>> good morning, this is "bloomberg daybreak: europe." these are the stories that set your agenda. u.s. treasury secretary scott bessent says president is not calling for the fed to cut rates with the focus instead on bringing down treasury yields. donald trump's aid to look to tone down his goal for the u.s.

to own the gaza strip, calling it an out-of-the-box idea. a bank of england looks set to cut interest rates for third time today, but official growth and inflation forecasts are expected to move in the wrong direction. lizzy: a very good morning, welcome to the program, and we kick off with breaking earnings from volvo, for the income coming in it 3.5 billion swedish krona. the estimate was for 6.2, so him is there. margins impacted by volumes, investments, extra cost, and volvo saying it sees 2025 truck

market, 710,000 units, fourth-quarter adjusting operating profit coming in it 14. they still see 2025 seeing the american truck market demand, 300,000 units there, so we will conduct of all volleyball later in the program. we will be speaking to the ceo about those earnings. volvo and the firing line for donald trump's economic policy given it is a european carmaker but also has a chinese majority owner. we will be speaking to jim rowen later. let's check in on these broad markets now. a choppy session yesterday and futures pointing higher on both sides of the pond. now in asia, a broadly higher session, up food -- up .25 of

1%, the highest around since december 18. treasury yields following two 2025 lowe's -- lows yesterday, adding to concerns about economic growth in the u.s., so the 10-year treasury yield, the or .4%. that is what scott bessent said he has a zion. -- had his eye on. gold benefiting from the flight to safety. brent way down but eking out against this morning. we had to what the bank of england decision at 12:00 p.m. london time come at the specter of stagflation hanging over those forecast. let's get a check on asian markets and how they are faring. we have avril hong on standby in singapore. avril: as you say asian markets

and a pretty good mood today, and some of this is tracking wall street's gains. look at how chinese shares are enjoying a bit of a bounce today. robotics, ai stocks doing well, but holiday spending data showing chinese consumers splurging in terms of travel, movie attendance, so that is helping to lift the mood. among other factors helping to feel that line in asia stocks today, the earnings story. we are halfway through reporting on nikkei225 firms, and they have mostly been beats rather than misses. consumer discretionary, financial names. today we have the likes of renesas, massive surge after earnings to be, so this helping to lift the gauge in japan, and is coming on a day where the japanese yen is climbing, but that is an uncomfortable

backdrop for entities. the step down for the u.s. dollar, but also be got fresh commentary from a hawkish boj board member today fueling yen goals. -- bulls. lizzy: we thank you with the update on asian markets. we also have breaking earnings from ing, a focused on net interest income and that comes in it 3.6 8 billion euros, so a slight beat on net interest income. fourth-quarter pretax profit of 4.7 7 billion euros. they say there has been sending commercial growth and loan loss provision also coming in at 299 million euros. i am pleased to say we can

discuss all of these results with the ing cfo who joins me at again on "daybreak: europe." so good to have you with us today. let me ask you about your expectations on net interest income and your calls coming into 2025 as we digest these results? >> thank you very much. nice to be here. i think i just want to say at the beginning i we are pleased with our commercial results in 2024. we headed primary customer and loan growth was strong, and income was high, a franchise record. i think our credit book remains resilient with a low performing loan ratio, and that has resulted in a strong profit and retail on equity. we are in the middle of eight to

billion euro -- a 2 billion euro share buyback. generally pleased with the results that we have at the moment. lizzy: to be clear, can we expect ing to keep up the pace of 2024's buybacks? >> we plan to go to venture capital ratio to around 12.5%. we normally announce any cap election with the results of our first quarter in may. we expect to make some announcement of what we will do in 2025 at that time. lizzy: one of the big questions hanging over european banks is how you were going to handle the turn to read cuts from the ecb. how do you expect a mortgage growth pending with rates coming down? >> yes, i think rates are

already coming down. just by having historic high revenue numbers in 2024, we expect our revenue numbers for 2025 to remain around that figure, and does rates come down they stimulate mortgage production. we saw strong mortgage production in 2024, and we expect that continued strength to continue for ing going into 2025. lizzy: as the netherlands' largest lender i wonder how you expect donald trump's tariffs into effect not just the netherlands, but also ing as well. >> tariffs are not good for economic growth, but ing has a diversified franchise operating in europe, the u.s., and asia,

and we had the opportunity to front pockets of growth, and european growth is not been strong and yet we managed to grow what pretty good pace. we are increasing our loan book by 27 million euros by 2024. we expect our customer growth to be more percent in terms of lending and deposit in 2025. lizzy: someplace where you do not have operations will be russia. you are expecting a profit of 700 million euros. when do you plan to take that hit? >> first of all we have been reducing our exposure to russia since the beginning of the war, so we are down in terms of our lending exposure by 80% since 2020, 2021, 2022 when the war

broke out. we expect the transactions will be closed in terms of our subsidies in russia by q3 of this year. lizzy: the chief financial of of ing group, always good to talk to you. the u.s. treasury secretary has denied that donald is calling for the fed to cut rates, saying instead to is focused on lowering 10-year treasury yield to keep cost down. scott bessent was speaking in a foxbusiness interview. we can get more with mark cranfield. i have to wonder if jay powell is heaving a sigh of relief. what does it mean for investors that bessent is focused on the 10 year? >> bond traders are taking this with a pinch of salt, because which president would not want lower yields, but what drove you will send yesterday is that the

treasury quarterly refunding announcement. in that the treasury committed themselves to not increasing long term issuance of bonds for quite a long time, probably throughout the rest of this year at least. that is significant, because it was clear trump would become president it was clear deficit would grow in they would use long-term borrowing to up with finance. that will be shifted toward the shorter end of the yield curve, and that is why yields are coming down. also expectations that inflation will not be hit as much as initially thought. what we have seen happen in the past couple of weeks is insignificant flattening of the yield curve driven by the long and -- end coming down faster than the short end. it has nothing to do whether you were talking about the fed with the president or anything like that. it is actual demand for bonds in

relation to the issuance. it should they keep going if the treasury maintains their promise? long end yields may come down further again depending upon the direction of inflation. lizzy: we have had all of these fed speakers calling for more clarity on trump of las vegas policies. let's take a listen to the richmond fed president. >> you mentioned tariffs, but deregulation, where is it going to head? what is going to happen in the migration, energy policy? there was a lot of uncertainty in the air, and it is hard to know what is happening with the growth implement, inflation and do you get more clarity on all of these uncertainties. lizzy: barkin been moaning the uncertainty. >> is a consistent message from

fed speakers recently that they want to see more data, take more time. they held a rate steady in january. they are indicating they are in no rush to make changes and went to see how new policies develop from the federal reserve, the white house, what is the effect on the economy, so in effect we are going back to the debate it -- a-dependent outlook -- the data dependent outlook. over the next few months inflation numbers will be important. that is the one where people think there was the risk of an upside. we may have reached a bit of a base, and now with the risk of lower taxes and expansion in the economy there could be upside inflation, so those numbers will be important. inflation numbers always are, but it may carry even more weight than job numbers, so by the middle of next week will

have a better picture of what the fed can digest in terms of where the data is taking them and whether they can start to think about interest rate cuts leather into gear. the market thanks one more cut in the second half. over the next couple of days we will get a better idea. lizzy: mark cranfield, we thank you for that analysis, and we will get a lot more from scott bessent later today. the u.s. treasury secretary joins us live at 6:00 p.m. london time. same with central banks, that a run today we will have a bank of england decision just across the road. the expectation unanimously among economists is we will have 25 basis point cut almost fully priced in by markets, and the reason is here in the u.k. the economy is somewhere between the u.s. and euro area. we have got weak growth, but

also the pick in inflation. the only member expected to dissent is catherine mann. mann voting for a hold, same a vote split at the november meeting, but if we saw her put in for a cut that would be read as a debit signal. if another voted for a jumbo cut, that would be read as dovish as well. the expectation that there will be a downgrade to the growth forecast and upgrade to the inflation of, and that is going to be based on an outdated market curve, so a tricky communications job for the governor and were bailey. he will either have to push back on market pricing or appeared to be criticizing the chancellor's budget, but embarrassed --

embarrassing the government given that the payroll tax resume abetted to inflation more than the bank of england initially. we will also be watching these work as a very closely for clues as to how much had a room -- head room she will have later in the year. that is the budget for the office of responsibility's responsibility to decide. whether she needs to cut spending, raise taxes, or break those nonnegotiable fiscal rules later in the year. lots to discuss. we will be speaking with hsbc's global chief economist janet and rate later, and we will bring you full coverage of the bank of england decision when it drops at 12:00 p.m. london time. andrew bailey at 4:00 p.m. an

interview with guy johnson. signs of falling support for the favorite to become the next german chancellor. we will bring you all of the details next. this is bloomberg. ♪

lizzy: two the german election, a new poll has shown up all in support for the conservative alliance following a disputed vote in parliament in which the favorite relied on support from the far right. let's get analysis from oliver crook. take us through the latest polling? >> let's recap what happened last week. this was a big gamble by frederick mertz footing with the afd on an immigration bill, and

that is the first time were a mainstream party voted with the afd. this came to a lot of shock from the centrists, but it was also a poor showing because even for those who thought he was being pragmatic, the vote did not pass parliament because he could not get his own party and line, and the consequence is the cdu coming in at 8% -- 28%, and what it has not done is obviously he is trying to undercut the afd saying cdu can be strong on immigration. we saw a bit of growth for the greens and other parts of the political spectrum, so this is releasing largely as a political blunder for the cdu and as dented support and has not changed meaningfully in terms of who will be in the running, but

did has created once again a fragmented political landscape in germany. it will be harder as these votes dissipate and all of these parties converge around 20% to bill the government when the time comes. lizzy: if we could link politics and the corporate dots, tesla sales in germany are at their lowest levels ever. do you think there is a link? >> we know that cars are fundamental to every part of german life, whether it is the culture or economy, but increasingly it seems of the politics, because elon musk came out in support of afd aggressively and sink the alternative for deutschland is the only thing can save germany. now it seems germans are looking for an alternative to tesla, because what we are seeing are

lowest sales of tesla in germany. it is a 59% plunge. the ev market itself was up 54%. we saw the exact same trend in france and to the u.k., and we asked a poll of germans how they feel about elon musk. 80% of them have an unfavorable view of elon musk particularly after he went into politics, and part of the afd platform is they are upset about the u.s. having so much influence in german politics but there were quick to accept elon musk when he supported them. lizzy: tom mackenzie will be speaking to some of germany's most powerful business voices ahead of the election. the germany election ceo

briefing today at 1:00 a.m. london time. the white house tries to temper anger and shot at president trump's controversial proposal to take over the gaza strip. this is bloomberg. ♪

lizzy: to the middle east now, aides do donald trump are playing down his proposal to own gaza after he suggested the u.s. should take over and redevelop of the coastal palestinian territory without displacing his residents to neighboring egypt and jordan. the white house press secretary calls it an out-of-the-box idea. >> the president has not

committed to putting boots on the ground in gaza. >> is the u.s. prepared to remove palestinians from gaza by force? >> the president is prepared to rebuild palestine for all people. >> why hasn't the president -- >> i think the president is good when you get is making deals and negotiating not to relet anything, because he wants to preserve that leverage in negotiations. lizzy: the announcement was criticized by countries including saudi arabia, egypt, and france but welcomed by some lawmakers in israel. paul wallace joins me now. the job of reconstructing gaza is going to be a massive one. i wonder whether there is going to be ending of this that

actually comes to reality, and if you could give us some reaction from leaders in the middle east. >> i think it is fair to say everyone was shocked by including the israelis. there is little sign israeli officials knew much about what trump would say at least in the sense that they were not given much notice, and even prime minister benjamin netanyahu seemed taken aback when he was standing next to donald trump at the press conference, and in the middle east whether it is arab states or turkey or palestinian officials themselves, the reaction was swift and negative. they say this cannot happen and this would be an injustice for palestinian people if gazans

were removed forcibly, and even european allies were firm against this. israel is different. on the far right there was more optimism about those comments. lizzy: our team leader for the middle east paul wallace. it is to boe decision day. we will have more for you next. stay with us. this is bloomberg. ♪

the way i approach work post fatherhood, has really trying to understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

lizzy: this is "bloomberg daybreak: europe." i am lizzy burden in london.

u.s. treasury secretary scott bessent says president trump is not calling for the fed to cut rates, with the focus instead on bringing down 10-year treasury yield's. donald trump's aides look to tone down his call to own the gaza strip. the bank of england looks at the cut interest rates for the third time today, but official growth and inflation forecasts are both expected to move in the wrong direction. welcome to thursday. we can check in on these markets after a choppy session yesterday. s&p managing cannot a second day of gains. msci asia pacific index taking a breather around its highest since mid-december, and futures on both sides of the pond pointing to a higher open. flipping over to the cross as a

picture, weaker than expected services sector data field concerns are economic growth. 10-year treasury yield currently at 4.43%. scott bessent has his eye on bringing that down. old extending its longest winning streak since april benefiting from the flight to safety, and oil way down by terror of uncertainty. cable, 1.24 is where we traded currently. bank of england decision coming at 12:00 p.m. yucatan and the specter of stagflation hanging over these forecast. the boe expected to cut rates again better today with inflation above target and a struggling economy. what might the boe say about its path ahead? we are joined by janet henry, global chief economist at hsbc.

a 25 basis point cut i assume is what you were expecting today. how with the market react if we had a debit surprise, say catherine mann voting for a cut or another does voting for a 50 basis point move? >> absolutely that is the risk. i do not think anyone is expecting in -- anything other than a 25 basis when cut. catherine mann, it would be interesting if it was complete consensus if she voted for a cut, because she has someone that is indicated eventually a time may come for more aggressive cuts to occur. there is a risk of one person voting for a 50 basis point cut, so we have seen some shift in market expectations pricing in more foreign 2025 -- more for

2025 in terms of red cuts. that is where the balance of rest are tilted despite inflation moving on the wrong direction in their projections for the near term. lizzy: you hint at that rapid deterioration in the labor market. i wonder how much chance you see of a march cut. >> at the moment we think that is quite low. it seems to be that they are likely to stick to the major meetings when we get the full forecast revisions, say february and may, so in a move toward a more aggressive cuts, which is what we are forecasting would be in the second half of the year because in the near term while we are seeing growth risks, and the balance of risks is looking through inflation toward growth risks, they know there will be this near term hump in inflation

because of the news we have seen in energy prices and what will happen to data and the coming months. lizzy: how much more stagflationary do you see the forecast being than they were in november? it will not be pleasant reading for the chancellor. do you think are supply-side reforms could do much to boost growth? >> i think it will take time, and duck-soo believe those that do get into the weeds in terms of the bank of england's projections, we know that they will lower growth. they will probably limit the growth outlook for 2025 to about 0/9%, but they also set up their views on supply-side. how do they think about productivity? certainly if we do get an

environment more conducive toward growth, and investment that makes consumers more confident to spend, because remember the household savings rate is high in the u.k., that could be conducive to a more improving growth backdrop, but that will not happen in the next couple of months. lizzy: part of what has a right of the chancellor's head room is the market turmoil, part of it a global story. how much risk do you think the u.k. is exposed to another shot like that? >> if we think that is what happened at the start of the year, the shop did come from the u.s. we saw is lower point of improvement on inflation and some concerns about physical stability across advanced economies. the selloff was bigger in the u.k. than germany.

i think it markets need to be assured the public finances are in a sustainable path, which is white tweaking around the edges five years ahead and terms of projections does not necessarily provide the right insurance -- assurance. they need to know public finances are on a sustainable path, which can often mean action is needed sooner rather than later. lizzy: very briefly, and i were you thinking about the impact of potential trump tariffs on the u.k., whether or not we are directly hit by them? >> clearly the u.s. president has indicated he has not decided yet regarding the u.k., but in terms of the direct impact on u.k., there could be some hit toward exports, but it's not like exports have been a major driver of growth in the u.k.

a bigger hit might be if there is retaliation, because then they will be making goods more expensive for consumers and companies, so if there is no retaliation it is a growth risk. lizzy: no one more aware of the growth risks to the ok'd than keir starmer himself. we think it was always for joining us this morning. we will bring you full coverage of the bank of a the decision when it drops at 12:00 p.m. london time. viewers in the u.k. will see full coverage of the news conference at 12:30 bien -- p.m. we will bring you andrew bailey's interview with guy johnson as well. let's get to french politics, the prime minister survived two no-confidence motion yesterday i ensuring the adoption of a budget following months of

political turmoil. we get more with kathleen. how did he manage to survive here? >> the new prime minister may have found this very narrow path to survive with a majority in parliament. he survived not one, but two votes of no confidence with 128 votes against him out of the 557 mp's. both the national rally of marine le pen and the socialists did not show up because they decided to abstain, so after six months since step elections the left-wing alliance has finally exploded, and the socialists breaking away from the far left,

who were the ones who presented this vote of no confidence. that is because the new prime minister as included the socialist party from the very beginning of the negotiations, at every stage for the past 1.5 months. that is why they decided to abstain, and also he has reopened talks of pension reform. there was a lot of fatigue in public opinion was 74% of the french you did not -- who did not want this motion of no confidence to present this week. lizzy: what is in the budget and what will come next? >> it was a committee of seven senators and seven mp's from the national assembly who came up with a compromise last week. no one was satisfied with it, which actually shows was indeed a compromise.

in fact, the government themselves are saying the motion of no-confidence that made barnier collapse already cost 7 billion euros to the economy because of savings and a lack of confidence. 50 billion euros of savings are planned, and there will be a new supertex on the profits of big companies with more than one billion euros of french revenues. that will impact lvmh. the ceo saying we should not tax french revenue made in france for this company. the government decided to have this tax for one year, make it temporary to not impact jobs at these big french companies. lizzy: kathleen with the latest

on french politics. we thank you for that update, and let's stay in france because we have breaking news. earnings are dropping surprisingly this morning on the terminal, and we have seen them cutting full-year organic net sales guidance with spirits. spirits dropping 25% in china and 2% in europe, those shares are down 6% year to date. nearly 7% in fact so far this year. the spirits maker, a european company and the think of the trump economic policy, his tariffs, will we see an impact to, but a downgrade to the outlook for pernod to regard --

ricard. volvo dropping their earnings earlier in the program. we will be speaking to the ceo jim rowen. he will join me next. this is bloomberg. ♪

lizzy: earlier in the program we had to dropping from volvo, a bleak picture, volvo warning of a tough year ahead after fourth quarter profit declined, and we can get into these results and go under the hood with the ceo jim rowan. back in the third quarter you were talking about accelerated weakness in most markets, including into premium segment. i am wondering how your outlook has changed and tires were looking at 2025?

>> the outlook has not change that much since we spoke at the third quarter. i think it is important we look at the whole year and not just the fourth quarter in isolation. what we are pleased about, in 2024 we had record results. we had record revenue, the first time the company reach that revenue. we had record profits of 27 billion. and we also freed up $14 billion of free cash flow in the fourth quarter. that is a really positive view of the underlying operations of the business. it is really the market that is changing. we are seeing additional tariffs and turbulence that comes in the wake of that. i think it will be turbulent,

but i think we are well-positioned when you compare us to many of our peers. that is because we have a wide portfolio of plug-in electric hybrids as well as ev's, and we have a nice range of cars, and we sell in 80 countries around the world. because we operate in the premium segment, we are better protected than the mass market segment. lizzy: you mentioned donald trump's tariffs. how are you affected? i know your ambition is to build where you sell. are you already tweaking production plans to get around his tariff plans? >> we started building a flagship ex90 in charleston in the usa. we have more capacity should we

need to get less of that. we do not get affected by the tariffs on mexico and canada that have been muted, and we have some assemblies that come in from mexico, all of our reduction is in the usa, europe, or asia. we have manufacturing facilities in each of those three big geographies. the biggest thing people are looking for is whether be tariffs between the european union and the usa, and that would be the bigger concern. lizzy: are you going to move even more production to the u.s. because of the tariffs? >> at this point in time we have two products now. we produce of the pulse star 3 and ex90. we are looking at what other models we should produce in the

u.s. going forward. lizzy: the u.s. might also introduce the sales ban on vehicles produced by chinese or russian entities. given that you majority owner is chinese how are you feeling that threat? >> we just released summary documentation, so we do not have a fuel -- full view of what that means. we will get a good look at that legislation in the coming weeks and figure out what we need to do in terms of any technical changes we need to make to the vehicles. that is one for the future more than today. lizzy: the big question for you for now is can you convince the u.s. administration that your tech is not a security threat? >> we need to wait and see what

that legislation actually is. the devil is in the details, so we will take a deep dive into that, but i feel like in the auto industry we are well-positioned to meet the requirements of each individual country. we operate in 80 different countries around the world. all of those have different requirements in terms of connectivity or safety requirements were one thing or another, and we have the skills and experience to modulate through, so we need to wait and see what icts say. lizzy: the volvo cars ceo. we think you as always taking us through these earnings. let's get to more breaking earnings, out of italy we have monte paschi coming up with net interest income at 588 million

euros in fourth-quarter net income coming in that 384 mill ion. another be there -- beat there. shares down 4.7% year to date, so we will keep an eye after those beats at the open. coming up right here on "daybreak: europe," plenty more on the program, so do stay with us. this is bloomberg. ♪

>> after years of stagnation germany's economy is on the brink.

lizzy: welcome back to "bloomberg daybreak: europe." 6:53 a.m. in london. bank of england decision day, 12:00 p.m. london time, so let's set you up with it with a look at the u.k. economy. we are in between the euro area and the u.s. not just geographically, but in terms of the growth picture, weakness, but in terms of inflation is what picking up. economists are expecting a 25 basis point out today almost fully priced and by markets. the expectation is we get an 8-1 vote split. the expectation that catherine

mann will be the only one devotes for a hold, so it will be endeavor surprise if she goes for a cut or the arch dove votes for a jumbo cut. the focus is also on the path ahead, and the expectation is the bank of england is not going to dig the line in the guidance that's says a gradual approach to removing monetary policy restraint remains appropriate. will be surprised if they are noncommittal later on today, but this brings me to the forecasts. if we flip over the board, there will be more focus on the forecast if you were sitting in downing street, if you are the chancellor of the exchequer rachel reeves at than on the decision itself. the bank of england is expected to downgrade its growth forecast, but if we flip the board for quite a balance expect the bank of england is also

going to upgrade its inflation forecasts. i should say this is on an outdated market curve. a difficult conversation for andrew bailey, but this could be embarrassing for the chancellor given that her top priority is to grow the u.k. economy, and may be her october budget as added to inflation more than initially thought. we will bring you this decision on bloomberg tv special coverage, 12:00 p.m. on daytime -- london time. at 4:00 p.m. we will bring you an interview with the governor of the bank of england. andrew bailey will be sitting down with guy johnson. also later today u.s. treasury secretary scott bessent is speaking to guy johnson. he has said that his focus is on

the 10-year treasury yield. with just over two weeks to go the german elections, tom mackenzie will be hosting a ceo briefing with some of the nation's most powerful business voices today at 9:00 a.m. london time. the opening trade is up next. anna edwards, kriti gupta, and guy johnson will be taking into the market open. this is bloomberg. ♪ (giggling) you go to sandals to get really, really close, (giggling) to the caribbean. we should do this every morning. sandals valentine's sale is now on. save up to $1,000 and get a sandal-lit dinner for two.

the way i approach work post fatherhood, sa has really trying toe understand the generation that we're building devices for. here in the comcast family, we're building an integrated in-home wifi solution for millions of families like my own. in the average household, there are dozens of connected devices. connectivity is a big part of my boys' lives. it brings people together in meaningful ways.

>> good morning from london. i'm anna edwards alongside guy and kriti grouped up. earnings beat driven by recovery in retail banking, we will bring you the latest numbers from the