Transcripts For BLOOMBERG Bloomberg 20240703

Tom good morning. This is bloomberg daybreak europe. Diplomatic efforts intensify as israel weighs a response to irans drone and missile attack. The west calls for deescalation to avert wider conflict. Markets show signs of stability with crude prices easing as oil traders largely shrugged off irans assault. On hopes the conflict is contained for now. German chancellor olaf scholz arrives in china for talks with president xi jinping. On a mission to dial down tensions between beijing and europe lets check in on markets on the back of those unprecedented attacks from iran. This is not a market that for now is showing significant signs of risk off. Yes gold is higher but treasuries are down, the dollar is softer and u. S. Futures and european futures pointing higher. The context for the u. S. Was that last week was the biggest weekly decline for u. S. Stocks since october. On expectations that there will be higher for longer on the rights view coming out of the u. S. And stickier inflation with a stronger jobs market. U. S. Futures gaining 0. 4 . Nasdaq futures higher. Stocks looking to open higher despite to political risk. Up 0. 3 . For the ftse 100, pointing lower 35 points this monday. I touched on gold and oil and treasuries. Lets look at the pricing on those key assets. European stocks futures pointing into the drain. Currently when it comes to the oil price, lower by 0. 3 on brent crude at just above 90 a barrel. Spot gold higher by 0. 5 . Eurodollar with a reflection on what is happening with softer dollar, at 1. 06, up zero point 1 . Bwest 10year yield currently up three basis points. Selling pressure coming off of treasuries. Not the flight to safety some had assumed over the weekend. 4. 55 on the u. S. Benchmark. When it comes to markets in the commodities space, sanctioning coming through from the u. S. And u. K. On parts of the russian metals market. Aluminum in focus for us, as is nickel. Prices higher on the back of that news. Sanctions coming into place over the weekend and the reaction in markets this monday. Aluminum up 4. 4 , nickel gaining 3. 7 , the consequences for the alameda on a reshipped commodities market on the back of sanctions around russia. Lets go over to the Asian Session. Go back to the geopolitics of iran and israel. And check in on how that is playing into the asian markets with vonnie quinn. What is standing out across the session so far . Funny the emperor but we are seeing throughout the session. At one point, the nikkei to 25 was pricing in gym political risk. It was risk off, down about one point 8 , the topix as well. This was in the early part of the session. But as you can see, ending down less than 1 rate not just for the nikkei 225 which is also dealing with a yen which is up at 133. 81 right now. Remember how 152 was panic stations, we are two figures bigger at this point, so we are likely to see more jawboning from the bank of japan. The Msci Asia Pacific only down, i say only with obviously caveats, down zero point 8 because we had an up day in china. Regulatory crackdown on friday had enthusiasm built into china stocks and we saw some upgrading. Were about to see that shekel trade. It has been strengthening. It seems like a long time ago now that that attack occurred. It is only just 36 hours and we are awaiting a response from israel but the shekel for now trading at 3. 73, stronger than initially. I want to point to the middle east markets. They havent open for the monday session but there was a sunday session. Again, it was muted. The towel opened tadawul finish the session down 0. 3 . The index in tel aviv was up a quarter of a percent. The broader index was higher by zero per and 3 . I thought i would throw in bitcoin because there was a kerfuffle about how it tanked. It was the only asset trading during the attack hours. There are lots of reasons but bitcoin is returning back above 65,000. You mentioned gold but it is interesting to look at silver. It has been tracking gold and is doing a lot better than gold is, up 1. 3 . Tom lets get the latest on our top story now and the details that have been unfolding. World leaders have urged restraint after iran fired more than 300 drones and missiles at israel on saturday evening. The attacks which were intercepted marked the first time iran has targeted israel directly from its own soil. Prime minister Benjamin Netanyahu says israel will defend itself. The state of israel is a strong. The idf. The public is strong. We appreciate the u. S. Standing by israels side, as well as the support of great britain, france and many other countries. I have set a clear principle. Whoever strikes us, we will strike him, defend ourselves against every threat. And we will do this calmly with determination. Tom for the latest, lets bring in paul wallace in dubai. What do we know in terms of the thinking around israels government and the reaction that may come to this unprecedented attack by iran . It seems as if so far israel is keeping its options on the table. And Still Deciding exactly what its going to do. To react to saturday nights drone and Missile Barrage against its territory. Obviously, this was a major and unprecedented attack from iran. It didnt cause much damage. There was only one casualty, a 10yearold girl and light damage to an airfield, but nine the last nonetheless this was a huge attack that required the assistance of not just the Israeli Air Force but the u. K. , u. S. , french and other air forces in order to foil it. The u. S. , europeans and arab states are all trying to urge restraint on the part of israel. The last thing they want to see is this conflict in the middle east escalating and getting more serious than it is. As we heard from Prime Minister Benjamin Netanyahu, he is not ruling out anything. He is not being extremely gung ho saying israel will react aggressively to what happened on saturday night. As i said, that is still possible. Israel may bite its time. There is no indication it will react amid italy. It could do this over the coming weeks. For the sake of its own public, it has to do something. A lot of israeli ministers and analysts saying it would be a very weak showing. And a dangerous showing for the country diffident react in some way to irans actions on saturday. That doesnt necessarily mean it has to strike iranian soil in a titfortat response. It could go after irans proxys harder than it is, the likes of hezbollah in lebanon, and groups in syria. It could target iranian assets around the World Without doing something as highprofile as what the iranians did on saturday. Everyone is now watching israel. Its reaction is the big question for Global Financial markets this week. Tom paul wallace on the latest. As you say, israel weighing his options, the analysis that israel may not react or at least rush to action but weighing his options. Lets get the other side of the story. At least, another angle. Tehran saying there will be no further attacks as long as israel doesnt retaliate. The chief of staff of irans armed forces saying the operation is now over. From our point of view, this operation is over. There is no intention to continue the operation. If the zionist regime takes any action against the islamic republic, whether on our soil or places belonging to us in syria or elsewhere, our next operation will be much larger. Tom lets bring in Patrick Sykes in istanbul. Is iran bracing for a potential counterattack from israel . Publicly, that is the important caveat, but publicly no. There may be plenty of Organization Going on behind the scenes but i think iran is keen to present a picture where life is continuing as normal. In iran, that is very unlike what we saw in the past week in israel with mobilizations and disruptions to normal life. So far, the only disruption we have seen his cancellation of flights yesterday in many of irans major airports but that has not been lifted. So the message is of normalization at least publicly. At the same time, you heard the threat from the military official that if israel does respond aggressively, iran is sending a message that it will be prepared to attack again. And it is keen to strike that balance and say this is done. But we are prepared to come back if we are forced to. Tom it signals that the tension between israel and iran longrunning as they have been have come out of the shadows then. What does it mean for the shadow war that had been prior to this weekend and the tensions . There were interesting comments from Iranian Military and government officials yesterday where they said this strike marks a new equation in that relationship. Or it is the end of what they call strategic patients, where they have been willing to let Israeli Attacks slide. And strike back when it suits them. Rather than being rushed into things. The message now is that whenever israel does strike iranian assets, its interests, be that in iran or abroad, that iran will be willing to strike israel directly in the way that we saw over the weekend. Thats new. That dynamic is new to. That makes for a much more fragile dynamic. In that shadow war where previously incidents have been perhaps allowed to let slide, or have been deescalated through revenge much further down the line, iran is signaling publicly at least that from now on that wont be the case. The response will be immediate and it will be direct. Tom very much a significant turning point and new chapter in this tension. Patrick sykes has been covering all of this for us across the weekend in detail. To the oil component. Traders have so far shrugged off irans unprecedented attack on israel with prices easing on spec you wish in the conflict will remain contained. Lets bring in anthony di paola in dubai. Fairly counterintuitive the move in brent and wti this morning. On tack how the oil markets have reacted to this. We had the slightest of increases at the start of the opening. What that is based on is the market seeing through what happened. And looking at, first of all the fundamentals. Oil supply hasnt been affected. Oil continues to flow and we dont see interruption either to shipments through the strait of hormuz or to any production there. Looking at what happened over the weekend, traders are looking at the fact that the iranians have said that they see the retaliation as completed. The israelis seem to be exercising restraint at the moment. The g7 countries discussed it. While everyone is trying to keep a lid on the situation and draw a line under this Current Situation of attacks. This was a big escalation because we did see that first direct attack between israel and iran on their own assets. As opposed to this proxy war patrick had been talking about. We will see if we get a reversion to that. And stepping back from this direct conflict but what traders are looking at was in part some of the risk that had already been priced into oil going into this weekend. We saw a runup on friday. And we have seen an increase going beyond 90 a barrel this month. We have seen some of that priced in already. And traders taking their foot off the gas as they see the prospect that this wont go further, or will be a more limited escalation. We are not seeing the worst Case Scenario yet. Tom is that where the lens of traders is . What is the next thing traders within the commodities space are watching in the days ahead . To be clear, the thing traders are looking at in terms of a catalyst to move oil higher, is any attack that would affect Oil Production or exports. We will be looking at the strait of hormuz. Iran did come out last week and say they dont plan to close the strait. But they did take an israelilinked freighter in the persian gulf are on the strait last week. That is a sign that they can react if they need to. We have the continuing houthi attacks around yemen. Those havent targeted directly any kind of energy shipments. Thats what oil has been mainly muted in response to that. Traders will be watching for any escalation that impacts supplies or exports. On the fundamentals side, we have got a healthy market with the demand going better than people expected. At least reaching the same levels it did last year. We have a good supply situation with lots of new oil from the u. S. , ghana and brazil. And we have opec still cutting. They have Spare Capacity that they need to bring into the market. Longerterm, traders will be watching just that, when does opec come back to the market and release those barrels . That will affect the balance towards the end of the year. On a fundamentals basis, we see opec slowly releasing those barrels over the end of the year but that geopolitical question is wide open. Tom fantastic analysis on these oil markets and the reaction to the conflict. Coming up, analysis on what next in the middle east conflict. We will talk to control risks partner for geopolitical risk, Sorana Parvulescu, on this story. The analysis coming up after the break. This is bloomberg. Tom lets get more analysis on the simmering crisis in the middle east. Lets bring in control risks partner for geopolitical risk. Lets check in on markets. We have been discussing with anthony di paola in dubai the consequences within the oil space towards whats happening. This unprecedented attack by iran on israel over the weekend. Oil prices moving lower. The view that a lot has been priced in leading up to this. It was flagged by the intelligence agencies in the weeks ahead of it. Currently brent at 90 a barrel, down 0. 4 , wti at 85 21. Lets get the analysis with Sorana Parvulescu who joins us now for some context. Thank you for joining us this morning. As israel ultimately heed the advice of its u. S. Allies and avoid significant retaliation . Sorana yes, that is the big question today. On balance probably yes they will. They will bide their time and respond in due time rather than necessarily launch something the next few days. Tom what are the options israel will be looking at right now . Sorana there are several options. The most dangerous option if you want is they would launch a strike against iranian territory itself. Iran has made clear that would be a redline again, but also, the u. S. Has made clear that they wouldnt support an offensive strike. That would be the worst Case Scenario we are looking at right now. The alternative options which hopefully they are thinking of now are either more titfortat retaliation against iranian proxies in the region, but not against iran itself. Maybe in time a more undercover sort of operation around the world against iranian targets. Which would bring it back down to the tempo we had a few weeks before the attack on the embassy in syria. Tom when you talk of iranian proxies, for some, that would include hezbollah across the lebanese border. Is there a role that hezbollah intervenes more aggressively . Sorana hezbollah has been quite cautious and communicated as such over the course of the conflict in because already. That it will react to with caution. And it doesnt want to draw israel into a war with lebanon. It is to some extent, hezbollah exists as a deterrent for iran on the borders of israel. Likely there would be coordination between iran and hezbollah on next moves. Tom how significant do you put the risk of iran closing the strait of hormuz, if you get that as you describe, worst Case Scenario in terms of an attack on iranian territory . Sorana the most likely scenario would be if we have an Israeli Attack on iranian territory, it will probably be missiles against irgc assets from where the attacks were staged in the first phase. In that case, iran would still have an option whether it wants to respond or not. It could choose to not respond directly. If it does respond, it will likely be through missiles initially rather than outright blocking the hormuz which is not in its interest either. It will maintain it as a strategic option and use it as leverage as it has done over the weekend. Tom control risks partner for geopolitical risk, Sorana Parvulescu, appreciate your analysis this morning. Unpacking the context around this iranisrael conflict. This is bloomberg. Tom another big week for u. S. Bank earnings. Goldman sachs, bank of america and Morgan Stanley all due to report. Joining me is jenny surane who covers all this across the team in the banking space for your we had jp morgan, citi and wells fargo reporting friday. They all one by one said this is probably the end of the boom times for net Interest Income. If the fed was to cut rates later this year, while there is a lot of discussion about when and how fast, and how quickly they will go down, they basically one by one said this is looking like the end of boom times. We will have to start relying on other parts of our business. He saw things like bright spots in Capital Markets. Real good equity underwriting and debt underwriting results from these banks. He saw them point to other areas that might bolster results as Interest Income fades away. Tom a transition in terms of the earnings picture and in the numbers. Goldman sachs, the preview for today, what are the metrics eu and the team will be scrutinizing . They are the wall streetiest of the wall street banks. When he thing rebound in Capital Markets and dealmaking, those things benefit Goldman Sachs paid that being said, you had a lot of bank ceos on friday warning that a lot of the industry was undervaluing the risk of geopolitical things. When you look at over the weekend in israel, how does that impact the dealmaking environment . Does that put us back on the wait and see mode for dealmaking . That is a huge risk to goldman. They will have to parse that out today. Even though we might have seen a pickup until now, does that geopolitical risk end up winning the day and put us back on the backfoot . Tom we had that morning from jamie dimon from j. P. Morgan morning about your clinical risks. About your clinical risks. Really interesting transition across the jenny and the team will be across all of that for us. There is blood more coming up as we look at european futures pointing higher 0. 4 percent. S p minis also pointing up 0. 4 , after a challenging week last week. The context is that so far this month, european and u. S. Stocks are off 1. 5 . But a brighter picture for the equities space despite geopolitical risks. We will keep across that story for you. To finally lose 80 pounds and keep it off with golo is amazing. Ive been maintaining. The weight is gone and its never coming back. With golo, ive not only kept off the weight but im happier, im healthier, and i have a new lease on life. Golo is the only thing that will let you lose weight and keep it off. Who loses 138 pounds in nine months . I did golos a lifestyle change and you make the change and it stays off. soft music tom good morning, this is bloomberg daybreak europe, im Tom Mackenzie in london. Diplomatic efforts intensify, as israel weighs a response to irans drone and missile attack. The u. N. Chief calls for deescalation to avert wider conflict. Global markets shows signs of stability with crude prices easing, as oil traders largely shrug off irans assault, on hopes the conflict is contained for now. Plus, german chancellor olaf scholz arrives in china for talks with president xi jinping. On a mission to dial down tensions between beijing and europe. Lets check in on these markets. Signs of relative stability, relatively sanguine, in the face of these geopolitical risks despite the unprecedented nature of irans attack on israel over the weekend. This is the picture across stoxx futures. European futures pointing to gains of 0. 4 . The ftse 100 lower by 31 points. S p futures at 5187, looking to gain 0. 4 , after a challenging week last week. Nasdaq futures at 18,000 to 50, pointing to gains of 71 points. There had been a lot of scrutiny on the oil, gold and treasuries action. Here is the pricing so far this monday to these geopolitical risks. 90 a barrel on brent, moving lower 0. 4 . Gold up 0. 4 at 2355 per troy ounce. The dollar is a softer so far in the session. The benchmark 10year yield edging higher by close to three basis points at 4. 55. Flicking on the middle story because we had the ban at midnight by the u. S. And u. K. On some metals being sent and shipped from russia. Aluminum, nickel in focus. You are seeing some price action in the session today. Aluminum up 4. 9 , nickel on the and l one the lme up close to 4 rate lets go back to vonnie quinn who is standing by for the reaction to that attack by iran on israel. How it looking across the Asian Session in the middle east . Vonnie you mentioned that we are looking quite cheery as we headed into the u. S. And european sessions. We had a down session overnight. This was asias first opportunity to react to fridays u. S. Data. And the idea that more cuts monthly off the table at least at the moment for a longer period of time. We did have some risk off sentiment across asia. Particularly australia and japan, and korea. Not so much in china, we had an obsession, the first in seven sessions in china, because of regulatory support. Either way it is giving chinese investors in the mainland some ho that therepe hope that there might be more activity in that market. The nikkei was down 1. 8 at its lowest level, and ended the session down 0. 19 . The yen continues to weaken. We are close to 154. I wanted to point to the shekel. We did see that improved predict traded weaker. It began trading stronger in the wake of the attacks. The notes that i have been getting say things like sigh of relief, or escalation averted. We dont know that thats going to be the case but right now the markets feel like that will be the case. I want to point to the session in the middle east on sunday. This was a few hours after the attacks. We saw saudi arabia open 1. 8 lower, it ended down 0. 3 . We saw volatility in israel. We were down, up, down a lot, a lot. We ended the session for the narrow market up a order of a percent. You can see the reaction in silver. Little bit more strong in silver than gold. Tom vonnie quinn in dubai with a check on the asian and middle east Market Reaction to the geopolitics over the weekend. The u. S. Hoping to avoid further escalation. Talking of escalation, that is something vonnie was feeding into the market check. Avoiding leading to wider war in the middle east following irans attack on israel on saturday. The u. S. Secretary of state says while the u. S. Is not seeking escalation, it will continue to support israels defense. Was bring in marc champion from bloomberg opinion. Are the markets being overly sanguine about the risks . Or are they reading this right. I dont think they are being overly sanguine. The important thing to happen was that the iranians, as soon as they had made this large attack, immediately said as far as we are concerned, this concludes it. The fact that the iranians took that view and the fact that despite it being an enormous attack, unprecedented, it actually failed. Virtually all the missiles were shot down. There was miner damage. Minor damage. Sadly, one young woman is badly injured. In terms of what mightve happened, it largely failed. That creates the space for israel, if it wants to, to deescalate, or at least put off any response. It looks like the latter is what they are doing. They had a fairly inconclusive war Cabinet Meeting last night. While they are keeping all options on the table. They prepared options, the idf said it prepared all options to take retaliatory action, they have not said they will not do s they have not said they will do so. There will at least be a delay. Tom one Central Point of attention seems to be between the extreme rightwing members of this war cabinet, and the pressure coming through from washington and the u. S. President. How do you see that tension evolving and how consequential is that . How does that tie into your view that this could be an opportunity for israel to regain the International Initiative that arguably it has lost . That tension is very real, very significant. It is been a huge driver throughout the conflict in gaza. After the hamas attacks of october the seventh. And it is very consequential. At the moment, in terms of retaliation against iran, netanyahus hand and the hand of the more dovish cabinet members are strengthened. Simply because the role the u. S. Played, the u. K. , that jordan played that these were all quite material. They for the First Time Since early on in gaza war put all these allies on the same page again. That is something the israelis will be loath to give up lightly. On the other hand, the right wing of the cabinet is making demands. What we may see play out is a negotiation between israel and the u. S. Over exchanging restraint with regard to iran for war u. S. Support to resume the war in gaza and go into rafah. In my view, that is a mistake, unless it is extremely well prepared. Much better prepared than previous assaults. To make sure that there arent civilian casualties in the same way. We may well see that as negotiation goes forward. Tom marc champion from bloomberg opinion, thank you very much indeed. Well worth reading marcs Opinion Pieces on the terminal for that context. Switching focus to the german chancellor, olaf scholz, who is currently in china. On a second visit. He started in chongqing and will deliver the delicate message that beijing has not acted on european warnings to end discriminatory business practices. Joining me is oliver crook who looks at this from both angles. In the journey from berlin to beijing, what is scholz hoping ultimately to achieve . He is walking a delicate tight rope. Its the second visit as chancellor. He will meet the premier and president and local officials in congqing. For people who are not familiar with this city, this is a city of more than 30 million people. One of the biggest on the planet. This illustrates why this market is so important to germany. The ceo is with him. Beam believed, mercedes, basf, bayer, merck. In terms of what he is trying to achieve and will be speaking about, there is obviously the war in ukraine, which looms very large over this. We know where chinas position has been. That will be hard to make any sort of progress. There is the eu dumping probe on evs but also other topix. We heard a lot about it from janet yellen last week when she was in china talking about this overcapacity china is bringing into the market. And at the green transition which is also connected when you talk about the Solar Industry for example. The u. S. And india have put up trade barriers on solar panels that come from china because they are so low in price. As have all come into europe those have all come into europe. It is challenging for scholz because it is a key economic relationship. A quarter trillion dollars traded last year with china, the biggest trading partner for germany, though it is down 15 from the year previous. Scholz needs to walk that fine line, on the one hand preserving the relationship, while on the other not stepping on the toes of the policy goals of the broader eu. Tom does that move lower, 15. 5 , talk to the derisking olaf scholz and his team have talked about when it comes to the china story . Perhaps to a certain degree. When you look at how to illustrate the point how massive this relationship is, bmw sells a third of their cars in china. Basf is about 13 . China is 15 of the chemical sector. Basf isnt looking back, they say this is where we need to be. Siemens is closer to 12 . When you look at what the companies are saying, when they did a survey of the german chambers of Congress Commerce in china saying to you have equal access to the market . Two thirds of German Companies say they face unfair competition in china currently. What is interesting on the question of derisking, the German Companies at home, where is china in their supply chain . More than a third of manufacturing copies have that, that is down 10 . When you look at Foreign Direct Investment into china, this is a key metric, we had a record last year of 12 billion euros. On that front, German Companies say we need to be in this market and they are dumping cash into it. Tom oliver crook on the importance of this visit by the german chancellor to china that continue starting in chongqing. Now in shanghai. Can the u. K. Build its Tech Industry into a leader in ai . We will speak to noel hurley, the ceo of ai company literal labs, and a former vp at chip designer arm. That interview is next. This is bloomberg. Tom welcome back to bloomberg daybreak europe. Microsoft recently announcing plans to open a new ai hub in london to drive work on advancing language models llms, and supporting infrastructure. Joining me to discuss the future of the u. K. Tech sector is noel hurley, ceo of literal labs, and a former vp at u. K. Chip designer arm. Such a consequential company within the tech space based in cambridge. Listed in the u. S. This is something that rishi sunak, the Prime Minister of the government, will welcome. They wanted to craft the u. K. Into a Global Leader when it comes to ai. What is the significance of a company like microsoft developing and investing in london . Noel it is a fantastic endorsement for the talent that we have in london and in the u. K. More broadly. It validates a long history of Computer Science and research off the back of what are strong universities from a research perspective. It is not just oxford and cambridge but also universities like manchester, sheffield, leeds, etc. Across the country, there is a fantastic base of research. This is validation that we are World Leaders in of the space. Tom i want to get your take on what your company is doing and the proposition around ai shortly. But monday get your view on talent in the u. K. Again. What is the depth and breadth of that talent . How aggressive is the fight for talent . Im hearing from some ai companies in the u. S. Coaching from the likes of deepmind and others, what is that looking like right now . Noel it is really competitive from a talent perspective. Again, because we have this history of Computer Science in this country, we are an obvious magnet for corporations to come into. You mentioned to deepmind. Deepmind was on of the early innovators based in london in 2010. It goes to show that we have the talent. Actually talent attracts more talent, as well, so researchers want to Work Together and work on the biggest problems together. This country has become a hub for ai talent. Tom so what does literal labs do . People are flagging risks of a bubble within ai, you are fundraising right now, what is that looking like . Noel for us, the big challenge we see in ai is it is computationally incredibly complex. As a result of that, its just not sustainable from an energy perspective. We need to address this complexity problem. That is what were looking to do at literal labs by developing a different approach that is more energyefficient. It is fast and computationally more efficient than the classic Neural Networks approaches today. Tom how receptive are investors to that proposition . Noel very receptive. You have got to be blind to not recognize that the ai Energy Problem is real, and we need do something significant to address that if this will scale and meet its promise. That message resonates around the world. Tom the Financial Times reporting today that the u. K. Government is looking potentially at regulating ai. They had said they will take a hands off approach. What should the policy prescription look like from the u. K. . Does it need to mirror the eu ai act . How should the Regulatory Framework build out in the u. K. . Noel when the Biggest Challenges with Regulatory Frameworks as they generally lag the technology. That is the biggest challenge from a business perspective, is many of the rules are written on how the technology was months and months ago. So that can cause challenges within business. A certain amount of regulation is good. Its just how well it keeps up with the progress in technology. That i see as one of the biggest risk factors. Whether you do a lightweight or heavyweight regulation i personally prefer a lighter weight relation, but regulating recognizing it is important. This affects peoples lives, therefore we need to have good regulation. Tom you are fundraising, earlystage, lets see if you push back on this, but at some point you will be looking to list. Does the u. K. Have the fundamentals in terms of Capital Markets for a company like yours . Noel one of the Biggest Challenges in the u. K. Is we have all this fantastic talent here. And yet, we dont have a microsoft, we dont have a google. Why is that . We have a really good start of community. Getting startup funding is strong. The challenge comes at the scale up stage. We have proven new technology and have got a customer and market, then you want to scale. And you want significant amounts of capital at that point to scale worldwide. And thats where the big hole is in the u. K. In most cases, it is almost institutionalized now, that startups in the u. K. End up opening a presence in the u. S. And moving there for that scale in capital. If the government will address anything, it needs to address that gap, that scaling cap in business. Tom noel hurley with a comedy to watch, literal labs, formerly vp at the chipmaker arm. There is plenty more coming up. This is bloomberg. Tom firstquarter earnings will be pivotal for the european market, after it suffered two quarters of mrs. And negative revisions. Joining me is Tim Craighead from Bloomberg Intelligence with a preview of all of this. With equity markets not far off record highs, what is your view, as we head into an earnings season some would suggest is more important than Central Banks at this point . You are right in a lot of ways. You highlighted we have gone through two quarters of declining earnings. We are suffering negative revisions in terms of consensus expectations now for the better part of nine months. Evaluations have lifted because of the central bank sentiment that has developed. That makes for a tricky. What we will see here hopefully is a bottom of view on bottom of the view on how companies are executing on a handful of underlying themes that could transcend the earnings picture. Or i should say the macro as we look out over the next 1218 months. Lizzy you highlighted 10 companies in focus for him you and the team in europe during results season. Tell us why you zeroed in on those. There is a couple of underlying themes we think are particularly important. Whether it be what is going on with china. Whats happening with technology. Things along those lines. We cover 2000 companies. What this note does is bring together the preview on what we think are a handful of bellwethers that should give a finger on the pulse of some of these key trends. Tom what are some metrics you will be looking at across these companies . Is it going to be margins, volumes, inflationary input . What would be focused on when it comes to metrics . Lets look at china. It is obviously front and center. You have a company like lvmh. We need to see what transpires with their sales trends. Are we continuing to see travel . And what is the demand from a bottom up perspective on mainland china. Porsche is another case in point where china is critical. With them, you have got the high end sales trend. You have also got the transition to ev. China is on the order of 3030 5 of its earnings. I think it does depend on which company, which trends you look at. In technology, you cant have a conversation today without talking about ai. Nvidia might be the poster child from the chip perspective, but asml is the enabling technology. And seeing what their order growth in terms of capex spending will be crucial. Tom Tim Craighead with an important preview of a crucial earnings season. But commit occasions advisor for the White House National Security Council will be joining surveillance to discuss the escalation, middle east. Markets today is up next. This is bloomberg. Good morning from london, im guy johnson with trading less than one hour