Fed Hold Rates for Sixth Time, Novo Nordisk Quadruples Numbers | Bloomberg Markets Today 05/02

Fed Hold Rates for Sixth Time, Novo Nordisk Quadruples Numbers | Bloomberg Markets Today 05/02

Good morning from london. This is Bloomberg Markets. Today i’m Anna Edwards alongside Guy Johnson and christie gives a we the cash rate just less than an hour away. Here’s what you need to know. Higher for longer. The fed holds rates steady for a sixth time in a row. Fed chair jerome powell keeps rate cuts on the table, but the timing is less certain. I do think it’s clear that that policy is restrictive. I think it’s unlikely that the next policy rate move will be a hike. The end weakens after a surge of over 3% in New York, Trading fuels speculation of intervention. Plus, another big day for earnings in Europe, with Novo Nordisk quadrupling the number of patients starting on its weight loss drug Wegovy. In the United States, we will bring you more European results and a live conversation with the CEO of Masque. In the meantime, a quick check on these markets here. When you look at the futures trade, you are seeing outperformance in the footsie, 100 higher by about 5/10 of 1%. By comparison to yourself, futures doing a whole lot of nothing unchanged at the moment. We’ll see if that change is closer to the open, the two year yield in the meantime. 494 a very careful retreat after Chair Powell’s commentary. We’re going to dive into the numbers there. And Brent crude getting closer to 80 than 90. Interesting dynamic there. Markets today. Starts right now. In recent months, inflation has shown a lack of further progress toward our 2% objective, and we remain highly attentive to inflation risks. It is likely that gaining such greater confidence will take longer than previously expected. I think it’s unlikely that the next policy rate move will be a hike. I do think it’s clear that that policy is restrictive and we believe over time it will be sufficiently restrictive. I don’t know how long it’ll take. I you know, I can just say that when we get that confidence, then then rate cuts will be will be in scope. See if anybody mentions in any way the pending election. It just isn’t part of our thinking. It’s not what we’re hired to do. We just don’t go down that road. If you go down the road where you stop. But Jay Powell telling the market nothing. It already hadn’t figured out for itself a big nothing burger, as one of our commentators said here at Bloomberg. In some ways, the market reacted as you would have expected initially. Yeah, we’re not going to get a hike as a result of which stock’s rally. Then the reality of higher for longer kicked back in again. Markets went back down again. A nice little round trip. European execs this morning are called higher. Just we’ll see exactly what the open looks like as he says, as we get closer to the start of play here in Europe. Hong Kong is looking strong this morning, which I think is an interesting divergence. And we’ve had that yen story which we need to factor in. But given all of that, I don’t think the world’s moved forward much on that Fed story. So we turn back to the story that we’re focusing on right now, and that is the earnings story this morning. Glory had mercy. It looks like it’s beaten. Shell’s looking good, standard chances looking good. Novo Nordisk has knocked it out of the park once again. Yeah, strong session that it seems, and says the only stories out of Europe are going to shell first. Shell announcing a share buyback program with three and a half billion dollars. And there’s a t live blog, a top live blog running on the on the Bloomberg terminals. You can find commentary and thoughts there. The question going into these numbers was whether they would maintain the pace of buybacks that they set in the first quarter. And the answer is yes, because that was three and a half billion and this is three and a half billion. So, so interesting on that particular front. But a lot of the numbers under the hood as well, the adjusted profit number looking much stronger than anticipated. Yeah, we’re at $7.73 billion for the first quarter. The estimate was 6.3 billion. So a pretty significant beat there as well. Shell also had been outperforming because of their natural gas business as well. And that was really kind of a question of whether that was a one quarter thing or if that was going to continue into the years ahead. As we get more of those headlines come out, we’ll of course, bring you updated. But sticking with that commodity theme, the Maersk story is really interesting as well, because three months ago when we had Vincent Clarke on very this very program, suspended buybacks, they suspended their guidance. They were really concerned about the kind of hit that the Red Sea was taking on their numbers. Now they’re saying actually guiding towards the top end of their market guidance, really saying the demand is actually outweighing some of the issues you see in the Red Sea. Demand is strong, the economy is strong, the global economy is looking like it’s in fairly good shape right now. Europe is really accelerating. That’s great news as well. There’s a capacity story we should talk to him about. But it does seem as if the Red Sea story is going to be with us for a while. And these are increasing their attacks. In fact, they’re pushing out into the Indian Ocean, making it kind of less likely that we do see some sort of conclusion to that. But then I would flag as well what’s happening between Saudi Arabia, the United States and Israel. You get a conclusion that what happens how does that impact that healthy story as well? Yes. And I know we had inventory data out of the U.S., but it was also that geopolitics that weighed little on oil prices. And back to the Shell story, also something that geopolitical over overlay that we need to keep in mind on mask then and how the geopolitics plays out there. They are saying this morning early comments from the CEO on just that subject. Conditions in the Red Sea remain entrenched that the state to stay for most of the year. That’s the assumption that they are making it Maersk demand growth, staying positive in coming quarters, those to the more positive side of things because on the one hand, demand’s not been too bad and they’ve managed to benefit from higher freight rates. But on the negative, the longer journeys that costs it does. And I think you were mentioning the shell buybacks earlier as well. The other kind of stories, the buybacks we’re seeing again in the banking space, AIG was another one that reported this morning as well. They’re coming out with a two and a half billion euro buyback as well. The banks buyback story is interesting. We had the CEO on earlier in programming specifically talk about the read through from the Fed into the ECB and therefore into their net interest margins. We’re going to bring you some of that sound later. I thought it was really interesting that you’re not having CEOs actively talk about and evaluate what kind of damage it’s going to be doing through those peak margins. I think the returns to shareholders is important because in some ways the market’s already front run this. This is confirmation of what the market has already priced in. You guys have got excess capital. You got to be returning it to us. Is this enough to keep the momentum in that banking story? That I think is the question that I think we’re going to have to look at in terms of the size and scale of how much actually is going to be coming back. So we’re going to be discussing all of these earnings. The CEO of Masque is going to join us shortly, as well as the CFO of Novo Nordisk. That’s a little bit later on this morning at 9 a.m. UK time. So those are the earnings stories. That’s the the micro news flow that we’re dealing with this morning. There’s plenty of it. We’ll keep an eye on all of these share prices in just under an hour’s time and see how they trade. The other thing that European markets are reacting to for the first time or will do is the Fed story. And as you suggest, by not a great deal of new information, but they didn’t join. Powell was not suggesting that they’d be back to hiking anytime soon. I don’t think anyone suggested his hawkishness might lean quite that far. Yeah, but there was a fear going into these meetings that maybe he’d be more hawkish than he was, at least in some quarters. There was. And I think there was a big onus on communication here. He had to really talk down the market, which he did effectively. And I would also argue that the market was kind of selling off the stock market, at least going into the meeting. So the actual reaction was quite limited to me. The highlight of this was the cut program, because even though they were kind of maintaining this rhetoric on the front end of the curve, keeping front end yields high, you were still tapering off your quantitative tightening program. We’re going down from, I think, starting in. June, something like 60 billion a month down to 25 billion a month. I loved what Alberto Gallo over at Andromeda Capital tweeted. He said it’s the equivalent of pulling the handbrake while also pulling pushing forward the accelerator on the long end of the curve. And he said that creates a really interesting kind of dynamic in the bond market. And my question to both of you, I imagine, is, is this some sort of I don’t want to call it yield curve and call it curve control or jawboning or anything like that, but is this the appropriate kind of guidance that the market is looking for from the Federal Reserve where they think yield should be? It certainly was where a lot of the focus of the statement was. I was looking at the side by sides and there wasn’t really much change apart from this large chunk of new text around Q2 and around the new the new numbers there. But again, there’s been this expectation they have to do this. If you look at the lending markets, it’s starting to get tighter. There is less liquidity in the system. They have to maybe make this change. What I thought what I thought is interesting here, though, is that there’s no end dates. And he was asked about this. There is no end dates. This is this is lower for longer. We couldn’t have maintained it at the pace of 60, but we’re going to be bringing it down to 25. That’s going to be the cap and then that’s going to carry on for a much longer period of time. So ultimately, what effect does that longer period have as well in terms of liquidity? This starts in June, right up May 29th is when the Treasury buyback operations start. And it’s not by the same margin as well because we got that announcement 30 minutes before the Federal Reserve yesterday. They’re looking at about 2 billion in terms of those support buybacks going through July of 2024. So it’s only like a two month thing. But the timing is interesting because that kind of switch happens at the same time. And if I have no answer to your question, Christine, we certainly have plenty of guests coming up on the program who can weigh in on the fixed income side of things and give us some some further some further thoughts on that. So slightly certainly be something that we will continue to pick up on and continue to explore when it comes to I mean, the Fed seems to be going to some lengths to separate what they’re doing on the balance sheet from what they’re doing on monetary policy. Alberto doesn’t buy that argument. It seems many in the market won’t either. But that said, that’s certainly what they are suggesting. Let’s talk about what’s going on in the yen, because as we mentioned in the headlines, we saw the yen surge in the New York session up by 3%, almost 1153. Was this more, you know, like it did? Was it more intervention? But was it intervention the first time? I mean, there were plenty of voices on the panel this morning saying, yes, these looked like intervention again. And it was really interesting timing because they were they waited perhaps for the end of the press, will pause for the press conference and for the part where they saw some dollar weakness. As Powell was saying, it was unlikely interest rates were going to rise again, that they were going to hike again. And that maybe seemed like a good time to get involved. And that’s the likelihood at the end of the session they can get involved. They can have a much bigger effect. Japan’s about to go on holiday, so you’ve got to factor that into your thinking. Good luck if you want to take a holiday. And you’re going on holiday. Yeah, even you. I know. I can’t really complain. Keep bringing that one up. Once again, a Spanish correspondent had to. But you’ve got Japan on holiday tomorrow. I don’t think many effects traders in Japan will be taking that holiday. And London is closed on Monday, which is a big center for affects trading as well. So there’s like liquidity conditions over quite an extended period of time. So they want a front run that they want to kind of put a statement down once again into that. Do they have to do they have to come through and deliver maybe more of that over the weekend as well? I don’t think many people in the world are going to be taking this holiday. Bad luck. Yeah, bad luck. I don’t know if you saw Jim O’Neill’s comments. Clearly, he is somebody of interest to talk to about what’s going on in markets with all his years of experience. So he was saying the Treasury also wants won’t want to see extreme volatility in the U.S.. Exactly. So the US Treasury won’t want to see extreme volatility in the yen and going so far as to suggest that maybe the Treasury would also in some way do what the, you know, the BMJ would like them to do and intervene to some degree. But anyway, we’ll wait to see what confirmation we get, at least from the Japanese at the end of this month. Yeah, we should we should also point out that historically we know that the Japanese have have intervened in their currency as of many and many, many times. But in the nineties, when you start to see even more extreme conditions, you have had coordinated currency moves with with the US Treasury, for example, with the BOJ, with the ECB. We haven’t gotten to that point just yet. Our currency, your problem? Well, our currency, no problem. But yes, it’s fascinating. Also, what is the longevity of this? Right. If you start to see the volume pick up as well, can they keep doing this? Is the light liquid expensive working right now? Will it work and say to three weeks, three weeks time? So we’re gonna be watching that very, very closely. Let’s bring up some of the other things that are on our docket. About 1:30 p.m. U.K. time. More U.S. data to keep an eye on initial jobless claims coming out. Plus, that trade balance data as well. Remember, the job market is still very, very much in focus. And initial jobless claims, perhaps a leading indicator on what we could see in the broader payrolls data, which is also coming tomorrow, 3 p.m. UK time U.S. factory orders, Durable goods data. How is the manufacturing sector looking in the states? We’ll have that for you as well live on Bloomberg TV. And later, of course, is more U.S. earnings. The Apple story fascinating. Booking.com, Coinbase, Live Nation, Live Nation, cough cough. Taylor Swift just saying always a reference. She makes it into this show an incredible number of times. I don’t know how she does. I know we’re trying to balance it out with an earnings and we are expecting for the first time to see a drop in. Sales at this absolute tech giants would be the fifth in six quarters, actually. And they’re losing share to rivals who talked about their difficulties in China. Many times we’re looking for an update on strategy. Clearly, that’s something others have been talking about a lot. And apparently also the Vision pro headset. I haven’t got one yet. No comment. No, I know I haven’t got one either. I’ve got an Android one in January. Kind of this color. Bad news in Apple, though, isn’t there? Yeah. So you do kind of wonder where we are in terms of the the station expectation management story. Precisely. And well, just expectations story. I’m not sure there’s much management going on and whether or not that could lead to the potential for a surprise here. Is Apple still a macro story? Does does the broader S&P 500 still care about the Apple story as a kind of proxy for the consumer, proxy for global trade, etc.? Or do you start to see a divergence tween Apple stock in the broader market and a political story as well? Yes. Also right. Coming up on the program then, Standard Chartered reports first quarter results beating estimates boosted by trading and its wealth business. While as IAG announces a fresh share buyback. We’ll dig into all of these European bank earnings stories a little bit later on in the program for you. Plus, the US and Saudi Arabia are said to be nearing an historic defense pact that would potentially reshape the Middle East. We’ll get the latest from that Bloomberg exclusive story and look at the impact on oil. Up next, mass reaffirms its global container trade forecast for the full year. We’ll speak to the CEO, Vincent Clarke. He’s going to join us shortly. If you have any questions you want to weigh in on these conversations, please do get in touch. I.B. Pills, TV Go is the function to use on your Bloomberg terminal. This is going back. Good morning. Welcome back. Tuesday, the 2nd of May. 17 minutes past the hour. We got 42 minutes and there’s still the start of equity trading here in Europe. We’ve got a lot of corporate news that we need to fold in to today’s session. Plus, also the Fed, of course, that is what we’re thinking about. So let’s start with one of the bigger corporates, too. We’re seeing reporting numbers this morning. That is AP Moller-maersk. The numbers look good. The key thing, the key line that seems to stand out at the moment is the shipping giant is saying its full year global container trade outlook at the upper end of its guidance. Let’s talk about why it has the confidence to make such a statement. We’re joined now by Vincent Clarke. He is the CEO of this company. Vincent, good morning. Thanks for the time. Thanks for joining us here on the show. What gives you the confidence to put a line like that out that you see fully a container trade at the upper end of guidance? Yeah, I think what we have seen actually consistently since already the second half year of 2023 was a real resilient market, a recovery into the US and a very resilient market in Europe actually ahead of some of the macroeconomics that that that you’re reading about. And this resilience has continued in in the first quarter here and seems set to continue also well into the second and possibly the third quarter. On top of that, we’ve seen actually markets into from the Far east into emerging markets actually take a turn, a positive turn with respect to container demand. And we’re seeing today very strong demand into Africa, into the Middle East and into Latin America, for instance, that are driving a very positive sentiment. But what this is going to mean for container demand here in 2024. It’s a lot of excess capacity coming into the market as well. Though I say excess capacity, it doesn’t feel like it’s assets excess now, but maybe it will do in the future in terms of kind of the supply demand balance. Right now, it feels like it is in balance and you’re able to talk about a positive picture, but to what extent is that being driven by the story out of the Red Sea, the story out of the two canals, which is so critical to Panama and the Red Sea Canal right now, how much of that is masking what is going on underneath in the market and giving a false impression maybe of the fact that this market is in balance? No, I think you’re absolutely right. There is a shortage of capacity today because of this combination of strong demand, but also because of the demand for extra capacity that there is to cope with the Red Sea disruption. Just a few months ago, we were looking at a much more dire picture with a lot of new tonnage coming in and maybe a more subdued demand, which would have created a very different environment for us to operate in. This gives us the strong demand and this disruption gives us a temporary reprieve, which is very positive for 2024. But we continue to be concerned over the longer run by potential downside risks on on the macro, on container demand as as interest rates stay higher for longer and also on continuing to see a lot of these new vessels coming on line. And that will eventually, on a fundamental basis, mean overcapacity coming in and price pressure returning to the market. Vincent is creating in London. He expanded on the security situation in the Red Sea. When are you forecasting that those are safe waters to go through again? Yeah. I think what what has become clear compared to just a few months ago is that the situation is becoming more entrenched, the conflict is becoming more entrenched. We have had to rejig all our network to be much more permanently set to sail south of the Cape. Our view right now is that at minimum we will be well into the second part of the year before we can. We can even consider restarting the network and the possibility that by the end of the year we will still be sailing south of the Cape of Good Hope is certainly increased significantly since two months ago. What would you need for those security conditions to look better, especially as I think I mentioned earlier in the program, the Houthis are actually expanding their attacks, not actually bringing them to a close. What does a safer security situation look like in the absence of just back to completely normal? Yeah. Given how dynamic the situation is, it’s actually very difficult to be able to paint a picture of what are the different points or things that we would need to see. As you rightfully say, the situation in the last few months has seen more escalation than de-escalation. And that’s that’s what leads us to actually believe that this situation is going to be with us for longer rather than than shorter. What what the solution looks like. I mean, it’s hard to see a good solution that doesn’t come through a resolution of the conflict between Hamas and Israel, which is what triggered actually the situation, the situation in the Red Sea. And it’s hard to see it actually from from the experience that we have had in the past few years, that without a solution between that conflict, that we would get to a military solution in the Red Sea that would guarantee safe passage for the trade, I think it’s very difficult to see that. Vincent. Good morning. Can I ask you about contract negotiations? Clearly, during the pandemic. The industry benefited from much higher shipping rates and then managed to lock some of those in after the pandemic and through longer term contract negotiations. So tell us about the trajectory of your of the shipping rates you’ll be able to secure because of what you’re able to do on those longer term negotiations? Yeah. It is clear that given the shortages that we have seen since the beginning of December and are set to continue for for at least another quarter, maybe two. We are able to secure in our contract higher prices than we would without that situation of tightness on on supply and demand. And that is that is contributing also to us lifting the bottom of our guidance for this year because we have much more confidence in both the operational situation, the volumes that are in the market for us to transport and the prices that we can achieve in in this set of circumstances. A visit in terms of the competition in the markets. I understand from colleagues that MSI is has replaced you to become the world’s number one container carrier. That was back in 2022. But some are looking at the rates of expansion that rivals plan and suggest that you could drop to third place. Wonder Can you tell us what your thinking is on that and the extent to which that that matters that will influence his strategy. Thing for us. Our strategy is very clear and it is not to grow share in in shipping or to retain number one or number two places. Our strategy is about diversification along the supply chain and into logistics in businesses that create more value for our customers and that provide us also with more predictable and resilient earnings. And that’s what we will continue to do. We are in a situation today in the in the shipping markets where actually market share has very little bearing on your ability to to generate margin or superior financial returns. And given the volatility that there is in this market, I think this diversification strategy that we have continues to be our focus and therefore we’re not too worried or interested in in the relative evolution compared to others orders or order books or market shares. Okay. Okay. So, Vincent, if that if the focus of of expansion is around logistics, creating value for shareholders, and just like the former CEO used to talk about the focus on the logistics side. Talk to us about DB. Schenker There’s been there was some surprise in the markets when you expressed confidence or some interest, at least in that business. Where have you got to on that? Are you still bidding? What are your chances of getting hold of that German logistics assets? Well, there is nothing new, really, compared two or three months ago when we announced that given the size of of DB Schenker and the the alignment that there was with all the potential alignment that there was with our strategy, we would look into this, this process and figure out whether this was a good fit for us and and the asset could be could be purchased at a price that did make sense for us. This process is still underway and there is nothing really new since then that that we can share. Yep. Where else could you be looking, Vincent? The the the European story is getting more and more interesting. And as much as it looks like we’ve got a ports crunch as well, I’m wondering where you see the opportunity in the logistics chain right now. Where are the biggest crunches and where are the biggest problems that need to be resolved? Yeah, I think there are two there are two main issues that our customers are facing. One is just the fragmentation of the offering, which means a very vulnerable supply chain. We’ve seen this during COVID. I think a lot of customers are saying is right now with the disruptions in the Red Sea and they are looking for partners that can expand their offering and they can actually take care of bigger chunks of their supply chain and guarantee outcomes that they otherwise have a hard time getting to. That’s that’s the one thing. And the second is still the digitisation, the technology, the integration of of data, so that they have a better understanding of the flow and a better management there. And then lastly, maybe also decarbonization. And the green agenda continues to be also a very, very prominent part of the conversation. All right. Benson Clark, the CEO of Maersk, we thank you so much for your time this morning. Coming up on the program, it’s back to the macro as the Federal Reserve for the markets continue to digest. Jay Powell as Commerce. We’ll discuss that with our guest. Coming up next, this is Bloomberg. The whole game plan is basically unchanged. We’re going to keep rates here until we’re highly confident that we’re going to get inflation down to 2%. No hint whatsoever of a rate hike. I think there’s a lot of relief here that the chairman stayed true to what we’ve seen from this chairman. I think Jay Powell was particularly disciplined here. I think he stayed on message very well. There’s a clear bias towards easing and he stuck to that. They’ve left wide open the question of why has progress been slipping less than they expected on the inflation front? The Federal Reserve is not living up to the commitment on inflation that other central banks are. Let that tight policy work for longer. I think that’s about as far as their they’re ready to go today. That’s that’s hawkish and may we’ll see what hawkish might look like in June. This is really good for the markets because here is a Fed that’s telling us look at the longer term, look where inflation was and look where we’ve gotten it to. Don’t worry about the last couple of months. We’ll see what happens there. Some of the guests on Bloomberg Television reacting to the latest Fed decision and Jerome Powells comments. Let’s get a little bit more analysis this morning. Althea Espinosa had a fixed income strategy over at Saxo Bank joins us. Althea, a pleasure to have you on the program. I’m going to leave the rate story to guide. And I’m really curious about the quantitative tightening piece because it feels like that was what was new when it came to this. This is commentary from Jay Powell and his colleagues. What do you make of that slowdown in June? Is this going to be a real shift in terms of what the bond market and how the bond market is able to cope with the changes? Well, creepy, I don’t think is going to be a massive machine. And the reason is that the while the Federal Reserve is going to taper quantitative tightening on the other side that we have the US Treasury maintaining coupon issuance at very high level to the same levels that we’ve seen in the first quarter of the year, with the exception that net terms these quarter, we are going to see a net coupon issuance, which is the highest that we have seen since 2022. So I think that the the message that came out from the Federal Reserve yesterday, it’s quite dovish. And the reason for that is that the quantitative tightening has been slowed down to $25 billion a month. Policymakers, So we’re talking about $30 billion cap and that would have been enough to preserve the T-bills within the Federal Reserve balance sheet by lowering it to to 25 billion. Samantha. The Federal Reserve is basically preserving also a chunky part of the coupon bearing US treasuries. And the question at this point, is it a coincidence that that announcement came just after the US Treasury said that that elevated coupon issuance that is going to stay here for the next couple of years? There is a real question about that monetization of the US, that tier. So to translate that then into what that actually does to the yield curve for the shape of the yield curve, how do you see this playing out? Well, the front part of the curve is going to hover around that 5% because we’ve had quantitative tightening tapering. Well, the Federal Reserve is going to cut rates later than expected that Powell really this means that the chance for imminent rate cuts at challenging the dot plot that we just received in March is showing three interest rate cuts. But the long path of the yield curve back is likely to continue to rise. The reason being is that there is going to be some relief in duration because the Federal Reserve is tapering it. But really, we are getting a lot of that U.S. Treasury coupon issuance. The ten year auction size is the largest on record that we have ever seen. Althea. Good morning. How should we think about QVC alongside more standard monetary policy? Because the Fed likes to say that they are. What they do on duty is independence of the rate story you’ve linked. You’ve linked it to the bond market. But link the two for us. Well, I don’t think that that they are really independent. And normally the Federal Reserve, that begins to as slow down quantitative tightening when is looking to ease the economy. And that I don’t think that it’s a coincidence that they start from tapering these time around as well. The problem with rate cuts this year is that we have a US election coming up and that we know that the Federal Reserve is not going to be inclined to cut rates in the middle of the election campaign. So September is out of the question. July, it’s still too close to quantitative tightening, yet we are left with November and December. But, Anna, yesterday Powell said that that the economy remains really resilient and doesn’t warrant interest rate cuts. So it might be that we don’t get any rate cut for this year. Hmm. Why do you make such an explicit link to the policy Excelsior? We had quite a lot of pushback from Jerome Powell. I suppose you’d expect that. What we did hear that pushback yesterday from the Fed around, you know, not going they’re not thinking about the politics. Well, yes. So the Federal Reserve is definitely a political but is formed by people that are going to vote in the US election. And that when we try to pinpoint that what the Federal Reserve is doing, well, the Federal Reserve is tapering quantitative tightening. When a bank reserves are almost around the $4 trillion set, they are nowhere cars and that buys looming down duty would be do is easing lively financing conditions. Why do they do that that in June now when the election campaign is going to start in September. I just believe that they do that because they are afraid of something breaking. And Q is just a way to ease financial condition and have a smooth sailing to where the US election. And the. The feds seem quite comfortable with the idea that inflation is is still tracking lower. Do you think how how important is inflation do you think, in the Fed’s thinking right now? I don’t think that the Federal Reserve is thinking about inflation or not. We have received quite bad numbers in the past couple of months that they are indicating that the inflation is bottoming at the very elevated levels and there are signs of that, probably a rebound from this level. So the problem that the Federal Reserve has right now is that the bond performance that is driven by inflation, if the Federal Reserve doesn’t resolve the inflation path to the bond market, it will do that. That by taking the situation under control already right now. And if we look at inflation premium, so the premium that investors are demanding to hold that US Treasuries is at and at the level that we have seen only eight times since the 1980s until today. It means markets perceive that inflation risk is demanding a premium and if the Federal Reserve dismisses it, they will demand a much higher premium. Okay, so what’s the right trade? Give me. Give me the scenario. You painted a scenario. You made that really clear. What do I do if I want to position for that trade? Remain very cautious and try to peak at duration and quality care fully. And you want that to stay in the front part of the curve. If we take the two year US Treasury, we need the IANS to rise well above 11% within a year. In order for that position to provide a loss. And when we look at credit risk, it’s very good idea to remain in high quality companies and looking at to secure rupee cap over US Treasury, but not extend duration too much. Don’t expand duration too much. I’m hearing that trait a few times over the last 24 hours. Thank you very much, Althea Espinosa, head of fixed income strategy, joining us from Saxo Bank. Thank you very much indeed. Let’s get back to the corporates we’ve just been talking about. The Novo Nordisk continues to ride the wave of the trade as Europe’s biggest company boosts its outlook. We’re going to talk about that stock. We’re going to talk about so many of the stocks that we have reporting numbers this morning. We will do that next. This is Bloomberg. Welcome back to markets today. We are 17 minutes away from the sounds of cash equities trading. The futures picture looks fairly mixed actually for European stocks. We’ve got a number of earnings reports out this morning. We’ll see how they factor in to the opening trade in around 17 minutes time. Joining us now to look at some of the macro themes, market lives. Van Ram with us this morning from Dubai. That very good morning to you. So the Federal Reserve, Jerome Powell keeping hopes alive for an interest rate cut and tweaking, Kitty, a little bit in that direction. Did you what was your big takeaway from the Fed? Does anything change for you crucially? Morning. And I think that the big picture is still the same. The Fed still thinks that there is room for them to cut. At rates they tend to go. I think it’s a pretty fair estimate given that we still have eight months left on the calendar. Powell remarked yesterday that there are broadly two parts to the Fed cutting rates, the first obviously being greater confidence that inflation is converging to target. The second being the weakness in the labor market. Well, they are not going to get the confidence on the inflation front any time soon. So we need to see how the labor market fare as in the months to come. What we have seen is that the jobs market has lost some momentum. There is no question about it. But on the whole, it’s still healthy. I mean, they’ve got to admit that prints that we have seen show the economic resilience. Historically, what has happened is that we don’t typically go into a recession gradually, but rather abruptly. It all falls in one fell swoop. And so it’s still possible that we could get one or two rate cuts, which is roughly what the markets are positioned for and which is the outcome that Powell would have wanted last night going into that meeting. Okay. And then we saw some movement in the end, after we after we got the the statement from the Federal Reserve, we saw some movement in the end. Perhaps it was intervention. I see a trader talk piece this morning saying this intervention looks doomed and desperate. Are we seeing more intervention? Is that what it looks like to you then? Well, I mean, yesterday’s moves in context, I mean, the Treasury yields swung a lot. I mean, like 11 basis points on the day. Given those kind of moves, it’s not hard to see the yen moving as much as it did. But I think the big picture is that. But you know, too much of the marketing up getting caught up in bed on. Call it the body image affair in the markets. I think that is kind of distracting the wider conversation. The big picture here is what happens, what happens to the yen. And I think that the markets are still underpricing volatility. The yen, as the markets are thinking the yen will snap back to 115 one month’s time. I think that that is underpricing the volatility in the market. So it could go on for longer than people think. All right, Van. Don’t go anywhere. I want to stick with that currency conversation. But before we do, I want to bring a chart to everyone’s attention. A chart that very specifically caught my eye when it comes to the dollar in particular. And this is really interesting. I’m really excited. I got so excited about this and I decided to stand up to really show you what I’m talking about here. The dollar positioning is really important going into the story. Now, of course, we know this kind of higher for a longer narrative from the Federal Reserve suggest that there are going to be those bullish dollar bets. But just look at how bullish people are getting. And that’s why I want to bring your attention to this bottom panel here, which shows this green on the screen. The surge that you are seeing. It is your most bullish people have been all the way going back to 2017. This is even pre-COVID. It really speaks to this idea of just how much the Federal Reserve is changing this long dollar bet when a lot of people are saying this is a crowded trade at the end of the day. Compare this, by the way, to what you’re seeing was acceleration during those supply chain cuts that post COVID surge you saw on the dollar. I’m curious what that means, Ben, I’m going to bring it right back to you. Is the bet on the dollar still very much driven by interest rate differentials or is this a capital flows story at the end of the day? I think it’s very much still an interest rate differential story, because if you look at the markets, the markets are now thinking 35 basis points of faith at a possible. Now, what happens if the economy proves to be extremely resilient and inflation proves sticky? In that case, I think the dollar and the dollar in the broad sense has got more to go. But what happens if the economy caves in? And then so the dollar, I think in that scenario, the dollar is kind of overpriced. And I think that there is a bigger scope for a correction in the dollar than there is room for it to run up. So I think there is an asymmetry in the kind of positioning for the dollar. And I do think that the risk reward is also asymmetric from here, i.e. the risk of a correction in the dollar is is bigger than the risk of it running up too much from. All right environment our markets live team. We thank you so much for a little bit of a spotlight on the currency picture. We get more from Ben and the rest of the team and I’ll get up to date analysis on MLive. Go on your Bloomberg terminal. Very easy function. You’ll get real time data. In the meantime, please continue that currency conversation as well, because as we were talking about the dollar, we’re already seeing some moves this morning in the euro, the yuan, and of course the Swiss franc as well. Swiss franc is really interesting. So the Swiss have already cut. Yeah, surprised this surprised everybody, but certainly surprised many with that cut. So this morning we get data out of Switzerland. The CPI number is coming at 1.4. Now. The number was one. The survey was 1.1. This is a hotter than anticipated inflated inflation print out of Switzerland, sticky than anticipated inflation, just flagging the risks of central banks going early on this story. This may be a blip. This may be a one off. Who knows? But it just again, just kind of finds a little warning shot across the central bank’s bounce about. Do you want to go early with cuts? Yeah, really interesting. I remember a conversation earlier on this week with one of our guests who was saying inflation. He was talking about the US, but you could apply it as inflation is not sticky. It’s stuck. Yeah, and that’s that’s an interesting one. If the market starts to come around to that way of thinking, then that changes our expectations. Obviously for rate cuts also, how do you treat it? I mean, Ben, there was talking about it as very simple is still be an interest rate trade. But if the Swiss franc is kind of your alternative as a funding currency to the Japanese yen and then you see moves like this, which may be maybe a one off, maybe more sustained, what’s your alternative? If you got the yen off the off the docket, you’ve got the Swiss franc potentially off the docket in the long term. Where else do you go? So this is the problem with the funding trade. So these are funding currencies that are being used by a lot of people. There are others out there, but there aren’t many out there. And you’re starting to see volatility in the landscape in a much more pronounced way than we’ve seen over the last few years. Do these carry trade still work in that environment? And if we if we get into a greater or a more volatile environment and the Fed is kind of hinting about that we are data dependent that yes, that would imply more volatility, do those traits still work? We saw plenty of bond market volatility whilst there was no fixed and no equity market volatility. So now maybe we get it in effects as well. And to your point, I get some some colleagues writing on the blog that gets a handle this morning about how more data dependency leads to more volatility because every piece of data can can change your thinking. And the other side of that trade as well to your to your point about the volatility is, yes, we talk about the Swiss franc and the Japanese yen as well. The other side of that very popular trade is the Brazilian real in the Mexican peso rate. And if the concern around the euro, for example, and even the pound is what does a Fed that doesn’t cut for a while mean for these currencies, that squeeze gets even more acute in some of the stories, especially in Latin America, which, by the way, is far more commodity exposed, more copper exposed as well economies, not to mention the oil story as well. So there’s to your point about that kind of easy carry trade disappearing. Here’s a great example. Absolutely. Let’s go for the switch. Switch asset classes. We’re going to go from what’s happening in the world of foreign exchange to the world of equities. There are lots there’s there is a lot of equity news out there this morning. Joe Eastern is having a busy, busy morning. Let’s see what he’s kind of taken away from it over here. Morning, guys. One of the busiest sectors today is the financial space. Lots going on. We have got earnings out of stanchart, smashing expectations for the dual listed Hong kong and London bank today. One Q adjusted pre-tax profit above $2 billion versus expected 1.6. A lot of that is driven by the wealth and retail business. That sector did see an 8% gain for STANCHART, according to the report, and only a very small charge on the Chinese real estate. That was an issue. Would that be a big impairment on that sector? Doesn’t seem to be the case. That looks positive there. Then also in Spain, Madrid reopening following that holiday yesterday and yesterday, we did get details of Bbva’s takeover of Sabadell and we’ve brought the numbers up here. So every share for Sabadell 4.8 of those will be exchanged for one share of BBVA. Now, BBVA says that that is a 30% premium by ARM. And I reporter tells us that some of that is already priced into the premium. Looks to be about 17% according to her calculations to keep an eye on that one. The merged entity will have around €1,000,000,000,000 worth of assets according to the two companies. Finally, we’ve also got numbers out of IAG beating expectations as well, has this one on the screen. They are doing a buyback as well. The buyback there is €2.5 billion. So chunky one out of that one. All of those stocks should get a boost. But take a look at sabadell almost doubled already over one year as that down is priced into the market, then we’re going to move over and look at Novo Nordisk, the obesity drug giant smashing expectations as well as an epic sales of 27.8 billion Danish kroner in the last period, according to them. And in terms of work, over 20,000 people a week now joining that drug in the US versus only 5000 a week at the end of last year. So explosive growth in both of those obesity drugs. And as a result, they have upped their guidance for sales for the year to as much as 27% from as low as $0.18. So a big one that the three year chart on Novo looks very impressive. Of course, we can see that gain at 287% rise for Novo Nordisk given those obesity drugs. And as we’ve been covering before on the show, that does make Novo the largest company by market cap across the entire European space, bigger than LVMH, ASML and Nestlé as well. Just showing how strong that company’s been over the past few years. Finally, we’re looking at Merck numbers out of them staying in Copenhagen. A positive reaction expected from this one. We’ve seen some gains on trade already. They say that container trade volumes will be at the upper end of their previous guidance, according to Maersk today. Now, the issues in the Red Sea are expected to continue for the rest of the year, but that has the had the positive impact on rates and that’s fed through into their profits, which are beating expectations we’ve seen again this year. But if we look back across the pandemic period, we’ve got a long way to go to get back to that peak when we had a wave of supply chain disruption. But for now, the earnings almost look pretty positive. And as I say, gaining on the trade exchange this morning. Joe, thanks very much. Our equities reporter Joe Easton with a host of companies to keep an eye on from financials to energy names. Interesting debate going on on the t blog around Shell about whether they continue to keep up this pace of buybacks given they’ve done so, so much for so long and the balance sheet looking increasingly healthy in the eyes of some. So we’ll see what analysts come back with on that. The French finance ministers out on the tape certainly catching on. Time is not going to move. The primary thing must stay in Paris, is basically saying another strategic asset for the French. It has implications for shallow. What can can they do that? Can they? Yes, I’m pretty sure they could. They could make life very difficult. If moving, leaving jurisdictions is very difficult. Leaving you ahead causes is very difficult. Okay. Lots of questions coming up. We’re going to answer them all. It’s the market open. Futures are pointing higher, at least when you look at the footsie 100 year. Not that they’re not doing as well. Stick with us. This is Bloomberg. Couple of minutes to go until the start of trading here in Europe this morning. US stocks did this and then they did this yesterday. So we basically kind of ended up where we started. And therefore for European markets this morning. The guide I think is relatively limited out of the states yesterday. So what I think is going to happen here is that single stocks are going to have a quite a disproportionate impact on what we are watching. London looks like it’s going to be fairly positive. We’ve got a pricing shell this morning. You’ve got a price in Standard Chartered, which looks like it’s going to have a decent bounce. NOVA is obviously in the mess it makes. You’ve got to put Maersk in there as well. There’s a lot of big names with a big impact today, plus a few dips as well. Yeah, you David was thinking about where we were yesterday because we’ve got a lot of energy names reporting this morning and In Focus and energy stocks were weaker on the back of that drop of oil in oil prices that we saw on inventories and also geopolitics. Some of our reporting colleagues at Bloomberg talking about what could happen between the US, Israel and Saudi Arabia. All of that adding up to a slightly lower oil price. I’m really interested in the Maersk story here because literally three months ago when we had this conversation with Vince de Klerk, which you just had, he suspended buyback, suspended guidance. It was a brutal, a brutal drop in the stock price as well as is expected of those Red Sea tensions. Do you recoup the move coming off of this kind of brighter demand picture, this brighter demand story, demand story, and really kind of saying that these Red Sea tensions, they’re here, they still exist, but perhaps not going to be as much of a wait as previously. And they flatter the business to your point in terms of the demand story. And then you’ll know in answer to my question about pricing and contract negotiations, they flatter there as well. Absolutely. How does that continue for is probably the most important determinant here. 20 seconds to go. Keep an eye on the banking sector as well. Standard Chartered looks like it’s had a good time in wealth management that’s going to probably boost its share price this morning. We’ve already seen that in Hong Kong. IAG sounding really quite positive as well. So buyback critics excited about the buybacks. Buybacks are big feature of the landscape once again. So here we go. European markets are opening a lot to price in. We are anticipating that the Footsie 100 gets a little bit of a pop. We’ll wait for that to come through. It’s starting to turn a little bit more green, but also sort of going into May. And I wonder whether there’s some jitters around that as well. But at the moment, I think probably everybody’s focused on the bottom up story, what is happening with the single stocks. We’re beginning to climb a little bit in London. What does the early action look like? Hmm. In terms of that early action yet? Just a little bit of upside then for the London market, as you suggest. Obviously, a lot of markets were closed yesterday in Europe and elsewhere. So that will add to the divergence between London and the rest today. In terms of those energy names, then looking to see if we get movement, it looks as if we’re a little shell coming in very hot right at the beginning of the session index move here. One of your biggest top performers, higher by one and a half percent. That’s moving the docket. But it’s kind of it’s it’s a lone wolf there because you look at some of the other energy names, they are all in the red. So to your point, yeah, they’re sector. Exactly correct. Which I wonder if it’s kind of a bit of a macro read through as well. You are seeing some of the banking names higher, though, as well. HSBC is your second biggest index contributor to the Footsie, coming right after Shell. So are the London Stock Exchange. And there’s some interesting kind of financial names in play here in terms of the best performers this morning. Vestas is a little soft. We’re going to talk to the CFO CEO tomorrow. Looking forward to that. But that stock certainly looks very soft. Novo is understandably the biggest kind of points game, but I think he’s in there as well. HSBC looks like it’s up as well. I wonder whether that’s the Hong Kong the Hong Kong session really stands out to me this morning. It was very, very strong. And it looks like you’re getting some divergence between the Hong Kong market and other major markets around the world, which I think is worth paying attention to. And HSBC may be a beneficiary of that this morning. Plus, also what Standard Chartered had to say this morning to luxury is popping higher. Pandora is up quite strongly. It’s had some very strong numbers as well this morning. But weakness in energy, even Shell is now down by half of 1%. So despite the the news they delivered this morning, that stock is weakening in line with the rest of the sector. Now, the rest of the sector is down by much more, but it is still down. Yeah, I think the London listing of Shell looks a little stronger. So with this, we’ll dig into the details there. But AP Moller-maersk in Focus as well. That stock down by one and a half percent this morning. And we’ve of course spoken to the CEO earlier on. We talked about what he had to say about global container rates and about the Red Sea and the extent to which that all persist. The impact from the Red Sea conflict will last most of 2024. And he said that certainly into the second half of this year, that was his expectation, that that’s where you’d see the impact and that was in the lower end of their profit forecast range, that not having a positive impact on the stock though that went down by two and a half percent this morning. You’re right about Shell. It looks like it’s the the other listings that are moving that story down. But but the rest of the sector is soft. But yes, know Shell in London is currently higher by 1.33%. I apologize for the error. Where does this take us? I think it’s really hard to to kind of pull stories out of this, to give us a clear sense of direction. What is what is the read across here? The financials actually sound quite positive. So that’s that’s a that’s a fairly solid foundation for the market elsewhere. I think it’s a more murky picture. I think the the mask story is difficult to navigate, to excuse the pun, in terms of what actually it tells us. I think there’s a lot of geopolitics folded into that story. And the old story, I think, is all over the place. I think it’s really hard to get a handle on what is happening with the oil sector right now with with this kind of Saudi story hanging over us. We potentially could see a deal between Saudi, the United States and Israel. What would that mean for the oil story? So I think that’s a difficult one to read. Is that an overhang? Is the geopolitics still an overhang in this market in terms of kind of do we if we do get that either normalization talks or do we see that deal? Is that then ultimately a positive or does it really ultimately just come back down to the monetary policy story? Where is the relief rally on the idea that maybe there will not be a hike? At least this is what Sherpao had to say on the subject. Take a listen. I do think it’s clear that that policy is restrictive and we believe over time it will be sufficiently restrictive. That will be a question that that the data will have to answer. I think it’s unlikely that the next policy rate move will be a hike. A little bit more on that. Let’s bring in on the markets. Kevin was at portfolio advisor investment committee member at Car Maniac. I’m hoping I’m saying all of that right. I apologize, Kevin, if I’m not. Let’s get right into the analysis and write into the monetary policy there in particular, we’re talking a lot about this kind of maybe not a hike on the table, but perhaps a cut. Getting further and further priced out. Is this good news or is this bad news? How are you thinking about it in terms of the tailwind to the equity market? Well, I think Mr. Powell, last night’s word gave something close to a perfect speech. On the one hand, he maintained credibility, so stating that cuts would likely be pushed further out and he’s postponing the decisions on. On that front, in the wake of still solid economic data, solid higher than unexpected inflation data. And on the other hand, he’s been pushing back on on the hikes, which was a growing concern for for markets. So all of this, I think, gives a very favorable backdrop all together for risk assets and for equities, notably. What would bring that kind of a hiccup to the forefront if the monetary policy is kind of on pause at the moment, which I think is a fair way to look at it. Where’s the next growth catalyst coming from? Yeah, well, you know, it could be slower economic data and not as good economic data. And I think that this would be pretty well digested by financial markets, really, and by risk market risk assets. Really what it is, because in fact, markets expectations have adjusted. Now, what is expecting expected for this year on the US monetary policy front? My one one quotes at best. So I think, you know, again on that front, the job has been done by uh, by financial markets in adjusting us per what the Fed might be doing. So should we be getting any kind of signs of a deceleration in economic growth or not as good economic data, then we would likely see kind of, you know, increasing pricing of more cuts, which will be well received, I think, by markets as well, and by risk assets even more so giving the starting point we are at, which again, a solid economic backdrop. What are the cuts? Not because we’ve got a solid economic backdrop. It kind of feels like the Fed is waiting for a recession. The idea that the Fed can lend this economy softly is becoming more and more difficult to entertain, isn’t it? Yes. It’s always been a tough sell. Let’s put it this way. We have collectively all been very doubtful about the possibility of a soft landing in the in the US. But one has to admit that so far this is what is actually being being planned out. And that’s what is on rolling, uh, these days. So, you know, here again, I think that what’s back to the central scenario is more out of, you know, insurance costs and those interest costs are being, uh, or being or being postponed for sure. But again, those are not kind of an emergency in an emergency phase. And so all this is, again, quite favorable for credit for equities altogether. Are the earnings strong enough to justify further equity outperformance, do you think? Well, again, I mean, if I’m looking at what is expected, uh, in Europe for this quarter, they earnings have adjusted significantly on the on the downside. And, you know, again, what is important to be looking at is what’s being integrated. And there’s I’d say I don’t know if it’s a fair bit of pessimism, but I think it’s just quite some some cautiousness out there. So, you know, if we kind of look at, I’d say analysts and investors, which have adjusted on the earnings side, the potential for it’s a decent economic vintage for 2024 for the US, but also for Europe, potentially for China as well. All this would mean that your trajectories going forward shouldn’t be that bad across the board. Kevin, are you concerned or maybe concern is the wrong word? Maybe there are opportunities in it. Are you thinking about how Europe and the US and Central Bank central banks there, the rates will decline at different paces. I’m quoting here a line from the OECD this morning. Flagging that the EU and US central banks rates will decline at different paces. What does that mean for you in your portfolio? I mean, for sure the I’d say strong upward movement we have seen on risk assets for the past six months or so was fueled by two strong factors on the top down from top down basis. One was this synchronized economic recovery of synchronized economic growth for 2024. I think this is still on the cards. And I’d say the second lever was that of a synchronized monetary easing for sure, which again, those, you know, higher than expected or even reacceleration in some inflation measures in the U.S. What is likely ahead of us in some form of divergence in monetary policies. So with the Fed, you know, remaining on hold for most of of of this year, what or is that they will not move before election, not during election. So this kind of pushes back. It’s a potential cut in in December. What ECB might be cutting rates as soon as as soon as June I think misses out has been pretty clear on that front initially. I don’t think it’s going to harm too much. Obviously, it puts some form of a cap or a ceiling or floor. As for how low European rates can go, because it will feed into the Eurodollar, and there’s some transmission between this weakness of the euro and inflation for sure. Okay. And we know about interest rate differentials that could be influencing where the yen is trading right now. Kevin, I noticed in your notes, you talk about the yen and you talk about in whose interests it is to shore up the yen and not have it. We can further. Would you expect to see other players then in an intervention, not just the Japanese? Yes. I mean, that’s you know, it’s something we saw in the in the late nineties which a minister from the US intervening as well so as to kind of, you know, shop uh sharply and generally it could be something that could be happening again. They’re going to catch up. Thanks very much indeed. On Thursday, hopefully, an adviser and investment committee member over a cognac. Let’s take a look at the bigger picture here in Europe. Here are the main stocks that we often follow the core six, Novo Nordisk, obviously, one of the stories that is standing out this morning. But it’s interesting to see the reaction that we are getting in some of these stocks this morning. ASML is down pretty hard, but look at Novo as well. I think it’s this is fascinating. This stock is, as you can see on the screen at the moment, weakening think there are very few of these major stocks that are higher this morning. Schneider is also soft. Nestlé is down. There’s no kind of obvious sort of growth value narrative that seems to be developing here either. Ferrari is showing signs of weakness as well. So it’s interesting how the market is taking some of these stock stories. Merck is down this morning as well. It gapped higher a few days ago and is now fading. That move. Let’s work out work our way through some of the other names that we’re watching. This is turning into a really interesting kind of granular story developing here in Europe. Joe Easton, over to you. So we start with the bank stocks. We have got a move in Sabadell over in Madrid, reopening following that holiday, up 7%. We got the details of that merger. It is actually trading well below the implied price of perhaps some at risk of execution on that one. BBVA coming down. It’s a merger between Sunny Alicante and Bilbao in the north and it is getting a positive reaction on Sabadell at least. But BBVA is declining in terms of the other big banks. Stanchart getting a 6% gain, much bigger than the rise we saw in Hong Kong. In fact, they are seeing some strength in the wealth management business and IAG rising following that €2.5 billion buyback this morning over in Amsterdam, up 5%, a big gain for that one today. Then in terms of some of those other Danish earnings, it’s not just novo today. We’ve got a bunch of other firms reporting that it’s novo, though, extending that decline. That’s down 2.5%. Obviously a massive gainer over the past few years for the obesity drug maker and Merck actually declining. Most of the numbers look pretty positive out of them. But one trader pointing to a line on attributable profit, which is a specific number that they report. And apparently that one is weak. And we are seeing that stock declining 4% in Copenhagen. Vestas, a serial offender over on the Danish exchange, that one declining. That one’s down 4% today. Wind turbines are weakening, but Pandora charm bracelets, we can’t get enough of them come in. They’re also gaining in terms of Pandora stock today, it’s up 4% following some strong earnings out of them this morning. A couple of other quick earnings to bring you on. The final vote there show only up 0.6%. Had a good run today. Hugo boss over in apparel. Pretty strong numbers out of them, but not a huge gain. Teleperformance hit hard this year due to worries about AI encroaching on the call center business, but that is rebounding today following results from them. Strong numbers and world line. Also a serial profit warning that one gainers in the payment processor space, both of them in France. The London Stock Exchange, meanwhile, gets again, they are re buying $500 million worth of stock from Blackstone. Their former investor still has a big stake in them. They re buying more stock from that one. It’s up 1%. It was up around 3% at the open. That one is gaining in terms of chemicals. Finally, we’ve got Beyer, a positive court ruling out of the German company that comes from Washington, a court ruling against a almost $200 million rolling around of one of their chemicals at the Monsanto business that was said to cause health issues. A court overturns that and we are seeing a decent gain for buyer up 5% over in Frankfurt. Jo Thanks very much, Jeremy. Some from our equities team. We’re going to dig into what’s going on in Evernorth Nordisk next. Its it’s shipping four times more introductory doses of its weight loss drug. We know in the United States that at the end of last year. That’s not enough though to shore up confidence in the in the story down by 2.3% this morning for that Danish listing. We’ll discuss those numbers from Europe’s most valuable company next. This is pulling back. People breaking data to bring you this morning. We have Spanish manufacturing PMI dropping onto the Bloomberg terminal. It comes through at 52.2. That’s up from 51.4 and above the 51.4 that economists were anticipating more evidence perhaps of a manufacturing rebound that is occurring. More strong data out of Spain, which will cheer, Kristie, up. But it’s a it’s a slow progress story when it comes to the manufacturing side of things. Talking of manufacturing. Let’s talk a bit about never notice this morning. So in theory, it’s outperformed its first quarter results expectations. So the Danish pharma giants are now saying that it’s going to be quadrupling the number of patients starting the weight loss drug wegovy in the United States. But it looks like some issues around pricing. We’ve got a stock that is now down. So. Earlier on, the indications were that it was going to open higher. Now it is down and and adding significant weight to the K effects this morning actually. Furlong joins us now to give us some sort of assessment of what is going on and maybe sort of clear this muddle picture up for us. So why is the stock down? It’s increasingly becoming sort of a supply issue. We’ve seen with where the the estimates, the the sales or where could be slightly missed estimates. And I think we’re seeing that, you know, everyone’s looking, can these drug makers supply enough product to meet this insatiable demand? And the question at the moment is that they can’t. And today, Novo Nordisk also said that they the demand is expected to continue to outstrip supply for the for the coming months. So that’s the supply side of things, Ashleigh, which you rightly point out to point out, and that seems to be an issue for them. They have increased their guidance on profit and sales. So what do we learn today about the long term potential of these types of drugs? So they’re doing a lot of work to actually increase that that supply and a lot of investment into the manufacturing capacity. So this year, they plan to spend double what they spent previously in investment in manufacturing capacity and as we’ve heard, quadrupled starter doses every week in the US compared to compared to December 5000 people starting on WEGOVY in December 20,000 starting now every week in the US. That’s quite a significant increase and they’re hoping obviously that they can continue to to to ramp up supply to meet that demand. We talked a little bit about pricing here because if there is this demand’s insatiable demand, why are the prices decreasing at a time when the competitor, Eli Lilly, seems to be doing just fine? We’ll be seeing sort of increasing. You know, and governments and and and sort of people who will reimburse these drugs, looking at the prices and, you know, questions about whether they can continue to continue to actually pay those prices, as we’ve seen. Also reimbursement in the home country as well. You know, questions about whether continue to be reimbursed at the same rate. So I think the drug makers are feeling pressure to lower those prices. Yes, certainly in the United States, it’s becoming quite, quite heated, isn’t it? And I noticed in our big tech story, I did mention yesterday about how they drop prices in their home market as you reference that, to try and neutralize some of the politics there. What’s the rivalry with Eli Lilly like? Because they seemed a little later to the party, but then people impressed with their numbers. So where do we stand exactly? And Eli Lilly stock has soared just after they posted results earlier this week and also raised their guidance at the moment with demand outstripping supply. There space for them both. You know, there’s there’s not enough of these weight loss drugs on the market and people want them. So there’s there’s competition, obviously. But I think in the coming years, that’s something that’s obviously going to be very closely watched to see who comes out on top. Expectation management is really important. And we’re two worlds, as you say, that we are supply constrained. The market is extrapolating. How difficult is it to extrapolate on what is what is going on here? It’s really you can compare and contrast in Vedere and Novo really easily the both supply constraints. We don’t know ultimately what the potential of these markets could be. We know it’s going to be enormous. But the kind of the exact nature of the enormous bets is really hard to pick. Well, as we’ve seen, Bloomberg intelligence says $80 billion market annually by 2030. They think that might be conservative now. And there’s many other drug makers, you know, sort of knocking on that door with their own obesity drugs and and as well as Eli Lilly and Novo Nordisk coming up with with different sort of product, oral product things that might be more sort of palatable for patients. Hot topic, but certainly still looking good despite the the little wobble that we’re seeing certainly this morning. Ashley, thank you very much indeed for providing some clarity. Ashley Furlong on what is happening with Novo Nordisk. Of course, you do not want to miss our interview. The CFO of Novo Nordisk is coming up just after 9 a.m. London time. We are going to be hearing from the company’s chief executive a little later on the day. It’s a busy day for Novo Nordisk and we have definitely got it covered. Plus, we’ve got other news coming out of the the pharma sector as well. But Dunn is going to be joining us, too. CEO Stephane Bancel is going to be joining the team a little bit later on 1230 London. Time for that conversation. Listen to Steph. He has many interesting things to say. So there’s lots of great insights coming up on the pharma sector throughout the morning. Watson Pharma. Watson Banks. The earnings don’t stop. Let’s go to the bank’s next standard charter posting first quarter earnings that topped their estimates as that first traders collected a windfall from tumultuous credit and commodity markets. IAG, on the other hand, meanwhile, announcing a two and a half billion euro share buyback for reporting a first quarter profit that beat estimates. We spoke to the CFO earlier, got his take on the macro and how it influences his business. Take a listen. Federal Reserve may be delaying rate cuts that would have a read across to the ECB decision making. So the market expectation is that June will be the first rate cut. But I think the shape of that rate cut will be more benign than perhaps even the market expected. We believe we can operate profitably and in a structural way when rates are at 4% and we expect that we can operate quite profitably even if rates comes down to two and a half to 75. All right. Joining us now, Bloomberg’s Tom Metcalf. Tom, we just heard from the CEO there. Let’s start there. The Indy number is interesting. Big buyback, though. Is this just catch up? Is this a one off? How are you viewing it? Well, I have been coming out with some big buybacks for a while now, you know, for signs that bank, I should say 2.5 billion, not bad. So no surprise, shareholders have been reacting well over the past few months to that sort of policy. And I thought his comments there were just really interesting, really just convey why banks like I think you’re doing well at the moment. You know, this rate story, the fact rates will stay high for longer, they’re going to be making plenty of profits. And it’s interesting to see kind of the range he gave there as well. Right. Right down to two and a half percent. He’s seen looking pretty comfortable. So that’s the story around that particular business around IAG. What about Standard Chartered then, Tom? We have got a beat there. Wealth management, it seems a bright spot. Yeah, very strong beat, actually. I think shares now up six, 7% in London. And yeah, you had the wealth management there bringing in new money, bringing in those wealthy clients that all banks are trying to chase. And of course, the other thing would be the traders say they’re in the last few quarters, the traders at Standard Chartered maybe somewhat more unheralded than those at Goldman Sachs, but they’re doing a pretty good job and really push those earnings up brutal over at Barclays through the job cuts. Yeah. So this is you know, we knew they were coming and they were started yesterday, basically. So several hundred. And this is right across the investment bank. Yep. So, you know, that comes back to a very tricky situation that Barclays are in. Right. They want to stay as a global investment bank. It’s a pretty hard message to be selling when, guess what, you’re dropping 300 or so people very quickly. It feels like three different breaks, three different stories. Is there a takeaway here that we need to know from this morning’s bank deluge? The takeaway is you got to watch every single earnings individually basically be a time that can just be across it. And that’s the really interesting thing about European banking, I think, is, you know, we’ve got an acquisition story in Spain right now with BBVA and we are well aware. Yeah, it’s a completely different story when you swing, you know, that’s in Southern Europe, you look at how different it is in northern Europe. So everything kind of shifts. Obviously, generally a higher rate environment. Thanks very much, Simone Foxman Metcalf, where the hopes of corporates reporting from the banking space he’s been. He’s had a busy week. He’s joined us a few times and we’re very grateful. Thanks very much. Coming up on the program, shelling out oil. Major Shell keeps up the pace at share buybacks as first quarter profit drops less than expected. That was a key question going into these numbers. Would they keep up that pace? And they seem to have answered that with a yes. The stock is moving higher in London and maybe that’s the listing to look at today given some markets were closed yesterday. We’ll be back with analysis. This is by Maggie. This is Marcus Today. We’re about 30 minutes into the European trading day. Kind of a mixed picture when you look at some of these earnings stories, there’s a lot to digest and no real read through across the board. So let’s dive into them. Maersk is catching all of our eyes. I have to start off there. There seems to be a lot of pressure on Danish stocks. Despite this move and positive numbers. It seems like moller-maersk f Nova will start with Maersk. So what I think is interesting is about much this morning is that there was a gap higher on the 25th, which we almost filled now in terms of the move on the downside. So you just think about the kind of the round trip that the know that Maersk has been on over the last few days. We’re kind of back to where we started. So it’s going to be waiting to see whether this move extends or whether this is simply just a kind of round trip. A little expectation coming in to the stock. You get a boost and then you fade that move. But Danish stocks more broadly under pressure. But as that has been pointing out, the bulk of the move on the Danish market this morning and this speaks to the big take yesterday. Yeah, I just know Novo 66% of the waiting on the Danish index. Yeah. And look at all the points this morning. Yeah, I guess there’s some softness elsewhere. Vestas is down, Max is down a little bit. But to be honest, you can spot that because it’s all down to basically what we’re seeing with Nova. It doesn’t really cut through, does I wonder on the mask side of things as well? Yes, there was not greater guidance, but there’s also this continuing conversation about M&A in the logistics side. And, you know, that’s been the strategy for this business for quite for a long time to not grow on the sea but to grow on land and the wider logistics story. I wonder if it’s some nervousness around that and what that costs. Yeah, the DB Schenker story. We asked the CEO about it. You ask the CEO about it and he said, Well, we have nothing new to update. Surprise, surprise. So that must have been in the market. So he talks that he was quite positive about this today. Is that is that new? No, I don’t think it is. Do you price that this morning? I don’t know. No, maybe not. Maybe not. The thing that moves it. But certainly the the wait is downwards this morning, isn’t it. And what else we got then. We’ve talked quite a lot about the banking sector and the earnings coming through there, bit of M&A to to sort of spice up that sector. Oh, I’m so I’m so obsessed with the Spanish banking story. I it seems like we’re still getting the proper pricing in the proper there’s an expectation at least that there will be some sort of return offer from BBVA and it’ll be some sort of increased offer as well, perhaps lasting at least. How does that become dilutive? That’s the real challenge here, is that there’s quite how do you make this actually make sense if you are going to boost the price significantly further from here, I think is the question that BBVA would have to answer on this. And how big a cost cuts would you necessarily need to generate in order to justify a higher price? And would that be politically palatable? I just get even with even with the deal at the current price to make it work. Yeah, you have to you have to deliver quite significant cost cuts. So it’s politically palatable in terms of. Yes, I don’t I don’t think the Sanchez government is very is viewed as very pro-business at the moment. I’m nerding out, bear with me. But I think the prospect of having a Santander size or similar to Santander size bank coming out of Spain, another one is quite palatable, at least from from international perspective. So I don’t know. I don’t know how that’s viewed politically, to be honest. We’ll see how the Spanish government ultimately reacts to this. We’ll see how ultimately we’ll see how Sabadell works its way through this story. Let’s talk about Shell. The the stock moving this morning strong. Q1 beat lots of buybacks. How sustainable is it? James Heron joins us to discuss what is the takeaway this morning from these numbers? Is it a belief that this is a business that’s firing on all cylinders that can continue to deliver? What is the sense? Yeah, I think so. The big change we’ve seen in the past 12 months is that gas prices, especially in Europe, have dropped a lot. But Shell’s gas business is proving pretty resilient. So profits down a bit on year as expected, but holding up quarter on quarter and they’ve kept up the pace of buybacks. It really is a very sort of strong, dependable performance. Investors seem quite pleased. So what they’re getting is, you know, dependability after lots of years of ups and downs, Covid was a huge problem for them in the dividend cut and now they seem to be back to steady pretty good returns. So yeah, about positive overall I think. Okay. So that’s the story around Shell. What links Bell, Shell and Totalenergies both being talked about as potentially interested in moving their primary listings to New York? This generates a lot of chatter, this kind of story. And interesting to see the French finance minister out this morning talking to domestic TV in France, saying it’s important the Totalenergies primary listing stays in Paris. And what do we make of that kind of French intervention? Yeah, I think it’s to be expected. The French have a more interventionist standpoints when it comes to their companies. The reason they’re totally talking about this and Shell also is this valuation gap they have with their U.S. peers, the Exxon Chevron trading at much higher valuations. And the perception at least certainly what Pouyanne said in explaining his rationale is that because of ESG concerns, European financial institutions just aren’t buying into oil companies. But this obstacle doesn’t really exist in the US, so they think if they move to the US as a primary listing, they can get a high valuation, which is, you know what their job is to achieve, really. So yes, you you’re speaking guys language, the amount of PE and multiple big oil we’ve been speaking about on this show. Talk to us about the. A piece of this business, though if I remember correctly, Shell actually helped drive Footsie 100 to a record at the time a couple of months ago because of LNG nat gas revenue. Yeah. What’s going on in their trading business? The trading business is doing pretty well. At the end of last year they were putting exceptional earnings because the LNG business now. But since the invasion of Ukraine, the LNG business has been making so much money because they can divert cargoes from lower value markets to high value markets. It’s been really driving their profits. That’s come off the peak, but they’re still doing really well. They have higher volumes because they’re producing a bit more and they’ve resolved some maintenance issues at some of their plants. So really the LNG business, which Shell has really invested into and is I think one of the biggest companies out there, is looking like a really strong long term bet, especially as it looks like, you know, Russian gas is going to be out of Europe for the foreseeable future. Oil is at a seven week low. It would be days. Yesterday seems to be the factor behind the latest move lower. What is happening in terms of the expectation around what demand is looking like at the moment and kind of how do I how do I think about a range now for crude? Is it 80 to 100? Is it 70 to 90? What am I looking at? Yeah, that’s a tough question. What’s really changed, I think, is two things. The de-escalation in the Middle East. Yep. When I was looked like it was going towards 100, we had Iran and Israel shooting at each other. Now we’ve got talk about potentially a cease fire in Gaza, but there’s still a lot of obstacles remain to that. And then also the the big shift in sentiment about the outlook for interest rate cuts and the economy has really sort of tamped down the expectations of demand. But then it’s what makes it difficult is those two feed into each other. Right. Because as oil prices start rising, it makes it look less likely they can cut interest rates. But as they start falling again, the the inverse becomes true. So there’s a bit of a feedback going on, though, and it’s kind of hard to see where the equilibrium is. It seems more that it shoots up and then it drops down and shoots up again rather than finding a sustainable level. Okay. James, thanks very much. So Brent, at two 8407 WTI 7959 this morning, both of those are about two three quarter percent. On yesterday’s close, James Heron, thank you very much for joining us. That took all things oil this morning and we were referencing the Middle East there so let’s stick with that theme. Bloomberg has learned that the United States and Saudi Arabia are nearing an historic deal that could potentially reshape security in the Middle East. Let’s get more on this really important story. Bloomberg’s Flavia Cross Jackson joins us with the latest here. Flavia, good to have you on the program. So what do we know about the details of any potential agreement here? I mean, what we know is that the US and Saudi officials have been discussing the contours of a deal that of course, many people will remember. That was meant to be a three way thing with Israel. And what essentially it would involve is that the U.S. would help Saudi Arabia to get defense and some of the weapons that its really wants. And the exchange would be a normalization between Saudi Arabia and Israel. This is something that, of course, before October the seventh was very much desired. And as you’ll recall also an interview that Netanyahu gave with Bloomberg News at the time, he felt that the Palestinian issue was a box that had to be ticked. So he could have this normalization with Saudi Arabia. Of course, October 7th changed everything and everything was put on ice. And the main difference now is that what you’re looking at is the U.S. and Saudi Arabia essentially looking at a deal. And then it would be put to Netanyahu would essentially would sort of have a, you know, the option to either sort of get in or not. But the main hurdle here, of course, is Palestinian statehood. That is just something that right now Israel can’t contemplate. So I think we need a sort of degree of skepticism about the likelihood that this could go through. But the fact that now they’re sort of talking about it and it’s been sort of six months because this was essentially a taboo subject for a while is quite interesting. Flavia, you mentioned there may still be some hurdles here, that this is something to be watched with kind of a skeptical eye. What does timeline look like and in terms of potentially getting this deal done, in terms of developments? I think this I mean, right now, I think there’s a strong sense that this is something that Saudi Arabia really wants. And I’ll probably. So pushing it the most. The timeline we’ve been given is a couple of weeks, but I think we’re sort of sensing a certain degree of hesitation from U.S. officials. And of course, you’ve got a lot of unknowns, right. Is Israel going to go into Rafah? Will there be a cease fire deal? All these things are part of the delicate balance and the considerations that these countries are all weighing. And, you know, another big thing, of course, is that as per a story that we’ve just published, Saudi Arabia is facing, you know, trying to crack down on some dissent in its own country. Right. And so trying to put a lid on any kind of sort of online, you know, protests in terms of sort of criticism of Israel. So they’re also trying to control their own sort of narrative and make sure that, you know, there’s a great fear, of course, of protests going back to sort of the Arab Springs. And a lot of countries in the region are sort of concerned that things like that could sort of kick off again. Player. Is this a first step to a Saudi led coalition, a regional coalition that would take control and responsibility for Gaza? I’m not too sure I would go that far. I think for from the Saudi perspective, I think they have really longed to sort of have access to these kind of weapons. And I think they are sort of looking at a timeline of you’ve got an election year and they sort of want to get this done potentially before the uncertainty around the election. And, you know, this is a way to sort of the optic they’re seeing a potential window and also trying to work out how they could potentially overcome a big obstacle in terms of like the Senate. Right. Because anything like this would have to go through Senate approval in the U.S.. Thanks so much for joining us by Slaviero. Jackson with the latest on those relationships, crucial as they could be to the developments in the Middle East. Coming up, European data is in focus. We’ll be discussing the latest PMI readings. We have the numbers out of Spain, of course, and what they mean for the ECB’s rate. Half that conversation next. This is big back. Folks. Welcome back. Spanish PMI data out this morning, the manufacturing side of things looking actually a little better than anticipated. Remember, these are primary readings for Spain. We’re about to get Italy data as well dropping onto our screens, 45. So about 5 seconds to go until we see those numbers. But the data more broadly this week has painted a picture of a European economy, a Eurozone economy that’s maybe faring a little bit better than anticipated. As I say that the Spanish the Italian data drops and I say drops, it drops. 47.3 is the number on the the manufacturing PMI, the prior 50.4. So a mixed picture maybe emerging on the manufacturing story out of the euro area this morning. Spanish DAX, better Italian data not so good. So let’s put it all together. So Levi’s joins us to get a an ECB perspective on all of this. We saw GDP data earlier on this week. We can folded some of this data. We’re getting fresh data from Spain and Italy this morning. So where does it leave the picture? So manufacturing for a while for the euro area as a whole has been quite disappointing. We’ve had readings below 50 and as a reminder with PMI, 50 is the line that differentiates between growth and contraction. We’ve had those readings under 50 for quite a while now in the area that primarily was due to Germany and France. And that in turn is because of the weak situation in China, Germany and Germany that German manufacturing relies so much on exports to China. So if China isn’t well, that then feeds through. And again, Germany being such a manufacturing heavyweight place through the whole euro area, the Italian data today obviously are quite a disappointment. Last month they had edged back above 50, so we’d seen Italian manufacturing growth again. But now these numbers are bad. And that’s just one of those things as a reminder that Europe is very much split with a very weak manufacturing sector, but services still doing really well. And also feels like and I mean I mean, I’m been harping on the Spanish story all week long, Zoe, only because it is such an anomaly in terms of the broader data we have. The Kaiser makes the one thing it feels like the Spanish economy is on another continent altogether. Does that matter when it comes to ECB policy or simply overall growth in the region? So overall growth in the region, you alluded to it already on Tuesday, we had that bumper reading of 0.3 percent. So quite a massive rebound from that very shallow recession we had in the euro area as a whole over the winter. Now we had that 0.3 reading in Spain. We had 2.7 readings. So, yes, Spain is kind of out of this world. Spain obviously had the advantage that while the rest of Europe very much relied on a relied now doesn’t rely anymore on Russian gas. Spain is energy independent. So that still did the economy there. Now, when we look at the ECB, the ECB, as we all know, a month from now, they’ll be doing that first rate cuts. That’s June 6th. The question now very much shifts to what happens in July. And if the economy is doing quite well, that does mean that there is the danger that a strong economy will again potentially blame inflation. So the hawkish members of the Governing Council who say we don’t want back to back rate cuts, this strong economy, economic readings will mean that they have some ammunition here to hold against the doves. And those doves come from Italy and Spain, although by the July decision, we will have a new Spanish central bank governor. Very, very, really interesting. Then if we end up with a cut in June and we really don’t know what happens after that, I mean, there’s always a danger that if you start a rate path and you only do one, that it ends up looking like a policy mistake. I suppose that’s something the ECB will be very aware of. They’ll be very aware of that. At the same time, they can argue that they maybe only want to cut at meetings where they have economic forecasts. So they have eight meetings a year and they only get economic forecasts at every second one. So that’s the march to June, the September and the December readings at meetings. And that then for them can be the way to explain why they don’t want to do back to back ones. At the same time, the French central banker and others have said we shouldn’t just be tied to these forecasts. So exciting times ahead for the ECB. So you follow the SNB very carefully. We’ve just seen a strong inflation data out of Switzerland. Does it start to look as if maybe the S&P has made a little bit of a mistake going early? Well, you say a strong reading. It’s a reading of 1.4% from 1% to 1.4 that the rest of Europe can dream of numbers that low. The Swiss and Switzerland, again, has quite a generous inflation forecast. It goes between it’s between 0% and 2%. They are within target. So what does that mean? And overall, if we look at the AS and BS inflation path, they actually said that’s their read their projection for the second quarter is 1.4%. So quite honestly that’s though that means that if the ECB wants and wants to have an excuse not to cut again in June, they would have one. But although on the other hand, they if I were betting, I would think that they would cut in June particularly it’ll be two weeks after the ECB and. It’ll put it will put pressure on the Frank if they don’t follow the ECB. Okay, Zoe, thanks very much. Thanks for the analysis. Sipping back economics editor Zoe Sleeves with the latest on the ECB and the S&P this morning. Here’s what else we’re watching for then in terms of the data. The still ahead, 130 UK telling us initial jobless claims. We also get the trade balance data. 3 p.m. UK time US factory orders and durable goods. And then later we get a lot of US earnings and will linger on this for a moment. We’ll get Booking.com, Coinbase and Live Nation. Christie’s on that one. We’ll also get numbers out from Apple. This is going to be a real focus, isn’t it? The Apple numbers we’re looking for for what happens there. We only fix on Live Nation because Guy Johnson is like tuned in mind to it. Taylor Swift tickets coming to Europe. I think she’s coming to Europe this month actually. So I hear that. I know people who have tickets. I’m not one of them. I, I was expecting it to be my birthday present. Still waiting on that guy. Let’s talk about Apple, though, because this is a really big one. Is it? Well, big one. I was trying to make a streaming connection, but I can’t remember what is actually on Apple. Nevertheless. Let’s talk about the hardware piece of the equation. I mean. No, no, no. Sorry to answer your question. Correct. Not that one. I’m going to backtrack here. Apple, the macro story is more interesting to me. I’m curious about how the market takes this, because traditionally when we see these Big Apple results, the next day, we see it really showing up in NASDAQ 100 pricing, etc.. It feels like lately that hasn’t been the case. Apple hasn’t been the macro story that a lot of people watch, despite the fact of that exposure to China, exposure to the earnings story, etc.. And I’m very excited about this one. Well, but it’s a bit like the kind of the Fed yesterday that we already know the news. Well, where does the surprise come from? Well, let’s. Should we ask Robert Lee? He might have some new information for us or at least Bloomberg intelligence senior analyst. Maybe there’ll be a surprise. Maybe we don’t know everything about their troubles in China. Well, but what should investors look out for then when it comes to the Apple results? Okay. Do you want to start with the bad news or the good news? Tell you each. Okay. Well, I guess the the story of weakness in the China business is quite well known at the moment, but I’d say the incremental risk is still to the downside because there’s a growing sense of, dare I say, even nationalism in the way that Chinese consumers purchase by China campaign. Not that that’s an official slogan or a policy of the government at this point. But having said that, the domestic Chinese handset handset so actually really good smartphones are a commodity these days. And if you look at the technical performance and the bang for the buck that you get from a local brand like a far way, it’s really good value for money. And you know, they’re excellent products. So in these sort of more cost conscious times, people are tending to buy more local in China. So that is a challenge for Apple, you know, not just this quarter, but the coming quarters and and even into next year. I don’t think we’ll see a big change on that. Unfortunately for Apple at the moment, what their challenges, you know, where’s the big new killer product coming from? We’ve got the Vision Pro, whatever. But personally, I would argue that as a product for technophiles, people who really like their tech is a mass market product price around 3000 to 3, three and a half thousand US dollars is probably outside the budget of your average consumer. Impressive, though it might be. So I don’t really see that that’s going to transform their earnings. The sort of solid part of Apple that should continue to underpin the earnings going forward is obviously services. And if you’re captured by the Apple ecosystem, then services remains, you know, relatively robust. Well, Robert’s right when it comes to the downside. There was a question coming now. Now there is just. Just thinking for a second. We already kind of got the numbers, though, didn’t we? Counterpoint research put out numbers. We know kind of just how much damage there is going to be. How much sensitivity could you see to the China commentary? I understand that a big part of their business, but don’t we already have the numbers around it? Okay. I neglected to tie in some of the comments from my US colleagues who leave coverage on Apple. I think that, oops, my earpiece has dropped out. Oh, we’re doing well. Sorry. Just a second. Oops. Well, save the cigarette down on the blue. Well, I was just about to save the situation. Robert saves the day. You okay now, Robert? Go on to tell us about what you. No, I’m okay. I can hear you. Yeah. U.S. colleagues have said. I think it’s probably likely you’ll see a bit of a mix shift. Mix shift within their iPhone shipments with a bias towards the higher end products like the iPhone 15 max. So we could see the ASPs come out a little bit better than expected. And therefore, the revenue numbers for the quarter are about to report could be at the higher end. But again, the market looks forward. So if we’ve got ongoing weakness on the China side, that is is obviously an ongoing risk for them. So, you know, the key question for investors and for Apple is where the bit where is the next big killer product going to come from? And to be honest, it’s quite hard to see that at the moment. So I think a remain challenge for them for some time to come. Are we just waiting for the story to develop and for some clarity on what it looks like for Apple? That’s what it feels like. Investors are just waiting for every other stock in The Magnificent Seven has got some sort of narrative around this. Apple doesn’t. It is very quiet on what it’s doing with API right now and we need some information and we just have to wait until we get that to understand what the strategy is going to be. And then maybe that is the catalyst we can use maybe to move the stock one way or the other. Yeah. As you know, Apple likes to it has its bigger product launches and bigger trade events where it likes to talk more about its longer term strategy and forthcoming product lineup. So having said that, I’m sure they will talk about it tonight. But again, just taking a step back and being fair to them, maybe more through accident than design, the fact that they are a little bit behind on air may not necessarily be a bad thing because at least they’re forgoing the tens of billions of CapEx investments that the like, you know, that the rest of the or a lot of the other magnificent seven are having to invest in at the moment. So in a way that’s maybe a positive for them. And also we’re partnering with a more developed player, perhaps like an alphabet or Google again, may be a more cost efficient way for them to gain access to that market. So it may not necessarily be a bad thing in the long run, but we’ll have to wait and see. All right. Robert Lee from Bloomberg Intelligence previewing those Apple earnings for us. We thank you so much. Of course, you do not want to miss our interviews with the CFO of Novo Nordisk coming up just after 9 a.m. London time. And of course, we later hear from the company’s chief executive as well. Plus, later in the day, Bloomberg speaks to the CEO of Moderna at about 1230 London time. That does it for markets today. The Pulse is up next. Don’t go anywhere. This is Bloomberg.

Higher for longer, the fed holds rates for his six time. Fed chair Jerome Powell keeps rate cuts on the table but the timing is less certain. The yen weakens after a surge of over 3% in New York trading, fueling speculation of intervention. Plus another big day for earnings in Europe as Novo Nordisk quadruple the number of patients starting its weight loss drug, Wegovy, in the united states. We bring you more European results and a conversation with CEO of Maersk. With analysis you won’t find anywhere else, we break down the biggest stories of the day and speak to top guests who have skin in the game. Hosted by Anna Edwards, Guy Johnson, and Kriti Gupta.
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00:15:00 – Maersk CEO Speaks
00:25:20 – Saxo Bank’s Head of Fixed Income Research Althea Spinozzi Speaks
00:35:05 – Fed’s Powell Says Rate Hike Unlikely as Next Move
00:47:06 – Shell Maintains Pace of Buybacks, Profit Beats Estimates
01:04:14 – Novo Nordisk Quadruples Patients in the US
01:14:09 – BBVA Eyes Takeover of Sabadell
01:23:45 – Spain Economic Outlook
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