>> good morning and welcome to daybreak europe. israel widens its ground invasion of gaza sending in troops and tanks warning of a long second stage of the war. prime minister netanyahu facing calls to resign over the security failings ahead of the hamas attacks. in around the foreign minister warming -- warning the united states over support for israel promising new fronts in the war. mixed sentiment ahead of major central bank decisions on corporate earnings. hsbc kicking off with a $3 billion share buyback announcement. that comes after the company missed estimates. a lot of geopolitics back in the fray. central bank decisions on corporate earnings. how do you trade this monday morning? some positive sentiment when it comes to equities trading but i'm going to caution you to really look at the green on the screen as a clearer easing of a

bid for safe havens because there is a little bit of interesting dynamics underneath the hood. i'm going to start with euro stoxx 50 futures. you have seen that paired, a lot of low-volume. we have the boj this week, the fed, the boe, not to mention corporate earnings, apple later this week, a slew of bank earnings. now a lot of that is going to feed into the sentiment which is why there is investor caution right now when it comes to the volume trade. ftse 100 futures higher by 0.2%. a bit of a defensive bid for nasdaq 100 futures. that is pretty normal ahead of the slow central bank decisions. a lot of fund flow exiting asia. exiting europe as well. where do you park your cash when you do not know where to put it? american assets to be the answer. you have to look cross asset. where stocks are seeing broad

flow, bonds are not. look at the 10 year yield higher by three basis points. what is interesting is that is going to feed into the fx story as well. euro-dollar at 105. as we get more out of the central banks, the question of euro-dollar parity is back on the table, virtually unchanged but it is the biggest contributor to the bloomberg dollar index. boj decision tomorrow, a lot of cross currency, we are going to get an update of asia but dollar-yen, 14964 is where we are and brent crude shy of a 90 handle not in line with the positive risk sentiment in futures which speaks to the confusion, the lack of market narrative that goes cross asset. geopolitics are going to be a big part of that story. kriti: that is where i want to go next. israel has widened its ground offensive in gaza with prime minister netanyahu morning of a, quote, quote come along a

difficult campaign. this comes as the international criminal court chief prosecutor asked that israel may, quote, discernible efforts to ensure civilians get food and medicine. >> we want to underline clearly to israel there must be discernible efforts without further delay to make sure civilians receive food, medicine , and anesthetics, morphine. we hear reports of operations taking place without these basic medicines as if we were in the middle ages. >> inside the gaza strip, it will be long and difficult and we are ready. this is our second war for independence. we will fight and will not back down. we will fight on the ground, the sea, and the year. we will eliminate the enemy on the ground and underground.

we will fight and we will win. it will be the victory of good over bad, of light over darkness, of life over death. kriti: let's get more on the ground. oliver crook is live in tel aviv. bring us the latest on the conflict. >> as we enter the fourth week of this war we are in a new chapter, the next stage as benjamin netanyahu said. how do you define that? by a more concerted land components. a greater ground operation that still falls short of the full-scale invasion many people had anticipated when the attacks occurred on october 7. this is something the israelis have been guiding us to a little bit to change expectations about what this war, ground war would look like. there is a more progressive approach and that is what is being embodied. the question is, how long will this take? benjamin netanyahu said this is going to be a long and hard

battle. the officials we have spoken to, that could mean six weeks or six months and it is a very live issue. why are they doing this? there's a question of passages, so more than 200 people held by hamas. there's also the question of escalation. this is a primary one for the region and also globally. we've heard criticism from saudi arabia and the emirates saying this step up in the ground operations, criticizing that. iran has made the same pronouncements we have been hearing the last few weeks. we still see skirmishes in the north with lebanon nothing that is a dramatic step up. there are reports of some back and forth within the west bank. these are things we need to watch critically. we are hearing from lebanese television, the news we might hear from the hezbollah secretary-general on friday. these are things we need to watch in terms of escalation. kriti: that is speaking a lot to

the geopolitical story and the regional conflict but let's talk what's happening locally in israel. a lot of geopolitical strategists saying as soon as the ground invasion is over in whatever capacity it does eventually take on, it is going to lead to some kind of exit from prime minister benjamin netanyahu at the end of the day. he's facing internal pressure, his unwillingness to accept responsibility for the hamas attack. there was a deleted tweet over the weekend. can you walk us through the last 48 hours in the world of the israeli prime minister? >> it has been a very complex and difficult 48 hours, as is often the case. let's place this in the context of benjamin netanyahu as prime minister who has been running the country on and off for 14 years and in the last year has been reaching a huge amount of protest from the israeli public, many of them support him and his judiciary form, many do not. many people taking to the street

in objection. they have all rallied behind the military effort in the lead up to this is to see him go out on x and say he was not briefed on any threat and put the blame on the security apparatus while people have been very withheld in terms of their criticism of the prime minister particularly in international media, this came out very badly. he came under pressure even within the war cabinet. he deleted the tweet, he apologized, but it speaks to your point. the blame. he has not accepted responsibility. he has said there are going to be tough questions that need to be answered after this and by himself but that is as far as he has gone. lacing this in a broader context, whatever comes next in israel politically will be fundamental to the future of the country but also how they deal long-term with the palestinian question. kriti: on top of that, a lot of the left kind of taking i want to say initially the side of

israel but now it is becoming a more complicated question. where does that leave the question of aid when it comes to the united states? >> let's deal first with the aid to israel because this is where we have some lines that came out over the weekend. republicans want to push for an israel only aid package of $14 billion, they want to put that first to vote. this comes as biden was asking for over $100 billion to deal with aid to israel but also to deal with ukraine. that was the lion's share of the package. republicans are less thrilled about that. this package also had provisions for taiwan, fentanyl, the southern border. they want to disconnect these things. in terms of gaza, another critical issue, requests from the united states, vocally, there needs to be more aid going in, this is a challenge. 33 trucks crossed yesterday into gaza according to the u.n. but it is still a trickle compared to what is needed.

we understand from the israeli army, they said there will be a substantial increase in what is allowed to pass but we have heard things about aid and what we need to do is see more aid to cross in order to deal with the humanitarian situation which as we know is devolving in gaza. kriti: and of course as we get potential confirmation of the house speaker in the u.s., it looks like that aid may be on its way. oliver crook in tel aviv. we thank you for live reporting as we get more on the story. you talked about the geopolitical ramifications but a big player in the middle east is iran. we had an interview with the iranian foreign minister who spoke with manus cranny in new york ahead of israel's latest escalation of its ground invasion. take a listen to the conversation. >> as long as the syrian government, they ask us for help and within the framework of our

defense cooperation, we will act. manus: are you scaling up troops to syria? are you sending more? right now? hossein: if it takes -- if fighting leads to terrorism for that, the syrian government asks us to do that, we already have. manus: have they asked for more troops? you already have? hossein: yes, when they were fighting isis. manus: since october 7. have you sent more troops since october 7 to syria? hossein: no. i do not think so. manus: are you sending more naval vessels to the gulf? hossein: are you putting me on trial? manus: i am trying to understand

respectfully, minister. i'm trying to understand the difference between i suppose escalation and de-escalation. the world wants to understand where you are in terms of your assets. hossein: after the seventh of october, how many weapons, american troops and weapons have been sent to tel aviv? can you give me the number? how many aircraft, trucks? manus: you are the foreign minister. i would expect you to have access that information. i am simply a journalist. i'm trying to understand for our bloomberg audience with the state of play is in the world and with that in mind, you have obviously been very critical of these additional troops, additional deployments to the region. i want to understand, for example, you have a great influence as a nation over the trade routes of the world in the persian gulf, in the red sea.

our audience will want to know, will you be a protector of those trade lines or a disruptor? that is what i'm trying to get an answer to. hossein: we have not dispatched any new forces and new troops to neither syria nor iraq or other parts of the region. we are not just onlookers. we have not just been watching developments. at any time we think it is necessary, proportionate to end in accordance with our national interests, at the right time and place, we will make the decision. i want to warn right here that the continuation of the situation, the killing of people in gaza, women and children,

will make the situation get out of control in the region. kriti: iran's foreign minister speaking with manus cranny. there are going to be international repercussions on geopolitics but the first place you are going to see this for a financial audience is going to be the middle eastern equity markets. they have not opened yet in today's session but as of yesterday this is the last close. he saw the ta 35 higher by 1.3%. that does not speak to strength into the conflict. i have a hard time making that direct translation or that direct read across. i think it is important to keep in mind that because the index has been under pressure it is natural that when the news of a ground invasion comes universe the trade priced into the market . that is what you are seeing with the 1.3% gain. the egyptian index on the

downside down by 0.8%, that is a function of the aid story and the concerns around that index down by 0.8%. the qatari index unchanged. we are going to keep an eye on that. a quick check on the israeli shekel because that is where you have seen the most weakness in terms of the fx space. it is at about 407. that continues to be a theme. jp morgan calls for a weaker israeli economy. the shekel is reflecting that and has been for the broader part of this month. lot we are going to monitor. there are plenty of other stories around the world. hsbc announcing a buyback program, third-quarter process miss. -- profits miss. this is bloomberg. ♪

kriti: looking back to daybreak europe. hsbc shares are trading lower today. the bank has announced a new $3 billion share buyback program but it did report a third-quarter profit miss thanks to rising costs. tom mackenzie spoke exclusively to the hsbc ceo noel quinn a little earlier. noel: i'm very pleased with our profit for the first nine months of this year. that puts us on a return tangible equity of around 17% from nine months. very pleased with $3 billion buyback. that takes it to 7 billion for the full year. i'm also pleased we have announced another $.10 dividend. in terms of the miss people have

talked about i want to draw attention to the fact we booked losses on treasuries because we were seeking longer duration, higher yield. the last 600 million in q3 will be fully recovered over subsequent quarters. that's all about our hidden strategy. it is the timing difference between the loss today and future profits over subsequent quarters. we are well-positioned. we have good momentum in the business. that is evident in our wealth performance. our trade in assets, wealth balances were up. we took in around $34 billion of new invested assets in the quarter, bringing our total growth on net new invested assets to around seven $7 billion for the past 12 months. good momentum in diversifying

our revenue stream. tom: the buyback does come in higher than estimates. 3 billion u.s. dollars. you know this better than most. investors always want more. is there scope for more? noel: we have strong capital generation. we have announced when we sell our canadian business in q1 it is our intention to do a further special dividend in q1 of $.21. we will consider what we do with the remaining of that disposal. i think we have a good capital regeneration this year and good capital generation prospects for the next 24 months as well. we are in a good position to reward our shareholders for their patience and loyalty over the past few years. tom: on the canadian business there has been pushback from the opposition party in canada

around rbc taking over the canadian business. what gives you the confidence, you have reiterated you think the deal does get done. what gives you the confidence that indeed does come to pass? >> we have good dialogue with the canadian authorities and regulators. we continue to work on that basis. tom: i want to talk about the china part. half a billion u.s. dollars in terms of provision charges on losses. how do you see the commercial real estate story in china evolving? is it fair to say further charges of that scope are going to be coming through on the quarters ahead? noel: we signaled last year we had a plausible downside scenario, the potential for an extra billion dollars of

ecl's on our china real estate exposure. if you look at q3, we have booked around $800 million of the $1 billion possible downside. there's a potential for a top up to that. but i think we are relatively comfortable with where we sit at the moment on our provisions. by the end of this year we will have been will provided on our exposures in china. clearly it is an evolving situation. we will keep it under review. how we think we are going to be in good position by the end of this year. kriti: hsbc ceo noel quinn speaking with our own tom mackenzie. as we get a check on those shares they are now down 0.5%. they were much higher on those earnings. it was the reaction of the $3 billion share buyback. as you heard, there are issues in fundamentals. that is catching up to them.

when he talks about early trade in the european session. let's get a look at asian markets more broadly. avril hong standing by. avril: we see how those fears easing about the conflict in the middle east is affecting the sovereign bonds. we see selling in that space among the g10's especially. it is not like investors are piling back into equities. there is still little risk appetite. the benchmark is negative today. we are seeing the japanese benchmark actually underperforming as we keep a close watch on what we are going to get out of the boj with the decision due tomorrow. pairing the losses of 1.3% earlier. we also have the two year government bond sale. actually showing the lowest bid to cover ratio since 2010. even that end of the market is pricing in the possible risk of

a policy tweet from the japanese central bank. let's look healthy chinese assets are faring. there's outperformance, the csi 300 is climbing today on the back of the boost of sentiment potentially from the chinese were conference for the finance sector. there is expected to be a focus on financial stability and ensuring that we do not see further fallout from the property crisis, deepening further into the banking sector. that's a bit of a tailwind. the csi 300 is higher for a fifth straight session, a bit of strengthening as well on the chinese redman me versus -- chinese renminbi versus the u.s. dollar. today was supposed to be make or break for the property developer evergrande and liquidation hearing but we did not actually get that. what we got was adjournment. this pushes back the timeline

for what we are going to get of the property development but gives it a shot at restructuring. kriti: certainly something we are going to be watching closely. we thank you for the update. plenty more ahead, stick with us. this is bloomberg. ♪

kriti: welcome back to "daybreak europe." former u.s. vice president mike pence has ended his presidential nominee campaign in an unexpected early exit. his campaign was struggling to raise funds in his attempt to unseat donald trump. pence said, quote, this is not my time, bringing an end to the campaign and an end for the party to return to a more

conservative -- traditional conservative stance. stellantis has come to a tentative agreement with uaw but is facing a strike in canada after talks failed with 8000 workers in that part of the world. in the u.s. the union is expanding at strike against general motors. the last of the big three yet to agree to a deal with workers walking out of plants in tennessee on saturday. there is plenty more ahead, real market read through. the uaw changing its strategy. we are going to dive into that throughout the hours ahead. stick with us. this is bloomberg. ♪

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.

kriti: welcome to open daybreak -- welcome to "daybreak europe." israel widens as ground invasion of gaza sending more troops and tanks and warning of a long second stage of the war. prime minister netanyahu faces calls to resign over than security failings ahead of the hamas attack. in around the foreign minister warning the united states over continued support for israel threatening new fronts in the war. geopolitical risk at the core of the markets but mixed risk sentiment right now ahead of major central-bank decisions and corporate earnings this week. we are getting hsbc kicking off today with a $3 billion share buyback announcement after missing estimates. mixed risk sentiment picture but i want to dive into the details. futures trading, green on the screen, euro stoxx futures unchanged, ftse 100 tilting to the green higher by 0.2%. real outperformance in the american bid.

that's going to be a turnaround from the european and asian trade. i want to say pre-israel war. the idea is europe and asia would sell american assets, now you are seeing the opposite when it comes to the equity market. a lot of that might be anticipation for the federal reserve, for earnings later in the week, but there is this idea that in the absence of anywhere else to invest, the geopolitical risk to israel driving it, why not have that defensive bid in the united states? that makes sense on the equity picture. look at the bond market. the bond market is doing something funky. the federal reserve is reporting -- excuse me, is making their decision on wednesday. you are going to see a bond market trying to price in another pause for the major central-bank. the 10 year yield at 486. no major selloff but a selloff nonetheless. when you see bond yields higher you would expect things like oil prices to be higher as well. even the dollar to be higher.

you are seeing that for euro-dollar but not dollar-yen. a lot of mixed picture. the conversation of parity is going to come back into the conversation. dollar-yen still on the currency intervention watch. the boj coming out tomorrow with their decision. what do they have to say on the currency story? brent doing its own thing not in line with the risk picture around the world just shy of a $90 per barrel handle. a lot of the confusion in the market narrative is really rooted in geopolitical risk and that is where i want to go. israel has widened its ground offensive in gaza with prime minister netanyahu warning of a long and difficult campaign as the international criminal court chief prosecutor asked that israel make, quote, discernible efforts to ensure civilians get basic food and medicine. >> i want to underline clearly to israel there must be discernible efforts without further delay to make sure

civilians receive basic food, medicine, and aesthetics. morphine. we hear reports of operations taking place without basic medicines as if we are in the middle ages. >> it is going to be long and difficult and we are ready. we will fight for our native land, we will fight and will not back down. we will fight on the ground. by sea and air. we will eliminate the enemy on the ground and underground. we will fight and win. it will be the victory of good over bad, light over darkness, life over death. kriti: oliver crocus live in tel aviv. bring us the latest on the conflict.

oliver: we are entering a new chapter, a new stage as benjamin netanyahu has said. it looks like a more expanded ground offensive within gaza. this is the biggest to date. we understand the stage in terms of how many israeli troops and tanks have come into gaza, but it falls short of the full-scale land invasion many people anticipated the israelis over the last week and a half or so had been talking people back down from, saying change your expectations in terms of what this is going to be. what will it be and how long will it take? benjamin netanyahu says it is going to be a long and hard battle. officials we speak to say it could be six weeks or six months. why are they going about it this way? they have hostages being held by hamas but there is also the question of escalation. we have heard condemnation from the saudi's, the emma rowdies -- the emiratis.

in terms of what to watch, the fear of escalation emma we continue to look at the northern border with lebanon come over there has been tit-for-tat exchanges --, where there has been tit-for-tat exchanges. we have seen another thing we need to pay attention to. potential clashes in the west bank. we understand from a lebanese news outlet we may hear a public statement from the general secretary of hezbollah. these are the things we need to be watching. kriti: let's talk locally as well. benjamin netanyahu under pressure, unwilling to accept responsibility for the amount of tax. walk us through what we need to know on that front. oliver: before this israel has been deeply divided. really around benjamin netanyahu and what his government is trying to do.

many support it but many are against the judiciary reform where hundreds of thousands of people took to the street on a weekly basis to object. the second this attack happened, many people who protested benjamin netanyahu rallied against the war effort. benjamin netanyahu put out this tweet saying basically it was the security apparatus's fault for not warning the prime minister. the prime minister did not know anything. every assurance was that hamas had been deterred. this was poorly taken. for many people who are even critical of netanyahu, they have been quiet particularly in international media. for the prime minister to say this many found shocking. he was attacked within his own defense cabinet. he has not taken personal responsibility for any of the events. he said tough questions need to be answered. that's the extent of it. we need to pay attention to this because the long-term political domestic future of israel is

going to be crucial in terms of how they go about dealing with the palestinian question in the future. kriti: that is of course going to be a really tough spot for the united states. the crew of the house who is looking to get confirmed could be the last hurdle you need for the aid to go to gaza. what do we really know about the update? oliver: there's two questions of aid for the u.s.. the first is what we are getting reports from over the weekend. the aid to israel. biden put forward $100 billion in spending toward another -- a number of different causes. one of them israel. the one where most of the money was going to was ukraine. we understand they are trying to disentangle these different things. just an israel bill forward to the house to get aid to israel. in terms of aid to gaza, 33 trucks went over the rafah crossing yesterday.

that fall dramatically short from any humanitarian agents, what they say is required. the israelis say there's going to be an increase but it is still short of what is required by many observers. -- what many observers have said. kriti: a lot of crosscurrents. thank god we have all croak live in tel aviv to walk us through that. we thank you for your reporting. he was talking about regional escalation. the risks of major players and how the u.s. fits into all of it. a big piece of the equation is where iran fits into it as well. bloomberg spoke with the foreign minister of iran. he spoke exclusively with manus cranny in new york ahead of israel's latest escalation of its ground invasion. take a listen to what he had to say. >> as long as the syrian government asks us for help,

within the framework of our defense cooperation, we will act. >> are you scaling up troops to syria? are you sending more? right now? >> if fighting against terrorism, for that, the syrian government asks us to do that, we already have. >> have they asked for more troops? you already have? >> when they were fighting isis, syria asked us. >> since october 7. have you send more troops since october 7 to syria? >> no. i do not think so. >> are you sending more naval vessels to the gulf? >> are you putting me on trial?

>> i am trying to understand. respectfully, minister, i am trying to understand the difference between i suppose escalation and de-escalation. i think the world wants to understand where you are. in terms of your assets. >> after the seventh of october, how many weapons have american troops -- weapons, american troops and weapons have been sent to tel aviv. can you give me the number? how many aircraft? oliver: you are the foreign minister. i would expect you to have access that information. i'm simply a journalist, i'm trying to understand for our bloomberg audience what the state of play is in the world and with that in mind, sir, you have obviously been very critical of these additional troops, additional deployments to the region. i want to understand for example, you have a great

influence as a nation over the trade routes of the world. in the persian gulf, the red sea. what our audience will want to know, will you be a protector of those trade lines, or a disrupter? that's what i'm trying to get an answer to. >> we have not dispatched any new forces, any new troops to syria, nor iraq, or other parts of the region. we are not just onlookers. we have not just been watching the developments. any time we think it is necessary proportionate to end in accordance with our natural -- our national interests, at the right time and place, we will make the decision. i would like to warn right here. the continuation of the situation, the killing of people

in gaza, will make the situation get out of control in the region. kriti: i want to get to other news we are following from around the world starting with spacex ceo elon musk saying his satellite internet company starling will provide service to internationally recognized aid organizations in gaza. muska said earlier on x that no terminals from gaza have attempted to communicate with our constellation. russian regional airport in a majority muslim region was shut down after report showed a mob forcing their way onto the tarmac where a plane from israel had landed. russia's federal aviation agency said on sunday that parts of the airport were invaded by, quote, unknown people and that it took hours to restore order. the agency said the premises have been cleared but the hub

would remain closed for a week. ukraine is reported to have downed a russian su 25 military fighter in the eastern region of donetsk. a fierce battle for control continued in the area over the weekend with russia making no confirmed territorial gains. kremlin forces are said to have sustained heavy losses. in the u.k. property portal zoopla says property costs in the u.k. are falling. four of every five areas saw price declines. houses are coming under pressure from pricey borrowing and a cost-of-living squeeze. u.k. based telecom giant vodafone is that to be nearing a deal to sell 50% of the spanish operations to sedona communications. bloomberg understands the deal values the asset at more than 5 billion euros.

the firms are still finalizing details of the transaction in an announcement could come sometime this week. coming up, a big week for european eco-data. we are going to preview the numbers live from germany next. stick with us. this is bloomberg. ♪

kriti: welcome back to "daybreak europe." new data out of the north rhine westphalia. cpi lower. boone futures higher. i want to bring in a true expert here and talk about all the data we are going to get.

zoe, all eyes on europe. let's start with gop data. inflation numbers we are going to get today. it's economy is probably in contraction. to the inflation numbers help at all? >> german numbers for gdp third-quarter, they are likely to show a 0.2% contraction. germany will have four quarters without growth, of those three were contractions. this current quarter probably was another contraction which means germany is back in recession. inflation data do in some way alleviate this. consumers are much more concerned with the daily cost of red, cheese, etc. -- of bread, of cheese, etc.. inflation is one of those 20 data point today people notice. inflation in october probably slowed to 3.3%. that's from 4.3% a month ago.

that compares to 11.6% a year ago. that is quite good news and means that inflation at least, things are looking up. kriti: and that is just one piece of the equation. tomorrow we get information -- inflation data out of the euro area broadly. how does that translate to what the ecb is thinking, with one governing council members saying rate are finished for now? do you think that is the consensus? zoe: it does seem very much that this is the consensus. saying rate hikes are over for now does not mean rate cuts are anywhere on the horizon. the signal we are getting from christine lagarde and all other policymakers is that higher for longer is here to stay. inflation slowing does not translate to rate cuts because the ecb has the longer-term goal

where they need to be at 2% in the three year horizon. what is the danger here is that bad gdp readings and numbers tomorrow might show the euro area economy stagnated in the third quarter, that might force the ecb to cut rates a lot sooner than they planned our that they anticipated. kriti: the ecb we had last week. we have a slew of other central bank decisions today. this week as well. how does the european data may be factor long-term? zoe: joining us from frankfurt, we thank you for the update. coming up, 40% to the european market by value has reported earnings. it is not looking great so far. we discussed why. this is bloomberg. ♪

kriti: welcome back to "daybreak europe." breaking headlines from the swiss biotech giant if you will, talking about a new endpoint when it comes to a specific kidney disease drug that targets a certain type of nephropathy. they are saying it is not only met their primary endpoint but has surpassed it by a big margin. they are saying they are going to apply for accelerated approval with the fda. we know from global biotech if the fda does approve it it sets the tone for other peers around the world. that is a positive thing at a time when biotech and pharmaceutical companies are trying to diversify quickly for the next couple of years. looks like novartis is on track to do that with this latest kidney disease drug.

we will keep you apprised of how it opens in an hours time. we are roughly halfway through european earnings season. bloomberg intelligence has been crunching numbers. the big theme seems to be sales mrs. but earnings beats with better margins. tim craighead from bloomberg intelligence joining us now. in a scorecard with europe how do you grade this earnings season? tim: it is not a great earnings season. if you look at stats you might think actually it is ok. it is roughly 50%, a better beat, 35% miss. actually that is the worst earnings performance we have seen since the pandemic lows. usually more companies play the game and are able to beat expectation. kriti: is that reflective in the markets? we should point out over in the u.s. we are seeing a 10% correction in the s&p 500.

how is europe faring off this earnings story? tim: you would think with the selloff we have seen an european stocks have been under pressure as well, this is already baked in. in fact it is not. you have a skew to the negative on earnings results especially if there's any whiff of disappointment. the financial group is a highlight. they have been profitable on the heels of rising interest rates. for banks that have shown a crack if you will in that story they are all off significantly. the one offset to this is energy. doesn't matter whether the energy companies have beat or missed on earnings. it is all about rising oil prices. stocks have been reacting positively. kriti: margins have been important always when looking at earnings but right now, the idea that when you are seeing inflation come down -- a lot of the major parts of the world, the german data for example

earlier in the show, are a lot of companies able to make it up in the profitability story? that feels like an easy win. is it? tim: a couple things to consider. margins are a key touchstone in this reporting period. we are at almost record levels in terms of european profitability across the market. yes, we are seeing some costs received. at the same time we have economic slowing. that calls into question the top line. the top line has missed a little bit. companies are not resting on their laurels with this. we have seen reorganizations announced. optimization of portfolios with consumer companies. a significant amount of headcount cuts. much more so than earlier in the year. companies are taking action. kriti: it is a fascinating story. bloomberg's tim craighead, we

thank you for joining the program. tim talked us through the european earnings picture. we have apple earnings, snuck up on us. it is thursday. those china sales are really going to be in focus because china is a major growth market for apple right now. there is a big concern they are not making the kind of progress they want to and instead losing market share to wall way -- to h uawei. up next, markets today, anna edwards, tom mackenzie, and mark cudmore will walk you through the european open. stick with us. this is bloomberg. ♪

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anna: this is "bloomberg markets: today."