Welcome to daybreak europe. Lets get to the top stories that set your agenda. Hamas released two elderly women who were among hostages taken in the october 7 attack ahead of a highprofile visit to the u. S. At the same time china says israel has a right to selfdefense but should protect civilians. French president Emmanuel Macron has officially arrived in israel. Now to the markets, the most prominent bond bearers bill ackman and bill gross say the fixed income rout has gone too far. The market paring the move from the overnight session in the u. S. Bank earnings kicking off today, unicredit and barclays reporting , plus top interviews from riyadhs future Investment Initiative. We speak exclusively to ceos of state street and acwa power. Breaking earnings news. I want to start with unicredit. Net Interest Income coming in at 3. 6 billion, the estimate was 3. 4 6 billion, so a big jump when you talk about revenue on the top line. They are raising full year revenue and net Interest Income outlook. The markets are closed so you cannot see the immediate market reaction. When you look at the headlines they are looking good on the surface. Net income beating quite a bit, significantly lower than what the market was expecting. We are looking at 135 million. The estimate was 301 million so less than half on the Loan Loss Provisions. Thats going to be a big piece of the equation in terms of how much support they might need if you see a market downturn. Is this a vote of confidence we are getting out of Italys Unicredit . Something we are going to be exploring. At the same time net Interest Income significantly higher. I want to get you some other earnings. Novartis is top of our radar. Their Third Quarter net sales coming in at 11. 8 billion. The estimate was for 11. 3 billion. Seeing another big jump for the Swiss Pharmaceutical Company as well. Pps catching my eye. 1. 74 for Third Quarter cpi, they are seeing amid two high doubledigit team rise in operating profit, a big positive. For an industry that is going to see a lot of pressure. That is something we are going to be discussing with our interview with the novartis ceo coming up this morning. That happening at 10 30 a. M. U. K. Time. You do not want to miss that interview. Lets get a quick check on the broader markets as well. A really interesting dynamic playing out in terms of futures trading. Euro stoxx 50 futures unchanged. The ftse 100 futures on the back foot, defensive bid really forming in s p futures higher by 0. 3 . I say defensive because what is important at this time of day is you have pregeopolitical conflict seen. Investors actively dive into American Assets. You are seeing that now. As we get more development out of the middle east and whats going on with the israelHamas Conflict the risk of escalation is high but defensive bid into American Assets gets high when you have a pair back in the bond picture. Thats where we want to go next. Cross asset story. Intraday in the u. S. 16 basis point intraday move you saw for the 10 year yield, that is scary for a lot of people, redline in the sand is the 5 level for the bond market. That is something we are going to be monitoring closely. For now, 10 year yield, 484, virtually unchanged but it is early. The two year yield selling off. Steepening at play. Brent crude a 90 handle. If youre worried about geopolitical risk brent crude is where it plays out. It has every thing to do with what iranian output might look like or not look like. Bitcoin as well, something i want to bring to your attention, higher by 9. 3 . Speculation that perhaps they get more etf approval for a bitcoin backed offering is getting a bit more traction. What that means is that the passive investments, active investments, can be more easily accessible for the cryptocurrency market and thats going to create a massive bid into bitcoin. You see investors getting ahead of the trading just shy of the 35,000 level. I want to get to our top story. Hamas has released two elderly women who were among the hostages taken when it attacked israel on october 7. Lets bring in israel oliver crook live in tel aviv. Give us the update from the ground. Oliver two women released from the Division Line between israel and gaza. Their husbands are still being held by hamas. This was brokered by the qataris but also the egyptians who are running as intermediaries. We understand biden and netanyahu spoke about the hostages. They have been speaking about aid. The u. S. Has been active in the conversation about aid. We heard yesterday that 35 trucks cross into southern gaza, still a fraction of the 100 u. N. Say are going to be required to make a meaningful dent in a huge humanitarian crisis. But 35 is the largest that any number have crossed in one day. The question is how does this play on the ground offensive that has been widely anticipated whose shape seems to be evolving as time goes on. Theres also the question of deterrence. We heard from the pentagon overnight saying they are going to deploy more u. S. Military assets through the region, in part to deter hezbollah and the emboldening of iran potentially but the u. S. Has said they are fearing more strikes on their own installations across the region. Kriti so what do we expect on the diplomatic front . We had this massive effort from the u. S. You are seeing the french president there as well. Where does diplomacy play a role if any at the moment . Oliver Emmanuel Macron just landed. We saw him arriving in tel aviv. Hes going to be speaking with netanyahu. We heard from his office an idea of the message is going to carry with him. The first is support of israel, the second is basically castigating and standing against terrorism, but also talking about longerterm peace solutions. He will mention a two state solution. According to his office also the halting of the colonization of the west bank. These are priorities for the french president. We hope to hear from him later today but we also heard an exchange from the Chinese Foreign minister and his counterpart in israel and palestine. That is the highest Level Exchange we are aware of the has occurred between the chinese and the israelis since this conflict began. We understand he was saying that yes, every nation has a right to defend itself, however the priority needs to be defending civilian life. We know in a call the Chinese Foreign minister had with the saudis, he said israels response has gone beyond selfdefense and it needs to stop its collective punishment of the people of gaza. That is a readout from a conversation they had previously. Xi jinping has called for cease fire. The complex context of this is the u. S. Has been a full backer of israel since the beginning and china and the u. S. Have their own issues that are rippling through the contest of geopolitics globally. Kriti lets talk about the longerterm economic consequences. We are getting news out of israel, the shekel as well as under high watch. What are the longerterm consequences . Oliver the economic question has taken a back burner to the primary military confrontation that is going on right now. Theres going to be huge economic consequences to everything that has happened. We had a bank of israel Rate Decision yesterday that left rates unchanged. They did give an assessment of growth and they have reduced the Growth Outlook for this year and for next year. It was going to be 3 this year. Now they say its going to be closer to 2. 3 percent admixture closer to 2. 8 . That is a big if if the conflict stays contained which is by no means a guarantee. The shekel has sold off more than 5 in the last few days, the last few weeks. The central bank is willing to defend it to the tune of hundreds of billions of dollars. The benchmark index itself has been down 15 and closer to 17 if you take that into dollar terms. What this does not take into account as the gazan side of this where the economic consequences are incalculable. Kriti a tragic humanitarian situation that does have global repercussions. Oliver crook reporting for us in tel aviv. I want to bring us back some headlines we got from earlier in the show. The idea that unicredit did come out with an earnings story. We are getting an update that they will not pay italys windfall tax. They are opting out. They are opting to contribute the 1. 1 billion euros for the italian 2024 tax toward its nondistributed will reserve. We will see how that is interpreted by the markets later on as we are watching the bank follow it as well, the big part of that is the bond volatility. We are talking about the readthrough from the windfall tax but it also depends how many Loan Loss Provisions you have. Unicredit has pulled back significantly. Less than half of what is estimated. Positive results when it comes to unicredit. Have they factored in the bond volatility . That is where we want to go next. The overnight session when we looked at treasury yield, a 16 basis point intraday move in the 10 year yield, freaking a lot of investors out, away from the 5 level. It feels like for a lot of the major investors, bill ackman, bill gross, 5 on the 10 year was the line in the sand. Is it still the peak in rates in the face of geopolitical risk . Ven it is hard to call a peak on 10year treasury yield simply because of the volatility we are seeing and what investors are pricing in. If you look at the real risk premiums which has underpinned the move in treasuries, real risk premiums have moved, have seen a three standard deviation move. Investors are saying look, Interest Rates are going to be choppy. We dont know where they are going to settle down. They are going to be choppy. If that is going to be the narrative Going Forward we cannot say any measure of conviction that 5 is going to be a line in the sand. If you look at inflation in the u. S. It is 3. 7 . You can easily tack on five Percentage Points and that will leave you with a very high treasury yield. So 5 looks about where it should be at the moment. Kriti a lot of people i think about a year ago, im old enough to remember simply saying that terminal rate at 5 made absolutely no sense. Here we are looking at a 10 year yield hitting that very level. We thank you for your analysis this morning. When you see that volatility it does have repercussions. We are already seeing fallout in asian markets alive and trading. Avril hong has the report. How is the market looking where you are . Avril volatility is playing out in the asiapacific stock benchmark. The region benchmark has been in and out of positive territory for much of the session as traders try to glean clues from the movements in the u. S. Treasury market. We are seeing relief in the emfx space, the won and the rupee a gaining ground as we saw the slide in the dollar. The stock benchmark in china is showing more resilience than some of these regional peers on the back of the Sovereign Wealth Fund disclosing buying of these Exchange Traded funds. This is an expansion of a move from earlier this month where these Chinese State banks lets also look at what we are seeing in terms of the jgbs on the back of well, actually, lets look at the hong kong stock markets as well as hong kong has come back online. We are seeing the hang seng down 0. 4 . The csi 300 is the outperformer. Something to watch on the back of those moves for the stock market. Lets look quickly at what we see on the jgbs. We did see the move in the 10 year yield on the back of the the oj bond buying operation the boj bond buying operation. There is a cap to what we are seeing but all eyes will be on what we see out of the boj. Kriti something we are watching closely. What kind of game changer today set with the Federal Reserve and the boe on their toes . We appreciate your report out of singapore. Coming up, top interviews throughout the day from the future Investment Initiative in riyadh. Our conversation with state street ceo renault hanley next. This is bloomberg. Kriti the future invest conference future Investment Initiative conference currently underway in riyadh. Yousef is live with an interview. Yousef the halls are filling up quick with top executives. We have a chance to speak to one of the Worlds Largest asset managers. Now joined by ron oh hanley, ceo and chairman at state street. At the beginning of the year we were catching up and you were saying geopolitics is going to be the biggest risk of 2023. Here we are in october, you have seen the fallout from the gazaisrael war. Run me through your impressions in terms of how this progresses from this point onwards. Ron most would agree with the point that geopolitics is weighing on investment markets now as much as anything. The israelgaza war is only the latest in that. We are seeing a humanitarian crisis unfolding of extraordinary magnitude. Investors and the world at large are looking at this and taking a pause and saying, we need to see how this is going to play out. It is weighing on markets but more importantly it is weighing on world politics. How people and how nations are squaring off against each other. This is something we all need to watch for and i think demands a quick resolution, first for the humanitarian reasons but also to get on with some of the negotiations and the peace negotiations that were well underway. Yousef you have visited riyadh many times over the years. Run us through the importance of the kingdom in state streets global portfolio. Ron saudi is important for us because it is important for our clients. If you think about what is going on in terms of investment it is not just saudi investment in the rest of the world. It is saudi investment in saudi. What has happened over the last 10 years is it is not just about saudi investing in saudi. It is attracting outside investment to saudi. That investment is coming with technology. You are seeing extraordinary renaissance at a pace that i do not think one can point to any other time in history. It is an exciting time for our clients. Our clients are investors. They want to be where opportunities are. It is important for us to be here. Yousef how much is that going to grow . Ron there is much room to grow. The saudi equity markets are still relatively small compared to the size of the economy. There is much more room for growth. Yousef the big topic everywhere in the world is the rise in treasury yields in the United States. If you could advise the fed on what to do with Interest Rates what would you tell them given what you have seen . Ron the fed has a tough job and they are doing what they need to do. Which has been really focused on the data. Not calling the win too early but pausing like they have now and saying we are going to see whats going on but we are going to remain resolute. That is what they are trying to communicate. I believe what they are trying to communicate is if we are going to make a mistake it is going to be we will go too far as opposed to falling short. I think that is the way to do it. Yousef what do you think has been the biggest driver of rising treasury yields . A lot of variables. What is the top one . Has it quite a bit to do with questions around u. S. Debt as well that is being factored in properly . Ron i think the questions about inflation are the number one driver of it. Certainly u. S. Debt is not getting better. The cost of that debt is rising. That is weighing on markets, weighing on investors. The combination i think has led to what we are seeing in treasury yields. Yousef get into duration more meaningfully . Ron our chief Investment Officer would say yes, that this is the time to start thinking about adding some duration ron i dont know that anybody can call, but you look at a 10 year yield just touching a little bit over five yesterday, probably it is. Yousef you announced earnings a few days ago. You also announced the repositioning of your investment portfolio. Could you expand on what that repositioning entails . Ron it is fairly simple. You are selling off some of your lower yielding investments. And then taking those proceeds and reinvesting at current rates. It is saying we want to take advantage of the current rates. Rather than let these investments ride to maturity, lets sell them off now and invest. Yousef bank stocks in the u. S. Have been punished since the crisis earlier this year. Are you fully reassured when it comes to the health of the Balance Sheets of the biggest banks in the United States . Ron im confident in the Banking System in general. There is pressure on banks as you see the cost of funding going up and the return on assets going down. But in terms of the soundness of the Banking System, it is strong. A lot of work has been done since 2008. Yousef what about regional banks . Ron i would say they are in a challenging environment. I would not describe it as a crisis. They have to work through a combination of the commercial real estate, the cost of funding, and the fact that regulations are going to probably get leveled up. Yousef state street is one of the few Financial Institutions looking to enter crypto custody. You are working on a Digital Asset custody. Bitcoin is to the upside. Suddenly people are looking at story a lot more. Ron the narrow point of custody in cryptocurrency is right now regulators do not permit us to do that. We are working with regulators to find a way to do that in a way that makes sense actually for the system. In terms of Digital Assets we are very active. The tokenization of assets, we think this is the future. It will end up being able to democratize even more alternatives investing and we are very excited about that. Ron great to chat. Yousef great to chat. Many more guests coming throughout the day. Kriti state streets ceo renault hanley ron ohanley. Thank you for bringing us that interview. Stick with us. This is bloomberg. Kriti the eu considering a threetiered approach to regulating generative artificial intelligence. They would establish rules for Different Foundation models, systems that can be adapted to a range of tasks and require external testing for technology. It would make the eu the First Western government to place mandatory rules on ai. North volt is said to be looking to list shares in stockholm. The company has invited Investment Banks to pitch formally for rules on the deal that could number 20 billion. Northvolt place to unveil 5 billion of debt funding in the coming weeks. And via is using arm holding for chips that would challenge intel. That would rape up competition between the chipmakers. Nvidia whose chips already dominate the market is attempting to make central processing units for pcs. Cpus would run Microsoft Windows operating system and go on sale as soon as 2025. Coming up, the saudibased water and Power Services company acwa power is expanding into china. We will talk to their ceo next. This is when people come, they say theyve tried lots of diets, nothings worked 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. Good morning welcome back to daybreak europe, does get to the top stories that set your agenda. Hamas has released two elderly women who were among the hostages taken the october 7 attack head of a highprofile visit to the United States. In the meantime china says israel has a right to selfdefense but should be protecting civilians. Meanwhile in the last hour Emmanuel Macron has arrived in israel. The markets most prominent bond bearers say the fixed income wrote has gone too far. Markets pairing their move from the overnight session in the United States. Right here in Europe Bank Earnings are kicking off today, unicredit reporting betterthanexpected numbers and barclays coming up next. Plus rehabs future Investment Initiative, we spoke speak exclusively to the ceo. A quick check on these markets. There is a lot of geopolitics across currents, i want to go right into futures because you are seeing a regional divergence s p futures higher and nasdaq 100 outperforming. A bid going into u. S. Assets right now. I think that is interesting given the geopolitical turmoil. On the surface where it does look like perhaps the demand for safety in traditional havens are easing people are buying american and that is crucial given the complete turnaround given what you saw pregeopolitical conflict. Euro stocks futures not seeing that same outperformance unchanged, ftse 100 down by 1 10 of 1 but really all eyes on the bond market. This cross asset story with the bond market is really interesting, the two year yield at about 506 higher by one basis point earlier in the session but it is that 16 basis point move in the 10 year yield in yesterdays session that has everyone worried. The idea of how much more bond volatility can bond traders and the rest of the markets take. What are the ripple effects of that especially in the face of pricing and whether or not the fed is going to hike in the face of geopolitical risks. That is where brent crude is the game changer a 90 handle on the commodity higher by about 4 10 of 1 . Do you see this regional conflicts get bigger, increased oil prices and maybe scare some of the Monetary Policy makers more. That seems to be the worst case scenario. A quick check on bitcoin and support for etf adoption of a cryptocurrency type product is more widely escalated although still pending some of the Regulatory Approvals in the u. S. Nevertheless giving a bid to the bitcoin story higher by 9. 4 . I want to come back to our top story of the morning. Our update out of israel. Hamas has released two elderly women among the hostages that were taken on october 2. Lets bring in all of her crook live on the scene in tel aviv. What is the latest on the ground . Oliver as you mentioned that development of two additional hostages that were taken about two kilometers from the border line with gaza released overnight. Another significant development. Their husbands who are in their 80s are still being held by hamas. We understand this was negotiated by the qataris and the egyptians that played as intermediary in these negotiations. This was discussed by joe biden and netanyahu after it happened. The issue of aid also came up. We understand that 35 trucks crossed into gaza yesterday. The greatest number that have crossed on a single day since the conflict began and it falls quite a distance short of the 100 trucks a date that the u. N. Says are required to make a meaningful difference in the degenerating humanitarian situation in gaza. They also discussed u. S. Military presence in the region. We understand from the pentagon overnight that there is going to be more deployment of u. S. Military assets within the region to boost deterrence and on the diplomatic front today we have Emmanuel Macron, we just saw him landing in tel aviv. He will be speaking to benjamin netanyahu. His priority is going to be reaffirming his support for israel, speak out against terrorism but also talk about longerterm solutions. A two state solution. He will also talk about the ceasing of the colonization of the west bank says his office. Certainly a lot to digest. You are seeing a slew of Global Leaders join the solidarity over in tel aviv worried all of her crook live reporting from the scene, thank you for your reports. And we get some other global stories, the turkish president erdogan has asked his countrys parliament to ratify swedens application to join nato. The move after almost a year and a half of delays and frankly a controversial one. Now realigns the security dynamic in europe following russias invasion of ukraine. As we talk about russias invasion of ukraine it had a massive effect on the oil markets. The iea is predicting Global Demand for oil will peak this decade driven by the popularity of electric cars and chinas cooling economy. The agency says consumption will then plateau with volumes dropping from 102 Million Barrels a day in the late 20 20s to about 97 Million Barrels by 2050. The iea has also turned its outlook for global gas demand with a push toward renewables. We will speak to iea executive director over at 11 30 london time. This interview you do not want to miss. Meanwhile saudibased water and Power Services specialist a cwa power has signed a memorandums with Chinese Companies in the past week as it continues its push into countries looking to boost exposure to renewables. Yousef is standing by with the companys cio in riyadh. Yousef lets get straight into this announcement in terms of the push more into china. We are joined by the groups ceo and i thank you for making the time. So going into china despite all of the uncertainty, the trade tensions and hostility toward Foreign Investors in u. S. Companies in particular, run me through how you are making it work. Our relationship with china is very longstanding. We had an office there for the last 10 or 15 years. We have 40 people already there to source contract suppliers for our projects that we do around the world. We source about 30 billion in the past few years and chinese investors invested more than 10 billion in our project so far. So the relationship is really longstanding, very strong, very deep. I dont see any hostility. Quite the opposite. I see a government that is really welcoming us to invest and help the decarbonization process of china and i think the current discussions that are going about potential slowdown of the country in fact open a great opportunity for Companies Like us who can invest in infrastructure. That are good for the people, good for the environment that the Chinese Government wants to push. Yousef would it not make sense to team up with other local partners in china . Marco that is exactly the strategy we want to do, when we look at partners for us mostly state owned enterprises that we have worked with in the past. Chinese companies with local knowledge, local people. They of course are like a sister company. We are all part of the saudi environment. We are a little bit on different businesses of course but you know there could be areas that complement that we could certainly explore. Yousef saudi arabia would like to source quite a bit of its Power Generation from renewables. It half by 2030 is the target. That is going to require a lot of investment, can you quantify that for our global audience . Marco saudi arabia today is going through one of the most ambitious decarbonization plans in the world and we are privileged to be at the center of it because we are responsible for delivering 70 of all the renewables in the country. The country wants to be 50 renewable and 50 gas powered by 2030. That means the total investment would be about 60 to 80 gigawatts of renewables and about 30 gigawatts of generation and combined cycles. The total amount of these is like building the new Power Systems in less than 10 years and it is probably an investment that is in the hundreds of billions of dollars. Yousef we have the ongoing israel Hamas Conflict which has seen horrible levels of violence. It is also creating a bit of conversation around what the longerterm impact would look like for Global Financial markets. It of secondround effects. What is the language linkage to power here in terms of risks as you have been reflecting over the last couple weeks . Marco it is a tragedy of course. I cannot comment. It is out of my sphere, out of my domain. The situation. But it is really tragic. I think it hit at a time where the Peace Process that was going on in the region was very advanced with iran and the discussion we heard with israel. We hope the situation will be clarified soon and for the better and the good of the people there. Yousef in terms of impact on aqua power, if the violence sustains in the oil market gets rattled again we see oil lets say over 100 a barrel, lets take that scenario. That could affect power demand levels in the kingdom, could it not . Marco fact is the economy of the kingdom is already diversified a lot from oil. Which is part of vision 2030. So it is becoming more stable, stronger, a lot of tourism. A lot of industrial production. It is something where the trajectory is set and i think the figures i gave you before can be achieved. The other thing for aqua power we already operate in 12 countries soon to be 14 so we are quite diversified and we dont rely on the oil income or the effect of oil on the economy. So i think that we are much more resilient of the Short Term Impact this will have. Yousef what about capex levels were 2024 . What is going to go where in terms of your war chest . Marco for the next few years what we expect is to have an allocation of that would probably be around 60 in saudi arabia, 40 international. Today central asia is one of the biggest areas we are coming in. We have a great presence and relationship in uzbekistan. We are blessed in saudi arabia and uzbekistan and we have a great vision and dialogue with investors and quick decisions that are taken and moving the projects fast. The next as i mentioned is china. But we continue to look at africa and South East Asia to complement the portfolio. There are a lot of opportunities they are in desalination. Green hydrogen and renewables. Yousef good to chat that is marker group ceo of aqua power one of the biggest players in the energy space. Kriti use if there thank you so much for bringing us that interview. He has many more throughout the morning you dont want to miss our exclusive with the Hong Kong Stock Exchange ceo coming up at 8 30 london time live from the future Investment Initiative conference in riyadh. I want to stick with the banking story because unicredit has kicked off european Bank Earnings season by lifting its fullyear Revenue Target for a Third Straight quarter. Italys Second Largest Bank says it will use a get out clause to avoid paying the italian governments Bank Windfall tax. Tom metcalf joins us now to walk us through the results. These are some pretty good numbers. The net Interest Income even a loan loss provision, less than half of the estimate was. Where did all of the strong profit come from . Tom a strong set of numbers. I think revenue really soared and that was on the back of net Interest Income. Up Something Like 45 year on year. It is a higher Interest Rate environment and unicredit tactfully controlled deposit passthrough, i. E. Not passing was Interest Rate rises to consumers. For me the things that jump out would be that jumped. You just mentioned the windfall tax as well as the get out clause they will use. We expect most big italian banks to do that and then on cost as well. They managed to keep basically flat this quarter which is pretty impressive given inflation. Kriti lets talk about barclays as well because unicredit has set the standard for these banks. Is barclays going to match them . Tom i think its going to be a different story the u. K. Banks are typically a few months through ahead of the cycle. On the retail side i doubt we will see a big Net Interest Margin gain or anything like that. And of course barclays big Investment Bank had its fixed income traders thats probably the thing i will look at most closely. Kriti when you compare them to the two it always stands out how much Recession Risk proof they have gotten. There is an emphasis on the Loan Loss Provisions out of credit suisse. Is barclays going to release those numbers . Tom i think the provisions are expected to be much higher, Something Like 500 Million Pounds is what analysts expect. That could be may be maybe where the surprises, seeing them perform better. But i find most times u. K. Banks are pretty conservative on that front and it is that balancing act of they want to perform well but at the same time there is a lot of Political Tension on them. So perhaps they dont want to do that well. Kriti managing expectations, how british. Tom metcalf are finance managing editor thank you for your analysis. Plenty more ahead this is bloomberg. Kriti welcome back to daybreak europe, we are going to get preliminary october pmi data for france, germany and the euro area later. The contraction in manufacturing expected to continue. This comes ahead of thursdays ecb decision. I want to get more context from maria. Lets start out with the expectations here, what might we see this morning . Maria of course we have the pmi numbers. Especially the euro area number. That is a number that will matter a few days before the European CentralBank Decision happens on thursday. Overall when you look at the survey and the expectations were still going to see a contraction. Obviously at this point that is not a secret. See a contraction in the three Different Industries that make up the pmis but we may get some signs of stabilization for this economy. When you look to q3 the expectation given the data we have gone so far which is a mixed bag, is that the risks are still tilted to the downside for the european economy which is a line that the European Central bank says. The on that even though data matters and this is a central bank that has repeated and looks at every data point and then makes decisions based on that, you have to factor in the context here and that is a Monetary Policy decision that i dont want to say has been ellipse but is definitely engulfed in the geopolitics. I wonder to what extent the data that we get today will set the scene for thursday. Kriti speaking of setting the scene for thursday what is the biggest factor here, last time we heard from the ec we did not have a regional conflict in the middle east breaking out. Inflation was not thought of as double peaking anymore. What is the ecb thinking right now . Maria the entire debate, already by the way we should note in the previous meeting there was a thesis in the market that the European Central bank was probably heading towards a hold. At that point we should also note we have seen an aggressive hike in cycle, 10 consecutive hikes. More than 450 basis points of tighter policy. There is this perennial debate about hiking into a recession but you have to add another layer of complexity. Complexity potentially hiking into a conflict. When you go into the thursday meeting the market is expecting there will be a hold by the European Central bank. We should also note if they do decide to hold it may give them some optionality. This is a central bank that does not want to say whether rates have peaked. They can always say they have taken that decision to hold in a very volatile context. With respect to that more than a strong bias as to whether or not they are done, they have always wanted to keep that optionality. On top of that remember it is always a balancing act so if they decide to hold you could argue there may be a conversation about what to do with the balance sheet. Whether they want to accelerate that process. A lot of that will feature on that meeting in thursday in athens. It will be there live bring you that Monetary Policy decision. Kriti we look forward to that coverage and whether or not the market is pricing this one right. Interesting dynamics, maria in brussels we thank you for that preview. Maria talked a little about the Market Pricing but one piece of the economic story that people are not talking about globally is how much the labor market matters. I want to bring you a story from back in the states. At 6800 workers have down tools at the stellantis truck plant in Sterling Heights michigan. The surprise action is part of a strike against three biggest automakers now in its sixth week. The michigan plant aches the bestselling ram 50 pickup 450 pickup. They say they are outraged at the strike escalation. We will be monitoring that closely at the European Market open. Plenty more ahead, stick with us this is bloomberg. Kriti welcome back i am in london, air infinity is one of bloombergs 25 startups to watch in the u. K. The data Modeling Company wants to be able to stop disease outbreaks before they happen through the power of forecasting. Heres a look at how they intend to do that. We can forecast the weather, even the financial markets. But imagine we could forecast diseases and stop the next pandemic in its tracks. That is the mission of londonbased startup air infinity. We know the detailed pricing of a nickel mine in the congo but we dont know what people are dying from. Even in the western world we dont have a strong understanding of how many are suffering from the flu, isv, covid at any given time. Let alone able to forecast that. So a Weather Forecast for diseases is what we are trying to build and we think we saw that with covid there can be Immense Health benefits. It can allow authorities to plan better, understand risk better, allow the farm industry to bring things to market faster. Do trials faster. It has a huge amount of benefit if we are able to pull this off. A piece of advice to any other pharma the thing about building a business, if you are not doing anything people want to pay for it you will not last. You will not be sustainable. We also avoided over hype. I get asked all the time how much are you investing in ai and is it fully ai driven. We do invest in ai but we never saw it as an ai only company. We focused on the problem we are trying to solve and we are quite pragmatic in our approach to running a business. That is the second part of why we have been successful. Kriti that was a closer look at air infinity one of bloombergs 25 startups to watch. Right here in the u. K. Speaking of the u. K. I want to bring you a chart that i am keeping a close eye on because we are going to get that u. K. Employment data shortly and this is the trend you need to keep in mind. The idea simply that you have seen this massive deceleration in the employment rate but it is starting to tick higher into 2023. That is concerning and it is also why i want to put an end to assess emphasis on those berkeley numbers we will get. At those loanloss numbers are so important because it tells you if you do start to see the unemployment Unemployment Rate tick higher in people actively losing their jobs, are the markets and economy prepared for it . And if barclays follows unicredits shoes from an economic standpoint we know job losses are never easy. From an economic standpoint are these banks prepared for the turmoil that follows. You start to price some of the sin and that is going to be a big question on the economic and corporate front. Speaking of the corporate front there are two big numbers i want to keep on your radar. I want to show you some of the cross currency story there. It is showing up right here. Where is the sales growth estimates coming from the most. Ordinarily when we think european luxury we think it will come out of the middle east or china but most of the growth estimates staying current. It is actually coming from right here in the americas higher by almost 16 . That is a big jump from over in asia, it speaks to that American Consumer that is proving far more resilient than even a chinese consumer. And on top of that we are going to get numbers out of houma. Houma is really interesting, we keep a close eye on the relationship with not just houma houma but adidas. Their net income is actually dropping dramatically so they actually being able to hold up european luxury, maybe not so much when you look at some of the next tier it down in terms of brands. That speaks again to the wealth aspect. Some of the chart you want to keep an ion, stick with us. More exclusive interviews ahead all coming up. This is bloomberg. Anna this