>> good morning, this is bloomberg "daybreak: europe." these are the stories that set your agenda. indications for supersize rate cut by the fed. tomorrow ski reading on nonfarm payrolls. joe biden on tax rates, the u.s. democratic nominee says returning a million dollars or

more should pay 28% on capital gains. bloomberg understands that opec-plus is close to agreeing to a delay to a planned hike in output as brent crude trades at a 14 month low. tom: happy thursday. the action yesterday across asset classes was more pronounced in the treasury markets and in equities. a big move once again across the curve, and around eight basis points yield lower in terms of the 10 year. the equity markets, treading water could be the way to characterize it, leading up to the nonfarm payroll on friday to get further clarity with jobs data.

that number of vacancies dropping to the lowest level since around 2021. these that move and expectations at the fed will have to be more aggressive in its cutting cycle. european futures .2 losses of .2% after the downside of yesterday. s&p futures also down, nasdaq futures looking at losses of 54 points. nvidia saw its biggest two day law since around october of 2022. we talked about the moves into u.s. tragedies -- u.s. treasuries, and the curve briefly dissident birding. currently that is flat essentially, not a lot of movement so far in the session. brent seven should -- $72 a barrel. currently of .3% -- .3%.

further pressure coming through for iron or and the continued question around the demand out of china. let's cross over to singapore for a check on the asian markets. avril: we initially sought recovery in asia stocks age, one plus percent decline, but that seems to have disappeared and the rebound is pretty unconvincing. if you take a look at what were seeing, we are seeing a mixed bag. the ones that declined climate about 2% today but elsewhere a lot of them have flipped into negative territory. i think traders are coming to the realization that this ai narrative about how difficult is been to justify the rally, that is been difficult to shake off. the other thing to consider is as we keep an eye out for jobs numbers later in the week, especially after what we got from the u.s. job openings,

there the added layer of uncertainty their payment. amid all this were seeing stocks holding out flat and we did get the likes of j.p. morgan scrapping their bullish case for chinese equities and this is inciting some of these risk surrounding of potential trade war ahead of the u.s. elections. on the flipside, you had this story about how china is considering a two-step mortgage rate cut and this essentially would be a form of wealth transfer to households, may be lifting the consumption picture a bit, but as we've been harping on repeatedly, it's a market that has lost animal spirits. so really difficult to reinvigorate that. we see the mixed picture on some of these chip names, it's actually the japanese ones that are extending those declines today. this is perhaps no thanks to what were seen on the japanese currency. did see it rallying yesterday

after what we got from the u.s. job openings numbers and today after data in japan which showed labor cash earnings climbing more than expectedke. because perhaps markets are passing mixed signals from the boj board member, coming in today saying that yes, they could hike again if the data justifies the case for it, but also saying they are watching markets with a high sense of urgency. on dollar-yen it's not really given us that clear of a direction, if you flip the board as you see these japanese equities lagging with concerns around the japanese yen, you look at this chart which will show you that in terms of dollar-yen and how the risk reversals are pricing things, it's actually been lagging what we are seeing on the pair. it gives us a sense that perhaps

traders are bracing for the sudden jump in the u.s. dollar and that also could point to potentially dollar-yen moves being accelerated lower, if options pricing actually catches up eventually. tom: of course the dollar-yen and its future very much dependent as well. on what happens at the fed. we will get more details about the fed right now. treasury yields climbed after that's off u.s. jobs data bolstered bets that on steep rate cuts by the fed, starting this month. the cofounder of oaktree capital says he doesn't expect rates to go below 3% ultimately. mark cranfield joins me now. we saw the job openings down, layoffs up, the fed beige book suggesting there's a stagnant u.s. economy at least on some measures. traders are getting excited

again about a jumbo rate cut. you were one of the first people to put this on the table as a potential option for the fed. other overdoing it now? -- are they overdoing it now? mark: what traders can see is that it has to be discussed at the next fomc meeting. whether the federal reserve goes ahead with 50 basis points or 25, traders can smell that they can avoid this. it has to be on the table for discussion. it's a bit like the recent new zealand meeting, they acknowledged in the minutes afterwards that they had talked about lowering by even more. that's where traders are now, they can see the fed has no choice. it's a sufficient dream of data that is subpar as you're talking about the numbers there. the beige book was also a bit bland as well. it's moving in a direction where the fed may have made a mistake by not lowering rates in july

they may now need to rush to do even more. there almost certain they will have to talk about cutting by jumbo amount, even if they finally get the go-ahead. the jobs report tomorrow, after the data comes out we have two fed speakers coming up umesh shed light on how they view those numbers and may encourage traders even more if the fallout from that is at the numbers are particularly week and it could lead to larger cuts. so an interesting day tomorrow, not just how the numbers themselves come out but how the fed speak response to those numbers as well in view of the upcoming meeting. tom: talking about how to interpret the fed's next steps, we been hearing from howard marks, speaking in melbourne, australia, saying yes, we will get cuts from this fed but not

3%. what are traders making of that interpretation and assessment? mark: it's all about the conversation around where is the neutral rate going to be in the u.s. terms. we've heard various people talking about it, it's a conversation that will pick up a lot more once the federal reserve has started to lower interest rates because people need to know where are the parameters for this, where are we going? i something like 3%, it looks like a reason. the historical background, if you look at the derivatives, they were very long-term derivatives, it's about where people pricing for. this is not perfect science. this could well change if the inflation numbers coming even softer and the jobs market deteriorates more quickly. this is where we have the big swings in the yield curve. we are more or less flat but were likely to shop around for a while as a data comes through.

as people start to crystallize around where to sit correct neutral number, that can help to boost the steepening of the curve, providing the fed does indicate they have to more or less match the path priced in by the traders. if they push back against it, people will have to reassess. the whole conversation about neutral rates, that is the big one once the fed actually starts lowering rates. tom: we get the cuts and then we get the conversation and the strategy. mark cranfield with great set up once again for us. let's get to the commodity space, what a week it has been for oil. opec-plus delegates telling bloomberg that are close to an agreement on delaying a planned increase in oil production. brent crude slumped this week to his lowest since last year

following downbeat economic data from both china and the u.s.. joumanna, what has bloomberg learn from opec delegates around their thinking? >> after the slump in oil prices of about 9%, there were lots of questions as to how opec-plus would take on the data and whether it would actually change their plans. let me just rewind a little bit back to what we got out of that june meeting earlier this year. the highlight of that leading was at opec-plus, the whole group had actually agreed to extend the majority of their cuts into 2025. a small group, eight members of opec-plus agreed to start tapering their quality reductions of 2.2 million barrels per day for the fourth quarter of this year all the way out to the fourth quarter of 2025. that was the plan, but of course subject to market conditions which in theory would mean that

as of october this year, another 180,000 barrels of oil a day would start coming back to the market. back when they took a decision in june, britt was averaging around $82. now we are at $72. no wonder they are allegedly rethinking their plans to bring those extra barrels back to the market. our delegates to opec have told us they are evaluating their position at least for october and then we will see what the oil complex looks like. it does appear to be the case at opec-plus delegates are considering pausing the tapering would've taken place as of the fourth quarter of this year. tom: that reported reevaluation by opec-plus members, what are the other drivers to watch out for in terms of how we think about the next steps, the next moves for oil? >> i will give you central

banker answer, and that's watch out for the data that came out this week. china data showing weakness of demand there was one of the catalysts for the bearish move lower. a big difference for the commodities markets whether the u.s. is in a soft landing or a hard landing. that's a major driver on the demand side. on the supply side we keep talking about it, is not just about the potential barrels at opec-plus will bring back to the market but also the sheer volume of non-opec supply that is expected to hit as well. the likes of the u.s., brazil, guyana, estimating and 1.4 million barrels a day will come onto the market just from new supplies in 2025. all of this has led something tanks out there to say that the market is going to be in a surplus situation and if you have that, it will be very difficult to see further upside

for oil from here. on the flipside, short-term data, we do get some of the u.s. stockpile data the -- it came through yesterday has shown a decline. another big drop versus where we were back in june. given the news from opec in the u.s. stockpile situation, we may start to see some support that has come through in the last 24 hours. tom: thank you very much indeed. here's what else we are thinking about today, at 1:15 p.m. we get a little more clarity on the jobs picture in the u.s. after the jobs opening data moved the treasury markets yesterday in terms of the shrink and the decrease in the vacancies an increase in layoffs. the private payroll print comes through at 1:15 for the month of august.

meanwhile we will get the services pmi data after that contraction for the fifth straight month in terms of manufacturing. that causes at 35 u.k. time. aftermarket we will get broadcom earnings and that will give us an interesting picture in terms of demand for their semiconductors. you can get around up of the stories you need to know to get your day going, go to d.a. why be on the terminal -- dayb . howard marks in his view that even if you get cuts, there's an expectation from oaktree capital that you will get those cuts from the fed and you will get -- will still be above 3% in terms of neutral rates for the federal

reserve. so chicken on daybreak for some details on those top stories. kamala harris says she will raise those capital gains taxes if she wins the race for the white house. to ensure that america's big earners pay their fair share. the latest on the u.s. election and her economic plans, next. this is bloomberg. ♪

tom: welcome back to bloomberg "daybreak: europe." kamala harris wants to raise capital gains tax on people earning a million dollars or more. speaking at a campaign event in new hampshire, the democratic candidate set america's wealthiest should pay their fair share. >> if you aren't a million dollars a year or more, the tax rate on your long-term capital gains will be 28% under my plan, because we know when the government encourages investment, it leads to broad-based economic growth and it creates jobs which makes our economy stronger. tom: for the details, i'm joined by kriti gupta.

why do you make of these plans, these proposals coming from kamala harris and what it tells us about her economic priorities? >> this is a stark difference from her predecessor joe biden. there's a criticism that she doesn't understand economics. she has already expanded on joe biden stocks around price gouging, medicare, and center, where there is a concern that if you start include price caps and make things more affordable on things like groceries and health care, you basically create a stagnation in the economy. so kind of feels like a response to that when she talks about this capital gains tax which is also been heavily critiqued by joe biden who is looking to increase it as high as 40% if he had gotten a second term, making the same argument that the wealthy should pay their fair share. she saying maybe it should only be 28%, which is still significantly higher than what

it is at the moment. it is still a marked difference of substantially lower than her predecessor. the piece you need to keep in mind is that donald trump has also looked at this capital gains tax and is also saying this needs to be brought down even lower. this is something that was shopping corporations and high net worth individuals and also how people it who are investing in the stock market are able to reap those gains. tom: it's one thing making it as a proposal and another actually getting it through congress. that comes down to what extent it is split in november. to what extent could this prove damaging in terms of her relationships with corporations? or is the fact that she's coming in lower than buying the scene as a positive by the business community? >> is positive simply because democrats are not seen as market

friendly participants traditionally. into goldman sachs, it's an interesting call from goleman sex. you're coming into a little bit of a late cycle u.s. economy. there's consensus that we are toward the end of it and therefore slowing down and that recessionary call is getting louder. the timing of that is unclear. but goldman sachs is talking about a very slight boost to gdp, not only in a kamala harris presidency but a democratic sweep of the white house in 2025 or 2026 compared to what it might look like under president trump in the next 12 months. saying the peak of about .5% in the back half of the year is a big deal because they are basically highlighting concerns around immigration, feeding the consumer resilience. there also assuming an import

stair from china as well. that is the difference and also market participants are starting to say maybe your international and domestic policies could be more market friendly. tom: coming up, $50 billion in financial support, china going all in on strengthening ties with africa. more details, next. this is bloomberg. ♪

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tom: welcome back to bloomberg "daybreak: europe." china's president xi jinping has vowed to provide africa with $50 billion in financial support over the next three years, and

strengthen military cooperation. in a sweeping effort to deepen china's relations with the continent. >> after hard work in the 1970's, china and africa relations are at their best period in history. i propose to elevate the bilateral relations between china and all african countries that have diplomatic relations with china to the level of strategic relations. tom: from the continent in which you sit, what were the highlights from president xi jinping speech? this is a major event in beijing, bringing together 40 or 50 leaders from across the continent. how well received do you think his message will be? >> it was highly anticipated and also highly looked forward to

because judging from the number of african dignitaries that made their way to china, they were expecting that things will be the way they've been in the last couple of years. but it is not -- president xi jinping's checkbook is a little tighter this time around, vaguely worded as various a sentence, investing on the african continent. this just signals that the old era is gone, that chapter is closed. president xi jinping terms the new chapter is a chapter of small and beautiful projects. so every single cent that will flow into the continent will be well thought through and budgeted for. were also seeing china gearing away from the traditional projects they been doing and going toward renewable energy. anything they do on the continent will have greater benefit in china. tom: thank you very much indeed

for that assessment of that speech from president xi jinping to african leaders. we will have more in this month's edition of africa amplified. ukraine's president makes his biggest cabinet reshuffle since russia's invasion. we bring you the details, next. ♪

tom: good morning, this is bloomberg "daybreak: europe." treasuries receive adult after soft u.s. jobs data supports the case for supersized rate cut by the fed.

stocks trading water after tomorrow's key meeting on nonfarm payrolls. kamala harris rates with joe biden on tax rates. the u.s. democratic nominee says those earning a million dollars or more should pay 28% on capital gains. president zelenskyy is said to nominate someone -- it's all been about the job stayed out of the u.s.. we saw softness yesterday in terms of the number of openings, falling to the lowest level we seen since the start of 2021. that's a move up money again into u.s. treasuries, the benchmark 10 year dropping in terms of the yield by eight basis points. the equity markets this thursday soft, lacking conviction,

waiting for the next catalyst. the jobs data dropping tomorrow. european futures pointing lower by .2%. the softness yesterday across european stocks. nasdaq futures looking to losses of 31 points. nvidia has seen its biggest two day drop since around october of 2022. talked about the pronounced moving treasuries, that's where the action was yesterday on the back of further evidence of a cooling u.s. labor market. essentially flat with the 10 year and that has been marked the dissen version temporarily around the curve. reporting suggesting that maybe opec-plus will hold out on putting more oil and barrels on the market in october.

building on the losses of this week at $90 per ton, we will look again at the basic resources sector as pressure continues to weigh on iron or. ukraine's president set to nominate the former ambassador of the country to turkey as the country's new foreign minister. as part of his biggest cabinet reshuffle since the russian invasion began in 2022. granted, why is this -- greg, why is this reshuffling coming now and what does it signal? >> president zelenskyy says he wants a new emphasis oath end mastech and foreign policy. there's no doubt is a crucial time for you can. ukrainian cities have been facing a huge barrage of

missiles and they struggle to stop the incursions in the east. it is a critical time and if he did want to take a new m's this, this might be a strategic moment where he could make those changes. tom: what is the assessment as to how this either strengthens or undermines ukraine's ability to fight, and would have been beneficial to have a consistent cabinet makeup, or does it work to reshuffle and re-energize the cabinet, given the challenges ukraine faces? greg: i can't underscore enough how crucial this role is for ukraine. ukraine relies on western support to run its war. he is an accomplished diplomat in his own right, having been in turkey and poland. whoever they have in the role, it's important that person be strong. in some ways it's an interesting move because he was in the president's office and worked with the powerful chief of staff. so it might strengthen internal

cohesion. there's no doubt it's a very important role and zelenskyy must have confidence in him, placing him into it. tom: we have imf staff on the ground this week in kyiv. what is the goal for others member -- those members on the ground this week? greg: they are doing a review that could unlock almost a billion dollars disbursement of funding. they're expected to cost for cuts in the interest rate and devaluing of the currency and a stronger tax base. they already have a citizenry facing blackouts, were tom immobilization and other challenges. then being called on for a weaker currency which the national bank is said to want to resist and more taxes, that could be a fine line to walk. but ukraine's government does what i on western funding to run its government and for its military. so a tricky line to walk for

ukrainian officials on this one. tom: gregson sullivan with an important update on the reshuffle and demands request coming through from the imf to release that finding. other stories making the use this thursday, a long-awaited inquiry report says the grin fell tower fire here in london was the result of a catalog of failures by the government, local councils and construction industry. the report follows years of testimony and hundreds of thousands of documents examining the disaster that killed 72 people and sit -- in 2017. bloomberg understands u.k.'s to make further changes to water company insolvency laws. it's a verse on the new government has hinted that special administration is an increasing possibility. the company which supplies water for 60 million people in and

around london is seen by the government as too big to fail. nvidia shares fell for a third session in new york, now down around 14% since last week's earnings outlook disappointed. meanwhile the company says it is in contact with the u.s. justice department but is not been subpoenaed over and antitrust investigation. ai chip demand will boost growth for the broader semiconductor industry over the coming years. that at least is the view of major equipment supplier to tsmc in taiwan. the ceo of scientific spoke to us in an exclusive interview. >> were lucky in the ai industry, would benefit from the equipment that we build, the process that we developed to

enable ar processes. our investors are very excited for the potential company who can really contribute in this industry. >> what is your outlook for demand for your equipment toward the end of this year, but next year as well? >> it will be substantial for the next few years. the increase will be much higher than ever before. >> can you give the number? >> it will probably increase two or three times a year, it is possible. >> do you see any risk to that outlook? >> from my personal perspective, this booing of the ai industry, there is a lot of application,

that's why some time ago, saying the global market of ai will reach 100 trillion at some point in the next few years. >> we are seeing a lot of taiwanese companies that are choosing to expand abroad. do you see any sort of concentration risk from choosing to focus your attentions here? >> of course, definitely we will try to evaluate alternative locations, either for the imd or manufacturing. internally, this is under our position. >> speaking more broadly now, what is been really capturing a lot of attention in the chip

equipment manufacturer space or chip equipment provider space is the measures that we are seeing applied on tokyo electron and asml and restricting sales of certain equipment to mainland china. at risk of tariffs or being prevented from selling to the chinese market, is that something that concerns you or scientech as a business? >> my direct answer is no, because the equipment that we built, mainly for packaging applications, and that is not included in this implementation. >> to see that risk? -- do you see that risk ever appearing in the future? is it something you're looking at? ? closely >> it becomes more

critical every day. most likely it will happen, but who knows? tom: the scientech speaking inclusively to us in taipei. present biden is said to be preparing to block nippon steeles $14 billion takeover of u.s. steel. sources say decision could come as soon as this week. let's bring in our bloomberg commodities reporter, martin ricci. what is next in this saga? martin: it looks like this $14 billion bid by nippon steel, one of japan's largest steelmakers for iconic u.s. steel is hitting the books. as you said, biden is going to reject the proposalreviews -- pr this week. for nippon steel, it is a big

blow. they were hoping to expand their footprint globally as domestic demand for steel ebbs and japan. for u.s. steel, the company itself had their shares slumped, down 17% by close of business yesterday. the boss there has warned that without that takeover by nippon steel and all the investment that the japanese company were promising, without that they will largely have to close down. the way politics in the u.s. in an election year has done away with this deal, it looks like. tom: what does it mean for

nippon steel, the business, going forward? martin: there is the immediate response to this, both on a political level and at a company level. nippon steel has said they will pursue legal options if the deal is blocked. nippon seal has said they hope that the u.s. can do this innate lawful way, which i guess is a hint. the people we spoken to already, it doesn't look like there will be much ahead if the deal is turned down. nippon steel doesn't have that many other options, is trying to expand, to retain its clout as the chinese steel industry expands and becomes more sophisticated. that was a transformative transaction, and if it doesn't

happen, it doesn't have that many other options. tom: we got a couple of lines from one of the japanese government ministers 30 minutes ago or so, saying they believe u.s. government stance on u.s. steel is due to winning votes. interesting comments coming through from a senior member of the government in tokyo. what do you expect the democratic fallout to be? martin: i suspect pretty limited. of course from the japanese side, they want to register displeasure, he's one of the prime ministerial candidates are potential candidate at some point. but really, this is relatively small fry compared to the broader strategic priorities for the u.s. when it comes to the japan relationship and perhaps

that makes japan's options fairly limited in terms of what it can do in response. the u.n. general assembly this year, strategic competition with china and that strategic alliance between washington and tokyo is perhaps much more important than the takeover of a steelmaker. so i think japan's options may be fairly limited. tom: martin ricci with the latest on that story, reports that the u.s. will be looking to block that takeover by nippon later this week. we are talking barberry, that is next. this is bloomberg. ♪

tom: welcome back to bloomberg "daybreak: europe." you kate luxury brand burberry is to drop out of the ftse 100 later this month. it has been relegated after its market cap fell by a third over just the past three months as consumers continue to tighten their wallets. for the details let's bring in our european luxury retail reporter. it is in dignity after indignity for burberry. what has been? happening to this company? what are the major headwinds for burberry at this point? >> indeed it's been very tricky. basically burberry and the whole industry has been facing a downturn in demand compared to the post-pandemic boom years.

2023 we saw is slow down, it accelerated in 2024 and this year burberry said it is in turnaround mode. they had a ceo that lasted for about two years. he was let go in july and they named a new ceo who will basically have to chart a new path for burberry. we don't know exactly what he is going to do, but he will present his big plan in november. the strategy to become more premium and exclusive in the eyes of the consumer has not really worked so far. tom: lay out for us what the key challenges are for this new ceo. >> he comes from michael kors which is considered to be affordable luxury. so the question investors as himself is will burberry try to become a michael kors? will it become more affordable luxury instead of trying to

become more exclusive by offering leather bags and shoes. the other question is how will he get along with the creative director? when i fashion ceo is named, typically he or she likes to name their own designer who will translate their preferred commercial vision. so we will have to see about that. they have been facing pressure because under collapsing sales, you want to put out winning designs. but when you're seeing the quarterly sales go down, that's not very encouraging, so there is a lot of pressure there. that is pretty much what he is going to be focusing on. so we will hear from him in november. tom: what you have done is outline some of the idiosyncratic issues around burberry.

tiffany can reduce the size and scope of its warehouse store in shanghai, china. what is happening across the luxury space more broadly? >> basically the consumer appetite in china is not there. there are worries about the economy there, the property sector, and china became really like the driver of this sector. u.s. demand is quite soft so in different geographical locations you're not seeing the growth you would want to see. if you are in turnaround mode, that makes it even harder to post. tom: a fantastic tape there on what is happening to burberry, a story we continue to monitor.

there is plenty more coming up. stay with us. this is bloomberg. ♪

>> when it comes to the consumer , we continue to see the somewhat steady consumer. >> over the last year, things have settled out but they haven't in any way pullback in a meaningful manner.

>> not much has changed with the consumer over the last six months. they are employed, wages are growing. >> in terms of a major pullback, we haven't really seen that yet. tom: analysts and executives at the goldman sachs retail conference in new york opining on the state of the u.s. consumer. still need those record highs in the debate as to whether or not that can continue. we will unpack some of that data in the next minute or so. here's the difference with the u.s. equity performance and valuations versus their chinese counterparts. chinese equities now trading below 50% in terms of valuations versus their chinese-u.s. counterparts. the csi 300 benchmark down your to date. for an unprecedented fourth year of declines for chinese stocks.

it's partly down to the risk aversion around getting exposed to chinese stocks. let's flip the board and look at jobs, vacancies down, missing all the estimates and layoffs up. the ratio of vacancies to the unemployed also coming in lower than the expectations, now 1.1. we know the fed scrutinizes that number. we saw that money moving into treasuries once again yesterday with concerns about the cooling labor market. adp is expected to take up from 122,000. july the weakest since the start of the year. expect to see a slight tick up in terms of the adp numbers across later today in terms of private payrolls in the u.s.. when you get wage growth still above 7%, it becomes

consequential as well as to how the market is thinking about and interpreting the next rate cut from the federal reserve. coming up at 7:30 a.m. u.k. time, do not miss a conversation with the ceo of insurance market lloyd's of london. that conversation coming up on the opening trade. that is next. this is bloomberg. ♪ why do couples choose a sleep number smart bed? can it keep me warm when i'm cold? wait, no, i'm always hot. sleep number does that. can i make my side softer? i like my side firmer. sleep number does that. your ideal firmness and effortless comfort, all night. can it help us sleep better and better? please? sleep number does that. 9 out of 10 couples report better sleep. during our biggest sale of the year, the queen sleep number c2 smart bed is only $999

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>> good morning from london, i am anner edwards. we are one hour away from the opening trade. soft jobs data at a supersized fed cut. japane