans to grow. we have kept in touch with

europe. that is a market that when the aviation authority says it is safe, we are more than happy to go back to the market. lizzy: all right, great to have you with us. plenty more ahead. this is bloomberg. ♪

lizzy: a huge week for policymakers, decisions from the fed, the ecb and boj. joining me is our markets live editor mark cudmore. which of the nature central-bank meetings this week be most impactful for markets? mark: good morning. it is a fed week where the fed will be overshadowed and we don't see that often. i am in the camp that the ecb is

really exciting, i have to pretend it is because i do a european show. this is the week i think ecb will be the most exciting central bank. i think boj will disappoint, we have exclusive on friday saying as much, that will dampen some speculation. ultimately i think the boj will not change yield curve control and will not even tweak it and we won't get from guidance. obviously the fed is the most important central bank but i think between now and the next fed eating, we have not only jackson hole, we have quite a bit of jobs data and i think that will be more impactful than what powell says a that decision this week. the really interesting one is the ecb because they've been the stalwart for hawks and suddenly they are sounding more dovish, the communication we are getting from their hike will have i think level implications. lizzy: you've got to wonder about christine lagarde.

let's turn to earnings, they are kicking up a notch. what is the dynamic investors need to be conscious of this week? mark: the overall theme for this earnings season globally really, but we always the our focus mainly on the u.s. is earnings expectations are depressed and it is easy to be them. there is one massive exception and that's the tech sector. that was the one sector where there is large optimism and it is very hard and ironically for the tech sector to be that optimism. that's the dynamic we've got overall. i think the fact that the broader sphere is depressed expectations earnings should be a tailwind for stocks, but this week is tech heavy. not only is a tech heavy, is the largest week for earnings by market capitalization. it's a really important week for earnings and markets and i think it will be the most problematic when trying to work out does the negative from tech outweigh or

is it not enough to outweigh the enthusiasm from the rest of the broader equity sector? lizzy: ok, mark, thank you for that. just to update you on those philips earnings, it says it sees four year comp sales growth and raises its growth outlook. phillips second-quarter adjusted even talk 453 million euros, beating estimates. this is bloomberg. ♪

lizzy: good morning. this is "bloomberg daybreak: europe." asian stocks mixed ahead of a q. week for central banks with the

fed and ecb both expected to hike. yield curve control and focus for the boj. spain's a socialist prime minister pedro sanchez and his right wing opponent both claim victory after elections that let them struggling to build a majority. we are live in madrid. after european earnings season rents of this week, we bring you results from ryanair and phillips today. plus, a twitter shakeup as elon musk says the blue bird may soon fly the nest. happy monday and let me welcome you to the week and take your focus away from barbie and oppenheimer onto earnings and central banks. a lot of them coming up this week. the stoxx 600 has 200 companies reporting, $6.8 trillion, a busy one, especially for banking and luxury. markets also positioning for central-bank decisions, the main focus is the fed on wednesday, the ecb on thursday, order point hikes from both pretty much

nailed on at this point. and we will keep an eye on the path ahead. economists say the policy outlook for the back half of the year is very open ended, and also the bank of japan on friday. as we reported last week, we understand the boj will not be making changes to its yield curve control program, though yen waters will be watching tokyo's cpi just before the boj meeting. we look at short and yields across europe and the u.s., they are starting to look attractive at the end of the hiking cycle offering stability. yields up this morning as you can see. that's get more on how asian markets are faring with tania. tania: asian shares are broadly higher, it's a big central-bank meeting week, we will start with the laggards in china and hong kong, shares more downbeat.

investors have been yearning for this policy support they hoping to get out of the politburo maybe later this week. obviously regulators have been meeting with global investors, discussing regulatory reform, and one just announced potential private projects. these are smaller steps in terms of how the policymakers are looking to restore confidence in the chinese market. china bulls may still have a while to be patient. as you mentioned, on japan, japan is the bright spots for today. the instill trading around 141. expectations quite tempered after that report late friday saying boj officials are in no rush to discuss this ultra-loose monetary policy stance. lizzy: the past few hours we've had results from a battery

materials maker. take us through those. tania: it is south korea's largest steelmaker, they had a operating profit last quarter and the key thing is they are looking to reinvest a lot of that into what you were saying, ev materials in particular. the holdings today comes the most on record, around 24% earlier in the session. it's one of the biggest contributors to the msci asia today. lizzy: all right, thank you. let's come back to europe for the spanish elections. ever the political survivor, prime minister pedro sanchez lives to fight another day, though spain looks on course for gridlock after inconclusive results left both parties at different ends of the spectrum without a clear path to for the government. joining me now is maria tadeo. it is a nailbiter. what will the conservatives make of the result? maria: it was a nailbiter and a

shocker at one point because we knew the polls were suggesting this was going to be a tight result but it was much tighter than anticipated. what we know this monday morning is the conservatives have won the election, in terms of the seats and also the votes. it's not clear at all that the conservative candidate will be in a position to form a government. they are running short of a majority. the far right party, vox,, spanish voters did show up to some extent to prevent a majority of what they perceive is a far right, it means there's not a clear path to a majority. that's where he needs 176 seat to be able to form a government. when you look at the flipside, the socialists came in second, but almost celebrated like a victory. it was a better result than

anticipated and it keeps them in the game. you can see pedro sanchez explain options to form an alternative majority. there could also be a situation where none of them are able to form a government that needs deadlock for weeks, potentially months, and then the russian as to whether spain will be -- the question as to whether spain will be headed into a new election in the fall. lizzy: just take us through what happens next. maria: we should know that in the spanish system it's not like the united states or french. you have leading candidates but the crucial thing is they have to show up before both chambers and show they have a governing majority and at this point it is understood if you listen to the words of the conservative candidate yesterday night, he will try to form a government but the numbers don't add up. you have a situation where the

caretaker prime minister also tries to form an election and this could take months, it could take potentially weeks to form this new majority and both failed. at that point it will become clear that no one has a governing majority in either chamber. the spanish parliament is crucial, and at that stage you head into a new election that could happen, i had a number of contacts suggesting if the numbers stay the way they are and everyone says they do what they promised they would do and go to different coalitions, at this point it's hard to see a majority. the one thing is, a number of analysts suggest this is the worst outcome for the economy because it's inconclusive and there are a lot of questions about potential reforms bid when it comes to the eu recovery fund, the money paid out by brussels, a lot of it gets negotiated by technical staff, not the book -- not the

political side. the technical people behind the scenes that are not in the spotlight. it doesn't mean you will see full paralysis on the economy. when it comes to the spanish presidency of the european union, at this point he will be completely distracted especially if there is another election. lizzy: ok, thank you, maria. ever connected in the corridors of power. i'm sure she will be across that story for us. we were talking about the hot weather with ryanair earlier and how it is affecting flights. around 19,000 people have fled part of greece hit by wildfires ended record temperatures across southern europe. the great coast guard led efforts to rescue tourists and locals on the islands of rhodes. there was extreme weather in the region, including hailstorms in a tornado in italy. searing temperatures in europe is starting to threaten food production in the region with the war in ukraine already

weighing on the global food supply system. oliver cook reports on the short and long-term impacts of extreme heat in europe. >> the risk to global food supply are multiplying. already russia's invasion of ukraine destabilize global fertilizer and grain supplies but now there is another factor -- heat as europe makes under record breaking temperatures. the effect on food is fast. sometimes crops cannot be picked in time. heat and its consequence, drought. too little water means produce doesn't mature. an italian farming association estimates we production in italy will be down 10% and impacts animals. cows give less milk and it even hits honey production. financial losses could exceed 6 billion euros from last year. this all bears out in prices. take germany, which imports a

huge amount of its food. inflation has been huge but food prices have reached dizzying heights and everyone suffers as a consequence. it hits the farmers who lose crops, it hits consumers who pay more and puts pressure on the ecb trying to get inflation under control. while farmers are trying to adapt, it's hard to keep up with a new, hotter world. lizzy: oliver crook on the impact of record temperatures across europe. the israeli prime minister is to be fitted with a pacemaker after he was hospitalized over week ago for what his office said was dehydration. he was released from hospital last sunday after having a heart monitoring device implanted. he is undergoing the pacemaker procedure day before the israeli parliament is expected to vote on his contentious judicial reform. meanwhile, the u.k. prime minister vowed to meet his 2019

election manifesto commitment to build one million new years -- new homes in the course of this parliament. this in the wake of his conservative party's defeat into special elections last week. elon musk says twitter will soon change his logo, eating rid of the blue bird that has long -- getting rid of the bluebird that has long been it's logo. after he acquired the social media platform, he has merged it into an entity called x corporation which he plans to build into a bigger app. let's look ahead to what else is on the agenda this week. today, provisional pmi data for july for the u.k., germany and france. tomorrow, microsoft will report earnings rounding off a period in the spotlight for the company as it attempts to acquire game developer activision.

on wednesday, we get the fed rate decision, economists expect the fed to hike 25 basis points. thursday, it is the ecb decision, the central bank expected to follow the fed with another 25 basis point hike. we will also have results from cities, volkswagen and renault. freddie is the bank of japan's latest monetary policy decision. through the week we will be watching a several european banks, including deutsche bank, santander, barclays and bnp paribas report. coming up, the phillips ceo speaks to us after the dutch medical equipment maker raised it's a four year sales forecast. that interview is next. this is bloomberg. ♪

lizzy: welcome back. phillips has raised its sales forecast for the year following better supply of parts and a restructuring that slashed

thousands of jobs. they say that revenue should rise by did single-digit percentage, more than previously guided. it is a happy day for the phillips ceo, who is with me now. you've raised your four year sales outlook, what is driving it? what has helped most? roy: i am really happy that see the plan we put in place at the beginning of the year is really feeling an impact. we started the year we said we need to get back to growth and we achieve that in the first quarter and now in the second quarter with 9% growth, you see the actions we are taking for example to drive more supply that can help us convert a strong order book, that is turning it into sales. we also increased our profitability significantly and on one hand that is on the back of better sales but also productivity measures we are taking, including tough measures like you mentioned, taking jobs out of phillips.

it doesn't support the combating strong inflation. better sales, better profit, better cash, also gives us the confidence that in the second half we can continue this momentum and we raised the outlook. lizzy: give us an idea of the scale of demand pick specifically in china. roy: china is a strong contributor this year into our results. we saw that coming into the first quarter when it was especially the health care contribution. now second quarter, the consumer contribution is kicking in. we had double-digit growth out of china and we expect that to continue in the second half. while the chinese economy is not yet exactly at full strength, it is strengthening. i was there a few weeks ago and talking to many customers and the government, i have seen the plans and dedication and also the regaining of momentum. really excited about that and we are well-positioned to capture

the growth because we have strong local operations and great innovations that support the health care system in china but also great consumer propositions with the brand we have. we are generating command -- demand and generating sales. lizzy: we need to talk about the sleep apnea devices. you have the ongoing investigation with the u.s. justice department and the fda, waiting for the consent decree. when can we expect that agreement? roy: the recall of sleep and ventilation are our first priority. we are at 99% of produced devices for sleep therapy into the vast majority of that is with home care providers. ventilation is remaining. we are making strong progress. at the same time, we are still waiting and working through the consent decree that will be upcoming as well as working through further litigation

happening. we took a first provision in q1 on economic loss, that was something we could define and we are finalizing, i think that was important. we also said early the next up on litigation is more personal injury. the clarity around that probably only be coming in 2024 so we need to work through that further. when we have that clarity, we will come forward. lizzy: what do you estimate will be the total financial impact of the recall, which you say, you initiated? roy: on the recall initiated ourselves, we had the provision we took -- there is no clarity and that's why we haven't taken further provision beyond the 575 million economic loss took. we cannot speculate beyond that. that will be determined by manufacturers. what was encouraging, this quarter we could come up with

results that showed there was no residual harm done by the use of our devices. yes, we recalled the divisive -- devices, but continued use did not show appreciable harm and that was important. also important for litigation to come. lizzy: after the consent decree and the doj investigation, do you expect to be prevented from selling some of these sleep apnea devices? apnea devices? roy: again, i can't 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. we have been able to reach over 100 million people impacted and affected, and at risk of hiv.

the rocket fund takes all of the work that we're doing, all over the world, and looks at the most effective ways, to get resources to them, to get services to them. the idea that we have saved five million people's lives, it's overwhelming. it's everything.