Bloomberg Daybreak: Europe 03/21/2024

Summary

The S&P 500 hit another all-time high as the Federal Reserve maintained its outlook for three U.S. rate cuts this year. The focus now shifts to European central banks, with the Bank of England, Swiss National Bank, and Norges Bank all expected to deliver policy decisions. Meanwhile, the U.S. Justice Department is reportedly preparing to sue Apple for violating antitrust laws, and Hermès faces a class-action lawsuit alleging the company is breaking U.S. antitrust laws by making customers purchase additional products to access its Birkin handbags.

Takeaways

• 📈 The S&P 500 reached another all-time high as the Federal Reserve maintained its outlook for three U.S. rate cuts this year.
• 🌍 Focus shifts to European central banks as the Bank of England, Swiss National Bank, and Norges Bank are expected to deliver policy decisions.
• 📊 Market reactions show euro Stoxx 50 and Footsie 100 futures higher, continuing the positive trend from the U.S. session.
• 💹 Despite inflation upticks, the idea of rate cuts on the horizon has not changed, indicating continued optimism in equities.
• 🛠️ The bond market shows some dislocation with the equity market, as rate cuts are priced in, but the ten-year yield remains unchanged.
• 🌐 Asian markets, particularly tech and cyclical stocks, perform well with the region's stock gauge hitting a two-year high.
• 🔄 There's a divergence between the Philly Semiconductor index and tech-heavy indices in the Asia-Pacific, suggesting potential catch-up.
• 💲 The U.S. dollar's value against the euro and Swiss franc is influenced by the anticipated central bank decisions.
• 📉 Powell's statements suggest a gradual decrease in inflation with some bumps along the way, maintaining the outlook for rate cuts.
• 🏦 Barclays and Citigroup are reportedly preparing to cut several hundred jobs within their investment banking divisions.
• 🛫 Boeing predicts a significant cash drain for the first quarter due to regulatory scrutiny and slower output of its 737 Max aircraft.

Q & A

What is the current outlook for the S&P 500 according to the Federal Reserve?

The S&P 500 is currently hitting new all-time highs as the Federal Reserve maintains its outlook for three U.S. rate cuts this year.

What does the Federal Reserve's statement imply about the U.S. economy?

The Federal Reserve's statement implies that if the U.S. economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.

What central banks are expected to deliver policy decisions later in the day according to the transcript?

The Bank of England, the Swiss National Bank, and Norges Bank are all set to deliver policy decisions later in the day.

How is the market reacting to the Federal Reserve's decision?

The market is reacting positively, with futures on the euro Stoxx 50 and the Footsie 100 both higher, indicating that the momentum from the U.S. session is continuing into the Asian and European sessions.

What does the transcript suggest about the bond market's reaction to the Federal Reserve's meeting?

The bond market has shown some dislocations, with the affects market and the bond market being uncorrelated. The ten-year yield remains unchanged at the moment, despite the Fed change.

What is the current situation with the tech sector according to the transcript?

The tech sector is doing well, with cyclical stocks running nicely and the gauge for stocks in the region climbing by the most in four months. Chip stocks are expected to perform well, with companies like Micron, Samsung Electronics, and SK Hynix showing sales recovery in the first half of the year.

What does the transcript reveal about the U.S. Justice Department's plans for Apple?

The U.S. Justice Department is said to be poised to sue Apple for violating antitrust laws, with Apple being accused of blocking rivals from accessing hardware and software features of its iPhone.

What is the current financial prediction for Boeing?

Boeing has predicted a massive cash drain for the first quarter due to regulatory scrutiny and slower output of its 737 Max, which is taking a toll on the company's finances.

What is the World Trade Organization's chief economist's view on the state of globalization?

The chief economist, Ralph Aissa, believes that there are signs of fragmentation along geopolitical lines rather than any massive globalization. He notes a shift in trade shares away from China to the U.S. and other economies.

What is the current situation regarding Ukraine's military recruitment?

Ukraine's prime minister has indicated that military recruitment could be scaled back as more aid arrives, with the U.S. funding potentially arriving as early as this month.

What is the Swiss National Bank's position on the Swiss franc?

The Swiss National Bank is considering a potential rate cut due to lower than expected inflation and the strength of the Swiss franc since the beginning of the year.

Outlines

00:00

📺 Bloomberg Daybreak Europe: Market Updates and Central Bank Decisions

The script begins with Kriti Gupta introducing Bloomberg Daybreak Europe and setting the agenda for the day's financial news. The focus is on the S&P 500 reaching a new high due to the Federal Reserve's outlook for three U.S. rate cuts this year. The discussion shifts to Europe, with anticipation for policy decisions from the Bank of England, S&P, and Norges Bank. Kriti Gupta also mentions an upcoming interview with the World Trade Organization chief economist and provides a quick market check, noting the positive futures for the euro Stoxx 50 and Footsie 100. The segment ends with a brief analysis of the bond market and currency trends.

05:00

📈 Inflation and the Fed's Stance: Market Interpretations

This paragraph delves into the market's interpretation of the Federal Reserve's stance on inflation, as expressed by Chair Powell. Despite recent high inflation numbers, Powell suggests that these figures may have seasonal effects and maintains that the overall trend is one of gradual inflation decline. The market, however, seems to read the Fed's dot plot as slightly hawkish, with expectations for fewer rate cuts. The conversation includes an analysis by Ven Ram from Bloomberg Markets live team, who discusses the Fed's difficult task of reconciling strong growth forecasts with rate cuts and the potential implications for the bond market.

10:01

🏦 UK Central Bank Decisions and Geopolitical Tensions

The focus shifts to the UK, with correspondent Lizzie Borden discussing the Bank of England's upcoming decisions and the potential for a more dovish approach. The conversation includes an analysis of UK CPI data and its implications for the central bank's decisions. Borden also touches on the geopolitical tensions in the Middle East and their potential impact on trade and the global economy, with a particular emphasis on the Red Sea conflict's effects on shipping and energy markets.

15:05

💡 WTO Chief Economist on Globalization and Trade

Chief Economist of the World Trade Organization, Ralph Aissa, joins the program for an exclusive interview. Aissa discusses the current state of globalization, noting signs of fragmentation along geopolitical lines, particularly in trade between the U.S. and China. He also talks about the resilience of international trade in the face of geopolitical tensions and the potential impacts on consumer behavior and global economies. The conversation highlights the importance of understanding trade patterns and the shifting dynamics in global trade due to geopolitical factors.

20:08

🌐 Global Market Updates and Corporate News

The script concludes with a roundup of global market updates and corporate news. It covers Barclays' and Citigroup's plans to cut jobs within their investment banking divisions, the U.S. Justice Department's potential lawsuit against Apple for antitrust violations, Boeing's predicted cash drain for the first quarter, Micron Technology's strong revenue forecast, and a class-action lawsuit against Hermés for alleged antitrust violations. The segment also mentions the World Trade Organization's Ralph Aissa's upcoming appearance in a later segment of the program.

Keywords

💡Federal Reserve

The Federal Reserve, often referred to as 'the Fed,' is the central banking system of the United States, responsible for implementing monetary policy to promote economic stability. In the context of the video, the Fed's decision to maintain its outlook for three U.S. rate cuts this year is a significant development that impacts financial markets and economic expectations.

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a U.S. stock market index that tracks the performance of 500 large companies listed on stock exchanges in the United States. It is a widely followed index and is considered a benchmark for the overall U.S. stock market. In the video, the S&P 500 hitting an all-time high is indicative of a strong stock market performance.

💡Bank of England

The Bank of England, often referred to as the 'Old Lady of Threadneedle Street,' is the central bank for the United Kingdom. It is responsible for setting monetary policy and maintaining financial stability. In the video, the anticipation of the Bank of England's policy decisions is a key focus for market participants looking for cues on the UK's economic direction.

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks and governments aim to keep inflation at a low and stable rate to ensure economic growth and stability. In the video, the discussion around inflation upticks and the Fed's response to it is central to understanding future monetary policy.

💡Rate Cuts

Rate cuts refer to the reduction in interest rates set by a central bank, which typically aims to stimulate economic growth by making borrowing cheaper. In the video, the Federal Reserve's outlook for three U.S. rate cuts is a significant policy decision that influences global financial markets and economic forecasts.

💡Futures

Futures are financial contracts that obligate the buyer to purchase an asset or the seller to sell an asset, such as a commodity or financial instrument, at a predetermined future date and price. Futures are often used for hedging and speculative purposes and are traded on specialized exchanges. In the video, the mention of futures indicates the market's expectations for future price movements based on current economic conditions and policy decisions.

💡Bond Market

The bond market is where debt securities, such as government bonds, corporate bonds, and municipal bonds, are issued, bought, and sold. Changes in the bond market can reflect investor sentiment about the economy and influence interest rates. In the video, the bond market's reaction to the Fed's decisions is crucial for understanding broader financial market trends.

💡Swiss National Bank

The Swiss National Bank (SNB) is the central bank of Switzerland, responsible for issuing the country's currency, the Swiss franc, and setting its monetary policy. The SNB's decisions on interest rates and currency interventions have significant impacts on the Swiss economy and global financial markets. In the video, the anticipation of a potential rate cut by the SNB is a key focus for currency traders and investors.

💡Geopolitical Tensions

Geopolitical tensions refer to the strained relationships and conflicts between nations, often arising from political, economic, or territorial disputes. These tensions can influence global trade, investment flows, and security. In the video, the mention of geopolitical tensions, particularly in the Middle East, underscores the potential risks to global economic stability and trade.

💡Trade

Trade refers to the exchange of goods and services between entities, such as countries or organizations. International trade is a critical component of global economic growth and development, and it can be influenced by various factors, including tariffs, trade agreements, and geopolitical events. In the video, the state of globalization and trade patterns is a central theme, with a focus on how these patterns are shifting due to various economic and political factors.

Highlights

The S&P 500 hits another all-time high as the Federal Reserve maintains its outlook for three U.S. rate cuts this year.

The focus now shifts to Europe, with the Bank of England, the S&P, and Norges all set to deliver policy decisions later today.

The U.S. futures are in positive territory, continuing the upward trend from the U.S. session, despite traditionally pulling back.

The bond market shows a bit of dislocation, with the Fed pricing ahead of the meeting changing from three rate cuts to two.

The World Trade Organization chief economist discusses the state of globalization and its impact on trade.

Ukraine's prime minister suggests military recruitment could be scaled back as more aid arrives, highlighting the ongoing support from the U.S. and EU.

The Swiss National Bank could surprise the market with a rate cut, despite expectations of a hold.

Barclays and Citigroup are reportedly preparing to cut several hundred jobs within their investment bank divisions.

The U.S. Justice Department is said to be poised to sue Apple for violating antitrust laws, accusing the company of blocking rivals from accessing iPhone features.

Boeing predicts a massive cash drain for the first quarter due to regulatory scrutiny and slower output of its 737 Max.

Micron Technology shares soar after the company provides a strong revenue forecast for the current quarter, driven by demand for AI hardware.

Hermes faces a class-action lawsuit in California, with shoppers alleging the company is breaking U.S. antitrust laws by requiring significant additional purchases to access Birkin handbags.

Dubai sees a record-breaking $429 million IPO for a public parking business, attracting $71 billion in orders and jumping 26% intraday.

The Bank of England is expected to hold rates at 0.75%, with attention turning to the dot plot for potential excitement.

The U.K. CPI data is crucial in informing the central bank's decision, with headline and core levels beating expectations but services data not as strong.

The U.K. and EU are discussing the confiscation of frozen Russian assets to fund Ukraine's urgent needs, with further discussions on legal and political organization.

Ireland's prime minister unexpectedly resigns, feeling he is no longer the best person for the job after two referendum defeats.

U.S. Secretary of State Antony Blinken will visit Israel to continue efforts to protect civilians in Gaza, on his sixth Middle East tour since the war began.

Transcripts

Good morning. This is Bloomberg Daybreak Europe.

I'm Kriti Gupta in London. Let's get to the stories that set your

agenda. Powell keeps the party going.

The S&P 500 hitting another all time high as the Federal Reserve maintains

its outlook for three U.S. rate cuts this year.

If the economy evolves broadly as expected, it will likely be appropriate

to begin dialing back policy restraint at some point this year.

That puts the focus now on Europe, The Bank of England, the S&P and Norges

think all set to deliver policy decisions later today.

We're going to walk you through that, plus the market reaction.

And on top of that, I'll be speaking to the World Trade Organization chief

economist. That interview with Ramaphosa coming up

this hour. Let's get a quick check on the markets

in the meantime, because, look, there's a lot to digest that mentioned those

record highs that you saw in the US session.

You are also dealing with a lot of crosscurrents off of those central bank

decisions this morning. What does that mean for the futures

picture? Well, it does mean a little bit of green

on the screen. The party continues on this side of the

Atlantic, at least when you look at futures, euro Stoxx 50 futures higher by

1.2%. Footsie 100 higher by about the same

amount, higher by about 1%. What that tells you is that that read

across from the states is continuing into the Asian session and Europe as

well. But take a look at what you're seeing

even in the U.S. traditionally when you see those record

highs, futures trading at least in Asia and Europe tends to pull back on that

rally this morning. You are seeing the exact opposite,

higher by 4/10 of 1% of the S&P. A little bit of a defensive tilt to it,

given that the Nasdaq is higher by 7/10 of 1%.

But it really speaks to this idea that the party is continuing to go on simply

because even though you are seeing these inflation upticks, the idea of rate cuts

on the horizon has not changed at all. That's the equity story.

Let's talk about the bond market story as well, because even though we're

talking about these rate cuts on the horizon, remember, Fed pricing ahead of

the meeting had really change anywhere from three rate cuts to two rate cuts.

So if you get a quick check on the bond market, that's really where this story,

I would say has a little bit of dislocations, because so far the bond

market and the affects market have actually been a little bit uncorrelated.

You have seen this divergence. Any moves in the Bond story has actually

not translated into the story. And this is a really big piece of the

equation when you look at that ten year yield for 27 unchanged at the moment.

But that's interesting given that you are starting to see those rate cuts

getting priced in euro dollar at 109, cable at 127 stronger a little bit on

both of those European currencies and dollar Swiss by the way unchanged.

What is hard talk about these affect stories a lot of it has to do with again

the Fed change but again how much of this really puts the onus on the central

banks that we won't see later today? At least that's the story here in

Europe. Let's see what the story is in Asia.

Abril Hong has that story in Singapore. April, walk us through it.

Yeah, we're seeing the Fed tone as well as those dots really helping the assets

across the region. M Asia doing well.

Korean one outperforming and it's moving towards that 1320 level.

We're seeing tech cyclical stocks running quite nicely today as well.

And the gauge for stocks in the region climbing by the most in four months,

hitting roughly the highest level in about two years, gains from Tokyo to

Seoul. And you're seeing the Nikkei, I believe

this is a fresh closing high. It was on holiday yesterday.

It's really going great guns today. Let's flip the board because if you talk

about tech, it's not just about the Fed. It's also that I see.

And the idea that we have the chip sector doing pretty well amid all this,

especially after Micron surprised with its revenue forecast overnight and

Samsung Electronics, SK Hynix, these other companies that Bloomberg

intelligence things will show their sales recovery in the first half of this

year. Let's flip the board because then the

question also becomes for the tech heavy indices in the Asia-Pacific, where do we

go from here and for the cost be it used to move pretty much in tandem with the

Philly Semiconductor index. There's been a bit of a divergence of

late and given how we're expecting chip stocks to perform, maybe it's time for

it to play catch up. Let's put the board again, because I

want to take you to dollar yen. We saw how earlier in the week the BOJ

and Twitter pushed it towards 152. Now the Fed and Powell pushing it back

down to roughly the 151 level pretty. Abraham is saying if we're walking us

through that story and it felt like the onus went from the BOJ then to the

Federal Reserve APR again, top pointing to how you ask a team to see that kind

of transition filter out through the story.

And that's just one currency player. There's plenty more to go.

It all comes down to the inflationary story, especially because on the

surface, take a look at what he's kind of talking about, a lot of hawkish

rhetoric around the inflation print, but then a little bit of a dovish pivot when

you're talking about how the markets interpreted, yet that kind of overhang

that you're going to see really comes down to those hot prints that we saw in

the last two months. Take a listen to what Chair Powell had

to say. The January number, which was very high.

The January CPI and PCC numbers were quite high.

There's reason to think that that there could be seasonal effects there, but

nonetheless, we don't want to be completely dismissive of it.

The February number was high, higher than expectations.

I take the two of them together and I think they haven't really changed the

overall story, which is that of inflation moving down gradually on a

sometimes bumpy road. Take the two of them together and it

hasn't really changed the picture. Those are the words from Chair Powell

over the Federal Reserve in the face of some pretty consecutive hot prints.

How is the market interpreting this? So let's get a little bit more analysis

here. Ven Ram from Bloomberg Markets live

team joins me this morning. Ven, on the surface, this to me seemed a

little hawkish. You saw moves in the dots.

You saw the idea that they are still talking about some of these inflation

uptick. They're not as rushing towards cutting

as perhaps they were, or at least it seemed like they were in their last

press conference. What did you make of the dot plot in

particular that will go into the nitty gritty of inflation?

Morning. I thought that the dot plot was an

impossible effort to square the circle by the Fed.

On the one hand, they said that the jobless rate is going to be lower this

year. They said that peak is going to be

sharply higher than they were expecting in December.

And they also pushed up the GDP growth forecast for the year all the way from

1.4 to 2.1%. Now, 2.1% is a pretty magical level if

you think about the long term trend rate in the US is about 1.8%.

So they think that we are going to get above trend growth.

The labor market is going to be pretty strong.

And then inflation is also going to be taking higher than they thought.

And then here they go and stay with three rate cuts that they penciled in in

December. So they're trying to square that circle,

which is impossible and which is why we heard Powell say those make those

remarks in the press conference. And he was pretty evasive when he was

asked pointedly about why they're why they stayed with three rate cuts rather

than two. And he was pretty evasive on the

question. So the Fed is probably thinking that

rates are too restrictive here and they want to get it lower, even though the

economy is not offering the them the excuse that the Fed is, in fact,

fighting the economy at this stage. Well, it's interesting that you're

saying kind of they're fighting the economy at this stage because if you

look at the bond market reaction, again, I think when you look at some of the

nitty gritty, it seemed like initially a hawkish take and yet the bond market

interpreted it as dovish simply because they were sticking to that three rate

cuts then. Talk to us a little bit about the bond

market reaction. In particular, it feels like there's a

trend that on every Fed day, no matter what the data suggests, whether there's

an uptick in inflation or whether some of the rhetoric seems a little bit

hawkish, the bond market always catches the bid.

Why? And that's because you mean the markets

have to take the Fed at their word? I mean, here's the Fed, as we said, you

know, despite all the inputs that are coming in from the economy, they're

insisting that three rate cuts are on the table.

And it's the job of the markets to take the Fed at their word, not to fight the

Fed. And that's what the markets are doing.

But if you look at the rally in bonds, it's not it's not too emphatic.

I mean, we have come lower on the yields, but not by a whole lot.

And particularly the ten year hasn't rallied a whole lot.

And you know, what the Fed did was also raise the neutral rate.

I mean, that's the first time in a long time that they've raised the they

estimate of the neutral rate. And that suggests that interest rates

are going to be higher for longer, which is why I think that the inflation

premium attached to the longer end is going to be higher, and that's going to

keep it stickier at the longer end, albeit it may not be visible in the

price action today and tomorrow, but come in the fullness of time, come

probably next week, in the weeks to come after that.

I think that the markets will start reflecting those jitters.

It's interesting we talk about the fact that the bond market perhaps hasn't

moved that aggressively, but it kind of is doing it in slow motion.

The fact that we're looking at for 27 on the ten year yield right now.

Really fascinating. Bloomberg's Ben, Ron, thank you so much

for your analysis this morning on the day after the Fed.

Now the focus shifting to the bogey, at least that's one of the central banks.

We're watching the S&P, Norges Bank, of course, reporting later as well.

We're going to dive into the analysis later in the show.

But for now, let's zero in on the UK story.

Our U.K. correspondent Lizzie Borden, joining me

now this morning. Lizzie, ahead of this week's central

bank palooza, a lot of people said that both the Fed and the but we are going to

be a little bit of a snooze fest. Tell us why it might not be this time

around. The Buick City is never a snooze fest.

Yes, it might hold rates at 5.25%, a 60 year high.

But I would look to the dot plot for some more excitement.

Maybe we'll get into the three way split, but maybe this time it'll be a

little more dovish. Maybe you'll see Jonathan Haskel

dropping out of the hawkish camp and leaving Catherine Mann, the sole voter,

for a hike. You did get that U.K.

CPI data yesterday. That's going to be crucial to informing

this decision. And you had good news on the headline

and core levels beating better than expectations.

But on the services front, not such good news.

And that's a worry for the baby, of course, because it speaks to

domestically driven inflation. So really, today is all about clues as

to the future path for rates. And Citi economists say that Andrew

Bailey's already left it too late. They recommend positioning for as soon

as May off the back of the data. You did see traders changing their bets,

but still pretty much in line is where they were before a third still on the

table. But as I say, Bailey not likely to give

too much guidance on the timing today. Lizzie Borden, we thank you so much for

bringing us that analysis this morning. And of course, we're going be watching

the effect story on the cable right off that.

Let's talk a little bit about what else we're getting on the day ahead as well,

because, look, Lizzie talked about why the business news best, I would argue,

all eyes on the S&P this morning. That coming up at about 8:30 a.m.

London time. And of course, remember, a lot of the

market positioning here is going to be short the Swiss see.

So the market story, the read through is really significant.

We're going to follow that theme throughout the show at 9 a.m.

Then you have the Nordics Bank decision as well.

Look, we don't give a ton of emphasis, I think, to the Scandinavian nations, but

you should, especially in light of some of the oil markets or lack of oil market

moves that you're seeing. Remember, Norway is going to be directly

impacted by that. 9 a.m.

U.K. time, a very different story from the

S&P, a very different story from the barley, but to those commodity exposed

economies and have or create some sort of precedent for the other global

economies in the world. And then we go for some central bank

decisions to perhaps some of the investment banking decisions.

That long awaited Reddit IPO is due to debut today on in New York, I should

say. And remember, this is a lot to do when

it comes to simply the idea of whether or not this opens the floodgates for

other IPOs. Remember, we've had these kind of tech

companies that have IPO'd and then not performed that well in the days after.

Does Reddit follow that trend or break it?

It looks like those are getting priced at about $34 a share at the moment from

the current guidance, raising about $748 million dollars excuse me, in that

initial story, it's not the only IPO news that's on our radar just moments

ago. We are getting headlines, this time on

the IPO space, not in New York, but in Dubai.

Get this, Dubai's in jumping on their debut $429 million IPO, which again, in

the context of what you might see in London or New York, isn't that big, but

it is a record. It marks a record for Dubai.

This is a public parking business that seeing huge demand, getting this,

attracting $71 billion in orders, the IPO getting 165 times covered and

oversubscribed. So, again, that massive move there

intraday, you're already seeing a jump about 26%.

We're on of course you keep you apprised.

But whether that's a Dubai story, a stock specific story or indicative of

perhaps another realm or another success story for the IPO, lots to talk about

coming up later on the show, our exclusive interview with the World Trade

Organization chief economist Ralph Oza joining us now for a deep dive into the

state of globalization. That's coming up shortly.

Stick with us. This is Bloomberg.

Welcome back to Bloomberg Daybreak Europe.

I'm critic Gupta in London. Look at some of the other stories we're

watching from around the world. Bloomberg has learned that Barclays is

preparing to cut several hundred jobs within its investment bank division.

This comes as the company embarks on a year long effort to trim costs and boost

profits within the unit. And sticking with the banking space,

Bloomberg also understanding the Citigroup reducing its investment

banking headcount. In London, roughly 20 employees

affected, and the bulk of the cuts are likely to include junior staffers in the

analyst to director levels. Sticking with corporate news, the US

Justice Department is said to be poised to sue Apple as soon as today for

violating antitrust laws. Apple has been accused of blocking

rivals from accessing hardware and software features of its iPhone.

The DOJ has already sued Google for monopolization, while the FTC also

pursuing antitrust cases against Mehta and Amazon.

Boeing has predicted a massive cash drain for the first quarter as

regulatory scrutiny and slower output of its 737 max takes its toll on the

company's finances. Boeing's free cash flow will be in the

low single digit billions of dollars for the full year.

That's less than 5 billion expected by analysts across Wall Street.

This is the company grapples with the aftermath of a mid-air incident earlier

this year. Micron Technology shares have soared in

late trading in the U.S. after it gave a surprisingly strong

revenue forecast for the current quarter, buoyed by demand for artificial

intelligence hardware in line with some of the other tech names we've been

watching. The largest just US maker of computer

memory chips says that fiscal third quarter revenue will be between 6.4 and

$6.8 billion, topping the 6 billion pencilled in by analysts.

And finally, Birkin handbags just too difficult to buy.

That's the contention of two shoppers in California who are set to file a class

action lawsuit alleging Hermés is breaking U.S.

antitrust laws. The complaint saying the company

requires potential buyers purchase thousands of dollars of other products

just for the chance to access those coveted leather flags.

Plenty more ahead. Our Terms of Trade segment is coming up.

We're speaking exclusively to the WTO's chief economist.

This is Bloomberg.

It's time for our terms of trade, our weekly dive to the state of

globalization. Consumers have been pretty resilient in

multiple parts of the world, but how long can that last in the face of

geopolitical tensions, election risk, protectionism and, of course, tensions

in the Middle East? There's a lot to talk about when it

comes to the impact on trade. I want to bring in our exclusive guest

this morning. Ralph Aissa, the chief economist at the

World Trade Organization, joins me this morning.

Ralph, a pleasure to have you on the program.

Thank you so much for joining us. Let's start with this worry about

globalization. Good morning.

We're hearing a lot about this idea that where have a lot of election risk?

There's a lot of bringing manufacturing capacity onto U.S.

shores, onto Chinese shores, into Europe, these ideas of globalizing.

How much of a risk is it going into? I think 50% of the world's elections

this year. So when we look at the data, we don't

see any signs of globalization, or at least not any signs of any massive

globalization. But what we do see as we do see signs of

fragmentation along geopolitical lines. You mentioned the U.S.

And if you look at trade between the U.S.

and China, for example, what we see is that the trade between these two

economies is growing by 30%. It's growing 30% slower.

And trade between the U.S. and China and other economies, for

example. So there's a shift in trade shares away

from China to us. So that's one way in which we are seeing

as this fragmentation, but you also see it more broadly.

So it's not just the story about the U.S.

and China. One thing we've done, for example, in

our analysis, we've we've separated the world into two

hypothetical geopolitical blocs based on voting patterns at the U.N.

General Assembly. So one bloc of countries that tends to

vote with China and another bloc of countries that tends to vote with the

U.S.. And what you see, if you look at the

data, you see that the trade within this box tends to grow more slowly now than

trade between these hypothetical blocs. Again, I'm adding to this overall

picture of four signs of geoeconomic fragmentation.

Well, as we talk about that fragmentation, what is the rate through

then on the consumer? Does it then do you see some sort of

decrease in shipping activity because everyone's kind of doing their own

thing? How does that serve or not serve the

global economy? Well, it's not so much everyone doing

their own thing, so we don't see so much on shore.

I really see a shift in and trade patterns, I would say.

So for the from the US perspective, for example, not importing that much anymore

from China instead of importing from other countries Mexico, Vietnam and so

on. I mean, one interesting pattern that we

also are seeing in the data is to some extent, there also seems to be a

diversion of trade flows, for example, Mexico's importing from China and then

the US is importing not from Mexico. So it appears at least that some of

these trade flows are also being diverted.

So we're talking a little bit about kind of the North American sphere.

I want to bring it right back here to Europe and to the Middle East in

particular as we talk about kind of some of the tensions around the world.

We talk about the election risk worldwide by geopolitical tensions in

the Middle East, in the Red Sea. If you talk to corporate CEOs over and

over again on this program throughout Bloomberg Television, the theme seems to

be we're not seeing a read through just yet that the kind of trauma of the

post-COVID era, the supply chain crunches there, have created some sort

of resiliency in supply chains as well. How long does the conflict in the Red

Sea need to go on? Where do you start to see a breaking

point in some of these supply chains? Yeah.

So first of all, I must say that's also my assessment at the moment.

Even though the Suez Canal is of course an important trade route, we also don't

see any major effects so far other than, of course, that a lot of trade has to be

diverted. For me, the main risk to look out for

really is whether the conflict escalates and whether this is going to start

affecting energy markets. And because if you get that, then of

course, you can have a knock on effect on the economy.

But I think the reason international trade is coping quite well is quite

resilient to this shock is because we have a good amount of shipping capacity

at the moment. So the constraints on the shipping

industry are not what they were in Covid So shipping companies can absorb this

extra work that they have to do by taking the longer route at the moment.

So resilience they sure in shipping and that in terms of excess capacity but a

lot of the ways that this is tackled is done through excess fuel.

Excess labor rerouting around the Cape of Good Hope, among other ways, rail

lines, for example, getting more traffic as well.

A lot of those costs are passed on to the consumer, though.

So in this era where you are seeing consumer resiliency around the world and

strengthen the economies, that makes a lot of sense.

If this conflict last years, for example, and you see the same issues

passed on to a consumer amid a weak economic backdrop, would that see a

bigger result? Yeah.

No, of course it's not. It's not helping.

And that's especially not helping Europe.

I mean, one thing that that we've we've been seeing, of course, is that the US

has been doing better than we expected. Europe has been doing worse than we

expected. And as a result, global trade has also

been doing worse than we expected. And of course, these tensions that we

now see in the Red Sea, I mean, they affect the whole world, but they

particularly affect Europe. So it's going to last for a long time at

some point. You also don't see that and European

consumer prices. But at the moment, in a way, the weak

demand in Europe is helping. And because, you know, at this point at

least import demand is not so strong anyways.

Um, so of course the demand for products that was canal was

also a little bit less and for example, we saw towards the end of the crisis.

Ralph, a final question to you. I'm putting you on the spot in about 30

seconds. We're talking about this import demand

being fairly weak. Let's talk about the currency impact as

well. Coming out of China, out of Japan, out

of Korea that are still really dependent on those export revenues.

What is your read on the currency impact on the global trade situation?

30 seconds, if you can. So we have you know, the currency impact

is really not something that, you know, we're analyzing in depth.

So I don't think I can I can share any any interesting information here with

you. I can I can talk a little bit about

trying on what I what what we've seen. Nothing is to say China has been holding

up relatively strongly at the beginning of the year.

There were some onslaught even towards the end of the year, of course, there

were concerns about the property market in China and how this would affect

Chinese growth and Chinese trade. But at the moment that doesn't seem to

be affecting the global economy too much.

So what we are really looking at at the moment is a situation in Europe.

Understood. Ralph, also the chief economist over at

the World Trade Organization, joining us this morning for an exclusive interview.

We thank you so much. Coming up on the program, as EU leaders

meet in Brussels to discuss the support for Ukraine.

The nation's prime minister says military recruitment could be scaled

back as more aid arrives. We'll bring you more from that exclusive

conversation with us next. Stick with us.

This is Bloomberg.

Good morning. This is Bloomberg Daybreak Europe.

I'm pretty good in London. Let's get to the top stories that set

your agenda. Powell keeps the party going.

The s&p 500 hitting another all time high in the US session as the Fed

maintains its outlook for three US rate cuts this year.

If the economy evolves broadly as expected, it will likely be appropriate

to begin dialing back policy restraint at some point this year.

Now the spotlight on the Bank of England also expected to announce a hold later

today. We're having a little bit more time for

those inflationary pressures to cool. But it's Switzerland's national bank

that could be the surprise. A handful of banks eyeing a possible

trailblazing rate cut, not to mention what we get from the Norges Bank as

well. A lot to digest.

Let's get a quick check on the markets ahead of what's sure to be an action

packed next 24 hours. When you look at the futures picture,

you are seeing green on the screen, the record that you saw in the states

continuing in the European of the Asian sessions, euro Stoxx 50 futures higher

by about 1.2%, putting 100 right on its heels higher by 8/10 of 1% as well.

Traditionally when you see a record high in the states, you see a pullback in

features. You are not seeing that today.

Some outperformance in the states, U.S. futures, S&P at least 44/10 of 1%, 5309

on those contracts. Some outperformance, though, in the

defensive space. NASDAQ 100 higher by 8/10 of 1%.

That's your equity picture. Let's get a quick check on the bond

market as well, because that's where you're supposed to see more of the

monetary action Now, looks like it's flat on your screen right now.

But if you look at it, intraday intraday chart for 26 is where we are on the ten

year yield. You saw a massive bid into the bond

market after the Fed pared back only in the last 30, 30 minutes or so.

When you look at the market, the story is the focus this morning though, your

dollar 109 cable at 128. And of course, we're keeping an eye on

what that Swiss strength actually looks like this morning.

A bit stronger ahead of the SNB. That is your central banking story in

the market story. Let's get a little bit of the

geopolitics here. Ukraine's prime minister says that the

military might recruit recruit fewer than the half million troops than it

originally planned. Speaking exclusively with Bloomberg, he

said the blocked U.S. funding could arrive as early as this

month. So we have assurances from United States

Senate because they approved this draft law.

So now we are awaiting a decision of Congress.

We have very active dialogue and negotiations with many congressmen from

both parties. We have bilateral and bipartisan support

from from the Congress. And I believe that during the nearest

time this month or maximum next month, we will have this good news from United

States. And the United States will join the

European Union, the G-7 coalition, I mean, military and financial support of

Ukraine in this battle with Russia. The rhetoric changing here in Europe.

We heard Emmanuel Macron, the president of France, talking about potentially

boots on the ground in Ukraine. We hasten to add that that's not

something that Ukraine has asked for. But do you take a message from that?

Is there more urgency here in Europe? And also, would you welcome boots in

Ukraine from Europe, from Europe, even in non-combat capacities?

I should say that for the last one and half year of maybe two years of full

scale aggression, mindset of many European politicians is changed

dramatically. And it's very good news for all of us

because we understand that Russia is aggressor, is terrorist country, and

Ukraine now is protecting European borders.

So we are very glad that President Macron

communication is much, much stronger. It's very concrete, very clear.

And this is what we all need, not just Ukraine, but all European Union.

We should be very concrete, very fast, very clear, because the only way to

fight and to liberate in this full scale war with aggression of terrorist

countries such as Russia. Ukraine's prime minister speaking

exclusively to our very own Oliver Crook all.

He joins me now this morning from Brussels, where, of course, EU leaders

are meeting today, today to discuss key issues including security, defence and

spending. All.

Good morning from London. Let's talk a little bit about these

Russia, the story around freezing Russian assets.

How is it how are EU leaders approaching it?

Yes, I think this is going to be one of the most critical points that they're

going to be able to talk about and try to make some progress on, which is these

€260 billion that are being held right now by the G7, 200 of which are being

held in here in Europe right now. And they're all throwing off about €3

billion a year. So there is a short term needs of

Ukraine, which are ammunition, long range missiles, that sort of thing.

But there is a longer question, a longer term question about how to fund Ukraine,

how to get money to Ukraine, which is obviously a critical issue both in

Europe but also in the United States, judging by the fact that that $60

billion package is still stuck in Congress.

So one of the ways that they're thinking about doing it is tapping some of these

Russian assets, the profits from them and bringing them directly to Ukraine.

The issue is within Europe, you do not have unanimity on that.

You need that. So they're thinking about maybe fudging

it where they say about 90% of it will go to weapons, 10% will go to

reconstruction, because some of the member states are less comfortable with

funding military equipment directly. But there's also another idea, and this

came up with the Ukrainian prime minister.

Have a listen. Now European Union have made the first

step confiscation of revenue of this frozen

Russian assets and the usage. This for Ukrainian needs, for urgent

Ukrainian needs. And we believe that this is only a good

sign and only the first step. And we continue discussion how legally

and politically organize this confiscation of frozen Russian assets.

And so the conversation right now in Europe is about the profits from those

assets. But what he's talking about is seizing

the underlying assets themselves. We're talking about a quarter trillion

euros worth of assets which would obviously fund Ukraine for a long time.

It's not a surprise that the Ukrainians about that.

But Joe Biden wants that, the US wants that, and they want to make meaningful

steps in progress in discussing how they could use those assets to fund Ukraine.

There's resistance from that, from the French, from the Germans, even from the

ECB, saying that it could sort of threaten the euro as a as a reserve

currency. And really, obviously, that's one of the

pillars, not seizing private property in liberal Democratic states.

But again, if there's ever an exception for that, it can be in times of war.

Bloomberg's Oliver Crook live in Brussels for us this morning, walking us

through that frozen Russian asset picture and basically what we're keeping

an eye on. Thank you so much for bringing us that

crucial reporting. I want to bring up some of the other

stories making news around the world as well, especially in the geopolitical

space. Ireland's prime minister has

unexpectedly resigned, saying he's no longer feels he's the best person for

the job. His coalition government suffered two

heavy referendum defeats earlier this month, for which he took full

responsibility. He'll stay on until a successor is

chosen. And from Ireland over to the Middle

East, the US Secretary of State, Antony Blinken, will be visiting Israel later

this week to continue efforts to protect civilians in Gaza.

That is if Israeli forces enter Rafah. Blinken is on his sixth Middle East tour

since the war between Israel and Hamas had began.

He's already met leaders in Saudi Arabia and is due in Egypt today.

Now, coming up on the program, we go from the geopolitics back to the

monetary policy. The Swiss National Bank, due to make

their first decision of the year coming out at about 8:30 a.m.

UK time. Some banks say we could be in for a

surprise cut. We discuss what that means for the

markets next. Stick with us.

This is Bloomberg.

This is Bloomberg Daybreak hereupon created gupta in london.

Look at a central bank palooza this week and today is all about the central banks

of monetary policy in europe. We kick it off with the boss coming up

at 12. We got the s&p, we got norges bank as

well coming out throughout the day. That means there's going to be a lot of

volatility in the bond market in the space as well.

But let's kick it off our coverage at least with what to expect from the BOE.

We are UK correspondent Lizzie Burden. Joining me now this morning, Lizzie, we

had an uptick in some of the inflationary numbers.

When you look at what the U.K. CPI comes, how much of that changes what

we expect from the body today? Well, the services number wasn't what

they wanted, but it was good news in terms of the core number and the

headline level of CPI yesterday. So on balance, maybe it doesn't change

the picture. Just encouraging news that inflation is

moving towards the below 2% target. So, Christine, with that in mind,

yesterday you saw traders raising their bets for rate cuts from the board, but

not by much. They still see two cut this year, fully

priced, maybe with a third in play. But even then, Citi economists say that

Andrew Bailey's already left it too late and they recommend positioning for cuts

as soon as May. Now, in terms of the decision today, if

you think it's going to be a snooze fest, the place I encourage you to look

at is the vote split. Maybe we get into the three way vote

split. Maybe we lose one of the hawks in the

form of Jonathan Haskel leaving Catherine Mann, the sole MPC member, to

be voting for a hike. This time she's just had another term on

the MPC confirmed. You are still, though, likely to see

Swati Dhingra voting to cut. And if you see an even more dovish

surprise. HSBC says that the pound is increasingly

in jeopardy because, remember, Sterling has been the best performing G10

currency against the dollar this year on that higher for longer narrative.

So if it's a dovish surprise, HSBC asks whether that can last.

All right. Bloomberg's UK correspondent Lizzie

Borden, walking us a little bit of a preview of what we can get from the

blog. She says it's not going to be a snooze

fest. I believe we're going to keep an eye on

it. Thank you so much for joining the

program. It's not the only central bank reporting

this morning. The Swiss National Bank is as well.

And this is where it feels like a lot of the market is really focused because net

net, they seem to be short. The Swiss see, when you just actually

look at this expectation of a cut from the S&P, I want to get a little bit more

context here. Bloomberg's Bastian Ben Roth joining us

this morning from Zurich. Bastian, a pleasure to have you on the

program. This is not the first time that the S&P

has in the past and could potentially front run the ECB or front run the Fed

when it comes to actually cutting rates. Walk us through the logic of doing that

right now. Well, the inflation is just lower than

it was expected and significantly lower. We saw 1.2% lately and they expect an

average of 1.8 for the first quarter. So this is definitely a strong case for

them to lower rates. Also, the franc has lost strength since

the beginning of the year. It reached an all time high at the in

the final days of 2014 three. Since then, it has lost strength, but

it's still there's still some residual strength in the currency.

And since the franc is a haven currency, the S&P is always has always, for a long

time been focused on like keeping the French in check and keeping it from

appreciating too much. So these two things could easily make a

good case for them to do a surprise cut. Talk to us then about.

So we're talking about the surprise cut. We talk about the inflation picture.

You mentioned the currency piece as well.

We're gonna dive into that a little bit later in the show.

This is also coming after the recently announced departure of Thomas Jordan.

Does that change what we hear from the S&P?

Quite honestly, Thomas Jordan is at least going to try that.

It doesn't because he's he's just like a really old school central banker.

You will focus on like the monetary policy.

This is the important thing for him. He will make sure that his succession

stays out of the discussion. So if you ask me, I don't think it will

have a big influence. But obviously Jordan will face

questions, particularly about who will succeed him, because due to common

practice, it was always the case for a very long time that the vice president

of the S&P succeeded the president. So that would be Martin Schlegel this

time. But he's not in the board for very long.

He hasn't been there for two years. So he's like still kind of like a little

bit out of experience. So, yeah, it's we will face interesting

discussions about who will discuss who will succeed them.

But again, he will focus on monetary policy.

And even if he faces questions, he's very likely to deflect all of them and

say my personal future and will not influence test and B, I will leave the

house in good hands and everything will be fine.

That will be his main line of reasoning. Bloomberg's bash And Ben Roth, our man

in Zurich. We thank you so much for joining the

program. It's a crucial decision, as Sebastian

just pointed out, especially when we talk about just kind of what this means

for the market. Again, we're going to dive into that in

just a few moments. I want to mention, though, that the S&P

president, Thomas Jordan, that Bastian was just speaking about, will be

speaking to Bloomberg after the policy decision, talking perhaps about his

departure, talking about the economic outlook in Switzerland and the broader

European economy as well. We're certainly looking forward to that

interview. Stay tuned for that.

In the meantime, a little bit more analysis on the economics here.

I'm joined now by Sree, Kojo Covington. I hope I pronounce that right, our

senior research economist over at Aberdeen Investments.

A pleasure to have you on the program for having me.

Let's start with the Swiss National Bank, then we'll go broader.

The fact that they could front run the ECB in terms of rate cutting, what kind

of precedent might that set for other central banks around the world?

I think to be honest, for most central banks, it will really be a case of

looking at their domestic underlying inflation pressures rather than looking

at relative to other other central banks.

So I think for the SNB, obviously it's slightly idiosyncratic issues there in

that they are looking at the strength of the currency and there are now, even

though the consensus is still for for the SNB to wait, there are a few banks

starting to look at a potential earlier cut potentially for today.

So that would be quite, quite unusual. But there obviously, there are some

idiosyncratic reasons there, and particularly the strength of the

currency, which is 7% higher than when they started.

So, yeah, well, that's where I feel the precedent might actually come through.

Right? The fact that we have to actually start

thinking about currency impacts, not just for the Swiss National Bank, but

isn't this the exact issue that the BOJ is having as well?

So and potentially even the ECB, when we've in the past talked about the euro

hitting one or euro dollar, for example, hitting 120.

What do we need to know about the currency piece of the equation?

How's it bleed into the economics? I think obviously the channel there

would be looking at the impact on on on inflation, but also the impact on

domestic economy in trade and so on. I think for the BOJ, obviously that was

quite an interesting dynamic there. We saw and you know, a historic moment

this week. We saw the, you know, the package of

ultra easing monetary policy settings unwound.

You know, broad range of measures were not just a move to move away from

negative interest rates, it was y.s. see it was ETF purchases, etc.

that was very broad. But what did the yen do?

It weakens. And I think that was quite interesting.

A lot of this news was already priced in the the changes from the BOJ were

pre-announced in essence in terms of the media leaks.

So this had already been priced in to some extent.

So there's a lot of speculation ahead of time.

However, it's a very small move. It's just ten basis points.

And, you know, we still have a world of a very accommodative policy at the back.

And really that doesn't make a meaningful change for the relative value

of the end to the USD. It's interesting that you mentioned that

currency in particular because after the BOJ, there was so much emphasis on what

the Federal Reserve would do. Yeah, let's dive into that a little bit

more because to me, as we were listening to this press conference and the initial

lines that came out of the actual statement itself from Chair Powell, my

initial read was that it was a hawkish tilt that they were saying that, look,

inflation is is taking higher a little bit.

We can wait for a little bit longer for cuts.

It kind of felt like he was managing the message.

When you look to the bond market, they dove right into the into the bond story.

The bid there was quite dovish connect those dots for me here.

I think they said a few things. My take was actually that he was a bit

more neutral because he did talk about, you know, potentially delaying or

potentially cutting off sooner. And really, again, it really depends on

the underlying wage pressures to services, inflation, what's happening

with wages. And there are some obviously there are

some bumps on the road that they've decided to look through for now.

There was a lot of talk about what happened to the core PC equals CPI in

January and February. Slightly bumpy path there, but those

monthly numbers and quarterly numbers tend to be quite volatile.

They can be distorted by seasonals. But if you look going further, we've

seen a lot of improvement obviously in the last 18 months in terms of the

inflation path. Some of that is good.

Disinflation, deflation, that's really base affects commodity price, base

effects that could be masking some issues in the

labour market. The labour market has, you know, has

been incredibly tight that trade off between unemployment, inflation hasn't

occurred, you know, it hasn't been so bad.

So ultimately it seems that going forward, if we look at measures such as

the employment cost Index, Atlanta Wage Tracker, these are all moving in the in

the right direction. They are starting to show signs of wage

pressures easing off. If you look at underlying components of

core inflation such as shelter, the leading indicators such as house

prices and rent. Private sector rents, they're all

looking at indicating a steady deceleration in shelter component.

So it does look like we could see capacity heading towards 2.3, 2.5% later

on this year, heading in the right direction.

Really. So I love the nitty gritty and when I

want to go into that. But you initially said that this was a

neutral I've read, but for the bond market, it was dovish.

It was dovish. Dovish now.

Well, I think when I was saying neutral in terms of the the signaling from Chair

Powell, and I think it's also interesting the signal from the dots.

If we look back there specifically, obviously we still have three cuts in

the dots. However, if you look at the detail, it

was quite a close call. Yeah.

So I think there you can see there's some disparity across the members, the

FOMC members. And I was going to ask, not exactly.

Nancy Burton, are you correspondent had talked about this as well.

They're kind of in division and buying like the fact that we're seeing division

in the Fed now. Does that make perhaps a little bit more

sensitivity to each additional Fed speaker that we guess just 30 seconds

here? Absolutely.

Absolutely. And I think each additional Fed speak

and also the data that's coming out, this is really going to drive whether

there's going to be you know, there's a debate about whether it's going to be

consensus, June, but there could be a debate whether it's delayed.

And I think that's what the bond market was picking up on.

Yeah. Rather than even though if Chair Powell

was trying to be neutral and trying to suggest we'll look through this

inflation print and we can still move a bit earlier, I think the overall balance

that the bond market was focusing on the dots and and I mean, I get it.

We're all obsessed about the dots and the dot plot.

We thank you so much. I could talk to you for hours.

A shriek Coach, you go in there. I'm going to say that right.

Senior research economist over Aberdeen Investments, we thank you so much for

joining us this morning. Plenty more ahead.

We talked about the BWE, the Fed, the S&P, even a little bit of an August

bank. We're going to dive into more of the

details next. Stick with us.

This is Bloomberg.

I think this is a signal and the market is taking it as that, that they will

tolerate slightly higher inflation for longer.

The threshold to cut rates is a little higher than many people thought.

But also, they're not talking about raising rates, even though they've had

this higher inflation. I think this is a Fed that really wants

that soft landing to continue. They also are not willing to, you know,

raise rates again. And I think that's important, too.

So we still think we're going to cut rates this year.

It's uncertain. And, you know, he said over and over

again, it depends on the data. It's really much closer to a two cut

scenario. But they didn't go with that at all, and

neither did the neither did the market narrative, but still committed to trying

to get inflation down to 2%. But I think what's what's driving Powell

is the fact that he thinks that monetary policy is restrictive.

Bloomberg guests reacting to the Fed's decision and comments from Chair Jerome

Powell around really that decision that we got yesterday, some would call it a

snooze fest, others would call it actually really changing the game when

we talk about the inflationary story. There's another central bank I really

want to zero in on, though, because, yes, there's a big yes, there's no

obvious bank. But the S&P, I think the markets are

really paying attention to, especially when it comes to positioning.

I want to bring you a couple of charts here and specifically talk about this

move that we talk about in the Swiss franc.

Look, you are seeing in terms of CFTC positioning, essentially leverage funds

how some of these net asset managers are actually positioned.

You are actually seeing some of those shorts really built out now.

They've been short for a while, but take a look at this as we get closer and

closer to that decision, that cost, that shorting is going up more and more.

That's the positioning of this market. And that's why this cut, this potential

surprise cut is so important because take a look at how showing up in the

options market. That's where I want to bring you my next

chart here. The cost to hedge against potentially

that kind of story for for the Fed, it's getting more and more expensive.

And this is why this is so important, because you actually haven't seen it get

this expensive in about a year or even two, depending on what other pair you're

looking at. And that's where you're looking at all

this volatility in the Swiss franc. It's this right side of the chart.

I really want to focus in on the spike in the line that you're seeing relative

to the euro, relative to the dollar. And that's where it really speaks to the

idea that the market is looking for what the Swiss franc actually does in terms

of carry in terms of being that safe haven currency.

Does the S&P now have to focus on that even more?

That's going to be the conversation. That's going to be the themes that we

explore in the next couple of hours a lot across Bloomberg TV 8:30 a.m.

UK Time is when the S&P decision comes as well.

We're going to have an exclusive interview with Thomas Jordan over at the

S&P. We're also going to be hearing from the

BlackRock vice chairman, Philipp Hildebrand, coming up at about 9 a.m.

UK time. A lot to digest.

Don't go anywhere. Guy Johnson and Anna Edwards joining me in

just a few moments. Up next, markets today.

This is Bloomberg.