Lets talk about the markets. We are up about 8 . Stocks falling back to 64, spot 24 is where we are trading right now. What is driving that . Luxuries. I would argue china is one of the biggest effects on what is happening in europe today. Maybe more so than what is happening as a result of the cpr cpi we saw. Lvmh is up by 3. 5 . China is going to allow tour groups once again to visit the u. K. For, france, italy, you name it. As a result, luxury stocks will benefit. That is a big pickup. You can see the benefit in the stock it the engineering giant, there are issues with the digital business, but china is another factor. China boosting lvmh, china hitting siemens. You can see the share price reaction and both of those stories. China as ever continues to be a large factor for your. Lvmh is up and siemens is down by five. That is what we experience. Manufacturing versus services. You go buy a bag. You dont spend money on manufacturing. S p is up by. 7 . We are fading the rally. We are up over one percentage point. The biggest drag on the s ps luxury retail, with a capri for 1. 5 . That is like michael kors. There was some turnaround problems. There are issues that have to be dealt with red also, this is an area of the consumer that seems to be the most wrapped right now. Not super high and luxury. Not discounts. The timing of all that is interesting. We will break that down. Prude is up by down by 1 rid you have strikes happening in lng, and australia. The also have opec saying that they are looking at a 2 million barrel deficit because of the saudi cuts. You have to wonder, if oil stays supported over 80, will that if fact the inflation picture in terms of sentiment and expectation . And the 30 auction coming later today. Pay attention to that. You are seeing a selling yield a touch, but i bring up the commodity not just because i like commodities, but if you strip it out for core, it is the inflation expectations. Does that are to change the narrative . You mentioned friday. It will be interesting. We will see how the consumer is feeling. That is a big readthrough for gas prices. We will be watching out very carefully. Lets talk about the inflation data. Lets talk about the numbers weve had. We were pointing at china, but inflation data cannot be ignored, organic russian mark lets talk about where we are. This is the disinflationary trend we have been watching. This is core cpi. Smallest lengthy gains in over i think we continue the twoyear. What you see is basically the green area. A big drop down. We go sideways encore. Is this a bottoming out process. Is this kind of what you would normally expect at this point in time. Are the gains just getting smaller and smaller when we deal with smaller margins or is this that financially things are bottoming out and we are seeing a pickup in inflation . The downward path, does that continue to remain a critical question . I dont know. Plenty of people believe there is a significant risk of inflation. And what does volatile disinflation look like. How do you invest for that. We spoke to a chief Market Strategist in the last hour. Preparing for the worst. Right now, the markets are pricing in the best possible scenario. Not to be known that it doesnt play out, but there will be kinks in the road. Hundred basis points around there, cuts next year, in my view, that is unlikely to happen. Inflation could be stickier around 4 . It could react seller toward just not come down from four to 2 . Question of the day. Is this summer of disinflation over . Well talk about the summer of full pork. Id like that more, but is the summer of disinflation finally over . Lets talk start out the question grid equity strategy at ubs joining us now. Claudia, the equity market boom has been driven by equity market optimism that inflation is going to come down. Its going to be managed. Its going to see a soft landing and as a result, the fed could be cutting and we are all going to be good. Does this number confirm that story . Are you, what is the number telling you about what equity markets have and havent price thus far . Good afternoon. Thank you for having me. I think the market is surprised by a lot of the soft landing scenarios, and the inflation as well. You know, we are definitely being position since march, and of march, and i think today, they thought this was confirmed that inflation is falling, but today, it is not telling us that inflation will be down to the fed targets, this is important because the fed, as soon as it is, it is to mission ability and working pretty well. It is counting down, i think. There is a risk of uptick in inflation going forward. But then, the employment market is very strong. We have employment market last week, and on and limit rate is down 3. 5 . I think the expectations of soft landing, coupled with the account, this is not a scenario which is possible. When i look, the market is priced in, and it is pricing a soft landing in rate cuts. It seems to me to be not possible in the coming six months. Does that imply that inflation reaccelerates, or does it stay here and it has to be that much more work to get to 2 . When we look at this super court inflation, it uses it strips out transportation and health care. Then, you have everything with compensation which is still rising, more than. 6 a month. I would say that as long as the market employment remain strong, there is a risk to these pressures coming from wages. It is still very high. This is not discounted by the market. Mary daly of the San Francisco fed spoke right now. She just said in last couple miss, the fed has more work to do on inflation. Can we talk maybe in more detail about what more work is . Is it continuing to raise rates . Is it that we have rates kind of restrictive inlets territory. We can leave them there but we need to leave them there for longer so the market needs to price out the cuts that are being price for next year . What more work is there to do on inflation meaning to you. I think it is a mix of two. Probably the next meeting, the end of september, it would be a nod. We can see the employment figures plus cpi to be published before the fed meeting. It could be that the fed skips the next meeting, and then against 25 basis points. This is still possible. It is on the table. If it is inflation, once want inflation, it is like today. And you have a market which is very strong. We may have another rate hike. From our point of view, it is higher for longer. For us, the nominal and the delivery rate remain high for a long parade of time. Real rates have spiked recently, probably with arithmetic, and other phenomenon, but the rate cut which is priced for next year will probably be too optimistic, and considering the market is pricing growth, no one is expecting a recession to be the best scarce base Case Scenario anymore. I would say, equity, part of equity is mispriced. I know that tech stocks have been performing well because there is a new ai story which is supporting longterm growth, but tactically, the performance evaluation of the stocks, we look at the stretch i really think the growth part of the market is probably a bit overdone, and a mild correction is possible in the coming weeks. How does europe stack up for an equity point of view against the United States right now . Europe is being disappointing of the economic side. Inflation is secure. A big difference in europe is much cheaper, so you trade some stocks have very low multiples. What we are seeing is that some stocks which are disappointing because the money is factored in, it is really week. We have this labor result. I think it is very bad news in the price factored into part of the year market. Rather than the u. S. One. The u. S. Is getting to manufacture, with more i. T. Driven, so this is also a bit different in the valuation, but i think people are skeptical about recovery in the euro zone which has been a week and probably too optimistic about this scenario for the coming month. That also begs the question, again, we talked about this last hour. What do you do with the bond market. Too long for safety. Youd buy dividend payers in the market for safety . Where do you go for extra safety, and i dont know if you can qualify bonds is safe an environment that is being laid out. Exactly. This is why we are on the height great part in the investment rate. There is a spread of the widening, and we i think what people should do is take heart on the fact that it is reaching the peak, at least the long and part of this core. This is quite interesting. It is positive. It is close to the hiking cycle. I think that is a nice way to be exposed to some courage, and then there is we are not saying equity, every part of equity is unattractive, there is part of equity in the larger parts which look attractive on this six to 12 months. Yes. I see a mages up strongly. Ziemanns down on the back of some china news. His europe just a china proxy playwright now . Not only is it that, the proxy of china, but of course, the biggest market cap in the euro zone is exposed to chinas reopening. It is funny to see how this Manufacturing Service gap is also reflective in the performance of some industrial companies. There is some consumer discretionary. I think i like this globally, and also in the euro zone. After some problems like to china, some are performing extreme we will. There is also some company which should be because of consumption as well, and the manufacturing is bottoming. We see weakness in this. On the consumer side, with china and recovery, in the second, i would say later probably more early in 2024. Thank you very much. Greatly appreciated. Interesting to hear you talk about that. Claudia of ubs talking on the industrial story. Lets talk about the industrials did under a bit of pressure today. An interesting week for the wind turbine sector. We had zemans a few days back. This seems to be down with stocks for two days by 6. 5 . By 4 people the stock is down. I think the market is focused on the cps story. There is a bigger kind of narrative l developing your. There are two. A supply chain issue, and if that will still be a problem, and whether the industry as a whole, and this is exemplified by energy, is moving too far too fast, and there are some issues that crop up when the turbines are actually run really hard, and i dont know where we are in the cycle to understand that yet. Will be interesting. Are we going to see less new technology a more robust existing technology . Lets try and answer that question. I say that the stock is down. We will talk with the earning story for just a moment. But lets talk about the ceo. He joins us on set to go to the sense of what is happening. Welcome. Great to see you at, as ever. Lets talk about i want to talk about the longterm picture and what is happening, Bigger Picture, but lets talk about earnings. Stocks are down 4 . The market seems to be focusing on the eps mess. Is the market getting the right message from investors . Is that what you are telling them . I dont as you see, as always, the market is always right. We are up with what we are doing and how we are doing it. We say, we are pacing our own patients. We note 2023 is the year where we basically are coming out of full quarters. There things from 20 and 21. Where we have incredible headwinds from various parts, right from wrong materials and to some extent from what we did in logistics, where we were putting in qs like anyone else. That will take some quarters to go. I came out of the Second Quarter with the witness plan. The team at as a team of 29,000 colleagues, it is really grateful for the commitment, done it. And it is frustrating for us. It is frustrating for colleagues to execute on the backlog that creates a negativity from the turbines. However, forget it. We need to get to the next quarter, over and done with for the year. We are aiming incredibly hard to end with a black number, and i think, when you come out. When will that be . You have a couple of quarters coming up that will be tough did you stuck with guidance for the full year. Are you confident on that . The longer you go, the more confident you must be, in theory. Theres a little debate, backwards and forwards. We didnt narrow our guidance because last year was a year where we had all sorts of winds coming our way. Therefore, they were stronger for us. Nope on intended. I also think here, in this year, we want to be closer at it when we come out of q3. Where we are quarter longer, we can also see if we can manage to get to the year end. That is really pacing. Here, somebody is probably making one or two steps. They want to have us out of this one or two steps earlier than we think we will be. So, as said, the tone of voice, pace is what is reflected today. Hello, this is alex and year. You think the industry has quality problems . I dont know if it is a broad statement. You say quality problems. We dont it we are very transparent about our quality. The way we work with our quality and also how we go through it. We are transparent in that we have done the same process for 10 years. I think we are getting use to the world around us has to get used to that when there is a component that needs changing or fixing, it is like having a coffee. You change the component, and that is what we do. It is of course, it happens in heights. It happens in part of the regular maintenance, and others, but of course, the industry raises questions for added supply chain, and we havent found reasons to do, but that is also how we work with it for 10 years. And if i go a couple of years back, if you had me on there, we would work through some of our components, and some of our messages. We have seen factors are coming down. We have seen our consumption of this provided warranty coming down. Halfyear versus halfyear, that is the right direction. Dare i say, it is one of those where we say we might be a couple of years ahead of that because we took some of that, and we experienced some of that. To be fair, analysts were saying that before you reported, you are around for longer, and you had some of the cycle. Or stead was saying earlier on their call that they were asked about a partnership with you guys for recycled turbines. They say they dont have a project, so would mean an upcoming partnership. Is this happening . Would there be a precommitment on that . And you give us insight on if this would be the case . Ask i can tell you what no one will be more pleased than us where we can demonstrate the recycled blaze, but i would leave that entirely up to the team. We are 20 mins away, and you could call me 24 7, and that door will open. We have the technology and we are rate to do that. It will be fantastic to come again and have the r d and technology. It is something we are quite proud of because in all fairness, for years, we didnt have the technology. We opened up and said we dont know. Come and help us. That was like an open university exercise where we had a number of partners, so the solution came from partnerships basically out of the open. We were pretty cool with that. Can i take a Bigger Picture view of what is happening . The british prime minister, richie sunak, he was talking about squeezing every last drop out of the sea. Hydrocarbons here. Donald trump is talking about a similar thing in the United States. The fight back from the hydrocarbon industry seems to be underway. How does that affect the progression that you see for your industry . Do you think there is a backlash coming against green energy . I think lets talk facts. From that point of view, if you want to open something new, i think, it is not about either or. It is both. Right now, no one is saying either or. Everyone is saying both. But we also have to appreciate that when we look at the current capacity, the consumer in europe, making active choices towards electrification, if we look at the cars, if we look at the trains. If you look at the bus, they are all going towards the electrified transport. And of course, that means that there is a higher demand for electricity. Whatever we do, we need to have more electricity, and co2, neutral or negative electricity from wind and solar. Of course, it would be a priority, and it is a priority. I think then the disappointment has hit a couple of politicians. As part of their guard now, they have seen that the prices have gone up rid not down. Ive got to leave you there. Great to see you. Thank you for coming to see us. The ceo of western. We will see a Virgin Galactic launch. Life pictures. Ed ludlow, what are we seeing . One of my favorite parts of this. A vessel of the system that Virgin Galactic has. Carrying the actual spacecraft, the vss community up to an altitude of about 50,000 feet. What will happen in about one minute and 40 seconds time is that the two parts of the system will separate. The vss unity, which you are looking at the interior of now, a moment ago, will ignite had it will accelerate. There will be an upward curve with the ambition of getting to an altitude of 50 miles above the earth. They call that space, but as we have debated on this program many times, people do not consider that space. The headline is that this is the first commercial tourism attempt by Virgin Galactic to take tourists into space for just a few minutes of weightlessness. Use. Huge moment. Two of them arent paying customers. They got a nonperp profit ticket, and who is there. Who are we seeing. I am nervous watching this. I cant imagine what they feel like. Anastasia, the mothers daughter from a caribbean, in case it will be the First Caribbean woman to go into space, but as you say, we are in access to this for a charity draw. It raised money, they were not paying customers. There is one paying customer which i will tell you about as we get into the mission, but why dont we listen in in a few seconds time to the countdown. This is the key moment, septal age separation from the fuselage and the spacecraft. Lets listen into 10 seconds. 3, 2, 1, release. Ignition. Good control. There is mach one. Pilots have started trimming for the turn toward space. Trim is now set. There is max q. Maximum pressure in the atmosphere. Those on board are experiencing about 3gs right now. They are traveling over 1000 miles an hour. Thats incredible. I can imagine they are having a great time. We are at mach 2. We are in the vertical, headed toward space. Is the part where they are seeing earth move away, and seeing space come into view. Seeing that they are going to space and just, it is incredible. Weve got about mach 2. 8, mach three, approximately britt rocket motor cut off. Amazing. The crowds here are just absolutely going wild. I can imagine what is happening in nt go with the cheering. Incredible. Go, john. Everyone has been cleared to unstrap and enjoy the zero g experience rid the pilots have unlocked the feather. That is preparation. You are looking at the interior of the unity. The four tourism crewmembers. The other i was talking about is john could win. A former libyan. He actually competed at the 1972 munich games. He was diagnosed with parkinsons in 2014. He is the paying member of this crew. You can see this picture freeze, complete normal. Think about the latency of getting images back down to earth. The individual at the front left of the screen is beth moses. She is the chief astronaut instructor a Virgin Galactic. You can see the altitude reader. Heading towards 280,000 feet above the earth. The apogee or the highest altitude point of the mission will be a range of 280,000 eight to 360,000 depending on where they get treated the point is they 50 miles above the earth. Look, you can see their hair. That is weakness weightlessness. They are wearing parishes. What are those things on their backs . Are those parachutes . Is that breathing equipment . What are we looking at . Thats a good question. And truth i dont know the answer to that. I last Virgin Galactic right now. There are abort systems obviously within the vessel, but i will check on whether those are paid shoots or not. On the breathing side, there is, as any normal aircraft, a pressurized cabin. Even though they are at that altitude, it is selfcontained from the oxygen low side of things. Remember, these are the kinds of milestones. 20 years after founding, with a 2007 goal of initial launch, this is the first time they are taking tourists into space. It is the seventh time that they have achieved the boundary of space by zone definition. The large last Mission Carried on the show was a commercial mission, but for the Italian Space agency for scientific research. This is a real terrorism, spacers moment. You might remember branson went up in 2021. Richard branson aversion fame. What they did in the last two years is put things on hold in terms of the cadence of launch of they can make up rates to this vehicle. Guys, i dont want to keep harping on, but what you are looking on there, the wings of the vessel are feathering, essentially. What the craft is doing is a complete somersault. Using the wings to reorient and expose the flat bottom of the craft. This is oldfashioned space science. Rocket science. The flat bottom allows for resistance that we reenter the atmosphere, you slow down. Absently. That is what the heat shield will be. In terms of the complexity for what is happening here, how does it compare with what spacex is doing . Is this kind of is this relatively straight or what . Will the risk how do they compare . They are completely different space systems. The Spacex Technology is a vertical takeoff rocket that is highly automated. On crude missions, with the National Space station or otherwise, there are designated crew leaders and pilots that have some Manual Control operation. The difference is that in this procedure, the vss unity is piloted by two pilots on this occasion. Both of which have been flying craft of all types since the 80s, the mid80s. Cj however has been doing eight spaceflights previously. What you are seeing is what i talked about. The asked those flat bottom. Slowing slowing it down with heat resistance. High heat resistant. It is manual. Manual by the pilots. s feels like a Space Shuttle. This is more akin to the Space Shuttle that we saw flying years ago. Big time. You are looking at the reentry with the wings, as i, or as the rotors, and a feathered configuration. But, we saw the big ignition of the solidstate engine separating, essentially back down to earth as a glide. Using air resistance. Any time, around 70,000 feet of altitude, they will deep feather area they will go from pointing upwards to a more horizontal position and that will allow for a glide. It needs left. The wings provide they become wings again for the aircraft. Exactly. In terms of how how reasonable is the aircraft, the spacecraft that we are looking at . This is the question. They go to the cadence of how often they can lanse, which goes to one day. You have talked about this. It is laughable now. They make no money on this. Right . This is reusability. It is completely call or cord to the profit. They are designing the delta version of this plane. It will have a different Material Composition base. They call the delta class. Those that generations of ships are not supposed to go to operation until 2026. It will be interesting. They launched in the last week of june on an Italian Mission. We are now in the first or second week of august. When will we see the next mission . We want to ascend to the cadence, and to answer your question, the restriction is guy how scalable is the launch vehicle and the spacecraft . Can you use the launch vehicle for multiple launches . I am wondering how the different components fit together. Ed it is a dual fuselage airplane. It goes to an altitude of 50,000 feet. Refueling and maintenance is the usual thing. As any company that was burning through money faces, they have a limited pile of cash. They want to scale up and grow the fleet. That is the ambition, growing the vss unity. The focus is doing that with the next generation designer vehicle that will not go into production until the end of this year and will not go into operation until 2026. Guy ed, stay with us. We will continue to watch the glide back in. If you were watching Financial Markets from space, this is what europe would look like right now. We are coming into the european close. You have a space view of what is happening. The dax is a little more muted, we are up. 9 . Ftse 100 underperforming today. We will dig into the details. Lets get closer to earth. Give you an idea of how this has worked out the day. The big number has been uscpi but china has had big impacts on europe. The volatility this afternoon around the cpi number. It has impacted what is happening in europe. We are waiting, waiting. We are only up by. 8 . It is not a big move we are seeing. The u. S. Cpi number has had a big impact but so has china in europe. Lvmh rising by 3. 5 . We will see tour groups allowed to visit. That is good for lvmh and the rest of the european luxury sector. Siemens is down. A digital impact. The business is not performing. There is a china affect, a slow down effect from china. As i mentioned moments ago with vestas, vestas down 4 , seems to be a bit of a reaction from the eps number. The country is looking forward, we just heard from henrik andersen. It is friday, the landing we are looking for in europe. There is a whole range of numbers coming through. The german sovereign rating. Frankfurt airport numbers. French and spanish final cpi. The big number tomorrow to watch out for will be what is happening with the gdp number. We will be talking a great deal about that tomorrow. It will be interesting to see what kind of a slowdown we are seeing. Today, cpi. Tomorrow, gdp. Alix the first commercial flight to space. One paying customer, two getting a ticket from a nonprofit, a motherdaughter team. Youre looking at the moment they touch back down to earth. Ed ludlow is still with us. Ed interesting that Virgin Galactic shares are up 2. 5 right now. After the Italian Mission in june, shares fell. A long way from making any money, this company. So many years away. Call it what you want. It is a big moment. This is the first commercial Tourism Mission because i am sure the italians paid for their ride in june. That was based on scientific experiments for a public or government agency. This is one of them, a feepaying tourist. The original ticket price was 250,000. When they reintroduce them, 400,000. Imagine that feeling. Just getting back from space. Alix that would be amazing. How was the spaceflight . It was incredible to watch the first tourism flight. A long way from turning profitable. Lets get back to guy, talking about looking ahead to tomorrow. You are looking at a housing crisis potentially, higher Interest Rates, falling prices, rents are still quite high. There is a lot that will go into this. What is your call for tomorrow . Liz we had a small fall in gdp in may. We will get a tiny bounce back from that and that will give you roughly zero gdp growth for q2. It is an economy that is surviving, not thriving. In earlier times, we thought we would be falling and be in recession now. It depends if you look at it as class halffull or halfempty. A lot of people would take zero growth or a small increase compared to the fall we were initially expecting. Guy where do you think we are going, liz, that is the real question . It seems like the pain is growing. Mortgage pain is growing significantly. We are seeing some Mortgage Companies cutting the rates they are offering. It seems as if inflation is coming down relatively slowly. What trajectory is the u. K. On . Liz we are not expecting the u. K. Economy to shoot the lights out given all the issues you mentioned. The pain is mounting for those people refixing their mortgages or on variable rates. We have to remember they are still only a fraction of overall household. 2. 4 million households are prefixing by the end of 2024. There are 28 million households overall in the u. K. As we move into that remainder of the year, real wage growth should turn positive. We should have higher wage growth than inflation. We are expecting inflation to come down to 6. 6 in july while wage growth will be 7 . It is still high. Yes, the mortgage pain is in place. The rental situation really worries me and there was more news on that in todays survey. That is really bad. But there are people who benefit from higher Interest Rates, finally getting interest on their savings. We think that u. K. Economy will model through. Alix this that mean at some point a recession . If so, at what point . Liz economists are notoriously bad at forecasting recessions. There are certainly risks that one does materialize, either globally or in the u. K. It is a surviving not thriving. One step forward, one step back, inching higher, inching back toward where we were prepandemic but not actually falling. It is not too ambitious to say, can we get back to prepandemic levels and a little beyond geico that is not being a great optimist. We do not think we will fall back from here. Guy liz, how easy would it be to generate some meaningful productivity improvement for the u. K. Economy . The election season has started. We will be building up to it. It will be a subject of discussion. As you look at that u. K. Economy, are there levers that can be pulled, marginally improving relations with the e. U. . Maybe changing the tax regime . Are the relatively straightforward things that politicians can do that would have a meaningful impact at this stage or is it hard to fix the economy . Liz it is hard onto productivity front. The u. K. Has been looking for productivity since the Global Financial crisis. The obvious answer where productivity can come from is technology and ai. The flipside of that is if ai is doing all the work then there is a rise in unemployment. That is increased productivity but not anything that will win an election for anyone. The other way you could come is through Business Investment but that takes time. With Interest Rates over 5 the conditions are increasing Business Investment are a bit less conducive than they were. If firms find it hard to hire, if the cost of labor has gone up and it has become more scarce, maybe that is the time to invest in technology that can take place of labor but be careful what you wish for because that could mean unemployment. Alix what we have seen in countries like the u. S. Is fiscal spend and that had a surprising effect in supporting the economy. I feel like the u. K. Is doing the absolute opposite of that as we go into the election. Do we get a loosening of that and does that support growth . Liz i am sure the government would like to offer us some sweeteners. Rishi sunak was talking about cutting income tax. Both parties have been burned by the experience of the liz truss government last autumn and the risk is asking the government to fund more borrowing when you are spending more on debt servicing, pensions, Civil Service salaries, more on everything because of inflation. Rishi sunak will hope that by next march when he does the next budget, inflation is lower and he is in a better position to offer something. That experience last autumn and the impact of inflation and Interest Rates means both parties are being quite careful not to overpromise. Guy was it only last autumn . Liz, thank you very much, indeed. Liz martins, hsbc senior economist. European markets are done for the day. Ftse 100, china will allow group tours from china to europe. That will increase significantly the spend on the luxury sector. Kate going luxury shopping. More on the megadeal that is coming. We will talk about it next. This is bloomberg. 76 of 23andme Health Customers surveyed reported taking healthier actions. Because they know health isnt just a future state. Health happens now. Start your dnapowered Health Journey today with personalized insights from 23andme. Guy this is bloomberg markets. You are looking at live pictures of the principal room. Looking forward to diane joining us. This is bloomberg. The Chinese Markets did not deliver as we expected. The last guidance expected china to recover in the second half of the calendar year. It has not happened. China is very down in the market. The private consumption did not pick up. Exports are down. This is what happened. Guy china has been a really big theme running through europe. That was the ceo speaking on bloomberg television. China is a factor. The luxury sector in europe goes up. The reason for that, the country lifting a ban on group tours. There is a deal getting done in the u. S. With luxury staying in the headlines. Joining us now, andrea of bloomberg opinion. Lets dig into it. Lets start with this deal. Does it make sense . Is it a sign of things to come . Andrea what has happened is the strong in luxury led by lvmh, the strong have gotten stronger. It is a scale game. You need scale. You have to invest in the bigger groups with more resources. The best stores, the most highprofile designers. That is needed to keep your brands at the forefront of consumers minds. It looks like luxury is normalizing. Alix i do not think of coach and michael kors or kate spade as luxury. To me, tapestry and capri merger is not a european luxury company. Am i wrong in that . Andrea no, they are premium, super premium, they are aspirational luxury. That is a part of the market that has started to turn down. They have more clout to invest, for sachi and jimmy to, which capri owns, are probably more luxury. For sachi is a proper luxury brand. It is getting coach into that higher luxury area. I think tapestry has done a good job with coach. It is back to going viral. People want them. The problem child at capri is michael kors. If it can improve michael kors, there is a good chance it will be a success. Guy are the chinese coming . Andrea that is the question. They can come, but given what has happened in china, the economy, perhaps the rebound has not been as spectacular as expected. When they come, they spend more but it will cost them more to get here, flights and hotels in europe are expensive. That is happening at a time when they are under pressure at home. Alix if they go, andrea, will they spend . If we track the flights, can we put that in dollars . Andrea [laughter] what i would say is before the pandemic, when they came, they tended to spend more than they did at home. In those three years, they have gotten more used to spending at home. All the brands have improved service to their vip customers. The combination of the vips being served well at home, the middle class being under pressure makes me think that while they can come, they might not come to the extent that is expected. Alix andrea, thank you much. Andrea felsted of bloomberg opinion. I am still on my budget. Coming up, an unbelievable story in the last 24 hours. Hawaii erupting in flames. Deadly fire erupting in maui. It is not just in hawaii. It is also in europe. We will talk about this, next. This is bloomberg. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com guy i want to take you back to the story that alix was mentioning. 36 people have been killed, thousands forced to evacuate with wildfires sweeping across hawaii. People have had to jump into the ocean to escape this. The pictures are horrendous. Firefighters continue to battle blazes in portugal. We continue to see fires across the whole of europe. We are joined by a reporter out of berlin. When we get to the end of the summer, will we look back at this being a Pivotal Moment . Will we look back on a Northern Hemisphere that has changed and changed significantly this summer . They just pronounced july the hottest month ever on earth in recent history. What is interesting to look at is you look at the people who need to price this kind of risk. We looked at diving into the insurance cap, looking at natural disasters. How much is insured . 61 globally of damage done by natural disasters is uninsured. In asiapacific, it is aligned with the global average. In the u. S. , only 24 of damage is uninsured. In europe, you would expect it to be similar but in europe, 90 of the damage was uninsured, almost all of it. We asked how you close the gap and what he said was interesting and scary. It will be very challenging to do without government help because it will be too expensive. Alix i wonder for insurers, you are insured for the wrong thing. New york is not used to a hurricane. Are there every is in europe that are not used to fires, but used to different issues . Is that part of the problem . Oliver that will be part of the problem. When you speak to these insurers, there is a simple test. There are three components i go into pricing the policies. 1, the risk. 2, what have you done to mitigate the potential outcome. 3, the value of the underlying asset. With all of this inflation and you think about how much more it costs to rebuild the stuff and how much more your house is worth, that is one of the biggest drivers to these policies, it is more expensive. You might not be cash rich but if you own a house, these premiums will go up. Guy our people not ensuring because they think it is not a risk or it costs too much. Climate change is so real the risk of this happening is too great . Oliver i do not think we are there yet but would you speak to munich ray, are you concerned about parts of the world becoming uninsurable . They said we are an Insurance Company so we will come up with a policy but there is concern that this stuff could become totally out of reach for people. Their role might be mitigating, to make sure some of the things are in place to hit the second part of the equation, to reduce the likelihood of it being catastrophic. Alix what about the reinsurers . Oliver i have been looking at a lot of catastrophe bonds. I cannot say i am for it but you look at the total returns, it is clear to see it has been going straight up you can see when a hurricane hits. It is a vertical line down. This will be a very active discussion about how to mitigate risk and diversify it across the globe. Very famously, there were people pulling 12 yield on pandemic bonds, aaa rated and then guess what happens . The pandemic kids and you go to zero. Alix staggering pictures oliver the pandemic hits and you go to zero. Alix there is more to come today. Earnings after the bell. A book publisher, harpercollins. 30 year bonds coming up at 1 00 new york time. It has seemed to go pretty well for the other takedowns. You wonder if the data comes out. I am not here tomorrow. Bye. Good luck. Have a nice day. Let me know what happens. Guy i did not know that. That is a bit of a shock. Enjoy yourself. I am not sure what you are up to but i am sure it will be fantastic. That changes my friday. Alix it does. Guy lets hope for a quiet one. I will be back tomorrow, alix, not so much. This is bloomberg. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates or filing returns. Avalarahhh ahhh when people come, they say theyve tried lots of diets, nothings worked avalarahhh or theyve lost the same 10, 20, 50 pounds over and over again. They need a real solution. Ive always fought with 510 pounds all the time. Eating all these Different Things and nothings ever working. Ive done the diets, all the diets. Before golo, i was barely eating but the weight wasnt going anywhere. The secret to losing weight and keeping it off is managing insulin and glucose. Golo takes a systematic approach to eating that focuses on optimizing insulin levels. We tackle the cause of weight gain, not just the symptom. When you have good metabolic health, weight loss is easy. I always thought it would be so difficult to lose weight, but with golo, it wasnt. The weight just fell off. I have people come up to me all the time and ask me, does it really work . And all i have to say is, here i am. It works. My advice for everyone is to go with golo. It will release your fat and it will release you. This is Bloomberg Technology with Caroline Hyde and ed ludlow. Caroline ed im ed ludlow in San Francisco. Caroline is off. It is these Capital Spending and production costs lowerthanexpected. We will bring you all of the details