>> this is bloomberg daybreak: europe. these are the stories that set your agenda. chinese shares poised to enter a bull market as authorities rolled out fresh property using steps as part of a stimulus barrage. tensions in the middle east

escalate after the killing of hezbollah's leader with israeli jets targeting yemen's who the rebels. and austria's far-right freedom party wins the most votes in a national election for the first time with the country's traditional parties moving to keep it from power and happy monday as we check in on european futures. and the session in asia has been fascinating. ftse 100 futures currently lower which is interesting given the rally we are seeing.

s&p futures currently flat and nasdaq futures still holding above the 20,000 level. inflation data out of the u.s. friday pretty benign. the core gauge for the fed coming in at 0.1% so pretty relaxed with markets expecting close to 70 basis points of additional cuts from the fed as the inflation picture looks much closer. let's flip the board and look cross asset. 111 on euro-dollar. brent up 57 and iron ore coming in with a rally. they lifted up 9.7% at 112 for the core input into the steelmaking picture on the expectation of further demand. let's flip the board and have a

look at the gains coming through. a starkly divergent picture across asia. japan hammered and china soaring. gains of almost 7%. the msci index for the region down 5/10 of a percent. in the nikkei tumbling almost 5%. the markets wrongfooted by the new leader of the ldp. a slightly hawkish tilt when it comes to the boj. china property shares are rallying and you are seeing that predominantly now. and japanese markets are tumbling as investors are getting caught out in terms of their bets and let's get more in terms of how the markets are adjusting with mary nicola. talk to us about the divergence we are seeing within these markets.

i cannot remove the last time we saw a picture like the one we see now between japan and china. >> what a contrast, especially when talking about the divergence. china has been on the back foot and japan has been luring ahead. there has been this spectacular rally in china equities. largely driven by the stimulus and the constant news flow that is coming from policymakers in support of the chinese economy which is going to be critical so we had pmi's. just confirmed that stimulus was required and a lot of the data is not going to come through and we will see an improvement so you are going to see the impact from investors coming through and looking for the rally in china equities but we also have

to remember how much investors were underway china so you are seeing the shift and a lot of the indices in asia that did well and were some of the top performers are now suffering a setback because investors now have to be covering their shorts and thinking about the rotation and the longer-term implications for china into year end. >> so some short covering as well. reflect briefly on the inflation data. >> more when it comes to jobless claims later this week and nonfarm payrolls. what is our view now and what do we know about the moves around inflation and to what extent the fed has this under control. >> it looks like what inflation is telling us is that it's moving in the right direction. the fed could be more confident about moving ahead with easing

but if there's going to be aggressive easing it will come down to the labor market but unfortunately cracks in the labor market will indicate and spook some concerns about a recession and the activity data has been really positive, showing a robust economy. so the last thing we want to see is more cracks in the labor market or unemployment rising. that would take a turn on equity markets and on sentiment overall but we at least know for now that the inflation picture suggests easing is going to continue. >> thank you, mary nicola. and let's get back to the china story in granular detail. more measures. in terms of what is happening in terms of the first-tier cities

and in terms of easing some of these restrictions on property purchases. to what extent is that fueling the moves we are seeing in chinese markets this morning. >> property has been the question in china and the reason the economy has been doing so poorly. there were restrictions on how many homes people could buy and who could buy homes in the big megacities in china. and so we have had some cities all dramatically to a great extent reduced those restrictions. they actually took away all the restrictions on home purchases so anyone can buy homes, as many as they can afford. we have good not gotten those measures from beijing but it's been a huge boon for the market. the market expects after the politburo meeting in which they said they wanted to take action

to stop the decline in the housing market, there's an expectation that the government has switched its mode of operations and is now looking for ways to support this market and so that is partly why it is doing so well today. >> how would you characterize the stimulus we have on the monetary policy front and fiscal front and what are you looking for in the days and weeks ahead? >> certainly what the stimulus has done has changed the perception. , because before last week everyone was sort of bearish on china. and after that you have seen people switch their opinions so that's why i think the stock market is doing what it's doing. and whether or not people will continue to hold a relatively bullish view on future economic growth in china will depend on what the data looks like for october and the fourth quarter and it will also depend on earnings for companies. if we see the stimulus flow

through in terms of better profit and pricing power for corporate's, that will be a sustainable story. this right now is just a lot of excitement. and the excitement is pronounced. thank you for the context. let's switch focus to the geopolitics and developments in the middle east. israeli strikes have hit who the targets in yemen following the killing of the hezbollah leader. let's bring in our anchor, joumanna bercetche. how significant is the killing? >> it is one of those historic weekends in the middle east. it is difficult to overstate what he represents not just a lebanese politics but regional politics as well. he has been a key political voice for over four decades now and has led has blessings 1992

and over the course of his time at the helm transitioned hezbollah away from being a pure militia into a significant military force and even a political and social force within lebanon as well. what many of his detractors will say is that it is the state's capture that has below were responsible for, the need to believe he was not a good influence not only on lebanon but on regional politics as well because he had succeeded at taking some of lebanon's sovereignty under it and putting lebanon under this so-called axis of resistance. and many of his supporters view him as someone resisting israel's incursions into lebanon over the years but also someone who spearheaded reconciliation, including efforts between hamas

and iran before october 7 happened in the recent reconciliation of who sees -- of houthis. from israel's standpoint, the operation to take naz rall out was called operation new order, underscoring the fact that from israel's perspective he was the central point to this access of resistance -- axis of resistance. whether the new era comes or is being heralded is a big question for the region. the airstrikes have continued over the course of the weekend. the number of deaths continues to rise. it seems as though appetite to continue with these airstrikes does not appear to be fading and it's opening up questions as to a potential diplomatic resolution, which again remains elusive. >> we have a reminder of the

multi-front nature of this. israel and hamas continuing to be battled in gaza and the conflict continuing. what is your sense as to whether or not this moment opens the door for a diplomatic solution or pushes it further down the line? >> what lebanese people are saying is that this is a time for the lebanese state to step up and a significant amount of state capture had been undertaken by has below. the lebanese prime minister finally spoke on saturday and said he is calling for a cease-fire in the lebanese government, a caretaker government have a desire to implement this resolution put forward by the united nations after the 2006 war, which stipulates has below move away from the border and lay down their arms, so it is perhaps

significant that the lebanon commentary or messaging is that they are willing to undertake discussions regarding 1701 whether or not hezbollah themselves does. you heard from biden as well saying that ultimately the u.s. will continue to support israel's right to self-defense but it is time for a cease-fire not just in lebanon but in gaza as well so there is still a direct linkage to what is happening in gaza and the events that will unfold in lebanon in the coming days. >> joumanna bercetche. >> here's what else to be thinking about. tuesday is china's golden week, a big week in terms of retail sales and consumer travel so all those data points will be filtering through but it's a gauge on the health of a consumer feeling increasingly embattled and that of course before all the stimulus efforts that came through.

on tuesday closer to home, the french prime minister will be laying out a policy speech detailing the policy priorities for him and the team so we will bring you the details on that. and at the end of the week it is the u.s. jobs report with nonfarm payrolls coming through with the surveys pointing to around 146,000 and an important data point when you are factoring in the next moves for this federal reserve. you can get a roundup of the stories you need to know in today's edition of daybreak and subscribers can go to da why bigo on the terminal. why the far-right in austria is unlikely to play any role in the new government despite winning a historic election via victory. the details next.

>> i have not spoken to anybody here even though we have that about selling or buying of shares from commerzbank. the job of foreign minister is to try to do everything so that the fire is not reaching the whole world. >> the german foreign minister speaking to bloomberg. austria's freedom party won the most votes in a general election and vowed to start coalition

talks. they are pledging to block the party from forming a government in austria. >> this was at the expense of the center-right, the conservative and green parties. we have seen that with the greens across europe. for the leader of this party it is going to be a moment where he will say we are the biggest party in austria and it's time to enter coalition talks and it will be a one sided conversation because the rest of the political establishment has vowed not to work with him so not only is he expected to lead the next government but is expected to play copart. this party has run an anti-immigration platform,

so-called fortress austria, and at the same time being opposed to sanctions within russia. that leaves a situation where you have coalition building with parties that are much weaker. there are enough votes for the center-right and centerleft to build a government. in the situation it leaves is potentially a weaker government while at the same time on the sidelines the most popular party within austria's giving policy proposals, which is not an ideal dynamic for these parties who may want to get something done and face opposition from the party that can rightly say they are the most popular within austria. >> we see echoes in austria of the political changes that we have seen across france and germany as well. what does this tell us about the broader political shifts at work

across europe right now. >> you have the same phenomenon in germany and france where you have this idea of the teaming up of these political parties to at any cost prevent them from coming into government. we are only now getting a prime minister to come into power and already it looks shaky. and a similar phenomenon in germany where they have found to block the afd at the local level. we have an idea of what awkward coalitions look like because we have one now and it is difficult to get things done. we have a new european commission. it says in the mario draghi reported that the only way europe survives is is it begins to add more like a singular country.

and that is harder when you have weaker governments and the reason they are week is because they have more nationalist and anti-establishment and euro skeptic parties on the sidelines. it will make things difficult to get things done in europe >> he said the last election weekend american democracy. andre plink of it has been speaking to vonnie quinn. >> it is up to the american people to decide what is important that america walks out of the elections by strengthening american democracy because everybody looks up at what happens in the u.s. and last time we felt that the u.s.

democracy was weakened rather than strengthened so we very much expect an orderly and democratic process and a smooth transition, whatever the transition will be. >> domestically, you are in your third term. a more difficult election this time around. in spite of the fact that you brought croatia into the european union. you were disappointed that those successes do not lead to an outright victory in the since you had to make a coalition with the far-right. >> we always had a coalition in the first, second and third mandate but we converged on the main points of our government program and the government program is predominantly the program of my party and i think that the croatian citizens gave us confidence for the third time

and maybe it could have been one mandate more or less but when i look from a larger perspective, we have regained confidence in global, regional and national circumstances with consequences from covid and two devastating earthquakes. inflationary pressures. we have despite that managed to join the eurozone, the schengen area, entered the global entry program, european stability mechanism, on the joining the oecd and increasing gdp. we have reached gdp growth in croatia of 7.6%. only two european union member states having a higher percentage and also, we have for the first time two out of three agencies put us into the a

investment credit rating. and it's a good absorption of the investments. >> you are referring to the fitch upgrade. are you planning to use those upgrades in the primary markets but -- or are your needs met? irr -- our needs are continually refreshed. we are having the possibility to have low interest rates. there are immediate effects on our banking sector of loans for our citizens and the entire economic perception of croatia with our feet in the heart of the european union with a very good reputational assessment by the agencies. most of the business sector i've been in touch with are really excited with this development.

and it is helping them to work on their productivity and on their exports and contribute to the economy. >> coming up, we will be joined by the ceo of five digital technology. to discuss the energy demands of ai data centers. stay with us for that conversation.

>> welcome back to a major corporate story that continues to bring headlines for us with the focus the impacts the jerk -- impacts on the german economy. volkswagen squares off with the unions on possible job cuts in

plant closures. they lower their operating margin forecast of 5.6% back in july. and germany's biggest three carmakers have all issued profit warnings this month due to slower chinese sales and rising competition in electric vehicles. let's check back on the markets in china. the superlatives are coming thick and fast. you are looking at the biggest five-day rally ever.

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.

>> this is bloomberg daybreak: europe. these are the stories that show. genda.

iron ore rallies. and tensions in the middle east escalate after the killing of hezbollah's leader with israeli jets targeting yemen's who the rebels and bombing a seaport and power stations and austria's freedom party wins the most votes in a national election for the first time but the country's traditional parties move to keep it from power. and european markets posted record gains by the end of the close on friday. here's the picture as we way up what is transpiring in china, the asian market rallied. the superlatives coming thick and fast. this is a turbocharged chinese market. there is no let up in the buying. we are looking at the longest

and most pronounced rally over a five-day period ever. that is how things are set. the filter across european futures more muted. we will talk about that incredible run-up in iron ore prices. and european futures are pointing to modest gains on the back of a fresh record notched on friday. with ftse 100 futures currently down. and we will see how the auto market adjusts to another downgrade from volkswagen. s&p futures currently flat and nasdaq futures pointing to losses of .1% in the japan story is also there. and the nikkei is being crushed in the session. in expectations there could be a more hawkish tilt. the u.s. 10 year yield currently at .375.

the fed has space to go further with deeper cuts given that inflation seems to be well on track towards that 2% target. euro-dollar at .111. on those middle east tensions. ir or at 112 with soaring prices , up almost 10%. so let's go back to the middle east and the developments there. let's bring in our horizons middle east & africa anchor for the latest. how significant is the killing and where does it leave the region in the days and hours ahead? >> i'm reminded of the quote there are decades when nothing happens and weeks when decades happen.

and that is precisely what has occurred. the killing marks a significant turning point not least because he was effectively the leader of the crown jewel of this axis of resistance sponsored by enron. it is a huge blow to their fallen -- to their foreign policy. he has loomed large over regional politics, responsible from turning them from a militia group into a powerful and influential military and political force within lebanon and had close ties to the uranian supreme leader and in addition to having close ties with other proxies around the region was responsible for the reconciliation of hamas with iran. and he was close to syria throughout the uprising and therefore a pivotal leader when it came to the axis of resistance.

and it is noteworthy that israel themselves called the operation to take him out operation new order underscoring that this could potentially usher in a new europe for the region but there are still some learn green questions. the first is how will iran respond to this. will they use this as a reason to exact revenge or bide some time to help hezbollah regroup again and the second question is what does has below themselves to and what does the lebanese government do? we heard from the prime minister and he was saying they want a cease fire so still a lot a few things up in the air. tom: joumanna bercetche with the latest out of the region. a number of questions that we can output i'm pleased to say to the middle east analyst joining us for the analysis on this story. thank you for joining us. how would you characterize the

removal, then, of nasrallah, the leader, and how and where that leaves the region in the days and weeks ahead? >> as joumanna says, it's extremely significant. has below is of course a much broader movement, which has got deep roots in lebanon, so it has not killed the movement, but as well as in assassinating nasrallah, israel in recent weeks has managed to take out through assassinations virtually all of hezbollah's senior military command and assassinating further leaders from iran's revolutionary guard corps and hamas. so the movement is really in disarray and it appears at the moment that it is struggling to respond militarily to israel. it has a significant arsenal, including missiles that can go quite a long way and is really

territory -- into israeli territory, but these are not going a long way, because they are preoccupied with trying to stem losses, appointing new leaders and making sure those new leaders are not vulnerable to similar assassinations. meanwhile, the major issue if iran, it is fairly -- it is early to judge but the signals are that they don't want to get involved directly in responding militarily to avenge the killing of nasrallah, and syria definitely does not despite the fact that he was a huge support to bashar al asad. essentially, most states in the region don't want to confront israel because it is militarily strong and backed by the world's biggest superpower. >> is this an iran that has had

its bluff called by israel? and what do you think the calculations and factors are that israel is weighing up as it things about its next move? do we have clarity on what the game plan is for israel? there are definitely analysts judging that iran's bluff has been called in the fact that they have not responded much yet has really validated in their minds the views of those in israel to people like john bolton who have been saying iran has been a paper tiger all along and biden was wrong to call for something but it is early days and one of the worries is that this could encourage iran to judge that a nuclear weapon is a good strategy for it. it has already seen has below is what it calls its deterrence

network and as a group would be an insurance policy for it in the event of any israeli attack on iran so they may be concluding that they need to find other forms of deterrence such as nuclear deterrence. that's one of several questions about the medium to long-term effects. and as for israel i think they want to press their military advantage. there is clearly a concern. it seems they are not going to get much pressure from the u.s.. astonishing that in the past few days, just last week the u.s. was saying it intesa paid a cease-fire in lebanon and just after u.s. officials were saying this publicly israel assassinated the leader of the group that it was supposedly about to have a cease fire with, so the u.s. is looking quite exposed but they have only responded by saying the killing

was a good thing and helps to avenge his many victims. so israel has a lot of room for maneuver but will also be aware that when a new vice president comes in, whether that is harris or trump, they would very much like their to not be wars in the middle east. so there's a space of a few weeks where israel has this particular room for maneuver for military action and is therefore trying to move fast despite the mass displacement and general misery that is taking place. and then there is the question of the gaza cease fire which still does not seem to be moving , overshadowed by this in lebanon. arab countries at the u.n. talked of comprehensive regional peace if there was a two state solution. , saying they want to make this kind of arrangement with israel

to stabilize the whole region for the longer-term but israel was responding to that offer because it does not want to go down the route of a palestinian state and ultimately that is the recurring issue that keeps coming back. >> jane kinnaman with the analysis. . we will continue to monitor what it is unfolding in gaza. thank you for some analysis of a situation that continues to evolve. and we are going to switch focus. i will be speaking to the ceo of five digital technologies about whether crypto will ever become mainstream in the future for generative artificial intelligence. stay with us for the conversation. this is bloomberg. ♪

tom: welcome back. nvidia's ceo sees nuclear as a key source to help power the increasing energy demands of data centers. he also discussed how his company is managing demands in china against growing export tensions with the u.s.. >> nuclear is a wonderful way as one of the sources of sustainable energy. we will need energy from all sources to balance the availability and cost of energy as well as the sustainability over time. >> controls are a big topic as we go into the november election.

>> the first thing to do is comply with any regulations imposed in do the best we can to compete with -- in the markets that we serve. we will do our best to support them. we have to defer all of the policymaking to the administration. they understand that balancing national security versus the prosperity of american technology all over the world. and we are exporting american technology, which is terrific for the u.s. but the world is built on american standards. nvidia is an american company and our government and the administration would love to see us succeed so finding the right

balance is difficult to do but they are doing a wonderful job. my focus is to build our company and i trust they will do the best thing for our country. >> that was the nvidia ceo speaking with tyler kendall in washington. let's speak with ai and energy demands and bring in the ceo at five, a company that started out providing the infrastructure for the digital ecosystem. you are making a pivot now. talk to us about a pivot from the mining of crypto to providing inch -- infrastructure for the building of generative artificial intelligence. >> that's a great question.

we started this well over a year ago. and it was almost two years ago that something called the ether merger occurred and this means that the second-largest cryptocurrency went from what we call a proof of work consensus mechanism where people used to mine it and then it went from that to proof of state. hive was one of the largest ethereum minors. after the merge we repurposed these general processing units we had and we started mining what were called alt coins to take ownership of bitcoin. in the first quarter of 2023 we began our pivot towards ai. in that period of time, the

focus on high performance computing specifically with our nvidia gpu's because they were more powerful to allow for high performance computing, which is more robust than simple crypto mining and so is that took off and we saw the advent of chatgpt 3.5 and then four, we started building our clusters with stronger networking and computing capabilities to fuel the inference and training required for ai models and so now we are at this horizon where nvidia is announcing blackwell and chatgpt is consistent releasing new and more powerful models in the world is tuned into this exciting new world of generative ai and adoption is occurring slowly but surely at

the enterprise level and i think day today people are using accessible ai tools to fuel growth and creativity, which i think is phenomenal. our investors under appreciating that shift you are making? >> we are under appreciated now but the stock being down is a macro reflection of bitcoin price and as a company that has a dual focus we still are under just 1% of the global bitcoin mining network with almost four a day and we have over 50,000 mining in the canada, sweden and iceland. we are the first crypto mining company ever going public in september 2017. we are traded on several

exchanges. so the share price is very much tied to bitcoin and we have 2500 bitcoin mind with green and clean energy on our balance sheet, over $150 million on our balance sheet so that gives us a very compelling enterprise value when you just look at us within this sphere of bitcoin mining and moreover we recently reported $10 million of annualized revenue from rai business using our gp use this most recent quarter. so i think investors are starting to understand bitcoin mining a little bit more but they are still wrapping their head around the ai computing business and as this is bloomberg, a simple metric.

the profit density of ai compute is anywhere from tend to 20 times more profitable per kilowatt than bitcoin mining. for example, right now -- tom: we are short of time, but that's a good metric. i guess my question is do you eventually move out of crypto mining altogether and before we let you go, if you can give us a full cost on bitcoin, what are you targeting in terms of pricing and how do you balance that mix in terms of generative ai provision versus the mining of crypto? >> there are two very different businesses.

>> historically, nine to 12 months after each having event, we see the gold market,, so whether it's early next year or next summer, i expect to see a bull market and i think it is not out of the question if you simply look at the price-performance of bitcoin relative to its own previous highs. and on the ai side of the business, it operates out of tier three data centers and we have crypto mines that are rugged and our tier three data centers are refined with cooling, backup redundancy, and that is like a ferrari or a porsche so it's two different business units and revenue streams and the beauty of it is you have a lot more stable and fixed revenue in the ai business , which is an excellent compliment. >> you have the forward and the

ferrari. we appreciate your time this morning. thank you very much. plenty more coming up. this is bloomberg.

tom: welcome back. it is once again all about china, and 8% rally before they go off on a national holiday. it is a fullbore bull market in chinese stocks. and in terms of the five day. they are set for the biggest five-day gain ever. the money you continues to move into chinese equities. we have more of a breakdown but one of the ramifications is iron ore and the demand as well

because of course what we heard over the weekend is that they are easing some of the constraints in major cities and some have a population of 30 million. they are removing restrictions in a pretty comprehensive way leading into expectations that there could be more demand for steel and to make that you need iron ore and those prices are absolutely soaring. today's turnover is the highest in terms of turnover in three years when it comes to iron ore so just keep that in mind as we look at basic resources. and let's flip the boarding give you a preview out of nonfarm payrolls. we get jobs friday. we are looking for revisions. keep an eye on revisions. the survey sees a print of 146,000. they think that will not derail the fed because they say that

the high-frequency data shows there is actually less job shedding than in typical months and are also saying nonfarm payrolls often overstate by about 91,000 on average per month, so the view coming there from bloomberg economics. on friday, it's the second downgrade in just three months so cutting their forecast around revenue, profit and deliveries. a reminder on the challenge. stay with us. the opening trade is next. this is bloomberg

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.

guy: i am guy johnson. we are one hour from the opening trade. chinese equities and metals soaring as we get government stimulus. stellantis