tom: good morning, this is "bloomberg daybreak: europe." these are the stories that set your agenda. shutdown looms again, the republican led housing projects and funding plan backed by

donald trump just hours before today's deadline to the u.s. government running. asian stocks in u.s. futures had to as traders await the fed's preferred inflation gauge admitted today. china's one year bond yield sinks to 1% of the first time since 2009. bloomberg understands hungary up is because foreign minister has told eu leaders to hold up on extending sanctions to russia until donald trump returns to the white house. good morning, happy friday. risk off across these equity markets once again. no relief at the end of play across u.s. markets. the good news is bad news in terms of the data story that judy print -- gdp print coming

in. inflation edging higher. pce gauge later today, the last major data drop when it comes to the u.s. in terms of understanding how inflation is evolving, inconsequential given that the fed has shifted his focus obviously from the lens on the labor market to the lens back on inflation. european futures pointing to further losses of .8 of 1% after dropping 1.5% yesterday. ftse 100 futures pointing at lower 5.1 of 1%. we have the split at the boe. they held, but maybe markets need to readjust their views on how far the boe goes on rate cuts. s&p futures pointing lower by .3 of 1%. as i futures looking for a rough wide -- ride. some investors will be on the debt ceiling debate and debacle that continues to unfold in washington, d.c. at the clock ticks down on the question. let's flip the board in the

cross asset. we have seen the moves particularly pronounced when it comes to the selling pressure at the long end of the treasury curve. particularly around the concerns of the deficit and expanded spending from the incoming trump administration. 4.5 on the u.s. 10 year. japanese yen, 157 is the level right now, but we have had verbal interventions from officials in tokyo suggesting they may be edging closer to materially intervening given the softness of the japanese currency. brent, $72 per barrel. bitcoin is taken a knock, now at 96,000. let's get to the politics of the u.s. it is complicated, confusing, and it will be i had enhanced moment. republican-led house has voted on the plan backed by donald trump.

the rejection sets the stage for a potential u.s. government shut down, with funding set to lapse tonight. >> very disappointing to was that all but two democrats voted against aid to farmers and ranchers, disaster relief, all of these bipartisan measures that had already been negotiated and decided upon. the only difference on this legislation was that we would push the debt ceiling to january 2027. tom: let's get the latest with joshua. why did this updated bill fail? >> well, basically because the republicans via president-elect trump have introduced an incredibly touchy political issue, the debt limit, into what bill that was releasing at the beginning of this week that was

going to be pro forma. this is just a continuing resolution to keep the government running for the next three months, at which point again the issue would have to be addressed, but once on wednesday when it bipartisan bill was introduced by speaker johnson, elon musk and trump started weighing in on the problems with the bill and threatening lawmakers that would vote for it. instead trump came in asking for a two year lifting of the debt limit, which would clear that decks for him in january to push through some of his biggest agenda items, like making permanent his tax cuts from 2017, increasing spending on border security. these are going to cuts of dollars, so he is -- trillions

of dollars, so he is going to not want that going forward. that is a massive point of leverage for democrats, so the real question here is whether they would be able to loosen their grip on that point of leverage in order to pass this today or if that is something they want to hold onto, because trump politically benefits a great deal from being able to say that the debt limit was increased hunter biden and not by him. tom: mosque -- musk coming out and blaming the democrats and ignoring the fact that a number of republicans voted against this, because to them it is kryptonite removed the debt ceiling. what is the deadline? the deadline is hours away. what happens next? >> i think some pretty intense negotiations happen now. the deadline is midnight friday,

and johnson is in a tough position. he is going to have to, as you said, there are roughly three dozen republicans who voted against this new bill supported by trump. all the democrats voted against it. he was well sort of the post that he needs to pass a continuing resolution, so really the options here are limited to, and he will have to find some compromise. even if he had all of the republicans voted with him, he would still need some democrats. that suggests that he will have to revert more toward wednesday about bipartisan deal than trump's proposed plan with the debt ceiling. democrats have already signaled, the debt ceiling is not something -- that is a major topic. it has been a political issue before. it was in 2021 when this has

been used as a leverage point to halt government spending, generally from the republicans, so hakeem jeffries has at this is ridiculous. you cannot enter discussions on the debt limit at the 11th hour to raise it for two years, so the deadline for a deal is of course tonight. the debt limit expires on the first of january. at that point treasury takes over with emergency spending for the things of the u.s. with otherwise issued debt to pay for , so that was always the case for the last 18 months at least, and congress had not been planning to debate that issue until spring to get things set up for summer, but to throw it in at this last-minute is really going to be a difficult bill for democrats to swallow, and biden at the white house has signaled they are not going to sign it.

so not only does it have to get to the house. it will have to get through a still democratic-controlled senate and signed by president biden. tom: major hurdles ahead then for this bill and major questions and uncertainty and terms of the politics is that continues to unfold around the question of raising the debt and debt ceiling. joshua with a brilliant update as we come down to the hours of the deadline. let's cross over to the asian market session. i talked about being risk off across equity markets. market is adjusting to this hawkish fed. avril: absolutely, and they are still reeling. look at how the region's benchmark is down for a six session, the longest losing streak since april. there are concerns about higher yields, the strength of the dollar, the idea that central banks will not be able to ease aggressively. the kospi is underperforming. declines on the negate not as

bad as we see gains among exported names on the weaker yen , but the chinese gauge is interesting because they turned negative despite gains in the session. i wanted to read through what is helping cap declines. smic gaining by double digits. there is no clear catalyst as to why, but there are a lot of rumors flying around chip companies, and we have some analysts pointing to optimism around longer-term prospects given the government's push toward government self-reliance. chip stocks are doing well in china. also in china, today we had them leaving loan prime rates unchanged, but that is not deterring imponderables -- the bond bulls. the yield cross below the 1% level amid expectations of monetary easing, and as stock markets are not providing any

certainty, the preferred as a class has been chinese bonds. it is important to highlight the dynamics between the long and short end of things, because when you look at the shorter end there was a preference for it because of the perceived intervention risk on longer dated notes given how chinese authorities have been pushing back against the bond buying frenzy. interesting to see what we are seeing in chinese bonds as well. tom: are we starting to see that japanification of the chinese bond market. the yield curve steepened to a level last seen 30 months ago. let's dive deeper into these markets. what does it signaled to you? >> it was a two part move. at first we had the front end of the u.s. bond curve retracing a lot of post fed move. we sought yields spike higher on the hawkish fed. we did see them trickle lower

yesterday, a lot of that reversing a bit of that move. maybe it was a move pronounce because of the illiquidity around year end coming up, but the move in the low end we did see the post fed move extent with yields going higher in the long and causing the curve to steepen to levels we have not seen it a few years. a lot of this was exacerbated by the fact that we had reports that trump once described the debt ceiling, while many in the markets hate this theme coming up every two years. it does open the way up for the government to spend money more easily, and that is negative for the long and -- end. exacerbated by those headlines from trump. what also has been extended is equity week is. we reverse yesterday's equity strength we saw in the afternoon session. we have closed and that red for three days running on the s&p 500. if you look at the poly market

odds, we have crossed a 60% chance that we do get a government shutdown before the end of the year, but we have one more hurdle to get past, and that is u.s. bce -- pce. a lot of inflation analysts are calling for a software and especially when it comes to core pce month on the figure. market does assume we could get a supper in today, which could perhaps help the equity market close in the green. tom: let's see if we get that soft print on pce. valerie, inc. you very much with nai -- an eye on that potential government shutdown. u.k. retail sales drop at 7:00 a.m. u.k. time. looking at a print of 0.9%. we will see how healthy the consumer is in the u.k. in an environment of higher interest rates.

at 12:30 you get time the fed's mary daly will be speaking. that will be important. we will see what mary daly has to say to flesh out the views as we look into 2025, given the forecast being pulled back from four cuts to two cuts. at 1:30 you get time we get core pce data, the large did a drop expected to come in slightly softer. will it ease concerns in these markets as inflation becomes a more core focus for this federal reserve once again. hungary's viktor orban tells the eu to wait for donald trump before deciding to extend sanctions against russia. we are live in brussels with the latest. this is bloomberg. ♪

>> i would like to suggest to the upcoming presidencies to be brave. this was our slogan for our presidency, make europe great again. this is our only chance. thank you. tom: hungarian prime minister viktor orban speaking at the eu because summit yesterday. bloomberg understands orban has told eu leaders he wants to wait until the inauguration of his ally donald before deciding whether to extend sanctions against russia. let's get more with oliver crook

. how have eu leaders been r eacting to comments from orban who has become a thorn in the side to some of their ambitions? >> this is his favorite role in the eu as being a sort of contrarian and going against the eu, but it is a serious issue when it comes to things like ukraine. the overall message from the eu is one we have heard for many years. we heard from ursula von der leyen saying them a message his full support for ukraine as long as it takes. this means getting more arms shipments, but there is not a great deal of optimism that they will bring a lot more to ukraine given how long this has been going on and how long they've been trying to mobilize some of these things. the concern is the focus on losing things and potentially losing the ability to continue to roll on these sanctions. there are been a 50 rounds of sanctions on russia.

these are re-upped every six months. that requires a unanimous vote from all 26 member states, and orban has said he will not be in favor of rolling them over until the inauguration of president trump. it comes 11 days before the deadline to roll the sanctions over once more, so this will be a large concern, and over this entire meeting the big question looming over every single question in europe is donald trump, and leaders do not want to give a lot in terms of what they think their policy approach should be to trump. everyone is in a wait and see mode in europe, which is not a strong position to be in ahead of a disruptive presidency in the united states. tom: a line from incoming president trump untruth social, and i will read it directly. he says, and i am quoting directly, i told the european

union that they must make up their tremendous deficit with the united states by the large-scale purchase of our oil and gas. otherwise, it is tariffs all the way,! . do we read this as a positive sign? this is a reminder that trump is using the threat of tariffs to leverage a deal, or is it a reminder of his intent to go after europe? >> i think you can say it is a positive sign in so far as it begins to sketch out negotiating positions for what the trump administration will want to get from the eu. all we had was 10%, 20% tariffs. this starts to sketch out negotiating lines, and that is what everyone expects from donald trump that this will be a negotiation, these will be gambits to get what he wants. what he wants is for more oil

and gas to be purchased from the united states to the european union. the european union is buying more gas from the united states ever since the invasion of ukraine by russia. the gas transit is not going to be rolled over next year. that is 15 billion cubic meters going there every single year. that could be filled by the united states, and my first assignment in germany was this floating regasification unit stationed in the northern part of germany that converts lng into gaza that can be taken into the system, and that is the sort of thing where american lng would arrive. we are starting to get an idea sketch out by donald trump in terms of what he wants. this is a point that stephen carol made to me is who did he call in the eu? this is critical, and this was set the tone for who is going to be the powerbroker in these

discussions with the eu, and that is it question i would love to know the answer to. tom: orban has been at mar-a-lago. trump has met with macron in paris, so who is his line into the eu as we await this incoming response. the infrastructure is there, so europe can make the case it is ready to take on more oil and gas than it has already been doing so. we will see if there is an official response from the eu to this comment from the incoming president. u.s. secretary of state and has downplayed concerns member of president donald trump's penetration are engaging in foreign policy. he spoke to david about the transition process for his successor. >> i want to be able to hand off to the incoming administration the best possible hand to play in all of these areas, because

the world does not stop because we are in a political transition. it is normal countries around the world want to hear from the incoming administration. they want to know what they can expect. tom: outgoing u.s. secretary of state antony blinken speaking to david. let's get back to comments coming through from incoming president donald trump on truth social, this time focused on the debt ceiling debate. congress must get rid of or extend to perhaps 2029 the ridiculous debt ceiling. i am quoting. without this we should never make a deal. the pressure is on whoever is president, so it seems like incoming president donald trump is doubling down on his insistence that the debt ceiling is removed. we heard from mike johnson earlier saying the new bill rejected in the house contained a provision that will remove the debt ceiling until 2027.

now trump is suggesting she wants to see that -- he wants to see that extended until 2029 and quote, without this we should never see a deal. the clock is ticking to see this deal get across the line. the details, the ramifications, what it means for the ability of the government in the u.s. to continue operating into the holiday season and beyond. it has been a challenging year for the ev industry, but battery prices are still falling. is that a silver lining? we discussed the outlook for the sector next. ♪

tom: welcome back. other stories making the news,

the french prime minister is aiming to present a new cabinet over the weekend and deliver a budget by mid february. appointed a premier last week, and he is under pressure to move quickly and faster spending bill aimed at putting the country's finances back in order. he says he is open to unwinding macron's pension reform but rolled out suspending its application. there were prosecutors in the u.s. have charge luigi mangione with the murder of united healthcare ceo brian thompson. it is a charge prosecutors may seek the death penalty. mangione allegedly shot thompson from behind on a street in manhattan earlier this month. results congress has moved closer to delivering weekend spending cuts aimed at weakening the fears about the interpreting situation. brazil is running an annual budget gap of 10% deepening

market skepticism that drove the brazilian rial to record lows against the dollar this week. the crisis across brazilian markets continues. let's get you up to speed on what we've been hearing from president trump pointing out messages on truth social in relation to the debt ceiling and the dead deal that has so far not moved any closer to a resolution. the deadline is midnight tonight. trump said we should not make a deal without the debt ceiling removal. he said congress should extend the debt ceiling to

♪ >> good morning this is the

baker about tom mackenzie in london these are the stories that set your agenda. republicans act a funding plan to get rid of or extend the debt ceiling. asian stocks -- as we await the inflation gauge. bloomberg understands hungary's prime minister said to hold off sanctions until donna trump returns to the white house. trump suggesting that eu will face -- the eu will face terrorists -- terrorists. weighing in on the debt ceiling

is a story we will break down. futures are pointing lower, ftse 100 futures slightly less bad. markets readjusting after a split and futures .2 loss to after a soggy day. inflation date or later today, looming shutdown of course deadline and the clock is ticking. we have seen the steepest curve since 2022. 455, we had verbal intervention. the dollar strength continues

currently, down 3/10 of 1%. bitcoin down having crossed 108 earlier this week. challenging, yeah, of course. here to tell us more is and d leach from bloomberg's energy storage team. hundred dollars per kilowatt hour, price parity, how close are we? >> we are at 115 and when we dive into eb batteries it is 97.

different price points may make vehicle models the same price. china was saying 64% of dvds are cheaper driven by low battery prices and slowing demand. tom: that is reflected in sales. what about storage and -- and developments there? >> storage has been growing so we sewer -- saw an uptake driven

by low prices caused by slowing demand and the making up of the slack. tom: interesting because the narrative is woe in demand but your pointing to some evolution that could prove positive. thanks for the analysis.

andy leach, associate of bloomberg nes team. pce inflation dater is the last major piece following a hawkish pipit. you would have to be brave to bet against strength in the dollar, is there -- is there -- is there anything that derails the dollar? >> likely that we will continue to see strength, market has priced in a lot of good news, less dovish fed and stronger

growth, higher inflation and none of us know what will happen so i'm concerned there might be scope for disappointment, short setbacks but be wary, let's see what happens after trump is inaugurated and hopefully we will have a clear picture and not have to guess. tom: there is -- there is -- there is -- there is a lot of guesswork with the incoming trump administration. what assumptions -- what assumptions are you making? three seems to align with your view.

quite a gap. >> market christ to rate cuts, still at three, obviously very difficult, this is the crucial point, if they come early inflation will rise and could mean they can only cut once or twice. if you assume trump will make deals and use threats to bully other partners you could argue they will come later on and that leaves scope for the fed to cut. it will be the tariff strategy and three rate cuts but not

likely in january. tom: your thesis is being reinforced. how vulnerable the euro? guess when you look through the german lands we have weak growth , trump will mean less growth because tariffs will hit hard, cars in manufacturing will be hit and that is assuming the eu does not hit back. one thing we are hit by tariffs, quite vulnerable. worst case would be retaliating with massive tariffs of their own and then we will be hit by

double whammy. it definitely is good news. it might change but it's bad for the euro. i am not vetting on the next couple of weeks. you never know. sometime next spring. tom: 103 right now, 103 euro-dollar. japanese yen has a bit of strength with firm intervention, is -- is there a level which you -- you think forces the hand of the boj? >> they have tried hard to make clear it is the size that

triggers intervention but they shoot themselves in the foot, they made a turnaround, starting point for strong yen. they keep telling markets they will have to wait and see, ruining it every time, very cautious, i don't know what they're afraid of, but the yen weakens. less rate cuts from the fed, that keeps putting pressure on the becomes a one-way street. they have had a history, we will see. tom: before we let you go is the boe shooting itself in the foot

for the bank of england do you -- do you have clarity? >> i would like to say yes but i don't think they do, i mean central banks talk about data-dependent this is a prime example from one to the next, right thing to do, they will cut but be careful because they have a problem so they will not commit, that can backfire. tom: oh yeah. no commitment expected. sonja martin indeed always informative. literally will speak with mary daly on the fed outlook given the pivot it will be really

worth your time so do june in. u.s. president elect donald trump double down on calls to extend the debt ceiling after the house vote it down a funding plan. let's bring in pretty good to her for the latest. trump is not calling for 2027, 2029, running it down. kriti: in the united states this is what he is thinking about. it was a bipartisan deal, what has changed is desired to

address the debt ceiling, trying to have that under the biden administration. his plan was to extend the debt ceiling, easier to widen the deficit following a moving target, we are going toward a shutdown. a contentious issue, they want to bring it back in line, they

don't want to be associated with that. in 1917 congress had to get approval every time they wanted to do something. it all had to go through congress rather than treasury fundraising. the debt ceiling can make it easier so removing it could help but make things harder to get aids and funding to the rest of the country. tom cole and taking us all the way back to was it 1917, 1917,

1917, 1917? trump is taking aim, we have now trump targeting europe and oil and gas. kriti: ursula made the opening offer saying we need natural gas. a solution is to create that. feels like the same conclusion. tom: excellent. we will be hearing from trump pressuring europe. thank you. coming up, we speak to the ceo

of viridian which is closer to launching short-haul flights in electric aircraft. that's next, this is bloomberg. ♪

>> welcome back now. viridian raised 14 million euros to roll out its electric micro lineup as the industry pushes to cut admissions. i'm joined by the ceo. thanks for joining us. you have funding and approval,

how confident are you that 2030 will stick? guest: we are developing a simple airplane powered by batteries and we can certify it so it comes to engineering, not technological breakthroughs. we will get it in the air by 2030. tom: lawyer clients, who -- who -- who have you signed up? who -- who -- who do you hope to sign up? >> e-work with number of

operators. one does flights for tourists, we work with copenhagen arotech and asl group from belgium and the netherlands and we aim to sell to regional operators in areas with demand and allow operators to serve communities that need to go somewhere. equivalent to a commercial flight. tom: there is a framework to work through.

what have companies done wrong? guest: clearly developing more innovative vehicles and what we are doing is general aviation with existing flight physics so our challenges are small and what europe should do, there is public funding for sustainable aviation, the lack of capital or funding. a lot goes to national champions but some projects are at in other hands with small companies. tom: before we let you -- before we let you go, what is the

market opportunity? guest: market size there are two scenarios if we look there are 15,000 aircraft to be replaced, some are very old. $8 million sales market replacing them. market opportunity is bigger because there is regional air mobility which allows us to use airports with the economics we have in this is 115 billion sales per year, people will not commute when they go to their local airport and that will increase demand a lot. tom: meridian ceo and cofounder.

iver van bettel thank you very much. regulation in focus. a lot more coming up, we will check in on how wide the debt ceiling debate as become, up to speed on that yield curve steepening story as well, this is bloomberg. ♪

tom: do you have ever when republicans were wringing their hands? 20 trillion u.s. dollars and trump is no fiscal hawk. 33 trillion and trump wants to see it pushed back but to 2029,

he has called it ridiculous and wants to get rid of it. let's look at how this is reflecting, investors don't want exposure because of the yield curve 25 basis points read. we will have a conversation with mary daly 12:30 p.m. u.k. time and carlos of nissan. ♪

♪ ♪ ♪ something has changed within me ♪ ♪ it's time to try defying gravity ♪ ♪ ♪

anna: we're an hour away from the opening trade.