tom: this is bloomberg daybreak: europe. these are the stories that say your agenda. hurricane milton makes landfall on florida's west coast, bringing life-threatening storm

surge's and leaving millions without power. we will bring you the latest throughout the show. asian equities rally following wall street's fresh record high. u.s. inflation data out later, set to define fed policy. plus, split on rates. san francisco fed president mary daly expects one or two more 25 basis point cuts this year. that's after fed minutes reveal jerome powell faced some pushback on last month's jumbo cuts. european futures higher by .1% after the record gains on wall street. the smp notching a 44th record of the year. yes, our focus shifts to the inflation print.

cpi print out of the u.s. later. arguably less important potentially than it has been in previous months. given the fomc officials are leaning more to the labor market in terms of how they way up there for the response. we continue to pass the minutes and see how that reflects in terms of the pricing. markets pricing in fewer than two cuts by the end of the air from the fed. ftse 100 futures pointing to gains. s&p futures currently flat. nasdaq futures, after strength that came through from some of the tech names in the u.s. on wall street. currently holding about the 20,000 level but flat in terms of the futures as we lead up to the open later in the u.s. we look at a 10 year with a yield of around 4%. the dollar has been strong. 407 right now on the benchmark. euro-dollar at 109. rent, $77 a barrel. up. we continue to keep an eye on the middle east in terms of the conflict there, but we know the inventory has been building out in the u.s. the yellow metal up.

hurricane milton has made landfall in florida as a category three storm with warnings of extreme winds and a potentially life-threatening storm surge. bloomberg's w reporter mary has been following the story and joins us with the latest. mary. the latest as we watch this landfall of hurricane milton in florida. what are we seeing on the ground in florida? i think we may have lost the connection to mary. that happens, it's live tv. we will try to get that line reestablished with mary to get the latest in terms of what could be a devastating storm in florida. with millions, around 6 million people being told they should evacuate and the costs, in terms of the insurance cost, potentially running up above 100 billion dollars on some estimates.

that is a major story and we will bring you the latest when we reestablish that line. let's get back to these markets. strength coming through after the csi 300 saw significant selling pressure. the biggest downfall in about four years. avril hong standing by and singapore. give us the update in terms of how those asian markets are faring today. avril: we have seen these big swings in chinese equities for much of today, but they are, for now, leaning -- leading the gains in the asia-pacific, which are in a good mood if you take asia x china thanks to the s&p 500 clocking the 44th record this year. stocks and japan are also doing pretty well. but where the action really is is in china. yesterday we saw the csi 300. what a showing in four years.

it staging a bit of that comeback today on the hang seng. gains of almost 5% as well. this is looking ahead to saturday briefing from the chinese finance minister where hopefully he fills in the blanks as far as fiscal stimulus is concerned. but what was also really interesting is, as hong kong heads into a long weekend, the timing of a pboc announcement that the eligible investors can now start applying for that 71 plus billion dollar liquidity tool, four-star market investor. something that the governor had announced last month. that is what we are seeing in terms of sentiment boosters for chinese equities. the pessimist in me is thinking back to afternoon session of yesterday. think how quickly that stimulus speculation turned into stimulus skepticism. something to keep in mind, even as we watch these chinese equity markets. yen in focus, dollar-yen move

toward 150. might be turbocharge, depending on what we get out of the u.s. cpi print. let's look the board and look at other currencies. mainly the chinese u.n.. offshore, onshore they been gaining today. not just equities. also wanted to highlight what we are seeing in china's 10 year yield moving closer to the two point 111 chinese bonds have been gaining. if you take a look at this mixed chart, it is a really interesting dynamic that mary has been pointing out on the mliv blog amid the volatility we flipped the board in chinese stocks. we been seeing chinese bonds gaining ground, catching a bid. regardless of what we get out of the chinese finance minister this saturday, she thinks we can still see chinese bonds gaining ground because, if you think about the structural issues that need to be fixed in china, the high local government debt, as well as deepening property markets, these are things that need the help of looser monetary

policy. a good environment for chinese bonds. something to consider as we see the chinese equity volatility today. tom: avril hong with a fantastic breakdown of what is transpiring across these chinese markets. joining us out of singapore as we lean up to that finance ministry briefing on saturday. a risk factor for these equity markets is whether or not they under deliver. but we will get the details saturday out of china. let's get back to the situation on the ground in florida. hurricane milton has made landfall in that state as a category three storm with warnings of extreme winds and a potentially life-threatening storm surge. bloomberg's weather reporter is following the story for us. we've reestablished that line. what is going on right now in florida, what is the latest? mary: hurricane milton is continuing to move across the central part of the florida peninsula. it has now notched down to a category two. previously it was a category screen when it made landfall as

it was approaching florida earlier was a category five. it has fluctuated in intensity. what hasn't changed is that it will bring up and is bringing destructive winds, damaging waves from the storm surge. across large parts of the four to coast. and also extreme rains, which will trigger flooding, flash flooding on open flooding. we are seeing now all play out right now as it continues to maintain hurricane intensity through thursday as it's projected to move across the peninsula and then eventually through the east coast. tom: what is the latest in terms of expectations and estimates of the potential damage of this hurricane when it comes to the infrastructure and the housing stock of florida? mary: the fact that it has hit the tampa bay area where there is load topography where there

is damage from the storm surge will be significant. the power over 2 million customers in florida without electricity in st. petersburg there was a it is cut water service. across florida along the storm track we are seeing widespread damage as it's playing out. so that's definitely something to keep an eye on as the storm continues to move. tom: bloomberg's mary with an important update in terms of the damage coming through from hurricane milton as it hits florida. we will keep across that story for you throughout this morning. minutes from the fomc, september meeting revealed that fed chair jerome powell received some pushback on that have plate rate cut. what they are seeing as a recalibration. >> what we are seeing after the

first two months of this year is that the labor market has downshifted in is at a sustainable pace of growth. we are just where i believe we need to be at full employment, not going too fast or too slow, i am now quite confident that inflation is on path to hit our 2% goal. i think two more because this year or one more cut this year really spans the range of what is likely. it's really important to put caveats with that. tom: let's bring in bloomberg's valerie tytel right now. we had the fed speakers in the fed minutes. we did get an indication there was some pushback. there was only one fomc member, michelle bowman, who officially opposed that 50 basis point cut. the debate was live. what did we learn from those minutes? >> reading from those fomc minutes, it's a possibility chair powell could be the

deciding vote. maybe she could only see one more cut. they have now gone nearly 60 basis points higher since the end of september still hovering above the 4% line on the two year yield. it's also causing a bit of jazz happening in the fx market. we are seeing the dollar on quite a tear. it has been up for the last eight sessions in a row. this is its longest winning streak since 2022. you can see it's up over 2% on the winning streak. it's up again a little bit so far this morning. tom: cpi print later today, do we care less about it given that we know many of those fomc officials are prioritizing the labor market? valerie: if you asked me that before the payroll, i would say yes. the cpi isn't as important as it used to be. the fed repricing that's gone on

in the last week puts a bit more emphasis on today's print. we are expected to see the headline cpi number year tick down to 2.3% and keep an eye on the cpi month on month print. that will be up .1 and the consensus at the moment is that .1. the risk to the upside, if we get closer to a .3. a.3 month on month. if you annualize that it takes us farther away from the fed's 2% target. let's take a look back and look at how inflation has been falling in the recent months. my next utp chart. if you annualize the month on month figures for the last three months, for the last six months, we are below the fed's 2% target if we continue on that trend. the risk is, do we buck that trend like the payroll report bucked the trend of weakening labor market just last week. in my next chart i want to show you, maybe a naive overlay chart. but this is the chart that's maybe haunting the fed. back in the 1970's reside dip in inflation only to re-accelerate later. perhaps the fed members are

beginning to worry that we could have some sort of re-acceleration in the coming year. tom: bloomberg's valerie tytel. thank you. the chart that haunts some policymakers. valerie, thank you as we lead off the cpi print and inflation print out of the u.s., 1:30 pm u.k. time. 7:30 am u.k. time, the riksbank governor will be speaking. we will see if he says anything about the outlook when it comes to sweden's rate policy. apparatus in the thinking of that. 12:30 p.m. u.k. time. meanwhile, the ecb meeting minutes. they are increasingly suggesting that this month is live for a potential third cut from the european central bank. 1:30 pm meantime. it is that u.s. inflation data expected again to build on the picture of a move towards that 2% target. valerie was out riding for us. that's 1:30 p.m. u.k. time.

we will see how much sensitivity there is in the markets now to the inflation data of the u.s. you can get around up of the stories you need to know to get your day going in today's edition of daybreak. terminal subscribers can go to dayb on the terminal. cost-cutting at hsbc. one of the top stories on that daybreak page right now. the new ceo making a move at that thing. coming up, the spanish economy minister urges the eu to avoid a protectionist escalation with china. we are going to bring you more from that exclusive interview with carlos. that's next. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe, happy thursday. carlos has spoken exclusively with the one and only kriti gupta in madrid where they discussed the country's budget and economy. he also talked about sustainability and said their bet on renewables is paying off. kriti joins me now. spain has been a golden child. this is been a reversal where they have been performing better than the coronations of france and germany. talk to us about what you've been hearing from the finance minister. how well-positioned spain is right now and how much tension there is around this budget. kriti: no one pays attention to the yields. there on the periphery, traded high. no one wants spanish credit except for right now where they can't get enough of it. you see record bond options in spain. go to madrid and all they are talking about is spanish yields

are now lower than the french yields. the major source of pride, national pride for spanish investors. international investors have been bullish on spain. but the reasoning is not the sunny beaches of spain. it's a series of other factors as well. i asked the minister this very question. take a listen to what he said about the sustainability of that outperformance. >> competitiveness of our firms given the good track records in terms of energy costs, the spanish solution. it is also the exports of non-tourism services. it's not put into the picture but is equally important. 100 billion euros in non-tourism services. government -- growing faster than higher value added like information, telecommunication,

financial services. again, these are elements pointing toward sustainability in our growth modem because this is also an element that we point out. it's a balanced one because it's combined with moderation and inflation, and also with fiscal responsibility. kriti: non-tourism services, 100 billion euros relative to tourism of 90 billion. this isn't something that's new, this is a pivot spain has made post gfc where they have actively invested in industry and financial services pivoting. that's a change for the way spain is operated from a more domestic and were looking country. now to focusing on what they can offer the rest of the world. tom: they are seeing that demand for their debt, the economy is performing better on many metrics versus france and germany. why can't they just get this dusted off in a relatively good position. and get it squared away since the eu done. kriti: it's not happening because they can't seem to get a

budget together. still very fragmented domestic situation and the situation plays a role in to it. i won't get into the nitty-gritty of the spanish constitution, as tempted as i am, but this is crucial because in spain you see a marriage of the two issues we see in europe, which is the budget situation. and also the ev heads you see in germany. spain is not only a major manufacturer of financial services and exports. it is also the second-largest auto making industry in europe. so issues hitting germany are issues hitting spain, so spain is getting hit extra hard because off of those 45% tariffs on ev's, china has retaliated on pork. $1.5 billion worth of pork imported from spain into china. that will be crucial. when it comes to the budget there's a little bit of push and pull in terms of getting it in on time. matching the deadline. listen to what he had to say on that. carlos: the commission this year said we do not want no policy change, we do not need no policy

change documents, so we will give you a bit of flexibility in the commissioner said it. we will give you flexibility to make progress with your budgetary process at home. kriti: flexibility but limited flexibility. this is where france put everyone in a pickle. the idea that we need an extension on the budget and if france can do it, so can spain, so can italy and that puts the fiscal input on delay. tom: thank you with that exclusive interview with the economy minister of spain. coming up, airbus deliveries fall. the supply chain issues appear to persist for the play maker. we will bring you the details on airbus next. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. airbus deliveries fell 9% in september to 50 aircraft. compared with the same month last year. it comes as a rival boeing faces its own problems, including a strike by workers, which has shut large parts of its manufacturing. for more am joined by benny, who leads our global aviation coverage. this sector cannot catch a break. a 9% drop from this time last year for airbus, they should be stealing a march on boeing. what's going on? >> it's a weak set of numbers across the board if you look at what they had. they handed over 50 aircraft in total. that's below the long-term average they've achieved over time, which is around 55. september should be a month where they do reasonably well. where they are coming out of the summer break. but it's just not feeding through. they have persistent supply chain issues, a little bit of a warning for investors.

there's a supply called senior. they had a fairly chunky profit warning. they blame it on what's going on at airbus and boeing. that gave people a bit of a head up warning that things weren't going that well. if you dig into the numbers on the a320, very low on the eight to 20, that's a slightly smaller aircraft. even the wide-body is not doing too well. that leads -- leaves airbus with 270 aircraft to deliver towards the end of the year and the remaining three months. you'll have to be a mathematical genius to figure out that that's really going to be a really tight race to the finish line. tom: that 270 number is the target, but as you say, it looks like that will be a challenging target, to say the least. on the supply chain issues or airbus, where do we stand on that in terms of the detail, in terms of how they try to address that. do we have any sense of a timeframe as to when these are ironed out for airbus? benedikt: we really dealt.

this is something people are scratching their heads over a. at what point will the aviation industry finally managed to catch a break. other industries have managed to come out of this. it's always what you hear from the ceo of airbus. look, this is a very highly specialized industry. lots of very specialized parts that go into these aircraft. we are talking across the board. talking interiors, engine components, aeronautics. in large parts we are talking about the components. particularly engine seems to be one of the pinch points here. so, when that might ease is really unclear. we might see this going into next year. my colleague kate duffy was speaking to the eye auto chairman yesterday and he said, the deliveries and lack thereof are feeding through the airlines. some have had to furlough some cruise. it's really across the board that you see this playing out. tom: still of -- still a lack of clarity in terms of timing.

how does that leave the famous competition between airbus and boeing, these numbers? how are they squared up at this point? benedikt: you would think airbus could steal a march on boeing, given everything going on at boeing since the start of the year. in particular now they have the strike. really production at boeing is closed down on the 737. that's the competing airbus -- aircraft airbus a320. as we just discussed, airbus is not able to capitalize on those woes on the way that they should. boeing has their numbers a couple of days early. they delivered the 33 aircraft. a bit of a surprise because as i said, production is pretty much closed down. but they managed to eek out some of them in storage or that they had cleared before production closed down in the middle of september. right now boeing is at a very tough spot. they just suspended talks with the unions over the new labor agreement. windows will resume is unclear. but, at the moment, no production at boeing whatsoever

in terms of the cash cow 737. really, both companies are in a very tough spot but for somewhat different reasons. tom: bloomberg's aviation editor and leader benedikt with the later on airbus. the numbers coming through and how it positions them versus boeing who faces its own challenges. benny, thank you. coming up, hurricane milton makes landfall in florida. we will bring you the latest on this storms path of destruction. millions of people have been told to evacuate. you are seeing a live picture of tampa bay, florida right now as that hurricane hits. it's an evolving story. we bring you the latest. this is bloomberg. ♪ when people come, they say they've tried lots of diets, nothing's worked or they've lost the same 10, 20, 50 pounds over and over again. they need a real solution. i've always fought with 5-10 pounds all the time. eating all these different things and nothing's ever working. i've done the diets, all the diets.

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tom: this is bloomberg daybreak:

europe, i'm tom mackenzie in london, these are the stories that set your agenda. hurricane milton makes landfall on florida's west coast bringing life-threatening storm surge is and leaving millions without power. we bring you the latest throughout the morning. asian equities rally following wall street's fresh record high. u.s. inflation data out later. could define fed policy in the coming months. plus, split on rates. san francisco's fed president mary daly expects one, possibly two more 25 basis point cuts this year. that's after fed minutes revealed jerome powell did face some pushback on last month's half-point cut. european markets futures currently are wavering around the unchanged line. looking for the catalyst around inflation data out of the u.s. later today 1:30 pm u.k. time. and in terms of the story stateside, a fresh record high on the s&p.

the 44th of the year driven higher by rallies coming through for some of the tech stocks. ftse 100 pointing against of .2%. iron ore prices and copper jumping again in the session. a strong session in mainland china after the loss as substantial as they were yesterday, dropping the most in about four years yesterday. the regaining that. percolating back into the chinese markets. s&p futures currently flat. nasdaq futures and similar territory. let slip the board and look across assets. yields are down, they were down one basis point, now they are flat and unchanged at 407. that could be volatility around u.s. treasuries around that inflation print. euro-dollar at 109, brent trading up. $77 13 cents per barrel. go up .2%. hurricane milton has made landfall as a category three storm in florida where more than 2 million homes and businesses

are now without power. for more on this i'm joined by bloomberg's weather reporter. what kind of damage are we seeing so far from the surrogate? >> what we're seeing as far as local authorities, the damage is quite widespread, including in st. petersburg where milton late -- made landfall in florida. the stadium having its roof ripped off by the winds, this is where one of the major league baseball team plays, and also where hurricane sponsors were station. that's happening. in addition, we are seeing just how far the extent of the damage area, milton is. about 100 miles south of where milton made landfall. there is major flooding reported

by local authority. so the damage area is quite large. as milton continues moving inland across florida and out ease, that damage will extend most likely. tom: the damages there despite the fact it has been downgraded from category five to category three. for the context, what is it mean in terms of the strength of this hurricane. is there any relief at all for the fact that you've gone from category five to category three, is this a more benign storm? >> know, the winds have slowed for various reasons. they do that as hurricanes make landfall. but at the same time, the rains, the storm surge, the flooding, all of that still comes even as the winds themselves have slowed down a little bit. that is definitely something to look out for as we continue tracking the trajectory of milton through the peninsula.

tom: bloomberg's weather reporter mary with the latest on hurricane milton, carving that dangerous and devastating path through much of florida and the peninsula. as we speak we will keep you up-to-date on that story throughout this morning. let's turn our focus to germany where the economy is headed for a second straight annual contraction. second straight annual contraction. the government has advised down its output projection for 2024. is the latest sign euros biggest economy is struggling to shake off a prolonged time of weakness. bloomberg's oliver crook is in berlin. this is no way dovetails with your time in berlin in germany. there is no correlation. talk to us about that the -- the recovery being delayed for germany. >> this was supposed to be the year of the bounceback, we had growth at 0.3%, research house after research i'll start dropping their forecast in a negative territory until the

government had to do the same thing yesterday saying that this is an economy that will contract for another year, it will contract by 0.2 percent in just for context, that's only the second time that that is happen. two years of sequential decline in the german economy since the german wall fell in 1989. really gives you an idea of going against the macro trend in the german economy, which has been one that enjoyed a great deal of strength of the last 35 years. and for olaf scholz, maybe not a correlation of my arrival, but a correlation to the coalition taking power in germany. this is inches adding to the economic legacy of this government, the bank able to revise its economy apart because of the external shocks. we had the invasion of ukraine that led to the energy crisis in germany. but there's been a high level of political dysfunction, a government not able to get on the same page in terms of what deeper forms and strong reforms are needed to bring this german economy back into life. an economy that is in desperate need of that.

tom: are there any green shoots across the economy, any reason to think there's a silver lining that things could bounce back and if so, when. >> if you believe the economy minister here in berlin in germany, he believes the recovery will come next year. there will be growth of 1.1% next year and 1.6% in 2026. when you ask what will be the drivers, why do you have reason to be optimistic. he says because there will be recovery in consumer spending and wages were coming up. the ecb diminishing rates will have an effective simulation. in the last point is basically a recovery in exports. i would like to put a little bit of doubt because one thing we haven't talked about are these tariffs that have been imposed on the chinese evey's. we have yet to get the retaliation from china and germany is the biggest economy in terms of its exposure to the chinese economy if they decide to move big on that, that will have a huge impact. tom, let's not forget the other

unknown, there's an election happening in the united states and there's a candidate who said they will impose 10% to 20% tariffs on all imports into the united states in the united states as of this year is germany's biggest trading partner. if that comes to pass, that means german exports to the day on eight states could diminish. that's an economic shock that doesn't take long to hit. that hits very deep and very hard. so still some clouds on the horizon for the optimism despite the fact what we hear from the german economy minister here in berlin. tom: excellent stuff. bloomberg's oliver crook on the challenges facing germany. a second straight year of contraction. from one economic shock to another, a very different form. that's what's unfolding right now on the peninsula in florida, particularly around temple where hurricane milton has made landfall. it was spring in our managing editor for esg investing in the region.

some details around the losses for catastrophe bonds. i will get the words out eventually. thank you for joining us. the catastrophe bonds, investors get exposure with an understanding that they could end up losing their money if you face an event of this size and scale as a premium priced in for that. but the losses on this count could potentially keep some investors and short change in hit them. what are we seeing in terms of the catastrophe bonds and how that story is evolving on the back of hurricane milton? >> absolutely. the scale of the losses that cap on investors. it now depends on the economic devastation. if we take hurricane ian as a starting point, we could get a sense of the parameters we are looking at. en in 2022 was a category four hurricane. when it hit it cost $60 billion of insured losses.

back then that triggered a 10% decline in the cap index, which is when a happen. in 2022, cap bond investors saw a 2% decline that year. estimates of the kinds of losses have ranged from everywhere from 40 billion to as high as 150 billion. at the moment it looks like the worst case scenario may have been averted, but this is very hard to estimate at the moment. insurers or reinsurers will take the first losses and investors are facing a hit anywhere from 2% to as high as 15%. tom: up to 15%. how is this market evolving to the fact that there is now a climate crisis, that these storms are becoming more frequent, more dangerous and larger in scale. how was the market adjusting to that? >> this is the kind of event for which the market was created in the first place. these huge tailwind events that

are hard for insurance and reinsurance industry to absorb. after en and investors took a hit, they demanded higher premiums in order to take on such risk. and then in 2023, that was a relatively calm hurricane season. in 2023 investors had the benefit of higher returns without having to fork out any full payments. last year ended up being a bumpy year for the cap bond market. it actually turned into -- in end up being the best hedge fund strategy all of last year. climate change, you mentioned these extreme weather events are getting more frequent, more intense, more devastating and much more difficult to model. there's not enough accurate historical data that people can use on which to produce these models. so it is becoming a riskier business for the market. tom: managing editor for esg investing.

on those cap bonds as we look at the impact of hurricane milton as a makes landfall in florida. coming up, we speak with the cofounder of tech startup faculty, and what she calls the paradox of ai investments. more on that coming up. this is bloomberg. ♪

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tom: sierra is in talks to secure new funding at a 4 billion plus valuation. a prospective deal underscoring sustained investor interest in ai despite concerns about ballooning startup price tags. it may be a question mark over return on investment. sierra's ai start up cofounded

by billions of dollars invested in ai by big tech and hyper scalars, there is growing concern about the lack of return. there is something our next guest described as something is in ai paradox. joining me now is the cofounder of u.k. based company faculty. we want to get your views on this ai paradox. the money is still flowing into your space. but it's worth reminding our viewers that you are at this in 2014, well before chatgpt came on the stage towards the end of 2022. you've been at this for a while, 2014. you are at the cold face of this ai evolution and how the story is unfolding. what does faculty ai do, what is the value proposition for what you guys do? >> to solve this paradox, despite billions being poured into ai, the value for enterprise remains low. we are changing that as europe's leading applied ai specialist,

we prevailed ai systems that helps organizations make better and faster decisions. over the past decade, we have delivered some of the most nationally and internationally impact for ai solutions. a decade, thought leadership, ai and ai safety, including being the first to introduce president biden to the phase. we are the reason that theresa may, the prime minister, made the technology company take down the terrorist propaganda within two hours and we are the company that has helped save thousands of lives during covid. tom: you did have that government contract around covid. there may be some efficacy that came through in terms of distribution for covid health requirements that were needed. it's a complicated environment if you are the cfo of an enterprise and you are looking at how you spend and integrate ai.

there's multiple different models you can choose from in the applications you can choose from. how do you work with enterprises to navigate that, and how much integration are you seeing right now? >> what's really important is not thinking about what's a model, but rather with the business problem, and first, what's the business problem, then what's the technology. and what is the process is in the decisions that drive that business kpis. from there you can figure out the technologies in the data. but everything flows from what's the business problem. tom: do you have concrete examples of where you been able to work with the company to integrate these solutions and actually provide inefficiencies. actually close that gap on investment versus roi? >> yes, for example, we work with large pharmaceutical organizations where we are helping them to make better decisions managing clinical

trials. clinical trials is notoriously unreliable. 80% of them have failed to recruit patients to the planned timeline. what happens is that they are very expensive and are costing millions per day. so we implemented in ai that allows the decision-makers to assimilate to scenario plan the interventions you need. the child managers act retrospectively and wait for something to go wrong and then they intervene. now they can, beforehand, if something goes wrong, they can intervene. tom: is it is example of a sector on the front foot. and are there sectors that spring to mind that are still behind, that are still lagging on this in terms of the integration from these solutions? >> actually, if you look at the market, most organizations are

what i would call at the lower end of the ai maturity where they would be really making a one-off short-term, nonstrategic just jointed ai procurement. so there remains a chasm between data and impacts, and to really overcome that is to really thinking about how this business problem, and the better organizations, the ones that are of the more mature end, they have a holistic ai system that connects across business and also have oversight and governance built-in, ensuring ai safety and compliance. tom cole and the other part is the ai safety piece. work with the ai institute in the u.k. when you go and test some of these models, what are some of the risks that you are seeing? >> typically, with a lot of the

ai models, these frontier models, we don't understand them that well, so they could, for example, what we call -- they could tell something that's not true. the key is looking at the circumstances where an error cases, it's mostly critical where there's national security, where there is safety, then to see what are the scenarios in which these risks become an issue. tom: where do you think we get human level intelligence. it is truly trillion cult -- trillion dollar question agi. our governments really prepared for human level intelligence in terms of what it could do in terms of reshaping the labor market? >> what we see is that the key is due human centric ai because that's where you have human in the loop, entrusted by human. this is where human get augmented and be better and more effective in their work. then that's where the

productivity really comes into. tom: do you list in the u.k., is an ipo on the horizon? >> not yet but you never know. tom: we will come back to you on that one. they queue for joining us in the studio. walking us through what you guys do, and some of the changes we are seeing, some of the risks and how to mitigate. faculty cofounder. tomorrow we continue our focus on tech startups and speak with the chief executive, which uses ai to automate legal documents. another question mark about labor documents when it comes to labor services. that's at 6:40 am u.k. time. other stories making news this thursday, israeli prime minister benjamin netanyahu spoke with president biden for the first time in more than a month. by and urged netanyahu not to attack iran's energy infrastructure or nuclear facility. u.s. president affirmed israel's right to protect its citizens from has villas rockets while also stressing the need for a

diplomatic solution. bloomberg understands that the ceo is planning a deep management reshuffle in response to the automakers disasters profit morning. he may present his proposal at a board of directors meeting in the u.s. this week. the carmaker is struggling with waning demand and high inventor -- high inventory. hsbc is reportedly aiming to say this much is $300 million in a cost-cutting restructure that will target some of its senior bankers. the financial times says hsbc is weighing merging its commercial unit with its commercial banking and markets unit. the report adds an announcement is expected by the end of october. plenty more coming up, we will build up inflation print out of the u.s. and break that down with the preview. stay with us. this is bloomberg. ♪

>> getting the fed in a position is going to be difficult. i think what's much more likely as we end up in a world where inflation remains sticky above target and the pace of easing slows down relative to what the market has priced in. again, i think the opinions are so wide and so varied that we will see a market that responds aggressively. tom: citadel securities global head of race trading speaking to bloomberg sonali basak there in terms of inflation story. her's how much work is done in terms of repricing the fed's next steps. we have the fomc. we know there was a debate about whether they should have gotten 50 or 25 on the text -- on the september meeting. you've gone from 80 basis points price into the markets for the month of november. all the way down to 25 and 21.

so combined about 47, 46, 40 seven. last time i checked it was down a 42 in terms of the market pricing. the has adjusted lower in terms of how much is expected from the fed by the end of the year. that's with the board and have a look at why some of that is. inflation print later. here's the boards of what happened in the 1970's. that is the white line. 1970's in terms of inflation of the target, it reached up and continued to look at things like the middle east and reactions around the energy story if that conflict escalates further from here with some staying a hundred dollar barrel oil. that could have implications. that quickly reflects on that 44 record for the s&p. here you are at 5007 hundred 92. more analyst upgrading their views around the s&p 44 record highs. context is going back, but we are at a remarkable year. it's not a complete outlier but

it is remarkable given all the challenge faced at the global economy. the boj deputy governor will be speaking at a special event hosted by bloomberg. subscribers can stream live on bloomberg.com and live go on the terminal. in 9:00 a.m. u.k. time we will speak with citi's chief executive. the opening trade is next. stay with us. this is bloomberg. ♪

anna: we are an hour away from the opening trade, is what you need to know, hurricane milton makes landfall on florida's west coast, authoritis