tv Bloomberg Daybreak Europe Bloomberg September 12, 2024 1:00am-2:00am EDT
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lower borrowing costs today with the focus on whether christine lagarde offers any clues on the right path ahead. commerzbank prepares to defend against a possible takeover attempt from unicredit after the italian lender disclosed a 9% stake in the german bank. we will bring you the details ahead of bloomberg's exclusive interview with the unicredit ceo later. a strong session after a choppy few hours on wall street yesterday with the nasdaq with gains of over 2%. that fed into a bright session in asia. european futures as a result pointing higher.
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the tech rally in the u.s. and nvidia up 8%. european futures up. we are expecting another cut from the ecb. the ftse 100 looking to get a lift from a commodities pickup in the session so far. ftse 100 futures pointing higher 85 points. despite in flesh little stickier than the call level, nasdaq futures pointing higher. let's flip the board and look across asset. a little pressure on the bond markets, yields moved higher. euro-dollar at 110. brent, $71 a barrel with a focus on the gulf of mexico and a hurricane. gold up 0.2%.
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let's go to asia for a check on the asian markets. avril: we are seeing asian stocks rebounding today, set for the first positive close this week, and this is a tech lead rebound we are seeing. you think about the and narrative as the likes of nvidia talk about limited supply and strong demand, how emotional customers are, and then openai with a previous estimate at $150 billion. the chip related stocks are the ones, the tech names are leading the rebound in the region. the nikkei outperforming thanks in part to what we are saying on the japanese currency about to snap a seven session losing streak. the csi 300 has pared gains from earlier in the session after reports that china is detaining
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passports, cannot be helpful for sentiment on the chinese markets. i want to highlight some things among the check names. jensen huang saying he leans on this for the production of its chips, and this is a company he thinks leads the industry by a wide margin. the other supplier to nvidia, the most since june and july. and another company we have a focus on is this 711 convenience store operator which rejected the takeover proposal, saying the valuation was too low. couche-tard is discussing a higher price and the session. we saw the shares shooting to a record high, 7%, paring some of those gains.
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staying in japan, the japanese currency, as you mentioned a while ago, there was an impact from the core cpi out of the u.s., weakness reflected. japan ppi numbers are also week which left the yen with declines, but we got a reminder from a boj board member saying they see the neutral rate at least 1%. it looks like there could be more rate hiking to come. it is about the yield differentials. tom: that boj meeting is next friday. for we get to that, we get the ecb. let's check on the bond markets and how they are adjusting. to the bond market reaction, it had flirted with the possible 50 basis point cut, and that is being priced out for now. markets pricing 25 basis points after the corporate came in a
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little higher. let's bring in kristine aquino. talk to us about the bond market reaction to the inflation print. how has the bond market adjusted and what does it mean for broader sentiment? kristine: we have seen a pairing of those expectations, a 50 basis point rate cut from the fed, there is a little humble pine for the bond market because coming into this print, they had been pricing a lot of rate cuts, not just for this month but the rest of the year. bonds were trading like they were in recession which we are nowhere near as we have seen from the combination of labor and inflation data yesterday. it is more consistent with an economy that is moderating at a manageable pace. we have seen the pairing for the 50 basis rate cut this month, the question is if bond
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investors are expecting something of a jumbo rate cut for the rest of the year. tom: we continue to scrutinize the data. the equity market reaction overnight stateside was fascinating. tech doing very well, what was driving the equity market sentiment, and do we expect that to have legs? kristine: it looks like the equity market is buying into this idea that the u.s. is headed for a soft landing. the nvidia led rally very much helping matt. a lot of these rallies are driven by mega cap companies and nvidia in particular. sentiment seems more positive and there is a sense good economic news out of the u.s. is positive for stocks. there is this idea that the u.s. can weather this economic slowdown very well. it will not crash land anytime
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soon, and it is a controlled moderation, which is what equity investors want to see. tom: still looking at that goldilocks scenario. kristine aquino, managing editor of bloomberg markets today. to the ecb, the fed weighing out the cpi print. the ecb makes their decision later today and expected to cut their rates by a quarter-point. the ecb started its rate cutting cycle in june. the focus will be on the path ahead and any commentary on that front from christine lagarde who heads up the ecb. let's bring in lizzy burden with a preview. what should we be progress -- what should we be focused on today? lizzy: pretty much a done deal we will get a cut from the ecb
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today. it is unanimously expected by economists and priced in by markets and endorsed by all of the ecb speakers, even the hawks. this is because you have inflation receding towards the target and growth concerns mounting. it means the focus turns to the right path ahead. there is a divergence here. markets are more aggressive than what economists expect, they see a quarterly cadence of cuts of a quarter-point that would take rates to 2.5% by this time next year. markets reckon they could squeeze in another cut in october at the next meeting perhaps but that will be the focus of the press conference. i do not expect christine lagarde to be giving much away. she is very burned by the experience of over telegraphing the june cut my soy expect her
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to stick to the language of data dependent and say they are not pre-committing to a particular rate path. if we want clues, look to the forecasts and whether they give a haircut to growth outlook for 2024. some would say that would suggest they should have started cutting rates sooner. tom: that 0.9% forecast on growth may seem strong. we will see if that is adjusted lower. talk to us about the market rates plumbing, it is not just the deposit rate but other rates as well set by the ecb and what that tells us about support for the market? lizzy: you can see a 60 basis point trim, not a conventional size of rate cut at we are talking about two rates that the price of money taken from banks and the ecb.
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this goes back to the legacy of the negative interest rates era. they had to fight deflation and stimulate the economy. they need to never of the spread. this is the decision made in march with the decision on the operational framework. it is not going to be something that rocks the market probably. it is getting onto the plumbing to make sure the financial systems, the wheels are greased so they can continue shrinking the balance sheet smoothly. there is a technical interesting point but not relevant to markets. tom: bloomberg's lizzy burden in frankfurt. we will be following the twists and turns on the press conference later today. do not miss our coverage at 1:15 u.k. time and christine lagarde's news conference a half-hour later.
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on the central bank question, this time on the boe releasing its plan, details around capital requirements. we know about the scrutiny in the u.s., and they have adjusted their plan. that deal coming through today. at 9:00 a.m. u.k. time, we will get the oil report. that will be interesting in terms of demand and production at a time or we have to weigh up hurricane francine in the gulf of mexico and the impact on oil production. we will get a buildout of the inflation picture, cpi a little more sticky, producer prices out of the u.s. later today to round up that picture, and which components feed into the pce gauge which we know is the paper one by the federal reserve. get around up to get your day going in daybreak, subscribers
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tom: welcome back to "bloomberg daybreak europe." let's focus on the oil space which has steadied after the biggest gain in more than two weeks as hurricane francine hit crude producing regions in the gulf of mexico. a number of different factors are playing into the moves. what is helping to hold prices, is it likely to be sustained in your view? >> there are a few factors, you have the hurricane, it shut about 40% of gulf of mexico production.
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670,000 barrels a day, not a huge amount but it will tighten things in the near term, and we will see after the hurricane comes through, how quickly will these offshore production facilities resume, that will be one thing the market will be monitoring. that is a factor that could keep prices at that $71 level we are at now but later today we will have the iaea come up with a monthly oil report, and that is closely watched and will give a hint we stand in terms of potential oversupply for an increase in inventories in 2025. since the last report, opec-plus says they will extend their cuts in the market by two months through december. i doing so, there is expectation that could lead to more of a tightening situation. they have set in the past that
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even if opec us delays the increase in production resumption and getting rid of these cuts come on the market is looking frothy next year. we will see if the situation has changed at all in the report, and that could move the market. tom: we look ahead to that report and potentially market moving. we will be breaking that. what other factors are we thinking about driving these markets? it has been volatile, what are some key drivers for oil? wti well below that $70 level. >> one thing we certainly have seen in the market is the expectation of lower demand growth out of the united states and china. focusing on china in particular, a conference this week, there was a bearish outlook on chinese
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demand. a bloomberg survey done by my colleagues showed some traders and other folks of the conference expect the chinese oil demand to rise 200,000-300,000 barrels over the next two years, about that much each year, that is lower than what the iaea is expecting a much when he 5% lower. with that view, demand is weaker. the reason is the rollout of ev's, as well as the government pulling back from their big stimulus pushes. this is the first time they have seen in two decades were china is not the main driver of global oil demand. that will pull things down. it has been driving prices higher for a number of years. with that factor out of the way and a potentially weaker united
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states, that is pushing oil lower. tom: first time in two decades china is not the major driver of demand for oil. brent currently trading at $71. we will be speaking exclusively to the head of the iaea's oil market division, after the release of the report at 9:00 a.m. u.k. time. then later, jensen huang says nvidia is facing tensions with customers over shortages, and as demand for chips continues to boom, we bring you his comments. stay with us. this is bloomberg. ♪
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>> we just got overcooked on the whole ai theme. it does not mean it is over. we are not believers this will change productivity in the short-term, it is a long-term story. tom: morgan stanley's mike wilson on the ai boom. one voice of many in that debate. jensen huang says the scrabble for a limited amount of supply has frustrated some customers and raised tensions. speaking at a tech conference in san francisco, he says the company is experiencing strong demand for its latest generation of chips but there are problems. >> the delivery of our components and technology and infrastructure is emotional for people because it directly affects the revenues and competitiveness. we probably have more emotional customers today and deservedly so. if we could fulfill everybody's
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needs, the emotion would go away. we are trying to do the best we can. tom: let's bring in annabelle droulers. we heard jensen huang use the word emotional four times in that soundbite. what else did we hear? annabelle: he did talk a lot about the feelings around this space but there is so much in society. investors are anxious that perhaps the ai height is overplayed or there could be concerns around the rollout of the blackwell chip system but those fears are assuaged by jensen huang because he says the demand is strong in the blackwell is on its way and tsmc that manufactures the majority of their chips are doing a great job. off the back of that, the share
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price reacted strongly with the biggest jump in six weeks, and we saw that feed across to others on wall street. today you can see some names in asia and that strong move higher. tom: meanwhile, we have reporting that some of the valuations and one of the biggest customers, because they trade their models on the clouds provided by the hyper scalars. what do we know about the valuation and where openai stands in this sector? annabelle: valuation is strong, that is the key thing. we hear from sources that openai , the creator of chatgpt, is looking to raise $6.5 billion in equity financing, that is at a valuation of $150 billion which
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cements its status as one of the most valuable startups in the world and is a huge jump to where we were a few months ago. $86 billion is what we reported in february when they completed a different round of financing. now at $150 billion instead. we are hearing they're looking to raise $5 billion from banks for debt financing, a revolving credit facility. that could be the start of the walk toward the ipo. we have seen that previously from tech giants. tom: that $150 billion would make it one of the most valuable companies in the world. the success of nvidia has come at the cost of intel. that is the subject of today's big take.
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what are we learning of its future? annabelle: intel missed out on the ai boom, and that is something that has come across strongly. we had results a few weeks ago and in those result we saw growth undershooting wall street expectations and announcements around job cuts, that huge share price slump off the back. what it tells us, because of those result, they were considering serious possibilities to try to continue to turn the company around. that has been a mission of the ceo, pat gelsinger. scaling back multimillion dollar projects and selling off subsidiaries. all sorts of quite extreme scenarios will be presented to the board. they are meeting this week starting tuesday for three days.
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we will be listening to what we get out of it, and what is intel's future in this space? tom: great round up on key tech stories from annable drillers. -- annabelle droulers. coming up, commerzbank prepares to defend against possible takeover attempts from unicredit. stay with us. this is bloomberg. ♪
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the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.
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point fingers over with traders fully pricing in a 25 basis point reduction next week after inflation data doused hopes for bigger move. before the fed is the ecb, the bank expected to lower cost with whether christine lagarde offers clues on the right path ahead. commerzbank prepared to defend against a possible takeover attempt from unicredit after the italian lender disclosed a 9% stake in the german bank. we will bring you the details ahead of bloomberg's exclusive interview with the ceo andrea orcel later this morning. let's check in our markets. the equity balls have at least for now a bit between their teeth, a positive session overnight. the nasdaq ending up by 2%.
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european stocks futures pointing higher by 1.3%. ftse 100 looking to add 93 points. to what extent that will be sustained remains the key question. s&p future e minis pointing lower. a very solid session yesterday. there was choppiness throughout the day, inflation data and a rally in tech shares led by nvidia. the build up to the ecb decision, and it is the forecast and the language from christine lagarde that will be scrutinized given that most fully expected the next cut coming through today. u.s. two year at 365. euro-dollar in focus. brent, 71.21, hurricane francine and the gulf in focus.
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gold, 2518. let's get to one of the most fascinating corporate stories, because bloomberg learned commerzbank is reviewing its defense strategy as it watches for a potential takeover approach from unicredit. the german lender has taken the precautionary move after the disclosure of a 9% stake in commerzbank. let's bring in oliver crook. this is happening very fast. unicredit taking an assertive line, a 9% stake but not willing up further acquisition within commerzbank. what are the details at this point at the strategy of unicredit in commerzbank? >> this happen so very fast over the last 24 hours, and it caught a lot of people off guard. namely commerzbank and the
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german government who sold the stake. let's recap what happened. commerzbank has been held in part by the german government since the bella. they have been suggesting that they were going to start to sell the stake into the market. during that time unicredit went into the market, started buying shares, and when the government cannot to sell these shares and were finding market, 1250 for the shares unicredit came in for the whole 4.5% stake in the bank, a 5% premium of approximately what they were finding in the market, and the german government sold it. that brings their stake up to 9%. they have filled out the paperwork to bring their stake above nine point 9%. the problem for everybody is because we talked about consolidation in the banking
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system in europe is is unicredit going to make a play for the four? commerzbank is building a defense against the potentially. you were talking to goldman sachs in terms of how to advise them to mount the defense, but everybody and europe is watching this closely, from the politicians to the regulators and the bankers. tom: if a full takeover is unicredit's ultimate goal, what potentially could prevented -- prevent it? >> there are so many dimensions why this is such a fascinating story. let's do with the fact of other bids coming in. we talked about a tie between deutsche bank in commerzbank. they talked about it back in 2019. that did not come to fruition because there was so much overlap in terms of clients. i asked the ceo of deutsche bank about it, and they tried to
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batted away and said this does not make a lot of sense when you do not have a ranking union and cannot reap the fruits that this scale would provide. does that change things if unicredit is coming in. good deutsche bank get involved? there are questions about bnp, but there was a political dimension to this. on the one hand government wants to maximize the return, so they will go for the biggest bitter -- bidder. they will come under intense pressure. one, unions who were trying to build political pressure so that it does not get taken over. you have these nationalist forces in the far left that want to hold on to what they see as their wealth as a nation. all of these pressures coming together. we have heard from the greens who said they are ok with cross-border mergers.
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we also heard from the opposition right now saying they do not want the government to be guided by financial aspects of the deal, to consider other aspects, which is funny to hear from this cdu given that they are so focused on the health of the german economy. tom: that twist and turns and implications for the broader banking space in europe. we will be speaking with unicredit ceo about the increased stake in commerzbank. at that exclusive interview is that 9:38 a.m. on the pulse. the ecb widely expected to cut its key deposit rate 5.25 of one point today. lizzy burden is in frankfurt. what should we expect today? lizzy: tom, a quarter-point cut
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from the ecb is fully priced by markets. unanimously expected by economists and endorsed by the range of ecb speakers across the spectrum, including some of the hops as well, because we have had a busy summer of data christine lagarde told us to wait for. inflation receding back toward the target at headline and core levels, not at the services level perhaps attributable to the paris olympics. you have wage growth easing in the second quarter and concerns about the growth outlook mounting as well, so it all points towards a cut today, and therefore the focus will be on the right path ahead. there is a divergence between what markets and economists expect. economists see a quarterly pace of quarter cuts here on out, another one in december and each quarter through the september 2025 meeting where they see them
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resting 2.5%, but markets on the other hand see a more aggressive pace with an october could potentially squeezed in and rates hitting 2.25% by mid 2025. today i would not expect christine lagarde to give much away. i would expect her to stick to the language of data dependence, not pre-committing to a particular right path, and that is partly because she has been burned by the experience of over telegraphing that june cut, but also because of the diversions on the governing council, not just about the risks to the inflation outlook about where the neutral rate is, the point at which monetary policy stops constraining the growth outlook. there is this range of views from 2 to 3%. we have heard from policymakers that as they get toward that rate it will get more difficult to make a lessee, but it is not
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to say that in the near term policymaking will be any easier. tom: lizzy burden on the ground for us outside the ecb in frankfurt. do not miss our coverage of the policy decision 1:15 p.m. u.k. time and the news conference half an hour later. as we focus on the ecb rate decision the state of europe's economies will be in the spotlight, particularly the big two, germany and france. the forecasts are for growth of 0.9%. it will they adjust that lower and to what extent will germany and france numeral. now let's bring in our correspondent who was also in frankfurt with an eye on the euro zone economy. talk to us about the challenges facing germany in particular. is that where the spotlight should be, the old adage revised in the last 12 months or so of
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and digitization and climate change technologies. so it's coming from all sides for germany at the moment. yeah. okay. i mean, look, this is a movie we've seen before, which is which is the swing, the pendulum swing back to the ecb to to play that savior role as we look ahead for that. but again today, is that the right way to frame it or is there a fiscal impulse that could come through either from france or germany or the
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periphery nations, italy, spain seem to be faring slightly better. no, i don't think germany's problems are cyclical. they're truly structural. the car manufacturing is struggling with with the transition to evs. um, the, the, you know, public investment lagging far, far, far behind. uncertainty on the back of that. so it's structural problems that germany faces and has faced for quite some time. and that's what's playing out. so lower interest rates as such are not going to make much of a difference. and what we're seeing at the periphery of course in spain above all, is a very strong services sector. um, which is benefiting from people wanting to take vacation. people are channeling that, that, you know, a little bit of spending that they're doing. um, in, in spain, um, and, and that is helping the economy expand. uh, at a much, much faster pace than, than in the region's core. and you did mention france, of course. um, a lot of uncertainty there as well.
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it's doing better than germany, for sure. um, got a little bit of an olympics boost, but yeah, we'll have to see. it's not easy in europe at the moment. yeah, yeah. no, really, really great context for us. the services strength coming through from from spain and the idea that maybe even if we get this cut, which is expected from the ecb, it may not do that much for germany's economy. joanna randall, thank you very much indeed. coming up, roche shares fall amid concerns over potential side effects from its weight loss pill. we bring you the details next on that pharma story. stay with us. this is bloomberg. look, as history is being made national collectors mint and the cook islands announced the limited public release of their first 2024 silver double eagle $2 coins. angela buchanan, the 37th treasurer of the united states, was instrumental in supporting the creation of the united
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2024 silver double eagle $2 coin can be yours for only 19.95. each coin comes with a certificate of authenticity verifying its precious metal content and legal tender status. there is a strict limit of five coins per caller. earliest orders will receive priority status over later ones. all are covered by our 100% guarantee of satisfaction. so hurry, avoid disappointment and future regret. order now. to order, call one (800) 391-5227. strict limit of five per caller. ♪ >> u.s. traded shares tumble after the obesity pill was tied
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to side effects. raising questions about whether it can compete. let's bring in sam from bloomberg intelligence. how did the drug fair? >> the data seemed good. better than others, small trial. what was surprising and took people back was the side effect profile. when you have an obesity pill you can force the doses high and weight loss is better. a fine balance to work out, you
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cannot just run around. they're going to phase two next to, it was not vomiting and nausea. tom: stocks sold off. where investors right to overlook the efficacy? >> member, efficacy has to do with how many drugs go to people. there were signs that heart rate was increasing meaningfully. it is not a major problem, but they need to figure that out, and there were some increases in liver enzymes you never went to see with the drug so they have
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to figure these things out. you cannot rush it. that is what we saw when the share price went in the other direction. i cannot figure out why a company like roche -- we are sitting back thinking why did they do that? tom: very interesting, sam with the context how roche is trying to build out this bill. expecting to go to phase two and some expectations that will not be able to get this bill into the market until 2030. sam from bloomberg intelligence on a space crucial for investors in terms of the weight loss drug story. the debate between kamala harris and donald trump attracted an audience of more than 67 million u.s. viewers on major tv networks, beating numbers for june's showdown between trump and president biden. trump said he is not inclined to
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have another debate with vice president harris but left the door open if it is hosted by nbc or fox news. it dealmakers in china finding themselves in the crosshairs of authorities. bloomberg us learned three different top investors from different securities firms have been detained since august. summit state bank burger -- brokerages have been asked to hand over passports. regulators are scrutinizing ipo's and other capital raising activities. u.s. and u.k. are signaling being open to using weapons to strike deep into russia. the two top diplomats discussed the address with president zelenskyy during a joint visit to ukraine. washington has so far opposed the move citing concerns it might deepen the conflict. plenty more coming up.
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>> i think it is more noise than news and the fact that the core number was slightly higher than expected. >> at the end of the day it was a disappointing reading. we were expecting a slightly lower print last month, we have fed 2.4 four months now. >> inflation at the margin is still to get investors toward 25 basis points in september. >> the fed should be moving expectations back from these large rate cut destructions into a much more gradual steady approach of getting back to
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neutral and to the debate over what is neutral. >> it looks very well controlled, not deflation. inflation is gradually coming out of the system. tom: our guests weighing in on the latest u.s. inflation print with the core number up 0.3%, a higher than it been expected. here is the breakdown. you goods inflation once again and the energy component contracted within the basket, but breakdown of the different components and you can see the stickiness of services going back to june of last year. it has barely budged, and that remained in expansionary territory. think about housing rents, insurance premiums for car insurance, those two factors feeding into slightly higher core inflation. let's have a look at producer prices, because that is the latest print coming up today.
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it bloomberg economics expects once again on a core basis you could see stickiness. airfares, health care, and portfolio management fees as well in terms of producer prices. from the ppi, cpi feeding into pce, personal consumption expenditures index that drops on september 27. you strip it out and look for the headline number, the key components going into pce suggesting you can get upside on that number. before we get onto the fed's decision, we have the ecb deciding today. let's have a look at how things are shaping up. fully expected to come through with their second cut of the cycle. they cut in june and are expected to cardigan today. the latest inflation projection
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2.2%. bloomberg economics is that coming down to the 2% target for the ecb by the end of the year, but you need to focus on wage growth out of the euro zone and services as well. bloomberg economics sees a cut today, a skip in october and cut again in december. setting you up with the forecast from the ecb and the language from christine lagarde. do not miss our coverage of that ecb policy decision at 1:15 p.m. u.k. time, christine lagarde's conference half an hour later. we are going to be speaking with the unicredit ceo andrea orcel about the move to up its stake in commerzbank. 9%, but there is reporting from bloomberg suggesting they want more. that exclusive interview at 9:30
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on the pulse. the opening trade is next, and the equity bulls have their bit between the teeth. futures pointing higher after a decent session in asia. nasdaq intact lifting the gains. a choppy session on wall street the nasdaq ending up by more than 2%. the buildup starts in the next few seconds. stay with us. this is bloomberg. ♪
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the moment i met him i knew he was my soulmate. "soulmates." soulmate! [giggles] why do you need me? [laughs sarcastically] but then we switched to t-mobile 5g home internet. and now his attention is spent elsewhere. but i'm thinking of her the whole time. that's so much worse. why is that thing in bed with you? this is where it gets the best signal from the cell tower! i've tried everywhere else in the house! there's always a new excuse. well if we got xfinity you wouldn't have to mess around with the connection. therapy's tough, huh? -mmm. it's like a lot about me. [laughs] a home router should never be a home wrecker. oo this is a good book title.
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