how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

>> good morning. this is bloomberg daybreak: europe. these are the stories that excite your agenda. wall street calls -- goes off guard as u.s. inflation deals a blow to fed rate cut hopes. the yen slides past 150. u.k. inflation expected to take up this morning. we discussed what it could mean for the bank of england. a big morning for european corporate with their -- earnings do across the banking and consumer sectors. the print coming through from heineken. full-year organic revenue missing the estimates, coming in up 5.5%. the estimates had been for 5.83%. the analysts at morgan stanley have been looking at how the business in vietnam and nigeria is progressing as well. in terms of volume for heineken, that's also coming in a little bit below the estimates.

4.7%. the estimates had been 4.4%. when it comes to full-year organic revenue, 5.5 percent below the estimates. the redhead coming through for heineken. we are also looking at operating profit as well. this is the guidance. full-year adjusted operating profit up to low to high single digits. we will be speaking to the ceo of heineken on the back of those earnings. that interview will be interesting, given the mess. also we will be unpacking his views about the outlook. that interview at 7:40 u.k. time. we switch focus from the drink sector to the banking sector. fourth quarter earnings. the focus around the buyback plans. the buyback plan program of 500 million euros. the share buyback program has

been announced in these earnings. that follows 500 million euros of buybacks in april of last year. net interest income in terms of the top line coming through. they are beating profits in terms of the fourth quarter. coming in at 545 million euros. the estimates had been 448 million. it's a decent and healthy beat when it comes to fourth-quarter profit for this netherlands based lender. the final dividend per share coming in at $.89 on the euro. announcing a share buyback program of 500 million euros. we will be speaking to the cfo shortly. that interview is in just under 30 minutes. let's check in on how things are shaping up. after that hotter than expected print coming through on u.s. cpi, yes, 3.1%. services component of cpi going

up the most in about two years. european futures after the losses of yesterday pointing to further downside today. ftse 107,462 points. stateside, after the were cpi data since september of 2020 for the u.s. and the losses that came through, a bit of a breather maybe. a number of the big tech names took a hammering on the back of renewed expectations that they have to for ship -- further push out those fatcats. let's go through what we are seeing across bonds, currencies, and the commodity space. you are seeing yield coming in on the benchmark. 430 after that 14 basis point move higher yesterday on the benchmark 10 year. across the curve, the two-year as well as markets readjusted on the back of that hotter than expected inflation. the yen in focus for us today.

softness coming through. a couple of components. this is what we are hearing from boj officials. of course, the rate expectations from the federal reserve. pushback from financial officials in japan. 2/10 of 1% for the yen. gold is back below 2000. brent, $82 per barrel. down 1/10 of 1%. sony. we will be looking at the ps5. we will be looking at the china demand picture as well as the semiconductor business and how that ties into the iphone sales. the redhead for sony. that's interesting in terms of us been out of the financial business, the plans to list that in october of next year. it sees full-year operating income just above its previous estimates, ¥1.18 trillion. it had seen those four-year operating income numbers coming

in at ¥1.17 trillion. upgrading the forecast mildly there for phone -- sony. we will get more details on its exposure to china and the ps5. sales coming in at 8.2 million units, below the estimates of 9.1 3 million units for the ps5. let's get more on the asian markets and how the sony ties into that. good morning. what you looking at? avril: yeah. we are looking at risk aversion on the back of that u.s. cpi print. this is a loss we are seeing among the stock benchmarks in the region including on the nikkei 225. that rally stalled. losses and the like of soft banks after we saw that surge in past couple of sessions. this is despite having an upgraded price target thanks to the higher valuation and some of its key assets, namely arm.

jgb futures are also sliding. it's also about the data about the u.s.. where we are seeing the moves most obviously is in dollar-yen. that has caught everyone's attention. let's take a look at the hung sank here get hong kong markets started the year of the dragon on the back foot. we initially saw losses on the stock benchmark in the city. we can flip the board and take a look at that. we managed to eke out gains thanks to the chinese tech names as well as the casino related stocks such as galaxy entertainment. this is on the back of data coming in on travel and spending. investors seem to be digesting what we are getting from the lunar new year holiday. hsbc capping the gains on the hung sank. let's flip the board and take you to the yen. as i said, that's where all the attention is. we saw it hitting 150.89 levels,

which we hadn't seen since november of last year. that raises the risk of intervention. we got that verbally from the top currency official as well as the finance minister. that helped to push things back down on dollar-yen. still, the question remains as to what actually will prompt intervention. here are a couple things to consider. if history is any gauge, if you take a look at what happened in 2022, that was after the currency jumped about 5% in the span of two weeks. based on those calculations, the level of intervention. also consider here the other thing -- he talks about ¥10 in a span of a month being moved, considered rapid. given that, thanks to the cap -- calculations of our colleagues, that would put the level at 157. it's interesting how u.s. cpi

print has put dollar-yen above 150. tom: indeed. we will unpack that story in more detail. thank you very much indeed for walking us through the key market action in asia. let's get back to that u.s. consumer story. the inflation story coming in hotter than expected. traders continue to cut back their expectations. here's the reaction from some of our guests. >> this is a bit of a bruising cpi report. >> there are certain aspects of this report which puts the numbers higher. >> we would have preferred to see something a little bit less than that. >> it's not bad. just cooling less slowly. >> that last mile of getting down to target is proving to be chile. >> there's a lot of things the fed is not going to like about this. >> it does complicate the messaging and decision-making for the fed. >> we had to punt on rate cuts further into the year. >> the fed has been trying to

guide the market narrative to expecting less this year. >> the fed will not be cutting rates as market expected. >> is a rate cut going to happen in march? probably not. >> we are still thinking we are avoiding recession. may is a long way away. we have a lot of data. we will see how the totality pans out between now and then. tom: kriti gupta breaking down the numbers. across the board, mrs. for this inflation data. lift the hood for us and talk us through what we saw. kriti: there's a couple of pieces. the big thing is housing. how shelter prices feed into the services picture. we got a surprise on what the increase looks like. and what the other contributions are. the expectation was 2.9 percent year-over-year. came in at 3.1%. down from 3.4%. the direction is in the right direction. it's that last mile concept. transportation services made up

a bigger piece of that. think of ambulance drivers, medical. this is a lot of nerdy ways to say that pieces of this economy that are not housing also increase a little bit as well. so did airfare and hotels. bloomberg economics talks about how some of this is seasonality. coming off of the holiday as well so they called it residual seasonality. perhaps the cpi numbers are a one time thing. perhaps in february it could come in with better cpi numbers, given january is traditionally hot for the cpi. they are kicking the can down the right -- wrote to friday. ppi numbers coming up in the u.s. where they take into account airfare numbers but not hotel numbers. they also have a different way of calculating medical care. that matters because it factors into the pce deflator which people call the fed's preferred inflation. even though these numbers aren't good, it might not matter. tom: already looking ahead to

producer prices to give us a fuller picture. how has this changed all the market pricing around expectations for the fed? kriti: you would think with all the chaos that you saw in the markets yesterday, there would be a bigger change in rate pricing. it looks like they've taken one cut off the table. the earliest cut was supposed to be june. it's now pushing into july when you talk about what the fed pricing actually looks like. that being said, you are seeing a lot of the rhetoric getting back around the bond market in particular. the 10 year yield hadn't broken through 420 for about three months now. this bond market completely changed that. 431 on the 10 year yield. you are seeing a change now, breaking through the surface of those numbers. on top of that, there's a concern about whether or not some of these fed pricing even matters for a market that is still talking about liquidity and digestibility and supply

when we are not even talking about a rate cut into later, one that make be short-lived. tom: is the real inflation risk story back on the agendas and for markets? kriti: that's the doomsday scenario. the bears are saying, this is the start of a broader trend. this doesn't even conclude commodity pressures. this is still a wage growth driven story. very hot labor market. that's the pieces of the circle that saw the biggest increase. transportation, medical care. you've seen biggest wage growth there as well. there's concern that if you don't have the payrolls or the wage growth, how can we even talk about wage cuts -- rate cuts? tom: kriti gupta on the show there. now, amidst all the focus on the macro yesterday, there was a corporate story that stood out out of the u.s.. this is the ride-hailing company lyft.

what a session at hand. the earnings came out positive. they had a decent quarter. they also adjusted their outlook. they've adjusted earnings as much as 11% higher than estimates. bookings ahead of expectations. look at the move in the stock price. at one point, you saw a 67% top to the share price. why was that? they flagged in their initial press release, margins increasing by 500 basis points. yes, 500 basis points. here's the caveat. the cfo came in an hour after that. actually, that was a clerical error. not 500 basis points. 50 basis points. and then you saw the stock correct on the back of that. that's quite the clerical era -- era. saying they've never seen an error like this in almost 20 -- 25 years. whoever typed in that extra zero

on that initial press release is going to be feeling the heat. there you go. we will continue to focus on the ramifications of lyft, given the correction to that margin outlook. coming up, a different story. the u.k. and nigeria signing a landmark economic partnership aimed at unlocking new policy -- possibilities. i will be speaking with a cfo about lender earnings and drops in the last 14 minutes. we will get the details and push forward in terms of what he sees in terms of net interest income and demand for loans. this is bloomberg. ♪

tom: welcome back. happy wednesday. pakistan is closer to getting a

new government after -- was named candidate for prime minister. he was nominated by his older brother and three-time former prime minister who returned from exile last year. the move ends a deadlock following national elections last week that delivered a split mandate with the former leader trailed and barred from running. the u.k. has signed a landmark economic partnership with nigeria. the agreement will see the countries vildana strong trading relationship worth 7 billion pounds and unlock new opportunities in sectors such as legal, financial services, and energy. what are the main takeaways from this deal and how substantial is it really? ondiro: collaboration is at the center stage of the deal. it enables u.k. and nigerian lawyers to practice international and foreign law in

the various jurisdictions. this will enhance collaboration in legal and export. another big deal for this deal is that some of the nigerian exports will go to the u.k. as duty-free and there will be removal of tariffs on some value added goods from nigeria that are nonoil goods. the u.k. minister of trade, while she was speaking in nigeria during this visit, mentioned that nigeria is a country that is significant to the u.k.. they see it as a country with an arm's potential and they would like to ramp up exports from that country so we can ease challenges that nigeria is going through. her visit comes across -- against the backdrop of a deal that will see them help nigeria transition into sustainable and renewable energy and the investment is valued at 120 million pounds. tom: about 120 million pounds. where does the u.k. rank when it comes to nigeria's trade partners? give us a breakdown of where we set.

ondiro: china leads with $14.9 billion worth of total trade followed by the u.s., belgium, and the u.k. exports from the u.k. were about 4 billion pounds. imports are 2.7 billion pounds. however, nigeria is one of the economies that is touted to become the top 20 gdp's by 2035 with a population of 370 million people by 2050. this deal, the first of its kind in africa, is a forward-looking deal. tom: ok. forward-looking when it comes to the u.k. and nigeria. thank you very much indeed for bringing us the details. bloomberg learned that standard chartered is continuing restructuring its institutional banking arm. the revamp would be the latest efforts by bill winters to improve returns at the emerging markets focused lender. what is happening that has

standard chartered -- what is happening at standard chartered? what do we know about the restructuring efforts? >> sources are telling us that this would affect the institutional arm. this is the unit where its investment bankers and traders. what we are hearing is that the one option they are considering is can -- splitting the investment bank away from its corporate and commercial banking operations. this could potentially lead to job cuts which would not be great news for the lender. things could change. the plans could change. the bank is due to announce its results let -- next week. let's see more details then. tom: we can't talk about them without talking about china. it is such an important part of the business for them. what have they been saying about operations in china? ondiro: -- >> that's right. it earns a huge amount of its income from china. we've seen the economy they're struggling. real estate is a huge part of this.

the real estate sector has been going through a lot of difficulty recently. standard chartered made quite a big right turn in earnings last year from china. still, we spoke to bill winters last month and he says he's positive on china. he said the government has done enough to address the problems there. but this is more pressure that's coming on the bank and on bill winters to really improve returns, improve the share prices. share prices down about 40% since winters took over in 2015. so he is really under pressure now to improve returns and this could be one of the measures he's looking at to do that. tom: thank you very much indeed. standard chartered is weighing a breakup of its institutional banking unit. we will continue to follow that story. remaining on the banking space. santander says a review and it's in cap -- in its accounts has found no breach of u.s.

sanctions. the review came after a report in the financial times said iran was court -- covertly moving money around the world using accounts held at santander and elsewhere. there's plenty more coming up. we will be speaking earnings with abn amro. stay with us. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. shareholders voted to give up the secondary listing in london, leaving its stock to trade only in frankfurt. more than 98% of shareholders voted in favor of the resolution which marks another blow for the london stock exchange. the cfo says the u.k. market remains central to its activities.

airbnb shares fell in u.s. late trade. they ended last year stronger than expected but says demand in the current quarter won't be as robust as the last. airbnb says overall demand is normalizing after the post-pandemic boom. the company announced a share buyback of up to 6 billion u.s. dollars. jeff bezos has started the year cashing in on amazon's rally. less than two weeks after saying he would sell as many as 50 million shares of the company he founded, bezos offloaded 24 million shares, worth more than 4 billion u.s. dollars. he previously hadn't sold any stock since 2021. let's get you up to speed. today, the data print arguably is u.k. cpi today. after wages and the u.k. came in hotter than expected. how does this round out the picture as to where the bank of

england goes next? the expectation is that inflation will take up to 4.1%. that data drops at 7:00 u.k. time. then we get euro area fourth-quarter gdp. that comes through at 10:00 a.m.. the euro zone is essentially in stagnation territory. what it tells us about the health of the eurozone economy. on the earnings front, a touch of u.s. consumer earnings coming out after the market in the u.s.. to what extent are we going to get a sense as to whether there's a trade down coming through from consumers or whether there is still resilient -- resilience? that will be illustrated in the u.s. trading day. coming up, a 500 million euros share buyback program. fourth-quarter profit beat estimates. the cfo joins me next. we talk that story in the next couple of minutes.

stay with us. this is bloomberg. ♪ (jennifer) the reason why golo customers have such long term success is because we focus on real foods in the right balance so you get the results you want. when i tell people how easy it was for me to lose weight on golo, they don't believe me. they don't believe i can eat real food and lose this much weight. the release supplement makes losing weight easy.

release sets you up for successful weight loss because it supports your blood sugar levels between meals so you aren't hungry or fatigued. after i started taking release, the weight just started falling off. since starting golo and taking release, i've gone from a size 12 to a 4. before golo, i was hungry all the time and constantly thinking about food. after taking release, that stopped. with release, i didn't feel that hunger that comes with dieting. which made the golo plan really easy to stick to. since starting golo and release, i have dropped seven pant sizes and i've kept it off. golo is real, our customers are real, and our success stories are real. why not give it a try?

>> good morning.

this is daybreak. these are the stories that that your gender this wednesday. the end slides -- the yen slides past 150. we will discuss what it could mean for the bank of england. we have a print of 3.1% out of the u.s.. topline year on year. 51 futures pulling back.

the 500 level off by 20%. all of this in september of 2022. still below that 5000 level of course. the nasdaq futures currently looking at about a 10th of a percent. let's flip the board and look cross asset. it was a big move across the treasury curve. the yield is up, the dollar is up, pushing back expectations of that cuts, closing the door on march, feeding it from a, june and july seems to be where they are leading now. yields are down after picking up about 14 basis points.

he saw a bit of jawboning coming through from japanese officials. this is back below 2000. let's get back to the earnings story. this is the fourth quarter profit that beat estimates. this is the cfo. this is back on your opportunities, what is your optimism?

they fully recovered it. and then the quarter would lose it. if you look at the full year, it is an increase of 45.7 compared to last year. i am particularly pleased that all of these differ better resort -- live in better results. they specifically credit quality and client lending that are up. this is the economic backdrop. we saw a significantly de-risk bank by selling the operations that are near finalized. if you look at the reference you made to capital return, there are at least another 500 and share buyback.

>> you touched on return on equity. rov. the target is lower than many of your peers. why do you think that is? >> 23 has been an exceptional year. up to a normalized through the cycle cost of risk which is lower than previously. secondly, we also investing in the future. that will be around 5.3 billion. costs won't go up and those two elements with higher costs and also, normalization of our impairments. that will mean that rov will be lower for this year.

we provide new targets where we emphasize that we continue on our strategic path setting out in 2020. we provide and outlook of 9010% for 2026. -- nine or 10% for 2026. what are you putting in place to keep a check on costs going forward? what's a good question. we always focus on costs. this is a key drive. we have maps of the cost of 5.3 billion. we also laid out there are still significant investments around data, data infrastructure, the new recollection like sfr but also related to further investment and digitalization of our processes.

as we significantly move toward being a digital back with only 25 branches. going forward, we expect costs to remain roughly at the same level as existing cost savings programs. countering the effects -- effects of inflation. we also provide cost income targets of around 60%. clearly focusing on countering the effects of inflation. that is the initial problem. >> you flagged earlier that you don't see a major problem with the credit quality. an environment -- in an environment where energy costs remain a concern for many clients. talk to us about that credit score. that you will start to see a breakdown. do you expect to have to put more provisions in the books in the months and quarters ahead?

>> if you look over last year, it is quit exceptional or basically the last two years. a cost of risk of minus five basis points for 2023. we look at the gradual normalization this year. we have significantly de-risk because our corporate bank is fully restructured. this is the non-core bank that is finalized. this consists of 60% of residential mortgages. they have a very low cost of risk. for now, they look solid. we are currently looking at all of the several parts that we

have continued to deep dive. >> what is your exposure to commercial real estate at this point? >> it is a good question because it is top of the news. if you look at our commercial real estate, it is run 15 billion. it is very well diversified. we have no exposure to u.s. commercial real estatewe do. regular internal deep dives and stress tests. that is still in low levels. >> we're hearing the dutch government, a major stakeholder in the business is expected to

widen estate down. we wait for the politics to firm up. that does seem to be the plan. d prepare for the government to unwind? >> that is not up to us. clearly the intention is to fully privatize the bank. they are gradually reducing this year from around 49% to around 40%. it will be good. at the same time we will be in the market. i have also said that they want to participate in our share buyback. that is also the indication that they stick to their agenda despite having a caretaker government further reducing the stake. course there has been a lot of focus in terms of private credit.

the growth of that has been extraordinary. are you looking to partner at all in terms of private credit or to give your clients access to that class? >> it is significant growth. they are clearly partnered there. secondly, also, we fully restructured our corporate bank but on a continuous basis, we are looking at how we look at capital in a more -- and more active portfolio management. it is clearly something. we are looking at where we can offload some of this. that is a clear trend in the market we are seeing. quick thank you very much for your time. there was on the back of that be coming through. another 500 million euro

buyback. switching focus, they are said to be getting reassurances on the desk prime minister before approving his bid to be the next head of nato. they are keen to ensure that candidates will have a bias toward the alliance pause european union. the u.s. and has approved $95 billion in assistance for ukraine as well after months of delays. as in bite has urged the house to pass the bill but the legislation faces an uphill battle to say the least with house republicans targeting action on the border. this is the most narrow possible margin to impeach homeland security secretary al henschel mayorkas after a failed attempt last week. mayorkas becomes the second cabinet member in u.s. history to be impeached.

there is little chance that the democrats had to -- democrat led senate will vote to convict him. we will preview that number and see what to expect and where to find -- where to focus. this is bloomberg. as if no

>> will go back to bloomberg daybreak: europe. you can get is likely to show both the headline and services figures accelerated in january. here with the preview is lizzy burden. wise inflation expected to take up in the u.k.? quest partly because of rise in the enterprise cap a partly because of the services invasion your mission.

you saw that in the jobs data you saw yesterday. this lower-than-expected fall in wage growth is more closely tied to wages than goods inflation. on the back of that, you already saw traders pairing their bets on the back of this -- this year and next. i would say that once in 2023 to the consensus of economists get the inflation forecast right. that led to all this volatility on inflation days. if you get a particularly strong reading today, we can see the markets quick rattled. >> it is the politics always for the u.k.. >> this is the problem with taking the credit for inflation falling. when it goes up, you get the blame as well. on friday, as recently as friday you had the prime minister saying because abenomics -- economic conditions improve, you're starting to see mortgage rates come down and we have been able to cook taxes.

it is not a good look if you can inflation rising again and every session by the data. i would also quickly say that bloomberg economics warns if the chancellor comes to the wrong taxes, mortgage rates could go back up again. quick thank you very much indeed with the preview of inflation data. commercial real estate looks to be in crisis in many countries. there are concerns that contagion could spread. putting a black hole in the balance sheets of major financial institutions. >> we have around 405,000

billion euros of realistic exposure but it is almost only made of home loans to the french and european cities. it is definitely not an issue of commercial real estate. fancy commercial real estate in difficult areas. >> our expectation is we don't think we will be in a position to have the negative rates. >> i have known the market is stable. there is a need for new priorities and to rearrange products due to the interest rates. >> for more on this, let's bring in our reporter standing by in frankfurt. just how bad is it? how significant others commercial real estate risks right now? >> good morning.

commercial real estate has been facing the same big problem as the whole bill estate sector last year which is more interest rate hikes than anybody had expected. higher financing costs as a result. what has really been hurting the commercial real estate space in particular are those persisting -- persisting work from home trends. the last demand overall. valuation and prices for these assets have been falling in the last year. they are just on any transaction anywhere in the space. now, the problems in the sector are spreading to banks globally. they are or could be facing the higher risk of defaults for their loans in this space. >> you talk about the banks. what is our understanding of how

exposed european banks are to some of these commercial real estate challenges? >> at this point, we are still trying to find a piece together how exposed european banks really are to u.s. commercial real estate but also european commercial real estate. there are some smaller lenders who have drawn investor scrutiny in the last couple of days. most prominently deutsche bank in germany. pbb has significant exposure to u.s. commercial real estate. they have been saying that they are raising provisions for these loans. for the bigger banks, some people say this will be a problem for them at all. at least not a critical run. some big lenders like deutsche bank do seem to have little

exposure to the space. it could at least impair the ability to pay out investors. it was really interesting. what has been the rank and file response to this crisis? >> dcb and europe has been looking commercial real estate for a while now. especially the bank credit risk assessment. and lastly, my colleagues here reported that the ecb is now telling lenders they might face higher capital requirements if the ecb feels like they don't really have distantly handled these risks properly. and yesterday, the swedish regulator said they expect more pain had for real estate companies but also banks and potential write-downs. we can expect regulators will continue to closely watch this

space. well worth checking the story. we will give a debit -- we will give you the update.

>> welcome back to bloomberg daybreak: europe. let's get back to the data prince. the inflation story out of the u.s. that really about the markets yesterday with yields up and equities down, this was the picture then. you got the headline story here. that is the chart. the yellow line indicating the service and expectations and

then you have the headline cpi. they landed at 3.1%. the surveys had seen 2.9%. coming down off the surveys even as it moved down. the trajectory for the headline remains lower but not moving as quickly as the surveys expected. here is the really important cold part of the inflation story. you strip out food and drink it into 3.9%. that was in mind with the previous month. services ticked up most in almost two years. we know real estate was a big part of this. all of this lead into a pushback in rate expectations from the fed. this is what led to that jolt in the markets yesterday. it is the rate environment and inflation that feeds it. the stock has been on a tear. at least it had been until yesterday. i think it is expectations

around where rates are going. all of this after a riproaring three days. they always tripled their market cap. there we saw the biggest drop since its ipo of close to 20%. that is for the chips designer. that is the arm story. this is the earnings story. let's change the board and see how this reacted. the guidance was positive. the numbers and profitability came out. margins of 500 basis points. you saw this massive pop. 67%. it wasn't a 500 basis points. a fat finger, a clerical editor -- ever in terms of all that. they came out and corrected it. that is that story. in terms of the earnings interviews, another big day.

we will be speaking to heineken ceo. we will also bring you that exclusive earnings interview with catch, and the ceo there. they have some interesting tieups around ai as well. that is a: 30 this morning london time. markets today is next. this is bloomberg. ♪

this is bloomberg markets. i am anna edwards. with cash trade just less than an hour away.