>> good morning this is bloomberg a break europe i am lizzy burden these are the stories that set your agenda. ubs profits smash records with net income of $29 billion in the last quarter including $29 billion of negative goodwill from the credits we. ubs now commands roughly $5 trillion in client assets. china's services pmi slows as a deepening real estate slump sacs consumer spending. but a pickup in new orders sparks hope the manufacturing slump is bottoming. plus treasuries gain and u.s. stocks rise for a fourth day after weaker data raises hopes of an end to the tightening cycle. we look ahead to the release of the fed's preferred inflation gauge. good morning, welcome to thursday. those are your headlines but a few minutes ago ubs published its first quarterly results since taking over credit suisse and that unprecedented government led rescue. let me run you through the top

lines, ubs has smashed banking records, profit did indeed set a record, the biggest quarterly profit for a bank at 28 point $9 billion in the second quarter after $28.9 billion of negative goodwill from the credit suisse deal. profit before tax would have been $1.1 billion if you stripped out the negative goodwill as well as the cost of integrating and acquiring credit suisse. the bank also notes that $2 billion of that was from the ubs side. ubs also says it sees positive underlying tax profit in the second half of 2023 and it confirms our reporting that it will keep credit suisse's swiss unit. at the two swiss entities are going to operate separately until their planned legal integration for 2024 with the completion of migrating clients to ubs systems in 2025. the bank says its decision to retain the business came after a thorough evaluation of all

available options which is probably a nod to the fact that -- biggest bank getting bigger is a controversial issue. ubs has said it is engaged with credit suisse clients, it has seen their confidence returning and says there are positive returns and deposit flows continuing through july and august. the combined bank assad 23 billion dollars of deposit inflows in the second quarter and of that $18 billion were at the credit suisse wealth management and swiss bank units. you have got asset outflows of credit suisse's wealth business slowing in the quarter and turning positive in june. ubs global wealth management had it $16 billion of net new money and that is the highest second-quarter inflows in over a decade you have ubs shares up 30% year to date so it is the best values -- valued european major lender. it's options are implying a one-day move of 4.8% after these

results compared with an average move of 4.6% after the last eight quarterly releases. those are your top lines we are going to have more expert analysis on those earnings for you throughout the program and at 7 a.m. we're going to bring you an interview with the ubs ceo coming to you from zürich. that is the ubs earnings but let's get to your broader markets because the bad news equals good news narrative has continued. at yesterday's economic data pointed to slowing u.s. growth both gdp and second-quarter core pce were revised lower and even more of that bad news is likely to come today with more eco-data. those numbers yesterday supported bets that the fed is going to ease back on rate hikes so swap contracts are now pricing in less than a 50% chance of another quarter-point rise this year, treasury yields extended their retreat from last year's yield to date highs right

across the curve. most yields hit their lowest levels in more than two weeks. if you think about it it was only on tuesday that markets were putting a 75% chance on a rate hike. seems like a lifetime ago but u.s. equities gained thanks to those lower yields. the s&p 500 rose for a fourth day, the nasdaq is up 3.5% so far this week and you have got u.s. futures currently pretty flat. but just slightly pointing to an even higher opening. the dollar retreated, the yen strengthened and they had to ask myself who needs yen to mention when you have an economy that seems pretty weak. speaking of asia let's get over to averill for an update on how asian markets are faring. >> we are seeing asia stocks rising on the back of bad news for the u.s. economy. as you said earlier being good news for the stock markets.

that being said we are seeing the headwind in the form of the chinese indices despite signs that manufacturing in china is bottoming out. we are seeing those continued concerns about the property downturn and for much of this week we have been talking about how they have been squarely focused on the country garden, once the nation's top property developer, they have since posted record losses and warning of a possible default. it says as its financial performance worsens it will be increasingly difficult for it to meet its debt obligations and that might mean a default as possible. worth noting here is the property sector is of such huge concern because it accounts for about a quarter of china's economic activity. we have seen some measures such as major cities including -- relaxing some of the restrictions relating to home

purchases so that might explain why country garden stock is rising today but overall those concerns about the property sector are still waiting on the china indices. they are headed for monthly losses and are also expected to outpace the losses we are seeing in the msci asia pacific itself. headed for its biggest monthly loss since february. lizzy: thank you, averill and singapore for that check on asia markets. let's get back to her morning roundtable. today i am joined by tom and sophia. let's get to those ubs earnings. it has posted its biggest ever quarterly profit for a bank in the second quarter as a result of its takeover of credit suisse. the swiss lender also confirmed it is going to fully integrate the local business of its formal rival -- former rival by next year. tom we have these earnings this morning pretty eye watering. tom: it is hard to move away from that gigantic $29 billion

figure. that is the bad goodwill as it will so digging into the underlying numbers they look pretty good to me. in terms of ubs they are saying we expect underlying net profit for the second half to be positive and in terms of those outflows it looked like ubs was still bringing in client money and at the wealth unit credit suisse the outflows seem to be stabilized and then big news around the credit suisse unit. lizzy: obviously these numbers have just dropped but any surprises so far? tom: it is largely in line but one of these decisions might be delayed, they are talking about 10 billion of cost savings by 2026, all of this has been pretty well communicated by the bank and -- comments in the release today say it's all about the execution from here. a lot of challenges ahead so far no horrible surprises. lizzy: what do we know about when the job cuts,, are they going to be in waves? do they know how many jobs are going to be affected by the takeover? tom: they are reporting this year at least another set of job

cuts this month and then in the coming months in the s -- rest of the year. at that is one of the big numbers that is not showing results for obvious reasons, one at ubs wants any big figure of how many jobs there are looking to cut but from what we understand they are looking at 120,000 person bank and looking to cut something like 30%. according to our report. lizzy: what about the new perimeter of the business, do we know which bits are going to be cut? tom: it is the non-core unit, i think the focus there is basically they're trying to reduce weighted assets if they can and i think that investment bank and with trade and also some of the dealmakers they are probably the ones that are going to face some of the biggest cuts. ubs probably looking much more toward the wealth management or asset managers as to where they want to grow. lizzy: thank you to tom and we will keep going with more analysis of those earnings throughout the program, we will also have an interview with the ubs ceo in the next hour right

here on bloomberg. let's now get back to those china pmi's, actually stronger than anticipated when it came to manufacturing but there was a small mess on services. overall it was a higher composite print. could we see actually both manufacturing and services in expansion territory next month? sofia: that would be the good news. i would say the manufacturing beat was better than expected, still in contraction territory so there is still more growth to come from there and if you really dig into it and think where does beijing want the growth the come from it would be from services so actually it is the wrong mix of beat if i can say that for authorities so they will look to boost demand in net services -- the net -- the services sector of the economy. it is traveling in the right direction that is the key thing. these numbers do capture

companies linked to the government's of are the larger companies and this is highly correlated to industrial production. it is a very different segment to the economy. we do get the pma's -- pmi's tomorrow and that captures the private sector and more of the coastal towns of china so that is more closely correlated with exports. it is a muddy picture here there is still a lot more data to look at but traveling in the right direction may be just not the right mix for beijing. lizzy: trying to get good news here but i know bloomberg economics says china's growth problem probably won't help to solve jay powell's inflation problem. sofia: we have been talking for months about how china has been exporting deflation and if you look into the pmi numbers it looks like those deflationary pressures, the output prices from china's factories are actually easing. whether china or not, whether

china's adding to the deflationary picture for the global economy and actually helping jay powell bring down inflation over in the u.s., that could actually shift as china's factories improve and we do get higher input costs prices as well for china. i think we can read a bit into good news here because growth in china is good for growth globally and we are seeing growth pressures especially here in europe so whether china ramps up its support for the economy and offsets weaker growth in europe, that could be a balancing act that might be needed. lizzy: let's get to the u.s. growth story because we had more eco-data yesterday at u.s. second-quarter gdp revised down to 2.1% from 2.4. also the adp report showing firms added fewer than expected jobs in august. the labor market still resilient , where does it leave the fed? we have more pce numbers as well. sofia: it looks like we are

getting downside surprises in u.s. data in the market tends to react positively to that and then decide actually this is not so good news because the economy is still strong. jay powell still probably has a difficult wage problem and that will feed into the inflationary pressures. we are seeing the direction of travel in the right direction. the labor market is still quite strong and whether we see a decline, economists are expecting a softening in that pce number today. whether or not that is enough to really ramp up a pause in september depends on whether that narrative is still sticky. i think the market is obsessed over tomorrow's payrolls numbers but everything is pointing to downside surprises. but maybe not a slowdown in those pressures, as much of a slow as jay powell in the markets might want. lizzy: we will have full

coverage of that jobs report tomorrow but let's focus on what else we have today. 10 a.m. london time we get euro area flash cpi for august, the headline level and consensus is for a drop from 5.3% to 5.1%. what is crucial here is the core reading that is only expected to slip marginally it so keep an ecb hike in play. inking about the last decision at 12:30 p.m. will get the latest ecb accounts from the 27th of july meeting and finally at 1:30 p.m. get the personal income and spending data for july. this is the fed's preferred measure of inflation as we were just discussing pce. getting back to the european data, could we see big moves in ecb off the back of the cpi numbers? sofia: i think we could, we saw what happened when we had just a tiny marginal hotter than expected cpi print and regional german numbers yesterday and in spain. that was really small and again

we started with the conversation of whether actually inflation is running hotter than expected in certain pockets of the european economy. spain is actually the one place where inflation is pretty low so if that is where we are -- even in spain we are getting upside surprise that sets us up for a harder print in europe. we do get some seasonality, energy contributions are likely to have a smaller impact. but wage growth, sticky wage growth will send that number up. lizzy: ok so our markets guru thank you for being with us. you get a roundup up of the stories that you need to know to get your day going in today's addition of daybreak. this morning they are leading on earnings they also have a story about carried warned the chief market strategist for j.p. morgan asset management but also economic advisor to the u.k. chancellor jeremy hunt. she suggests a rethink of the bank of england's 2% target and finally they have that china

services pmi that we were just discussing. terminal subscribers can get all of that and more by going to d.a. why be go coming up prudential says it plans to more than double its new business profit by 2027. ceo joining us live next. this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe it is 6:17 a.m. here in the city of london prudential plans to more than double its new business profit by 2024 as it continues to pivot to asia and africa. the insurers new business profit grew to $1.49 billion topping average analyst estimates. we now have an interview for you with david ingles, he is in hong

kong sitting alongside prudential ceo. david: he is here with us on set, to talk us through these earnings. a good set of earnings beat across all metrics. to be completely honest when i look at a financial statement venture i cannot understand most of these things. most of these are greek to me so why don't you just tell me how you think you did in are you satisfied? >> it has been a good year and thank you for having me. we are very excited about the set of results we announced yesterday. i thought they were very strong and new business profits grew by 39%. if you remove the impact of interest rates the new business profit, grew by 52%. it was primarily driven by a very strong sales performance. sales 240% -- 42% year on year. largely driven by a strong rebound from the agency channels. during the pandemic the agency

movement was quite constrained so as the last of covid restrictions went away agency came back. we almost doubled the out volumes on agency and we have a very strong assurance channel to complement that and that did almost a billion, in fact in excess of a billion-dollar sales. hong kong led the strong growth but we also witnessed new business profit growth in 10 out of 13 asian markets. and all of our african markets have demonstrated sales growth. they were an exceptionally strong set of results and we are very pleased. david: hong kong, are you back to pre-pandemic levels. where are we on that conversation? >> quarter to we crossed the pre-pandemic and it was largely on account of the strength that we saw growth on the domestic hong kong side which grew impressively. also the fact that we now have a market leadership position in

the mainland chinese visitor sector. david: how does that do, do you distinguish that as a category? >> yes we basically look at categories and mainland china visitors -- it was very little on account of the closure last year. the growth was obviously amplified but the important piece was it demonstrated the core set of strengths that prudential has as a company and both on the domestic side and mainland chinese visitor segment side. some really impressive growth. david: and how is the business doing on the other side of the break are of mainland china because there is a little weakness there. >> i believe from a medium to long-term perspective the growth drivers in china mainland remain intact. if you look at the aging population, the high life expectancy, i believe that is actually going to cause a greater acceleration in demand of savings, retirement and health products.

at the messages we are getting is that china is going to be focused on quality and sustainable growth. we took some decisive steps to change our product mix which had an impact on both value and volume but from a longer-term perspective given our strength in china mainland, we have a joint venture with city and access to 100 cities across mainland china. medium to long-term we are optimistic about china's contribution to our growth strategy. david: i am curious what of the products you think will do well on the chinese --? >> i think it is a spectrum of products. at the end of the day you have to put the customer in focus and if you look at the customer needs they range between savings obviously with the aging population customers are concerned about their retirement. health is a big topic. not only in china mainland but across the country in this part of the world, expenses range

anywhere from 20 to 50% so a range of opportunities. as in asian and african insurer -- leading insurer we focus on addressing the range of needs the customers have. david: it looks like things are going well which takes me to my next question, this new strategy. nothing looks new about it though. what has changed? >> we did announce our new strategy -- david: what's different? >> the core piece is we believe that there is a huge opportunity for us to accelerate value creation for all of our stakeholders. the strength of our strategy in my view is in its simplicity. three strategic pillars, customers, technology driven distribution and scaling of health business. three enablers that will be powering strategic enablers. technology of course are people and our wealth investment

capability. the bottom line there is we believe prudential has an unmatched opportunity for value creation through operational and financial discipline. that is what we announced yesterday. david: the expectation is that you get new business by when? >> we announced to financial targets 15 to 20% between now and 2027 so effectively doubling a new business profit between now and 2027. as well as accelerating -- generation to growing double digits during the strategy. david: a surplus generation? >> basically the earnings that you get from the business that you create than distribute or reinvest in growing your business because at the end of the day the businesses that we operate and are present in the market in the markets we are present in, they are very high in nature and payback. we have an opportunity to then deploy that service capital --

surplus capital to create further growth as we serve our customers. david: nice to see you let's do this again soon. have a good weekend ahead. ceo of prudential and lizzie back to you. lizzy: bloomberg's david and glass, thank you for that interview. we will be back with more on the ubs earnings next. stay with us, this is bloomberg. ♪

lizzy: welcome back to bloomberg daybreak: europe if you are just joining us it is 6:26 a.m. here in the city of london and we have more breaking earnings for you. it has missed estimates when it comes to recurring operating income for the full year, coming in at 3.35 billion euros, the estimate was for 3.47 billion euros.

keep an eye on those shares on the euro index in paris later in the morning but i also wanted to have a look at the month as a whole because of course it is the last day of august. summer is drawing to a close and what a month it has been, rates have been all over the place the two year treasury yield -- bouncing up to five point 1%. you have had a stronger dollar, we could china data and mixed earnings. but there is not a single sector of the s&p 500 the ends of the month higher. here in the now we have had ubs earnings, we will have an interview with the ceo from zürich. that is a hi, i'm katie, i've lost 110 pounds on golo in just over a year. golo is different than other programs i had been on because i was specifically looking for something that helped with insulin resistance. i had had conversations with my physician indicating that that was probably an issue that i was facing and making it more difficult for me to sustain weight loss. golo has been more sustainable.

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lizzy: this is bloomberg daybreak: europe." ubs profits smashes records. $29 billion from the credit suisse deal. china's services pmi slows as a deepening real estate slope saps consumer spending. a pickup in new orders sparks hope that the manufacturing slump is bottoming out. treasuries gain and u.s. stocks rise for a fourth day after weaker data raises hopes of an end to the tightening cycle. we look ahead to the release of the fed's preferred inflation gauge. welcome to thursday. bad news equals good news. that narrative continuing in the latest u.s. eco-data. it pointed to slowing u.s. growth, both gdp and second-quarter core pce revised lower.

even more bad news is likely to come today. those numbers supported by word the fed is going to ease rate hikes. swap contracts pricing in less than a 50% chance of a quarter-point rise this year. treasury yields extend their retreat from last week's year-to-date highs right across the curve. most yields hit their lowest levels in more than two weeks. tuesday it was markets were putting a 75% chance of rate hike. u.s. equities gained thanks to lower yields. the s&p 500 rose for a fourth day. the nasdaq is up 3.5% so far this week. as things stand, u.s. futures are pretty flat. let's get more on those ubs earnings we have had in the past hour. it posted its biggest ever quarterly profit for a bank as a result of its emergency takeover of credit suisse. the swiss giant also confirmed it would fully integrate the

business of its former rival by next year. for more we are joined by bloomberg's leonard can sure but. your highlights from this report? leonard: i have to start with record profit. the largest ever windfall profit recorded by a bank only because of the steep discount at which ubs has bought credit suisse. it is also worth mentioning the profit that only came from ubs was $2 billion. roughly in line with previous quarters. fairly reassuring. we have the confirmation the swiss bank will be kept and fully integrated and this has always been ubs's preferred option because it will not have a domestic competitor. there was a note from citi going around saying the combined units will account for 35% of deposits in switzerland. fairly significant i would say. lizzy: it would have been

surprising if that did not happen. outflows have been a huge issue for credit suisse. what did ubs say about client activity? >> ubs's wealth management business has $60 billion of inflows in the second quarter, the highest second-quarter inflow for ubs in over a decade. they also said they saw the trend continue into july and august. this has been one of the key questions for them ahead of earnings. it shows that to some extent ubs has been able to win clients over from credit suisse. lizzy: we are going to be hearing from sergio ermotti, the ceo, shortly. i wonder what questions ubs still has to answer now. leonard: not just for markets but also employees crucially, the job cuts. how many people will go and where they will go is crucial. ubs today announced a cost

savings target for the end of 2026 of more than $10 billion. one crucial question will be where savings will be made and another one which is very important for investors, the resumption of buybacks. ubs has stopped buybacks because of the deal. i looked for it in the statement and found it in a footnote of the presentation that basically said they give an update on any resumption of buybacks by full-year results so investors will have to wait until early 2024 before they get an update and more clarity. lizzy: nothing gets past leo and his ctrl-f. as we mentioned in just under half an hour's time, do not miss our interview with the ceo of ubs, sergio ermotti. let's get to asia for how markets are faring. >> we are seeing asia-pacific

stocks erasing gains from earlier in the session despite the initial optimism of the outlook from the federal reserve. traders are now digesting the latest batch of economic data that came out of china. signs of the services sector contracting or rather slowing but manufacturing bottoming out. the concern really is focused on the property downturn and key among that, the concerns about, why do we care so much about this company? it was once china's top property developer. the worry is that now it is close to these record losses and it is flagging a potential default, there could be contagion risks. we could see some of the countries banks, the asset management companies as well as local government financing vehicles. the concerns about the property sector as well as the real estate sector are front and

center and that is really dragging the sentiment. the csi 300 as well as the hsi both headed for monthly declines that could outpace what we have seen, losses on the msci asia-pacific, which itself is headed for its biggest multi-loss -- biggest monthly loss since february. lizzy: thank you for the update. let's get deeper into the china data. pmi data. manufacturing activity contracted for a fifth consecutive month in august. pickups in new orders and outputs provided hope the worst of the factory slump might be ending. for more am joined by bloomberg's joe thesis. break down the data for us. jill: i think this is really about the mixed picture idea. there are signs about them as an within the factory sector. pmi contracting but you saw underlying gauges. orders picking up.

that was positive. you saw some improvement in supplier delivery times, production. that is what was giving markets this kind of hope that at least on the factory front we are seeing a bit of a bottoming out, but yes, there is some weakness in the services sector that was concerning. while the overall nonmanufacturing gauge, which include services and construction picked up, services that expand in august, you still saw an easing that was more than we were expecting. remember, this is an economic recovery that has been driven by the services sector, by consumer spending, particularly within that sector. any idea that maybe that is slowing more than we thought is cause for concern for the economy. lizzy: the pboc is drafting measures to improve funding for businesses area that includes the property sector. could it be that depressingly,

china property is too big to fail, too big to save? jill: we will have to see what comes out of these meetings. the latest on the pboc meeting is the central bank for the second time in august met with private firms, developers were included, but what they ultimately want to do is encourage financial institutions to lend more to the sectors, help them out a bit more. things in that meeting were certainly encouraging, having financial institutions set targets for how much they are servicing the private sector for example. as we have heard from a lot of other economists we still have a lot of concerns over demand within the economy. we have talked on this program about the idea of a looming default for a major developer within china. there's a lot more to go before we are out of the woods.

while we have talked about how china is not ruling out any bazooka stimulus or anything, what we want to see is where these measures go from here if there is more in terms of incremental, if there is a drumbeat of policies moving forward to try to help the economy and particularly the property sector. lizzy: nice to see you as always. now let's take a look at the big news stories we are looking at around the world. bloomberg has learned french billionaire francois henri pin ault is close to a deal to buy a majority stake in creative artists agency. he is seeking the majority stake held by private equity firmtpg. the talent agency is the largest in hollywood and home to scores of actors, directors, writers, and producers. now to italy where the governing coalition is said to be considering selling minority stakes in selected state owned

companies to boost the country's public finances. ministers are evaluating the disposal of assets including a stake in the state railway while still retaining control over the businesses. bloomberg understands prime minister maloney told a cabinet minister they need to pare back spending to pay for a tax cut and help families who are in need. here's what we are looking for today. at 10:00 am we get euro area cpi data. at 12:30 the account of the ecb's july meeting will be released and an hour later we will be watching for the u.s. eco-data. even more of it, including the fed's favorite measure of inflation, pce. the ecb central bank -- the ecb's isabel schnabel makes remarks at an inflation conference organized by the ecb and the cleveland fed. we are also going to look next

at where the fed can go in terms of its inflation fight after that weaker than expected u.s. gdp data. we will also look to the key u.s. inflation data that we get today. the pce, that is next. this is bloomberg. when it comes to getting your flu shot, cvs is pretty... flex. wanna schedule one online while prepping dinner? gravy. avoid the wait by scheduling for you... ...or the whole crew. or if you prefer to just pop in? do you. and if you wanna even tack on a covid-19 vaccine to your flu shot, feel free! and speaking of free? our flu shots are... well... free. really? yes, really. healthier is getting a flu shot on your schedule. cvs. healthier happens together.

lizzy: welcome back to bloomberg daybreak: europe. it is 6:43 a.m. in the city of london. u.s. futures pretty flat. let's get you up-to-date on our top stories. bloomberg has learned that tesla's plan to purchase hard to get construction materials is being investigated by ross acute or's. the u.s. it -- investigate by prosecutors. the probe is looking at whether the project was an appropriate

use of company funds. bloomberg has learned that apple is testing the use of 3d printers to produce the steel chassis that is used by some of its upcoming smart watches. this would signify a major change to how the company manufactures products and sources say it will reduce the amount of time it takes to build devices while also helping the environment by using less material. next, salesforce shares have climbed post-market after its third quarter sales topped estimates. revenue and profit forecast topped estimates, signaling progress in the campaign to cut costs. now back to the u.s. eco-data. weaker than expected gdp data for the second quarter. spurring a raft of peak rate bets yesterday. today we look ahead to europe's pce deflator data.

that hits the terminal at 1:30 u.k. time. for analysis, mliv strategist mark cranfield joins me now. mark, thank you for being with me. it seems this u.s. data has been the intervention the boj has not yet made. is it a game of chicken? mark: it is helping out for japan. you can see dollar-yen especially, getting to turn lower as the dollar is softening as other currencies. we hit 147 earlier in the week for dollar-yen. it's mostly from the u.s. side. there is not much happening on the japanese side of the story. it is mostly because as you say the u.s. data is showing cracks. there are signs of consumer softness. other data suggesting the u.s. economy is heading towards potential soft landing which would please the fed as well.

it would be good news for the bank of japan. if the yen starts to turn, japanese authorities would not necessarily have to do any intervention. so far they have refrained from it even though we have reached levels we have not been far away from last year. they have not had to yet. bank of japan would certainly like a bit more time before it changes policy. it could be a situation where as we go into september everybody could be happy. it is one of those bad data is good news for everybody situations. a little bit of a goldilocks scenario which we have seen this week. if the pce data comes in close to forecast, it is happy days for everybody. central banks, the preferred choice is not to do anything. suddenly the data is giving them reason to stand on the sidelines and just watch what happens. lizzy: speaking of the data, we have the china pmi's slightly better than anticipated overall. i'm looking at the hang seng currently down 0.5%.

same for the csi 300. that's not what was expected. is it? mark: that's a little misleading. we did see improvement in the markets this morning when the data came out. don't forget there is a huge typhoon heading for hong kong. traders here -- almost certainly there will be no business in hong kong tomorrow. the typhoon is going to hit and you have to close down the markets. really what they are doing is just scrambling to get the necessary stuff done and to get home safely before the typhoon hits hong kong. that is a little misleading. the data was better than expected. initially we did see the markets do well on that. there's been a lot of good soundbites coming out of china about how they are going to help companies. they are going to increase lending to the private sector and various other things. every day we seem to get incrementally the news is getting better and better for

what chinese authorities are offering. the problems of course are huge especially in the property sector. but each day we get more good news. lizzy: thanks for that explanation, mark. weatherman and mliv strategist. who knew we needed that analysis? there's an interesting story out for boe. the economic advisor to the chancellor suggesting the boe should have a different target or at least revise its 2% inflation target. very briefly, would a remit tweaked be the right move? mark: other central banks have said they would reconsider inflation targets when the whole thing settles down. it's probably early, even the u.s., australia, even europeans have hinted maybe the old inflation targets do not work anymore. they are more likely to address it once they are sure they have beaten this current wave of inflation. probably a discussion for next year. not this year. lizzy: thanks to mark cranfield

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lizzy: welcome back to bloomberg daybreak: europe. it is 6:51 a.m. in the city of london and just over an hour ago we got the latest ubs earnings. they are the first earnings since its takeover of credit suisse. these numbers for the second quarter. you did see indeed profits set a record. $28.9 billion in the second quarter. that's after a $28.9 billion of negative goodwill from the credits we steal. the profit before tax would have been $1.1 billion if you stripped out the negative goodwill as well as the cost of integrating and acquiring credit suisse. the bank also noted to billion

dollars of that was from the ubs side. ubs says it sees positive underlying pretax profit in the second half of 2023. it also confirmed are reporting that it's going to keep credit suisse's swiss unit. ubs said it is engaged with credit suisse quiets -- credit suisse client seeing confidence returning and positive trends into positive flows continuing into july and august. those shares are up over 30% year-to-date. options implying a one-day move of 4.8% after the results. we will keep an eye on that. we are going to be bringing an interview with the ubs ceo sergio ermotti from zurich coming to you in a few minutes. it's the end of the month. let's just take a moment to reflect on the price action. rates have been all over the place this month. two year treasury yields hitting a low of 4.71%, bouncing up to

5.1%. stronger dollar, weaker china data, cooling momentum in japan also weighing on stocks this month. the s&p 500 still heading for the worst month since february. and september is historically the weakest month for the s&p 500. you have all of that to look forward to. but stay tuned for that interview with sergio ermotti coming up next right here on bloomberg. next is markets today. this is bloomberg. this is bloomberg. ♪

tom: this is bloomberg markets

today. mark cudmore joins us from singapore to take us through the market action this hour. the cash trade is less than an hour away. here are your top headlines. ubs tops the biggest ever quarterly profits for a bank recording a $29 billion gain and announcing it will fully integrate credit suisse but the merger could cost more jobs. treasuries gained an u.s. stocks rise for a fourth day after weaker data raises hope of an end to the tightening cycle. we look to the release of the fed's preferred inflation gauge. chinese factory activity continues to slow despite the slump. real estate woes continue as country garden warns of default. mixed picture when it comes to china data. i wonder when it comes to the u.s. and the sentiment from the u.s. consumer whether you pull

forward your views and your forecast on a u.s. recession. mark: i have not change the timing of the u.s. recession. it is fourth-quarter but we are starting to see the cracks. i am now finally for the first time since 2021 -- i think u.s. two year yields have peaked. one of the calls is always thinking the u.s. to your yields will go higher. i reiterated that only two weeks ago but now i think they probably have peaked as we are going to start thinking about the recession again. we have passed growth optimism. in a short-term markets were quiet today overall. my conversations with portfolio managers today, people are really focused on the long-term dynamics. it is almost as if they got a bit exhausted by the short-term news flow. mark: the two-year and the call -- tom: the two-year and the call as we look at the u.s. treasury curve. markets now pricing in a less than 50% chance of an additional

hike coming through from the fed . mark stays with us to give analysis and context around what we are seeing. the big corporate story of the day, of the hour, arguably the week, is ubs of course. in terms of the top line the second quarter net income of 29 billion u.s. dollars including a $29 billion negative cs credit suisse goodwill of course. the accounting coming through as they absorb credit suisse. francine lacqua has been speaking to the ubs ceo sergio ermotti about the challenges of integrating the two banks. take a listen. >> the fact we are going through a massive exercise, the first-ever merger between two banks of this size but we have to stay close to clients, field expectations, help them navigate