>> good morning. this is "bloomberg daybreak: europe." these are the stories that set your agenda. asia stocks rise after a tech rally pushes the s&p 500 past 5600 for the first time ever. investors look for crucial u.s. inflation data for clues on the fed's 's.

comments by former speaker nancy pelosi added fuel to speculation over the president's candidacy. economists warned the new u.k. government faces a 30 billion pound budget hole. we will look ahead to today's gdp data. ♪ good morning, again, everybody. let's pick up on some of the market price action because he got another record high for the s&p 500 and nasdaq, both ending more than 1% higher, fueled by some of the gains in tech stocks. we will talk more about that, especially with some positive commentary around apple. futures are trading at slightly towards the green. as far as european markets are concerned, the ftse 100 about 0.2% higher, the euro stoxx

futures up a similar amount after a more positive close yesterday. we see the french index back in focus. we did see it recuperating after the losses the prior few days. s&p futures basically trading sideways. the major event will be that cpi print. will we get further signs of a disinflationary process coming through in the u.s.? that's a big question for investors. as for some of the other assets we are watching, of got to see we've been keeping a close eye o n jerome powell's testimony at capitol hill. the u.s. trading slightly weaker, down about six basis points, has not moved a lot over the course of this week. market pricing of interest rates is still sitting around 80% priced in for that first rate cut to begin in september. that 10 year yield, not a lot of movement, 4.28%, basically a couple of basis points lower from where we were at the beginning of the week. gold getting a little love, up

around half a percent. some of the weakness in the ust getting factored into gold -- u.s.d. getting factored into gold. there has been an upward trend for brent recently. overnight, we had data suggesting that u.s. stockpiles have started to drop, so that's a bullish signal for u.s. energy markets. let's take a look at how asian markets are faring, as ever, with avril hong in singapore. what are you watching out for this morning? avril: we are watching that rally trickling through from wall street. . today in the asian session, investors in a good move. ' asias stock a gauge at the highest since february of 2022. this is a tech driven rally. infotech is the sector performing the best helped along after the apple suppliers that it will be shipping more iphones. but also the likes of t smc as a got that sales surge a day ago. the other thing i wanted to

highlight is what we are seeing on the mainland, as chinese authorities have been restricting some of the shortselling. they want to crackdown on quant trading strategies. we've seen the equities with outstanding shorts among those gaining ground on the mainland today. this is what we see across the board. let's take a closer look at what we are seeing, some of the equities in focus, tsmc, as i mentioned. next week, what we will be watching out for is its earnings call. this is the sole supplier for nvidia and apple's advanced chips. we will see if they have anything to say about been able to charge customers more. sk hynix getting an upgrade on its price target, helped along get thinks my higher chip prices, as well as weaker korean won. today, we are seeing a gaining ground, getting a boost from the

bok, leaving rates unchanged. but it also seems to be wanting to keep things rather restrictive. the be ok governor -- bok governor even talked about how the market expectations for rate cut seem excessive. the won along with the thai currency gaining ground. this is a reflection in the asia-pacific of powell's comments, given he said they need to see 2% inflation in order for rate cuts. asia fx doing mostly ok. > thank you so much for that overview. avril hong in singapore. jerome powell returns to capital health for a second day of testimony as he back to the case for u.s. rate cuts in the coming months. but he warned policymakers are waiting for more data to come from a sustained path towards the fed's 2% inflation target. >> i have some confidence, as i said earlier, that we are on a downward path. i think if you look at the data, it's pretty clear.

we have not said, though, that we have sufficient confidence. and that will be a decision that our committee makes. >> let's talk more about this more with our mliv strategist, mark cranfield. interesting to hear jerome powell there. i think it is notable how much she has been talking about the labor market recently and the factor that there are signs of some weakness appearing in the labor market. he has talked about the labor market cooling considerably. how should we read those remarks? mark: we mustn't forget that it's a joint mandate that the federal reserve have. it's the employment situation and the inflation situation help drive all of its decisions. if you look at the jobs data in the past year or so, it's been generally very strong. unemployment rate is still in the low for percent area so not

on its own really enough to justify the federal reserve starting to lower interest rates. if you combine it with an inflation forecast that starting to go in the right direction, you put the two together, if the outlook for the jobs market is to weaken a bit, and they can get the core numbers down on the inflation as well, may be together that's enough to get the fed over the line in terms of lowering interest rates. and that is certainly how the market is reading and. the bond market -- reading it. if you look at the bond market, clearly the fact that you have 10 year yields more than 100 basis points below where the level is, key traders are pretty confident that the next major move will be a lower yield curve right across from start to finish. obviously, it's a question of when the fed moves over. as bloomberg economics has been pointing out, the key for the inflation data today is not so much the headline numbers, its where the rolling average for three and six months ago and they are likely to be below 3%. that's very important. if we get numbers coming in with a 2-handle, certainly the fed

members will be much more confident that they are getting toward their target. if we get a benign cpi report today, jerome powell speaks again early next week. it could well be that within a few days, we are pricing in a rate cut for september. it's not fully there yet but it won't take much to move the needle and for traders to put their money on a very early fed cut. >> let's talk about that in more granularity. the market is pricing at around 20 basis points of a rate cut in september, so almost fully priced in, but not quite there. in terms of the core cpi month on month, the estimates is it will come in around a number, 0.2%. if we do get a number that's lower than that, how could that affect market pricing? mark: certainly currency traders are the ones who will be watching it very closely. in the foreign exchange market, you can already begin to see a few cracks appearing in the dollar space. not so much in the dollar-yen, of course, the dollar yuan,

those currencies have a different story. if you look at the rest of the g10, where there is more stability, like the u.k., for example,, canada australia, those currencies are beginning to make some ground. even the euro is pushing above the 1.08eventually, the federale will be on this path of reducing interest rates. the momentum on that is probably going to be stronger than what you see in the u.k. or european central bank. as we look ahead toward the november elections, people are starting to get nervous that the u.s. political scene is going to get more cloudy, more uncertain. generally, one investors are uncertain about the path their country is taking, they hit the currency. the u.s. dollar will have to have a bit of a discount as people are uncertain about where the political vote is going to go in november. that will gradually be built into the market. it will be taken out more in terms of the major currencies than in the other rest of the world.

that's what traders are going to be looking for. bit more development on the u.s. dollar. bond market is already starting to think there's and using. equity market is very focused on -- easing. equity market is very focused on ai. >> that's one way to put it as about the s and p and nasdaq making new record highs. mark cranfield, thank you. nancy pelosi has added to the mounting pressure on joe biden to make a decision about his candidacy. the former house speaker says the president should "decide quickly, as time is running out." that comes as other heavyweight democrats voted step over whether biden -- voiced out over whether biden can win. in. november this is as he heads into his final day of the washington nato summit. thanks for staying up late for us. what is the state of joe biden's candidacy? it's been almost two weeks after that debate appearance and since then, he's insisting that he wants to stay in the race. but many people are skeptical.

john: well, you are right. his campaign exactly two weeks after that pretty awful debate appearance remains under siege. however, it's a very polite, understated siege. the calls for him to leave there is have been filled with praise for what he's done these last four years and what democrats regard as his accomplishments. but try as they might, biden and his allies have not quelled the misgivings that began on that now fateful night two weeks ago. >> in terms of the voices that are urging him to step aside, i mean, can you just highlight for us, who are some of the most prominent names and how

influential they are actually going to be in terms of convincing him to step aside? >> it's hard to say who, if anyone, could convince him. but we don't have in this country anymore powerbrokers, party bosses who could come together to dictate something like that. you mentioned nasty pelosi, who is still not speaker, still has enormous respect in democratic circles. george clooney the hollywood star wrote an op-ed in the new york times in which he said that biden should leave the race, as did peter welch, a senator from vermont, and he became the first democrat in that chamber with an op-ed in the washington post to urge the president to step aside for the good of not only the

party, but the country, because democrats look upon another trump administration with great trepidation. >> yeah, yeah. it is notable that even george clooney felt the need to wade into the debate. the clock is running. the democrat convention is going to take place on august 19, so if there is going to be a change in candidacy, it will probably have to happen the next few weeks, won't it? john: that's certainly right. and the republic can convention takes place next weekend that will culminate with the third nomination by the republican party of donald trump. it will be interesting to see how much affect that has on this clamor, if you will, growing clamor for joe biden to leave the race. and how he will react. as you point out, he will have a

chance later today at the conclusion of the nato summit to showcase his competence, his abilities at a press conference to close out this very important 75th anniversary summit that brought so many world leaders to washington and into contact with him. and there have been plenty of anxieties among them as well. joumanna: yeah, very fair. it's going to be something that the whole world is watching very closely. bloomberg's john harney in washington, thank you for staying up late with us. onto our day had stories and some of the major stories we are focused on today and in terms of some of the major data that's coming out later today, i should say. at 1:30 p.m., as we spoke about, we have u.s. cpi coming up. it could be a major mover for markets.

we spoke about that with mark cranfield. that 0.2 percent cora cpi prints will be in focus. after that, we have the initial jobless claims. jay powell has been pointing to some of the weakness in the labor market. if we do get a higher number than we've had in prior months, of course, the trend has been upwards, and that's something to watch. we are wrapping up the week of auctions with a 30 year bond auction. it will be interesting to see how much demand comes through for bonds at these levels. coming up, apple and samsung betting on ai to fuel demand for their ups, within the iphone maker expecting -- their new lineups, with the iphone maker expecting a 10% bump in sales next year. will talk about that next. this is bloomberg. ♪

♪ joumanna: welcome back to "bloomberg daybreak: europe." apple aims to ship at least 90 million iphone 16 devices in the second half, counting on air services to fuel demand after a bumpy 2023. annabelle droulers joins us for more on this bloomberg scoop. it seems as though apple is relying heavily on its ai features to boost upcoming demand after a softer 2023 for iphone sales. why is it going to be different this year? >> that's right. we seem pretty anemic sales growth for apple in the past couple of years but they are hoping that this time around might be a little bit different. last month, we had apple unveiling how it was planning to

integrate ai across his product lineup. we know chatgpt will be integrated. it's going to help users create text, create images. it's going to be updating siri, for instance, so lots of ai features is coming into its products and that's when apple is really counting on, or at least that's what we are hearing from sources. there's going to be 90 million iphone shipments just in the second part of 2024. that's around a 10% increase on the year, are compared to earlier models, of course. sometimes when you do have that comparison, that base effect comes into play given those weaker sales figures that we have seen of late. joumanna: paul obviously is not the only one betting on ai features. survey, samsung had their lunch event. what did they unveil at their galaxy unpacked event? in addition to some of the wearables that i think people will be interested in hearing about? annabelle: wearables were

certainly one thing. if you were to take a look at the event overall, it was really just about ai, similar to apple, but they are infusing ai across their product lineup. in terms of the actual products coming out, they had a real focus on the foldable funds. this is where samsung is trying to make inroads into china because it does not have a very big slice of the sales pie in the country but foldables in particular so two new devices. they are coming with other bit of a pricier cost, $100 more expensive than the last round. wearables was another big takeaway. we had, for instance, two new watches coming out, really going head-to-head with apple, because one of those watches in particular looks quite similar to apple's premium-end version. there was this new ring, which we will see how popular that is. we've got idc, for instance, expecting about 2 million to be sold. it can track your fitness, your

sleep, a whole lot more. it just comes with a $400 price tag as well. joumanna: let's see how well that one does. tech reporter annabelle droulers, thank you so much for the report. also coming up, -- has been found guilty of fraud and market manipulation three years after the fund's collapse. more details, next. this is bloomberg. ♪

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♪ joumanna: welcome back to "bloomberg daybreak: europe." archegos founder bill hwang has been found guilty of criminal charges stemming from his firm's multibillion-dollar collapse. vonnie quinn has more from the federal court in manhattan. vonnie: bill hwang, founder of archegos capital management,

found guilty of a raft of criminal charges in manhattan pertaining to racketeering conspiracy, two counts of securities fraud, wire fraud, and several counts of market manipulation, in particular, stocks such as viacom and tencent. damien williams and the southern district of new york said bill hwang intentionally lied to wall street banks to try to up the trading capacity of the firm in order to intentionally move the prices of the stocks and this new move just continued and continued. the defense, for its part, said it couldn't have been a pump and dump scheme because hwang never saw this and will share. defense sing the wipeout -- never sold a share. defense sing day -- saying the wipeout was due to a blackout. it was a week in which viacom issued more shares and s.e.c. says it was cracking down on some chinese companies listed in the u.s., two events very detrimental to archegos' portfolio.

within hours, margin calls started coming in from various banks and by friday, archegos was no more and banks across the street were down $10 billion. sentences which in theory could be up to 200 years, at least for hwang, but is likely to be just a fraction of that, is set for october 28. hwang is likely to appeal. vonnie quinn, glover news. joumanna: israel is a telling all palestinians in gaza city to leave immediately as fighting intensifies in what used to be the enclave's most popular list area. that is now ash populist area. the israeli military dropped leaflets on the city telling residents to move south. it was the first place is really forces targeted in their ground offensive. the u.s. will apply new tariffs to steel and aluminum shipments diverted through mexico. that's in a bid to prevent china from getting around existing levees. the white house is looking to head off what affairs could be a

flood of steel and aluminum products from oversupply into china. and a quick look at how oil is trading. we have seen oil trade steadily higher over the last couple of weeks. we see brent just shy of about $86 here, so i firm upswing in the last couple of weeks, boosted by the demand outlook, better seasonal outlook. opec demands yesterday reiterating that they see demand growth for oil at 2.2 million barrels per day for this year, economic growth revised slightly higher to 2.9%, so that's underpinning some of the strength there, in addition to the fact that the stockpiles out of the u.s. have started to drop as well. add to that the earlier start of the hurricane season, the fact that hurricane beryl did come in quite strongly, even though it did not have an impact on oil. what traders are anticipating is that the hurricane season will be quite strong, so something to watch out for from a supply perspective over the next couple of months as we go into the strong seasonals.

elsewhere, france's president, emmanuel macron, has called on parties that represent republican forces to build a broad majority from the political center. this snap elections left of the country with a divided parliament and no obvious path towards a stable government. macron wrote in a letter he would wait to name a prime minister in order to give negotiations between parties a chance to barefoot. novo nordisk once weekly insulin has failed to get approval from u.s. regulators after the government asked for more information to complete its review. novo said the agency asked for details on the manufacturing process and the type one diabetes indication. the danish pharma giant says it is evaluating the request and plans to work closely with the agency. also coming up, economists warned that the new u.k. government faces eight 30 billion pound budget hole. we will look ahead to today's gdp data, next. this is bloomberg. ♪

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>> good morning, this is bloomberg daybreak: europe. i'm in london and these are the stories that set your agenda. asia stocks rise after a tech rally pushes the s&p 500 passed 5006 hundred for the first time

ever. investors look ahead to crucial u.s. inflation data for clues on the fed's plans. top officials from joe biden's campaign are meeting democratic senators as comments by former senator nancy pelosi add fuel to speculation over the president's candidacy. economists warned the new u.k. government faces a 30 billion pound budget poll. we will look ahead to today's gdp data. first, a quick check on how markets are faring. as we spoke about in the headlines, we had a strong hand over from the u.s. where both the nasdaq and the s&p make another record high by the end of the day. both of those indices up more than 1%. you could see into the session today we are dipping, trading sideways, s&p futures, nasdaq futures pointing to a moderate open, barely negative. the big data points to watch out for today will be the u.s. cpi prints. will there be further signs of disinflation coming through and how will that affect market

pricing sitting at around 20 basis points of rate cuts priced into the meeting. european futures leaning more positive than their u.s. counterparts. in terms of other assets we are watching out for this morning, as woke briefly about what the market is penciling in for the fed. the 10 year yield is sitting below 4.3%, four point 29 is where we are at. the u.s. dollar continues its downtrend over the last couple of days with weakness coming through for the greenback. go doing quite well. that is probably because the ust has started to see some softness. gold is trading about .5%, shy of 2400. brent, as we spoke about, is doing quite well, up 8/10 of a percent just shy of $86 this morning. to the u.k. where economists have warned that the uk's new chancellor may be facing a 30 billion pound budget. the latest gdp data is due out in 30 minutes time. we are joined by our u.k.

correspondent lizzy burden. great to have your onset. i feel as though the conversation around that 30 billion pound and gdp growth are actually very closely linked together. maybe let's start with a with the gdp data today. >> the reason that the government is targeting economic growth, the new labour government is because they want to avoid a difficult choice between tax rises and spending cuts, but that rests on achieving growth that most economists say is unrealistic. we did a survey and the average of 56 economists put growth at 1.3%. the office of budget responsibility sees 1.9% for 2025. so there is still a gap that labor needs to fill, but as we look at the shorter term towards the numbers that come out in less than half an hour's time, the bigger picture is for more. we had a lot of stagnation recently in this particular

month for may we are expecting a bit of a rebound from april when it was very, very wet and you've already seen a rebound in retail sales. economists expect a 2% gain that may be consistent with retail sales. >> given the weather, i wonder what the july data will look like given how bad it's been this week. >> you're in dubai, thankfully for you. >> i want to turn to the market pricing out of the bank of england because they made some comments yesterday indicating that perhaps he does not seem inclined to go for a rate cut just yet. so how is that impacting market expectations? >> have been missing everything with the election campaign. throwing water on the expectations for an august cut. bets now below 50% looks less likely because of a couple of things that he said. he said the timing of the first cut is an open question and he said it's a matter of when, not if, so, we are still expecting

cuts, just not in august because he is worried about wage pressures. he has actually hinted that the one or two upcoming data prints are not necessarily going to change his mind, therefore, you saw the changing of the privacy, he might not see as much divergence between the boe and the fed as previously thought, we heard from one of the big hawks on the committee in her remarks are less surprising. quick she is one of the notable hawks on the committee. wonderful as ever to chat to you, uk's correspondent lizzy burden. the uk's financial conduct authority has set out a simplified listings regime with a single category and streamlined eligibility for companies listing to list in the country. they remove the need for votes on related party transactions and offer flexibility around enhanced voting rights. we will be speaking to sarah prichard the director of markets and international later today.

that interview will happen at 8:40 5 a.m. u.k. time. the future of the water hangs on a pivotal ruling by the industry regulator that comes after britain's largest water company admitted it only has enough cash to fund operations for less than a year. for more on joined by bloomberg's chest. thank you for joining us on set, what can we expect from this ruling later today? >> it's coming at 7:00 a.m. u.k. time and we are expecting hundreds, if not, thousands of pages of the regulator. the thing we will look out for is how it offsets the return of equity costs. what it says it will cause companies to raise equity over the next five years. they are heavily indebted. its debt level is gearing up to reach about 80%, which is the highest in the industry, and it desperately needs equity, its shareholders walked away in march, they might come back if it sets the equity level at the

level it was, which is about 5.7%. >> what do they need to see today out of the regulator in this decision in order to stay afloat? there's :00 ticking. >> they said we need a return on equity of 5.7% to attract investors, otherwise they won't come to us, they can go anywhere else where it's easier to raise debt, they cannot raise any more debt because they are heavily indebted already. they said two years ago it set out in early view and set the cost of equity is going to be about 4%. so that's a huge leap that it will need to see the 5.7% today. obviously we had huge changes in the economy since then, but whether it will see that is possibly quite unlikely, but they will be helpful. if they don't get that, it still got another six months to negotiate until final determination, or it may hope

some equity investors could be attracted at the lower level. >> it's definitely an issue the new government will have to think about. thank you so much. listen to this, england is through to the european championship final after the latest dramatic come win. olie watkins scored in stoppage time to earn england a 2-1 victory over the netherlands. it saw the king passing the players the royal families very best wishes and congratulations. england now play spain in the final on sunday and everyone's question is, is a coming home, yes, it is coming home. on to other data we are watching, in addition to the football, we also care about other market moving events. for the investment space, we have that u.s. cpi number to watch out for that is happening at 1:30 p.m. u.k. time. we also get an initial jobless

claims, the trend has been upwards, we keep a close eye on the weaker signals coming through from the u.s. neighbor markets and 6:00 p.m. u.k. time, the 30 year bond auction, 22 -- it will be out for auction today, interesting to see whether foreign demand shows up there in terms of some earnings coming up, getting the beginning of the earnings season, delta coming out with their earning, pepsico as well. then we get plenty of fed speak. lots more to hear from the likes of cooks, bostic for anyone watching the central bank space. also coming up, nato leaders call out china's military support for russia. we take a look at how the alliances planning to continue its support for ukraine, next. this is bloomberg. ♪

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>> welcome back to bloomberg daybreak: europe, nato leaders have issued the alliances strongest ever language calling out china's military support for russia, that's amid reports that beijing is developing an attack shown for the conflict with beijing. pretty notable that nato came out this declaration yesterday, was very strongly worded, specifically about china, what is driving the alliances concerns about beijing's support for russia? >> good morning, they label china a decisive enabler of russia in strong language. a concern from nato is that china is providing dual use

components, things you find in consumer goods that could be adapted for use by russia's military and therefore bolstering and continuing rushers were in ukraine. beijing says it's essentially -- in the war but they say they don't believe it and that they are calling out china over its support for the russia war machine and for its help in ensuring russia's economy can overcome international sanctions that were intended to bring putin's economy to its knees, making it very difficult for him to continue the war. nato increasingly focusing on beijing support for russia, russia and china say they have a no limits friendship and putin has been exploiting that friendship as recently as the last few months. he has met twice with president xi jingping, so they are clearly demonstrating their support for each other on a political and diplomatic level and nato says on an epic -- economic level we are less and less happy with the support for russia. >> of course around the summit

there had been several decisions being made in terms of supply -- supplying ukraine with extra weapons, utility and long-range missiles. but what are the allies saying about support for ukraine to be able to continue fighting the war? collects they are doing two things at the summit, they are making pledges of weaponry including things like f-16s to support ukraine in the short term in its fight to defend itself against russia. they are looking to bolster ukraine's military so that they can provide a credible deterrence in the future if and when this war eventually comes to an end. a group of nato countries are pledging to get together in the next six months to set out a roadmap to strengthen ukraine's defenses and military over the rest of the decade and into the 20 30's to provide a long-term credible deterrence against russia that will bolster ukraine and eventually offer ukraine

membership of nato, they are talking about an irreversible path for ukraine into nato, but there is no clear data attached to that and nato has been holding open the door for ukraine to join the alliance ever since 2008, it has already been a long winding path. the commitment is to bolster ukraine to strengthen its defenses for the long-term and make it ready for entering nato if and when it becomes possible. >> perhaps not as soon as president zelenskyy would like that at least the offer is there. bloomberg's tony, thank you. ukrainians have started taping grenades to drones with duct tape in an attempt to repel russian attacks. the cheap flying arsenal is changing the economics of war. >> in ukraine, unmanned aerial vehicles, drones, have become a critical part of the country's defense.

>> [speaking native language] >> they have come to epitomize the david versus goliath battle ukraine is found itself in, a battle that has seen the country developed cheap and disruptive technologies that has, until recently, kept russia at bay. >> it's like ak-47 today. it's working, it's very cheap. >> in january of 2020 four, ukraine's military released remarkable footage, the sinking of a russian warship by a naval drone, worth a tiny fraction of its target. as well as technological, drones indicate an economic shift in how wars are now being fought. ukraine's war has spawned an industry of start up defense companies and grassroots volunteers, many of whom are not just making a difference, but taking the fight to russia itself.

>> that was a part of today's big take mini documentary on ukraine's use of drones. let's get more on that story with bloomberg's jake. let me just start off by asking, how has ukraine built this wartime industry? jake: this industry really came out of nowhere. before the war, alexi was a street performer who twirled fire. then once the russians invaded, he started with a chinese drone that you could buy at walmart, some duct tape and see for, now he runs one of the country's top five drone producers. there are about hundred of these similar companies producing drones and what they all have in common is they rely on. cheap parts, many of which are coming from china, and can be used to great effect.

>> let me just ask whether you think these types of inventions and creativity, i should say, is actually going to change the economics of the war. jake: absolutely, one of his drones cost about $400 in two or three of them can take out a russian tank. i think if you look at what's happened to the russian black sea, that's the best example, ukrainian naval drones has basically rendered their entire navy useless and they are hiding now in a far corner of the black sea. i think militaries are going to have to look long and hard about these big ticket items that can be taken out by something you can make in a garage. >> how has russia been responding, what are they doing in response? >> russia has its own drone

force, which has been used to devastating effect -- effect against ukrainian infrastructure, russia is developing successful techniques to counter ukrainian drones, which can make that drones fall out of the sky. what you have is a cat and mouse game between russia and ukraine and both sides are innovating really, really quickly in an attempt to gain the advantage. >> bloomberg's jake, thank you so much for that report, of course, if you want to read more about it, it is on the big take on the terminal. plenty more coming up in our show. this is bloomberg. we will be right back. ♪

>> in the u.s., the ratio of vacancies to unemployment has fallen back to its level in the rate of voluntary quits has declined as workers are less confident of finding a better job. thus, my baseline forecast and that of many outside observers is that inflation will continue to move to a target over time without much further rise in unemployment. >> that was the federal reserve governor saying that they do have an increasing amount of confidence that inflation is going to be moving back towards target over time. of course, all of that is very important as we head into that u.s. cpi figure coming up later today. let's talk about some of the

drivers of these headline inflation prints, here is an interesting chart because we have broken it down into several components, supply components have been negative contributors, you have the monetary policy is well within the negative contributor and restricted monetary policy is not good for inflationary figures, but demand is 1 -- what i want to draw your attention to, that is the purple bars over here that tells you even demand pressure has started to fade recently. one of the reasons why this disinflationary process seems to be attacked, which is why we are getting a lot of commentary not just out of the fed chair jerome powell, but other members saying they have an increasing amount of confidence that inflation is on the right path down to 2%. let's talk about today's actual cpi print and what to expect out of there. this is the overall number, how the headline cpi print has been fearing over the last couple of months, you can see here that expectations into today are still around 3.3%.

if you look at the monthly components, core cpi will be a focus, the market is expecting around 0.2% for the monthly figure, if we do get a downside surprise of 0.1 percent, that would be a dovish signal to the market and could lead investors to price in more than what is currently pricing right now you have about 18 basis points of cuts priced in for that september meeting pricing by the end of the year, if you get a softer cpi print it may change equally. if the core cpi for the month comes up grounded to 0.3 percent, that could be somewhat of a hawkish surprise. a lot of focus into the cpi print that comes out at 1:30 pm u.k. time. let's not forget we are also just getting into earnings season as well, things are beginning to kick off tomorrow, we will have the u.s. banks reporting, this chart is pretty interesting as well because it tells you that in terms of earnings expectations, the u.s. has been leading the world in terms of vision and is a

reflection of the fact that the market has continued to do very well despite all of the macro headwinds. you talk about political headwinds as we head into the u.s. elections, despite all of the talk about what the fed is going to do an interest rate pricing, we see stock markets continue to go from strength to strength. yesterday was another day where you had the s&p and nasdaq breakthrough record highs, s&p through 5600 for the first time ever. again, propelled by some of the strength we are seeing and tech stocks. if you look at the composition of those s&p returns this year, about 60% of the returns can be pointed back to magnificent seven, the fact that big tech has been leading this rally is also reflective of how much concentration there is in this market as well. but as far as the bank earnings are concerned tomorrow, the u.s. banks are going to start reporting, and there we will be watching out for commentary about the macro economic output, interest rate sensitivity, but

as we head into the latter half of the year, loan loss provisions will also start to become a focus as well, recently the fed chair jerome powell has been talking about the weakness coming through in the labor market and how it will affect u.s. labor market spending, especially with some of those commercial banks as well. just to round things up, let's take a quick look at the futures as we head into the european session, again, we had a very strong hand over from the u.s. yesterday european markets to do quite well. we ended up 8/10 of a percent firmer. focus on those french markets. the cap iran is up. we are seeing a similar green theme. ftse 100 seen opening up in the green. u.k. gdp figure coming out in a couple of minutes time. euro stocks also seen up to tenths of a percent in the ask -- s&p futures and nasdaq futures are seen slightly weaker as we come up from those very strong handover's in yesterday's close. coming up, bloomberg will speak

exclusively to some of the world's most influential ceos, innovators and investors at the bank of america's breakthrough technology dialogue. that's why i'm filling in for tom mackenzie because he is there so you don't want to miss the interviews tom is doing later in the show. but thank you for watching, this was daybreak europe, the opening trade is up next. this is bloomberg. ♪

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>> good morning. here is what you need to know. president -- pressure mounts against president biden for a new candidate to face donald trump. u.k. data will provide evidence