tom: good morning, this is bloomberg "daybreak: europe". asian stocks trade higher as that had unanimously cuts rates 25 basis points.

chairman jay powell tells reporters donald trump does not have the power to make him resign. >> if he ask you to leave, would you go? >> no. tom: the president-elect picks susie wiles to be the first-ever female chief of staff at the white house. who else could join the new administration. the bank of england warns of inflation risks, as it cuts rates the second time this year, we hear from governor andrew bailey. tom: good morning, happy friday. before we get to the markets, the earnings story from the swiss luxury watch and jewelry maker richemont with first-half sales just below the estimates, 10.0 8 billion euros, the estimates have been 10.2 billion euros.

there is a focus on the chinese market, softness in terms of luxury. operating profit in the first half for richemont coming in below the estimates. it is amiss in terms ofe estimate had been 2.5 billion. 70% of its revenue coming from jewelry, so we will look at the details, around that but it is the exposure to the chinese market that is likely to have dragged on that company. let's get to the broader markets. you had another record yesterday across u.s. markets. a 49th record coming through for the s&p, the nasdaq as well punching through a fresh record. gains for mega cap tech companies in the u.s.. a little selfless when it comes to the banking space. some of the gains on the back of the election taken off but broadly the optimism continues. cross asset, there was a rally, money moving into treasuries and yields lower. european futures set for a bright picture when it comes to

the friday session, looking to gains of around 0.3% for european markets. looking to end the week in positive territory. keep an eye on the politics of germany. some market participants think a new government could be positive for the fiscal impulse that comes over that economy. 10-yield currently 4.33, they dropped 10 basis points in the session yesterday, as markets recalibrate. the fed came through with it when he five basis point cut as expected. it has put the markets in terms of whether they go again in december. we will be watching two inflation press before that decision. the boe with a cut, 25 basis points, but warning on inflation and maybe additional cuts next year will be at a slower, more gradual pace. bloomberg economics thinks they will hold at the next meeting in summer. the pound in focus, a move higher yesterday, today softer. 1.99 down to dollar strength today, after the u.s. dollar drops to the biggest since

august yesterday. brent trading at 75.23, currently down 0.5%, and bitcoin came in above $76,000 for the cryptocurrency, just shy of that right now. very modest gains but just closing in on that $76,000 level for the key cryptocurrency. over to singapore, avril hong standing by for a check on the asian markets. we're waiting for details from the national people's congress in beijing. >> we are waiting for details of potential fiscal stimulus. the readout, what we will get potentially for housing market support for china, or even local governments to ease their debt burden. that is what markets have been wanting to see. if you look at stock market performance, you can see how traders are bracing for disappointment. especially yesterday betting on the idea that china authorities would come through with stimulus to buffer against potential

tariffs out of the u.s. you can see how there is a turnaround today on the raising of the gains, csi 300 :00 to gains earlier of 1.3%, those have evaporated. as one trader puts it, china might be better prepared to deal with tariffs, but what we might see is longer stimulus, not bigger stimulus. it is about the pace of execution. let's look at how asian currencies are faring. we are seeing the offshore/onshore yuan weakness by earlier today managing to clock gains on a day where most asian currencies are recouping losses from earlier in the week, as the dollar erases postelection gains. take a look at the csi 300, this chart will show you how it has been impressive in managing to hang onto the gains from september, remember that monetary stimulus blitz.

that we see on the csi 300, despite that is kleins -- the declines today, look at this chart, actually managing weekly gains for the best week in about a month. there are trading volumes behind this. it is up to china's authorities come the legislators, to deliver. tom: we hope to get some details in next couple hours from the national people's congress how much additional stimulus when it comes to the fiscal front will come through for china? we may have an answer in the next couple hours. avril hong with the details of markets in asia. with get to the fed. cutting its benchmark rate by a quarter percentage point in a unanimous decision was not a surprise. but chair jay powell declined to say whether they will cut rates again in december. he says the election outcome will not affect what policymakers do, at least in the near term. >> some of the president-elect's advisors have suggested that you should resign. if he asked you to leave, would

you go? >> no. >> can you follow up -- legally, you are not required to leave? >> no. >> does the president have the power to fire or demote you and has the fed determine the legality of the president demoting any governors with leadership positions? tom: let's bring in valerie tytel. that was where the interest lay. the cut was expected. there were nuanced in terms of where they go from here but it was the question about jay powell's role at the fed. >> he appeared to get flustered late in the press conference. just how many times u.s. politics was brought up in the question-and-answer session. he did reiterate many times that in the near term the election has no effect on their policy decisions. his comments were generally taken by the market as quite

dovish. he gave indications that a december cut is the base case. let's talk about this december meeting because it is a big one. the market is on tenterhooks to know whether the anticipated expansionary fiscal policies are incorporated into their forecast. in december we get the new forecast for gdp and inflation. we get the updated dot plot. if they wanted to make a statement in december, it would be that moment read eyebrows are raised because powell tried to tamp down on that possibility saying we don't guess and we don't assume. some might not be convinced because december 2016, a month after trump first won the white house, the fed staff already change their forecast for inflation. they baked in an assumption of fiscal expansion. a lot of questions raised on whether we will get that from the fed come december but he did reiterate data dependence.

on that note, let's look at the data next week. we have cpi on wednesday follows with ppi on thursday and retail sales which feeds into gdp on friday. tom: a big week on the data front next week. we will see if it adjusts and need to make changes in the pricing around the fed's next steps. bloomberg's valerie tytel, thank you very much indeed. let's continue to focus on the unfolding changes around the political makeup we are likely to see in january, when donald trump takes office. he picked susie wiles, one of the top architects of his political campaign, as his white house chief of staff. she will be the first woman to hold that position paid my goodness, that is a position that comes with a lot of power. let's get the details from vonnie quinn. for our international viewers, give us a sense as to who susie wiles,'s she has been operating in the background for quite some time. >> the ice maiden as trump

called her when taking everybody for having won the election. she has been around politics many decades. her first campaign was ronald reagan's in 1990. fast-forward to 2018. she was the architect of ron desantis' successful gubernatorial campaign. get this, when she became the campaign architect for donald trump, it was her messaging that suggested he should distance himself from ron desantis and paint desantis as offputting and out of touch. she is a very candy political operator -- canny political operator. the first female chief of staff in washington, d.c. but postelection summoning names are being bandied about for cabinet positions thanks to the order this chief of staff is putting on trump. he tends to be chaotic. the first transition was the definition of insanity. people coming and going from the white house. this time around, looks like we

could have some names already in november for that transition to be successful and, the inauguratio to happen in january with people in their roles. this will also be helped if the republicans take the house. still 24 seats being counted but it looks like it is leaning towards republicans read that would mean nominations would be shoo-ins for the most part. tom: getting these names into positions could be quite quick by historical comparisons. give us a flavor of who we should be looking at particular when it comes to treasury secretary. >> the important economic ones will be the first named. you have a selection of people. some of these are fundraisers like hedge fund manager scott bessette and robert lighthizer who is known as a china hawk, so there would be consideration whether investors would like a china hawk. howard led nate, campaign cochair would have to divest but

he would be a special quote unquote government employee who could work for hundred 30 days. that is another fly in the ointment for him. hagerty is another one but he would be giving up a senate seat and trump may not be willing to give up a senate seat. those are for treasury secretary. then you have come are secretary perry robert lighthizer is up for this as well as well as linda mcmahon, the cofounder of the world wrestling federation who was campaign co chair. the secretary of state paid one of the names appear is steven mnuchin. we remember him as treasury secretary the first time around. senator marco rubio, one-time opponent of donald trump, almost his running mate this time around. tom: all men at this point. did you say world wrestling competition? that stood out to me. >> the wwf, yeah. tom: the wwf within the cabinet

maybe at some point. vonnie quinn with the names to watch as the picks come through and decisions are made by the incoming trump administration. to the monetary policy of the u.k. the bank of england cut borrowing costs for the second time this year. it stopped short of signaling the pastor easing, highlighting the importance of gradual adjustments in the face of pressures at home and abroad. >> there are a lot of uncertainties both in the world and domestic as well. we emphasized we are gradual again because we will have to take account of how those uncertainties play through. i am not in position to say gradual means every so often. that is not a judgment that we make. tom: andrew bailey speaking to bloomberg after yesterday's expected decision. not a big surprise priebus bring in u.k. correspondent lizzy burden because the interest is

not that they cut interest rates but what the path ahead is given the budget that you talked to the treasury secretary about, the chancellor, but what trump would mean for the boe and the u.k. z: this was a hawkish cut from the bank of england yesterday. it was obvious they were going to cut rates by a quarter-point and indeed they went for an 8-1 split, catherine mann the dissenter, partly because inflation is back below the 2% target but it is the path ahead and because of the budget and this massive fiscal loosening they see inflation going up again by up to half a percentage point. they say that rates will fall gradually rather than aggressively. so a change of language there. the governor very careful not to directly comment on the impact of donald trump's win on monetary policy or to blame the budget for hire for longer interest rates still though when you look at the way traders interpreted it, this looks to them like yesterday was the last

cut of 2024. they pared back pricing on december from 25% to 15%. as they look up to 2025, they only seek two more cuts with a high chance of a third. that would be less easing than the fed or the ecb. if you look at the sterling reaction, it did rise, but i would note partly because of the trump trade taking a breather. tom: important point in terms of inspected cuts to the boe being fewer than those for the ecb and the fed. lizzy burden, our u.k. correspondent, breaking down what we heard from the bank of england governor andrew bailey contending with a more challenging backdrop than he had expected a week ago. talking of the ecb, german politics plays into that. germany and delved into that political crisis, as parties argue over a limb election day in that country, following the collapse of the governing coalition. we are live in frankfurt with the latest. this is bloomberg. ♪

tom: welcome back to "bloomberg daybreak europe." breaking lines on the politics of germany. we will get details in the next couple seconds. the german opposition leader merz is talking to the dlf radio station giving an interview saying scholz the chancellor and the bid to delay that election until march is irresponsible. that is the line from the german opposition leader speaking to german radio. as olaf scholz pushes back on pressure from those competing parties to call an election earlier. scholz trying to push that back to early next year. opposition leaderd saying that is irresponsibles.

we will continue the story right now. olaf scholz rejected the opposition's demand to hold the confidence vote by next week, pushing for one early next year instead. you have to have the confidence vote before the president decides on whether you get that election. the german chancellor is trying to hold out until a possible election in march to give his beleaguered party a chance to recover in the polls. with go straight to -- let's go straight to christoph in frankfurt. we have headlines from friedrich merz. scholz trying to push this thing back what is the likelihood he succeeds in that? >> the pressure is absolutely building, as you say, good morning. i think it is difficult to conceive from a current standpoint what olaf scholz will be able to stay in office for several months. with his coalition not having a majority in parliament. their ability to get anything to

parliament is actually limited and very unlikely. it seems unlikely at the moment that he will be able to stick to his timeframe he laid out early this week when he announced the collapse of the coalition. tom: give us a sense of where this leaves germany. some in the investor community seem to be betting you will get more fiscal seamless with the new german government. german equities performed quite well yesterday. what is the expectation from economists as to where this leaves germany and that bid for some within the body politic of germany to get more fiscal spend for defense domestically, the transition for ukraine and to ensure there is some defense against potential tariffs from a trump administration? >> the market reaction you just mentioned sort of signals there is some hope in the market among investors that, after all, the

last couple of months were about infighting within the ruling coalition. they struggled to come to any agreement. that sort of backlog is finally easing. there potentially will be change and that there will be a new government in place that gets a lot more stuff done. which in turn would be good for companies. as we discussed previously on the show, pretty much on a daily basis, there are mounting problems from the german economy for industrial sectors from automotive to chemicals. there is a clear need and urgency for action. tom: we are looking at pictures of the cdu leader frederick merz. we have had a line crossing, merz we are raiding the call for a national election as soon as possible.

the cdu are leading in the polls, the afd, the far right a significant chunk of votes as well, what is the combination that is likely at this point to come through if you get that election? how willing is the cdu to spend more? >> that is good question. the spending ability of any new government will be quite limited. one key reason why the ruling coalition disintegrated was about their ability and willingness to spend. and also, to take on more debt by the government. germany has this net borrowing limit in place which restricts spending to a certain degree. that will have to be faced by any new government that will be in place. that will not go away just because the government changes. but generally, there will have to be some meaningful decisions, in order to allow these

investments that are needed in anything. from infrastructure, reducing bureaucracy to really revive the german economy again because the overall picture looks grim. the german economy has been stagnating for two years and it is unclear when momentum can return. tom: essential context for our viewers from bloomberg's christoph as we get lines crossing on the politics of germany. pressure from the cdu building on chancellor olaf scholz to get that election earlier than march of next year. we will come across it for you, the consequences for the german economy, the eurozone and markets. we will look at what donald trumps her turn to the white house could mean for investments into clean energy in the u.s. are they now imperiled? stay with us. this is bloomberg. ♪

tom: happy friday. with donald trump set to return to the white house, his second term will have repercussions for climate action in the u.s., as well as global efforts to shift to a low carbon economy. here to discuss the follow for cleantech supply chains is matthew hales, analyst in bloomberg's trade and supply chains team. timely to have you on given that we saw the impact when it comes to renewable stocks on the back of this election victory for trump. he talked about tariffs being his favorite word and potentially 6% tariffs on china. china is a key supplier in terms of components that go into this renewable shift. how much of a risk is this, what is your assessment when it comes to the green energy space? >> when looking at cleantech, you have to look back across the last few years we at cleantech has been subject to high import tariffs since 2012.

it has shut out imports from china in solar since 2020. it has shut out ev's well, especially with biden's hikes to the tariff regime last year. the area where this is not true is batteries. the u.s. is dependent on 60% of battery imports coming from china. when we look at these 16% tariffs, we think there will not be that big of an impact read the reason is the caustic lines of battery prices in china will not only offset these tariffs but by 2026 we expect chinese made batteries and projects -- in the u.s. battery products using chinese tech -- to be 26% cheaper than u.s.-made alternatives. global change under trump is the imposition rates. a lot of writing tariffs go until 2026, trump might move that forward in the big question is on non-chinese tariffs. tom: before we let you go, time is running short, will he undo

the inflation reduction act? >> we don't think so. mostly because a lot of the benefits of the ira are actually towards republican districts. so, when the house majority will be a thin margin, we don't expect there to be enough to push through and a full-scale repeal. we think there be tweaks around the edges of how the ira is implemented, may be scaling down of loan programs, but the package will stay there. tom: matthew from our bloomberg nef team focused on trade and supply chains. really important context as we look at the policy shift under a trump administration. plenty more coming up. this is bloomberg. ♪ it's our son, he is always up in our business. it's the verizon 5g home internet i got us. oh... he used to be a competitive gamer but with the higher lag, he can't keep up with his squad. so now we're his “squad”. what are kevin's plans for the fall? he's going to college. out of state, yeah. -yeah in the fall. change of plans, i've decided to stay local. oh excellent! oh that's great! why would i ever leave this? -aw!

we will do anything to get him gaming again. you and kevin need to fix this internet situation. heard my name! i swear to god, kevin! -we told you to wait in the car. everyone in my old squad has xfinity. less lag, better gaming! i'm gonna need to charge you for three people.

tom: good morning. this is bloomberg daybreak: europe. these are the stories that set your agenda. asian stocks trade higher as the fed cuts rates by 25 basis points. jay powell tells reporters, donald trump doesn't have the power to make them resign. >> if he asked you to leave, would you go? >> no. tom: the president-elect picks susie wiles to be the first-ever female chief of staff at the white house. we look at who else could join the new administration. the bank of england warns of inflation risks as it cuts rates for the second time this year to 4.75%. earnings crossing from sony. we will bring those for you shortly. sony still sees full-year operating income of ¥1.3 trillion. slightly below the estimate.

second quarter operating income for this japanese electronics maker coming in above the estimate. ¥455 billion. estimates of ¥335 billion. across the markets, we check in after another record was set by the s&p and the nasdaq. 49's record high for the s&p yesterday, closing in on that 6000 level. the fed cutting interest rates. the picture for december looks a little bit more challenged. will they go again? we get inflation data and retail sales data next week that could inform where the fed goes next. jay powell saying he's not going to be pushed out by trump anytime soon. some upside yesterday for european stocks. looking to end the week on a positive note. ftse 100 futures pointing to gains of 2/10 of 1%. nasdaq futures also flat. a bit of a breather after the rally of yesterday. you saw across is that -- a

process at rally. yields fell around 10 basis points. u.s. 10 year yielding you 143. softer buy 1/10 of 1%. andrew bailey saying the cause of rate cuts will be gradual. bitcoin close to that 76 thousand dollar level. currently unchanged in the session. european leaders diverging on the role that u.s. president-elect donald trump might play in the russia ukraine more give speaking exclusively to bloomberg, denmark's prime minister said she had a reassuring phone call with donald trump about the u.s. continuing to work with europe on geopolitical issues. >> we had a long discussion about some of the topics that are a big concern for u.s. and europe. of course the war in europe,

ukraine. the closer cooperation between iran, north korea, russia, china. tom: for more, let's bring in oliver krogh who was speaking with the danish p.m.. we've been hearing from a number of speakers there. you've been gauging the mood on the back of this victory by donald trump, what it means for europe. give us a flavor of what you've been hearing. oliver: the approach is that no one wants to be the one to fire the first shot. everyone is putting on a brave face for what was not the outcome that many of the leaders in europe wanted in the u.s. election. everybody saying, donald trump is a pragmatist. we will have these opening conversations and we are hoping for the best. that's the message that we got from a number of leaders. speaking to the prime minister of denmark, literally moments after she got off the phone with

donald trump, she said it was a conversation that gave her optimism. they focus mostly on security concerns and certain points they are aligned like china, israel. talking about ukraine. i asked, do you feel that there's a schism between europe and the united states? she said no, she is encouraged. we should remind people that donald trump and his first presidency, she is one of the first leaders that he worked with before. he canceled the state visit to denmark because she refused to sell him greenland. there are a number of different possible -- despite the optimism -- bumps in the road. they were discussing donald trump explicitly over dinner last night. this morning, we will see if there's a more coherent take from them. tom: you take me back to that day when trump tried to buy greenland from denmark. she speaks to trump and then she speaks to you. that's the correct arrangement in terms of priorities.

fantastic reaction and important. russia's president vladimir putin. i don't think he's going to give concessions to win -- and the your and ukraine. he sees -- says he's ready to hold talks with the president-elect. let's take a listen. >> i don't want to comment on what was said during the election campaign. i think it was a deliberately in the fight for votes. it does not matter what was said. the desire to restore relations with russia to help and the ukrainian crisis in my opinion seems to deserve at least attention. i would like to take this opportunity to congratulate him on his election as president of the united states of america. tom: what are you hearing? we heard from the russian president. what are you hearing in terms of voices on the ground in europe at this meeting in hungary about how willing they are to engage with putin to try to get some

kind of deal? is president zelenskyy pushing back against that prospect? oliver: of course he is pushing back against that prospect. when he arrived yesterday, we were shouting to try to get a comment from him. every european leader for the most part has been saying that regardless of what the united states does, europe needs to continue to support ukraine. there are voices that don't see things quite that way. i spoke to the chief political advisor yesterday about this very question. here's what he had to say about the stance in europe may need to change as a result of the trump presidency. have a listen. >> i think so. as soon as we can. all communication channels should be restored. otherwise how will we manage peace? if we are not communicating with each other, we are just only managing the war. oliver: more broadly, viktor

orban and his team have been very involved with trump in the lead up to this election. they've been in the united states a number of times. there were reports that they were working on policy proposals together. the hungarians are hoping this could change their position within europe but also force europe to move and change on a number of different things. what the advisor was calling liberal woke ideology. that's exactly the sort of thing that we will be hearing more and more from a more emboldened hungary as time goes on with this trump presidency. tom: yeah. a broader question as to whether trump emboldens the far more broadly across europe. just look at france and germany. really important context and reaction for key european leaders to the election of trump. joining me now for more on europe and its defense under a new u.s. presidency is the senior researcher in euro atlantic security and senior

lecturer at the university of sydney. thank you for joining us. maybe we start there, with the international implications of this trump presidency with a focus on europe. do you see splits in europe as a result of this or unity as europe tries to come together and spend more in defense and become less reliant on the u.s. administration? >> on a declaratory level, it seems that a lot of european leaders, even if they don't necessarily align with the incoming american administration , are trying to at least say that they will find ways to find common ground and work with president trump. however, you can't help but notice that there are some to whom this comes much easier than to others. of course as you just discussed

with your reporter there from budapest, it seems that the stars, those political ones, are ascendant if you are the prime minister of italy or the leader of parliamentary votes in france. so basically, there are differences across the continent. unlike 2016, i would say this is happening in a context where all across erupt, in a much greater way than potentially what we've seen in 2016, we are seeing this kind of common cause of far-right populist parties from across the transatlantic space. tom: you are talking about hungry -- hungary, speaking on radio.

saying, europe cannot finance the lost war in ukraine alone. many would take issue with the characterization that the war is lost. that's the line crossing from viktor orban. reminding us of his affiliations in this. trigger point around trump and the far-right movements in europe, just to be clear, you think of trump presidency in the u.s. will catalyze, encourage, and lead to further gains for right-wing parties in europe. that's a likely prospect you think. >> well so far, what we've seen all throughout the past couple years, even when donald trump was just the former president, he maintained his relationships and especially the one with victor or bond. so now, given the extended mandate that donald trump has,

and also republican party is now essentially the platform for this type of movement. the united states plays in the world and has repercussions on europe. obviously reverberating much further and wider than that. it does provide a license to leaders who have similar proclivities. in that sense, we will be looking at how this plays out over the coming months. for sure, it seems that so far president trump will have an easier time cooperating with the likes of victor or bond or giorgia meloni and others. tom: how vulnerable is nato at this point? >> leading into the election itself, we already had the two distinct visions of what future might bring, given the sort of

differing perspectives of the two presidential candidates in the united states. i think again, based on the four years of trump administration, which were marked by a lot of transatlantic security crisis in the sense of alliance management . of course, we have to put that into the historical context and say that some of these problems were not necessarily just a product of the trump era. but no other american president has questioned u.s. commitment to nato to the extent that president trump did during his time in office. so from that, and knowing what some of the policy proposals that have been swirling around and some of the senses on part of his now vice president-elect as well as some other associates who might end up landing jobs is national security advisor's or

potentially secretaries of state and defense. it is hard to see how president trump would act as some sort of elixir for nato. it's going to be a question just of the scale and magnitude of the policy direction change when it comes to nato. i think the direction is very clear. that's one that moves away from tighter transatlantic bonds. tom: ok. the analysis. senior researcher and euro woodland tick security and senior lecturer at the university of sydney. thank you very much indeed. later today, we speak with the france european affairs minister on this topic. benjamin had dog. how donald trump selection could affect the continents relations with the u.s.. that is an interview worth tuning in for. coming up, investors rethinking some of their trump trades as they weigh the economic agenda. the latest on the market

reaction from rbc wealth management. that's next. this is bloomberg. ♪

tom: welcome back. happy friday. investors are tapering their enthusiasm as they question whether donald trump will be able to push through his ambitious tariff proposals. the dollar treasury yields have reversed much of their postelection surge. fresh records on u.s. stocks yesterday. if they get the house pushing through things like tax policies will not be an issue. tariffs are at the behest of the president anyway. let's bring in the rbc wealth management investment strategy had for u.k. and asia with a view on how these markets are repositioning against and around a president trump. have things gone too far too fast? >> that's what we are looking

out for. we agreed that a trump presidency is moderately positive for the u.s. economy. it's also moderately good for u.s. equities. there's the end of business uncertainty. the fact that the u.s. consensus position in equities is going to remain intact. there are also crosscurrents. you mentioned tariffs. we think it's one of the first actions that the president will take. these negotiations tend to be acrimonious. that's a red flag to look out for perhaps in the first quarter, as early as the first quarter next year. high valuations and yields which could be a headwind to equities. so we are looking for potential overshoot of u.s. equities if they become too expensive, if investors become too optimistic

on the outlook. we would take that opportunity to perhaps fade slightly the overweight in u.s. equities and invest another asset classes. yields, very high. that could be a good entry point. tom: let's talk about that valuation story. we have a chart of what's been happening with u.s. stocks versus their european and asian peers. the highest level versus their european peers since 2006. the msci asia pacific index, highest level in 18 years. in many metrics, you would have to be rave to bet against u.s. stocks. windows that story become a real headwind for the u.s. equity story? frederique: we think there's no -- more to go for in u.s. equities. the gap in valuations that we are seeing is mostly do to the u.s. exceptionalism. companies there continue to

generate good, healthy earnings growth in europe. the situation is a lot more difficult. we've seen a forecast being downgraded the stock index as a whole. wiping out much of the earnings growth for this year. potentially with tariff next year, if they do happen, the relatively meager earnings growth in europe could also be downgraded. the outlook overall for europe is a lot more tenuous. tom: do you want to be betting on german stocks in light of a new government which will suspended more? frederique: our bets are not based on countries. they are based on global leaders . these companies which have a strong, very strong franchise worldwide but happen to be listed in europe. many of them benefit from structural trends in digitization, in electrification. these trends we believe are here to stay.

there's also a very strong tradition of health care in europe. these companies are the focus of our attention. sometimes, reporting season where there are hiccups in reporting can give opportunities to build positions. tom: what has the earnings season told us about the resilience of corporate europe? frederique: it has told us that life for companies which invest in china is very difficult. so european companies which export to china with businesses there are really struggling. that's the main message that we are hearing throughout. tom: the china story partly down to what's happening in the softness in terms of demand for luxury in china. what is your sector preference at this point? whether it's europe or the u.s.. frederique: we think the financials in the u.s. are likely to benefit from deregulation to get energy as well. tom: the window to get exposures

-- frederique: that still continues as far as we are concerned. we think possibility of m&a is now more interesting. we are mindful of industry cereals, materials. these are sectors which suffered the most during the 2018 trade war. industrials in particular are already quite expensive. this is how we are position. tom: further to go for the banking and energy stocks of the u.s.. how to think about these markets in the context of a trump presidency. plenty more coming up. stay with us. this is bloomberg. ♪

>> i think they are still going to cut again this summer. that said, the fed wants to

start talking about calibrating rate cuts to the economy. they won't want to hold rate cuts. do as many sequentially in 2025. >> the devil will be in the details on trade policy and fiscal policy. i don't think they need to make any big decisions at this meeting about how they will strategies -- strategize for 2025. >> how do you get from here to there? you've got to preserve the economy in some sort of steady state. we are too high right now. >> going forward, it's all data-dependent anyway. there's not even strong forward guidance for december. forget about 2025 in terms of forward guidance. tom: some of our guests reacting to the latest fed decision. 25 basis point cut. no big surprise that they were unanimous. you were not unanimous when it came to the bank of england. catherine mam holding out in terms of that decision. it was unanimous for the fed.

they did remove online -- a line about the greater confidence that they have. that was in the previous statement. maybe that's giving them some wiggle room. if you do get this policy around tariffs and immigration that could prove inflationary. the lines and expectations from many economists there. labor market conditions have eased. no effect on policy in the near term. when it comes to the new presidency. we will see how that address. inflation data out next week. maybe that leaves some adjustment in how we think about the next apps for the fed. finding balance in terms of december. markets essentially split on whether they go again in december. let's have a look at what power was saying in terms of expectations on that front. data dependency coming back to the four. beginning to think about slowing

the pace of cuts. to what extent and how far that slows again as the policy agenda of the incoming trump administration gets crystallized . that will be key for this markets. we have seen some indications that the labor market is starting to strengthen a little. some of the softness that had been there earlier starting to be washed out. in terms of expectations around the fed, pushing out to 2025. expectations that maybe you get free cuts and you get to the low -- below 4% in the second half of that year. currently the rate between 4.5 amps 4.75%. this is bloomberg. ♪

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>> i'm anner edwards, along with kriti gupter and guy johnson. we are an hour away from the opening trade. jerome