Bloomberg Daybreak: Europe 05/28/2025

Bloomberg

28-05-2025

00:00
LIZZIE: GOOD MORNING, I AM LIZZY BURDEN IN LONDON. WEEK JAPANESE DEBT SALE TAKES THE EDGE OFF THE BOND BALANCE. KEY EARNINGS FROM NVIDIA. THE U.S. STOPS STUDENT VISAS. SPACEX STARSHIP ROCKET LOSES CONTROL IN THE 3RD FAILED LAUNCH IN A ROW. GOOD MORNING. CHECKING ON MARKETS, THE RALLY WAS FUELED BY A SURGE IN GLOBAL BONDS. CAN IT CONTINUE? WE LOOK TO SEE WHETHER THE S & P CAN GET PAST 6000 LEVEL. FLIPPING OVER WE NEED TO LOOK AT THE TREASURY YIELD. GOLD IS A TOUCH WEAKER THIS MORNING. LET'S FLIP OVER TO THE ASIAN PICTURE WHERE EVERYTHING STARTED. JAPANESE AUTHORITIES CONSIDERED TWEAKING BOND SALES BECAUSE OF THE RISE IN YIELDS AND WE HAD A LONG END AUCTION. THE WEAKEST DEMAND FOR 40 YEAR JGB'S SINCE JULY AND YEN HAS BEEN FLUCTUATING IN THE RUN-UP TO THE HOP CHIN AND WE ARE AT 144. A TOUCH TO THE UPSIDE ON MAINLAND CHINA. WE WILL SPEAK TO GARFIELD IN ASIA TO TALK US THROUGH THE AUCTION. > > YEAH, HI. THE AUCTION DIDN'T GO WELL. THERE WAS OPTIMISM GIVEN THE MINISTRY OF FINANCE TWISTING A FEWW ARMS, BUT IT WAS THE WEAKEST SINCE JULY OF 2024, SETTING OFF DECLINES WITH THE 10, 30 YEAR BONDS UP. PRETTY CONCERNING, BUT THE READ ACROSS FOR GLOBAL MARKETS IS CONTAINED. THE 30 YEAR YIELD MADE A FRESH HIGH OF ONE BASIS POINT AND IT IS STILL UNDER 5%, SO THE CONCERNS ARE THERE SHOULD WE GET A POOR AUCTION. LONG TERM, BONDS REMAIN FRAGILE WITH FRESH SELL OFF POTENTIAL GOING FORWARD, GIVEN SUSTAINANILITY CONCERNS IN EUROPE AND THE IMPACT OF GOVERNMENT POLICY VOLATILITY AND THE VOLATILITY THAT BRINGS TO CENTRAL BANK POLICY. LIZZY: JOHN WILLIAMS, I WANT TO PLAY WHAT HE SAID. > > AVOID PERSISTENT INFLATION BECAUSE IT CAN BECOME PERMANENT, SO RESPOND STRONGLY TO DEVIATIONS. GARFIELD: THE MINUTES WILL LOOK FOR HOW MUCH THE UNCERTAINTY WAS COMING IN, WHAT THEY ARE WATCHING TO JUDGE THE TARIFF IMPACT. THE MINUTES MAY BE MORE HAWKISH. WHEN IT HAPPENED, THE OUTLOOK SEEMED WORSE FOR TARIFFS THAN NOW, THERE IS STILL PAIN TO COME IN INFLATION AND GROWTH DECLINES FROM TARIFFS. BUT THE MARKET IS MORE OPTIMISTIC THAN WHEN THE FED MET BACK WHEN THERE WAS CONCERN THE BIG TARIFFS ON CHINA WOULD STAY IN PLACE. LIZZY: GARFIELD REYNOLDS, WE THANK YOU FOR THE UPDATE AND THE PREVIEW OF THE FED MINUTES. IN THE EQUITY MARKET THE NEXT CATALYST COULD BE IN NVIDIA'S BIG EARNINGS REPORT FOR THE FIRST QUARTER THIS EVENING, THE LAST OF MAG SEVEN COMPANIES TO REPORT. BRINGING THE FINAL WORD TO SET THE FINAL TONE INTO JUNE SO LET'S HAVE A PREVIEW WITH MATT IN LONDON FOR BLOOMBERG INTELLIGENCE. IS THIS ABOUT NVIDIA WEATHERING THE TARIFF STORM MORE SO THAN BEATING ESTIMATES FOR THE OUTLOOK? MATT: A LOT IS GOING ON, TARIFFS IS ONE OF THEM INDIRECTLY. DEMAND IS PUSHING THROUGH HEADWINDS, SO THERE WILL BE FOCUS ON THE TOP LINE, DEMAND OUTLOOK, WHETHER THEY CAN RAMP UP PRODUCTION AND WHAT IS GOING ON WITH PRODUCTION OF CHIPS AND WHETHER IT WILL EASE IN Q2. LIZZY: ARE ANALYSTS GAUGING PAIN FROM THE TRADE WAR? MATT: THE H20 CHIP -- OUR TECH TEAM THINK 15 BILLION USD OF IMPACT, 7-8% OF THEIR SALES, IT'S OUT THERE. SO YOU SEE A TRADE BETWEEN INCREASING DEMAND, BUT ALSO FROM THE SMALLER PLAYERS, OFFSET BY THIS TEPID DEMAND AND TEMPERED ABILITY TO SELL INTO CHINA. AN ALTERNATIVE VARIATION OF THE CHIP MAY GET THAT BACK ON TRACK. LIZZY: AI DEMAND WAS THE BIG TOPIC OF TRUMP'S VISIT TO THE MIDDLE EAST, SO WHAT WILL WE HEAR? MATT: U.S. HYPERSCALERS SPENDING HUGE MONEY AND DOUBLING THEIR COMMITMENT WITH HUGE DEMAND OF HUNDREDS OF THOUSANDS OF CHIPS OVER THE NEXT FEW YEARS. IF WE GO INTO U.S. RECESSION, WHAT HAPPENS TO CORPORTATE SPENDING? WILL THAT SLIP INTO AI DEMAND? THAT COULD PLUG THE GAP FOR NVIDIA. LIZZY: MATT, THANKS. WE WILL BRING A LIVE INTERVIEW WITH JENSEN HUANG LATER. NOW THE TRUMP RAISES THE STAKES IN ITS BATTLE WITH UNIVERSITIES. MARCO RUBIO ORDERED THE U.S. TO STOP SCHEDULING STUDENT VISAS INTERVIEWS. BILL FARIES, THIS IS QUITE THE ESCALATION. BILL: THIS MOVE IS MORE WIDE-RANGING THAN WHAT WE HAVE SEEN AGAINST HARVARD OR OTHERS, OVER ONE POINT ONE MILLION FOREIGN STUDENTS STUDY IN AMERICA AND ONE QUARTER OF THOSE MAJOR IN MATH AND COMPUTER SCIENCE. STUDENTS WILL LOOK MUCH MORE AT UNIVERSITIES IN ASIA, EUROPE, THE U.K.. THEY COULD HAVE US APPEAR -- A SEVERE IMPACT AND ADD TO THE UNCERTAINTY STUDENTS AND PARENTS FROM OUTSIDE OF THE U.S. HAVE ABOUT STUDYING IN THE UNITED STATES AND LIVING UNDER UNCERTAIN POLICY LANDSCAPES THAT CHANGE ON A DAILY BASIS. LIZZY: WHAT COULD HAPPEN NEXT? YOU WOULD THINK THEY ARE ARMED WITH THE FINEST MINDS TO FIGHT THIS? BILL: YOU WOULD THINK. PEOPLE SAID LAW FIRMS WOULD NEVER TAKE GETTING PUSHED AROUND BY THE WHITE HOUSE AND SOME REACHED AGREEMENTS TO WORK WITH THE TRUMP ADMINISTRATION. THEY HAVE LEVERAGE AND I'VE SEEN PRESIDENTS TALKING TO FACULTY AND STUDENTS SAYING THEY NEED TO TELL THEIR STORY BETTER. FREEZING RESEARCH GRANTS FUND REAL ADVANCEMENTS THAT START AT UNIVERSITIES. COMPUTER SCIENCE RESEARCH TAKES PLACE AT UNIVERSITY LEVEL, SO THEY WILL PUSH BACK AND TRUMP FLOATED ENDING HARVARD'S TAX EXEMPT STATUS, WHICH FORCES HARVARD TO FIGHT ON A LOT OF FRONTS. LIZZY: OKAY, BILL, THANKS FOR THE LATEST ON HARVARD. WE HAVE THE GERMAN EMPLOYMENT DATA AHEAD OF THE ECB MEETING AND BED MINUTES FOR THE MAY MEETING. THE FED HELD RATES AND POWELL SIGNALED A HIGH BAR FOR CUTS SO WE WILL LOOK FOR CLUES YIELD THE SHOW STEALER AT 9 P.M., NVIDIA EARNINGS IS ONE TO WATCH. ALL THE ACTION NOW SEEMS TO BE HAPPENING IN JAPAN WITH NISSAN PLANNING A $7 BILLION FUNDING AROUND TO FIGHT FOR SURVIVAL. DETAILS NEXT, THIS IS BLOOMBERG. ♪ ♪ LIZZY: WELCOME BACK TO BLOOMBERG DAYBREAK: EUROPE. NISSAN SHARES JUMP AS THEY SEEK TO RAISE MORE THAN 7 BILLION DOLLARS FROM DEBT AND ASSET SALES AMID A HUGE LOAN REPAYMENT WALL. WE SPOKE TO THE CEO LAST MONTH AND HE TOLD US THEY DID NOT NEED A SAVIOR. IVAN: WE DON'T NEED A CAPITAL INVESTMENT, WE ARE FOCUSING ON BUILDING THE RIGHT FOOTING FOR THE COMPANY AND A PLAN THAT IS ROBUST WITH THE RIGHT PEOPLE AND PRODUCT. CASH ON HAND IS ENOUGH, WITHOUT DOING ANYTHING. LIZZY: IN TOKYO THE MAN BEHIND THE SCOOP, READ STEVENSON. WHAT DO WE KNOW ABOUT WHAT NISSAN IS PLANNING TO SELL, ISSUE AND BORROW? > > IT IS NEW FINANCING AS WELL AS ROLLING OVER THE DEBT WALL BUT REALLY IT SPEAKS TO THE NEED TO RAISE SOME CASH TO KEEP GOING BECAUSE WE SEE EXCESS CASH PROJECTED TO SHRINK AND DWINDLE ALMOST 20. LIZZY: WHY IS THIS NECESSARY? READ: IT DEPENDS HOW FAR YOU WANT TO GO. YOU CAN GO BACK TO THE ARREST OF THE FORMER CHAIRMAN BUT THE ISSUES TODAY STEM FROM LACK OF FRESH PRODUCTS. THERE IS LACK OF HYBRIDS, TURMOIL AND MISSTEPS, LEADING TO THE SITUATION WHERE THEY GO OUT AND GET BOND ISSUANCES, SELL OF STAKES IN RENAULT AND ASC AS WELL AS REAL ESTATE HOLDINGS. AN INTERESTING LOAN WILL BE BACKED BY UK FINANCE. LIZZY: PART OF THE REASON IS THEIR ROLE IN UK AUTO MAKING IN SUNDERLAND. I WONDER HOW MUCH A TRADE DEAL COULD HELP? REED: THAT IS IN THE AIR, THERE ARE DETAILS TO BE KNOWN, BUT THE ASSUMPTION IS IF YOU BUILD PARTS IN THE UK FOR EXPORT, THEY CAN AVERT THE TARIFFS ON CARS MADE IN JAPAN AND THIS KEEPS THE OPTION OPEN. NISSAN IS LOOKING TO SHRINK THE NUMBER OF FACTORIES, SOME WILL BE IN JAPAN, BUT THE SUNDERLAND FACTORY, YOU CAN READ INTO IT WHAT YOU WILL. LIZZY: THE UBS ASIAN INVESTMENT CONFERENCE BROUGHT TOGETHER LEADERS AND DAVID INGLES SPOKE TO THE UBS PRESIDENT. > > RISK HAS COME DOWN, BUT THERE IS POTENTIAL OF STAGFLATION AND ONE CALL WE MADE AROUND DIVERSIFYING ACROSSS SECTORS HAS WORKED OUT. DIVERSIFICATION REMAINS A KEY THEME. DAVID: WITH THE FACADE OF U.S. GOING AWAY, WHAT ARE YOU SEEING NOW? > > CLIENTS ARE COMING INTO 2025 AND SEEING HAVING A VARIED PORTFOLIO -- LOOK AT HANGSENG, YOU ARE CLEARLY THINKING ABOUT EQUITIES AND THE BOND MAKRET, -- MARKET, I THINK THAT IS WORKING QUITE WELL. WITH A LOT OF VOLATILITY, WHILE WE HAVE A TARIFF PAUSE, WE EXPECT VOLATILITY. BEING VARIED IS KEY AND WHAT WE ARE HELPING CLIENTS THINK THROUGH. > > WILL RATES GO DOWN? > > STARTING TO SEE INFLATION COMING DOWN, BUT THERE IS TIMING AROUND RATES. IT'S A QUESTION OF TIME AND AS WE SEE FURTHER DATA AND UNCERTAINTY AROUND TARIFFS. SO WE WILL SEE RATES COME DOWN. DAVID: IT IS PUZZLING IF YOU LOOK IN EUROPE OR HONG KONG, WE ARE BACK TO PRE-LIBERATION DAY LEVELS, BOND MARKETS ARE DANCING TO A DIFFERENT TUNE SO WHICH ASSETS SHOULD I BELIEVE? GUEST: AFTER ADJUSTMENTS AND EVENTS THAT WE SAW THIS YEAR, S & P IS AT 5900, HIGHER THAN WHEN WE STARTED THIS YEAR AND EUROPEAN EQUITY MARKETS AND THE HANG SENG ARE DOING WELL. BOND RATES ARE IMPACTED BY PHYSICAL POLICY AND THE U.S. BUDGET AND DEFICIT AND THE OVERALL PLAN THAT WILL BE IMPLEMENTED, THAT WILL IMPACT THE LONGER RATE CURVE. LIZZY: EXCLUSIVE CONVERSATION WITH THE UBS PRESIDENT. PLENTY MORE COMING UP, THIS IS BLOOMBERG. LIZZIE: U.S. PRESIDENT DONALD TRUMP HAS SAID HIS ADMINISTRATION WOULD RETAIN GUARANTEES WITH FANNIE MAE AND FREDDIE MAC. HE WOULD USE A PUBLIC OFFERING FOR THE MORTGAGE GIANTS. BOTH OF THE COMPANIES PLAY A CRUCIAL ROLE IN THE SECURITY MARKETS, SHARES SURGED WHEN TRUMP SAID HE WAS CONSIDERING A PUBLIC OFFERING. THE U.S. GOVERNMENT IS SAID TO BE POISED TO RECEIVE A SO CALLED GOLDEN SHARE IN U.S. STEEL AS A CONDITION FOR APPROVING NIPPON STEEL'S AVENUE POSITION. THE PLAN WOULD GIVE WASHINGTON DE FACTO VETO RIGHTS ON CERTAIN COMPANY DECISIONS BUT THE SCOPE OF THE VETO POWERS REMAIN UNCLEAR. PRESIDENT TRUMP ANNOUNCED A PARTNERSHIP FOR THE DEAL LAST WEEK INCLUDING $14 BILLION IN NEW INVESTMENTS. NEXT UP, UKRAINE'S PRESIDENT IS IN BERLIN. THIS IS BLOOMBERG. ♪ LIZZY: THIS IS BLOOMBERG DAYBREAK: EUROPE. I'M LIZZY BURDEN IN LONDON IN THESE ARE THE STORIES THAT THAT YOUR AGENDA. A WEEK JAPANESE GOVERNMENT DEBT SALE TAKES THE EDGE OFF THE POND. CLEAR EARNINGS FROM CHIP GIANT NVIDIA. PRESIDENT TRUMP WARNS VLADIMIR PUTIN THAT HE IS PLAYING WITH FIRE AFTER RUSSIA'S LONG-RANGE MISSILE AND DRONE ASSAULT ON UKRAINE. A SETBACK FOR SPACEX, A STARSHIP ROCKETS DISINTEGRATES DURING A TEST FLIGHT. THE THIRD FAILED LAUNCH IN A ROW. THOSE ARE SOME OF YOUR TOP STORIES THIS MORNING, WELCOME TO THE PROGRAM IF YOU'RE JUST JOINING US. CHECKING IN ON THESE MARKETS. WE HAVE THE RALLY ON WALL STREET YESTERDAY, THE BIGGEST IN MORE THAN TWO WEEKS BOOSTED BY THE REBOUND OF A U.S. CONSUMER CONFIDENCE ACROSS THE GLOBAL BOND SEARCH. THE QUESTION IS, CAN IT CONTINUE TODAY. FUTURE FLAT ON BOTH SIDES OF THE ATLANTIC, BUT WE ARE KEEPING AN EYE ON THE NVIDIA EARNINGS AFTER THE U.S. SPELL LATER ON, CAN THEY SEND THE S & P ABOUT THAT 6000 LEVEL. FLIPPING THE BOARD TO THE CROSS ASSET PICTURE, YOU ARE AT TREASURY YIELDS LOOKING TO THE 30 YEAR AT 4.9 7%. EURO-DOLLAR 113 HANDLE. BRENT AT $64 A BARREL AHEAD OF THAT OPEC-PLUS MEETING AND GO UP A TOUCH AT 3300 FIVE DOLLARS A TROY OUNCE. THE ASIAN MARKET PICTURE IS WHERE THE ACTION REALLY HAS BEEN. FLIP THE BOARD AGAIN AND OF COURSE WE HAD THAT JGB AUCTION ON 40 YEARS EARLIER. THE WEAKEST AMOUNT SINCE JULY AND CURRENTLY YIELDS ARE AT 3.39 PERCENT. THE YEN HAD BEEN FLUCTUATING ALL THE WAY UP TO THAT OPTION UP TO 1.4 FOR A DOLLAR. STOCKS ACROSS ASIA LOOKING PRETTY STEADY AT THE MOMENT AND SPECIFICALLY ON THE CSI 300 MAINLAND CHINA UP .2%. I WANT TO DIVE INTO THE BOND STORY. JOINED BY BLOOMBERG'S RATES REPORTER OVER IN SINGAPORE. GOOD MORNING. JUST TALK TO US ABOUT THIS JAPANESE BOND AUCTION, VERY WEAK DEMAND HERE, WHAT DOES IT SIGNAL TO INVESTORS? > > IS NOT EVERY DAY THAT WE WOULD ACTUALLY BE TALKING ABOUT FORTY-YEAR BONDS IN JAPAN, BUT DEFINITELY TODAY GIVEN THE ATTENTION THAT GLOBAL RATES TRADERS ARE PLANT -- PAYING TO JAPAN. WE SEEN THE LAST 24 HOURS, A LOT OF VOLATILITY AND BOND MARKETS BARKED FROM JAPANESE BOND NEWS. ABSOLUTELY WEAKEST DEMAND SINCE JULY. SOCIETE GENERALE HAS CALLED THE RESULT UNIMPRESSIVE AND YES, WHAT DOES IT SIGNAL TO MARKETS, MORE VOLATILITY AHEAD TO BRACE FOR. WE KNOW THAT LONG BOND YIELDS HAS BEEN RISING FROM THE U.S. THROUGH TO THE REST OF THE DEVELOPED MARKET WORLD. JAPAN INCLUDED, THIS IS ANOTHER IMPORTANT SIGNAL TO RATES TRADERS EVERYWHERE. DO NOT SIT ON YOUR LAURELS DESPITE REASSURANCES ARE WOULD LOOKS LIKE REASSURANCES FROM AUTHORITIES, STILL NERVOUSNESS IN MARKETS ABOUT WHAT EXACTLY THE OUTLOOK IS FOR INFLATION GLOBALLY AS THE DOLLAR TRADE WAR CONTINUES TO RIP ACROSS MARKETS AND THE ECONOMIES. LIZZY: YOU'VE WRITTEN A FANTASTIC BIG TAKE ON THE TERMINAL LOOKING AT HOW TRUMP'S TRADE WAR IS PUTTING $7.5 TRILLION OF U.S. INVESTMENTS FROM ASIA UNDER INTENSE SCRUTINY. YOU TALKED ABOUT THIS A BIT THERE, BUT THERE ARE ASIAN INVESTORS LOOKING FOR ALTERNATIVES? WHOSE GAIN IS AMERICA'S LOST QUEST -- LOSS? > > I THINK IT'S AN INCREDIBLY IMPORTANT QUESTION TO UNPACK. IT'S $.5 TRILLION WORTH OF U.S. INVESTMENTS THAT HAVE BEEN AMASSED THROUGHOUT THE DECADES. IT'S NOT EXACTLY SMALL FRY. EVEN A SMALL FRACTION OF THAT BEING TAKEN OUT OF EVERYTHING FROM TREASURIES TO U.S. CREDIT WILL HAVE IMPLICATIONS NOT JUST TO THE U.S., BUT TO THE REST OF THE WORLD. THE QUESTION THEN IS, WHERE IS THE MARKET GOING TO GO TO AND HOW LONG DOES THE JOURNEY HAVE TO RUN. DEFINITELY SPEAKING TO TRADING DESKS, MONEY MANAGERS, WHOLE ARRAY OF INVESTORS, WE ARE TALKING ABOUT GO, WE ARE TALKING ABOUT BONDS, JGB'S, THE YEN, AND AS THAT DEBATE CONTINUES TO RAGE THROUGH IN ASIAN MARKETS, EVERYONE IS SAYING, THIS IS LIKE A TITANIC, IT'S SO MOVING BUT WHEN IT DOES, DEFINITELY BRINGS MORE VOL AS PEOPLE FIND ALTERNATIVES TO PARK THEIR CASH. LIZZY: BLOOMBERG'S RUTH CARSON IN SINGAPORE. THANK YOU FOR A PREVIEW OF THAT BIG TAKE AND SUBSCRIBERS CAN READ IT ABOUT ASIA'S DE-DOLLARIZATION ON THE TERMINAL RIGHT NOW. YOUR FUNCTION IS NI BIGTAKE. IT'S ALSO ON BLOOMBERG.COM. THE EUROPEAN POLITICS, BLOOMBERG HAS LEARNED THAT UKRAINIAN PRESIDENT VOLODYMYR ZELENSKYY IS SET TO TRAVEL TO BERLIN TODAY FOR TALKS WITH THE GERMAN CHANCELLOR FRIEDRICH MAERSK. THIS COMES AFTER DONALD TRUMP SAID PUTIN WAS PLAYING WITH FIRE OVER HIS ATTACKS ON UKRAINE. LET'S GET MORE WITH BLOOMBERG'S OLIVER CROOK, WHO JOINS US FROM BERLIN. TRUMP'S CRITICISM OF RUSSIA ISRAELI GOVERNMENT -- GROWING, IS IT SIGNIFICANT, WILL IT MOVE THE NEEDLE FOR PUTIN? OLIVER: THAT'S THE KEY QUESTION. WE HEAR THESE OCCASIONAL CRITICISMS BY DONALD TRUMP OF VLADIMIR PUTIN, THEY COME EVERY NOW AND THEN. WE GOT ONE LAST NIGHT AND I WILL QUOTE DIRECTLY FROM WHAT HE POSTED ON TRUTH SOCIAL SAYING THAT WHAT VLADIMIR PUTIN DOESN'T REALIZE IS THAT IF IT WEREN'T FOR ME, LOTS OF BAD THINGS WOULD HAVE ALREADY HAPPENED TO RUSSIA AND I MEAN REALLY BAD, HE'S PLAYING WITH FIRE. WE HAVE TO IMAGINE THAT WHAT HE'S REFERRING TO IS THE NUMBER OF BOMBINGS THAT HAVE OCCURRED OVER UKRAINE IN THE LAST FEW DAYS. PUTIN HAS STEPPED UP ON HIS BOMBING AND KILLING A NUMBER OF CIVILIANS AND REALLY THE BIGGEST DAYS OF BOMBING SINCE THE BEGINNING OF THE WAR MORE THAN THREE YEARS AGO. THIS HAS COME IN THE LAST FEW DAYS AT A POINT IN WHICH DONALD TRUMP WOULD LIKE TO SEE A CEASE-FIRE BEGIN, CONVERSATIONS BEGIN BETWEEN ZELENSKY AND PUTIN, THIS IS ONE OF THE RARE CRITICISMS THAT DONALD TRUMP HAS PUT OUT OF VLADIMIR PUTIN THAT DOES NOT ALSO INVOLVE A CRITICISM OF ZELENSKY. OFTEN THESE TWO THINGS ARE SORT OF PAIRED. IN TRYING TO READ THE TEA LEAVES AND IMPRESSED HOW THIS WOULD AFFECT AMERICAN POLICY. BUT WE DO KNOW IS WAITING IN THE WINGS AT THE U.S. SENATE IS THIS BILL PUT FORWARD BY LINDSEY GRAHAM. THESE ARE THE SO-CALLED SECONDARY SANCTIONS THAT COULD BE IMPOSED UPON RUSSIA. THIS EFFECTIVELY WOULD BE A SANCTIONING THIRD-PARTY COUNTRIES THAT STILL BUY OIL AND GAS FROM RUSSIA. THIS WOULD CUT OFF A HUGE AMOUNT OF MONEY OF THE RUSSIAN WAR MACHINE. THE QUESTION IS, HOW CLOSE IS THE TRUMP ADMINISTRATION TO PULLING THE TRIGGER? WE HAVE TO WATCH VERY CAREFULLY AS THE TRUMP ADMINISTRATION REACTS TO THIS. THERE'S A BIG QUESTION ABOUT HOW COMMITTED DONALD TRUMP IS TO RESOLVING THIS WHERE HAVING TO SEEMINGLY WASH HIS HANDS A BIT A COUPLE WEEKS AGO AND NOW COMING BACK INTO THE FRAY BUT OF COURSE IT'S ABSOLUTELY KEY AHEAD OF THE SUMMER WHERE YOU SEE A RENEWED OFFENSIVE BY RUSSIA AND MAY BE THAT BIDEN A RUNNING OUT BY THE END OF THE SUMMER. LIZZY: SO GRANDMA SAYING THE SENATE IS READY TO ACT. INTERESTING THAT MAERSK IS STEPPING UP HIS SUPPORT FOR UKRAINE WHEN YOU COMPARE IT TO HIS PREDECESSOR, OLAF SCHOLZ. SO WHAT DO WE EXPECT BETWEEN THE TALKS OF MAERSK AND ZELENSKY, ANYTHING NEW? ALL OF HER: FREDERICK MAERSK CAN LAY OUT WHAT ALLY HE INTENDS TO BE TOO UKRAINE AND TO ZELENSKY. IT'S THE FIRST VISIT BY BERLIN SINCE FREDERICK MAERSK HAS TAKEN OVER AS CHANCELLOR. OLAF SCHOLZ WAS VERY SUPPORTIVE IF UKRAINE BUT A LITTLE BIT MORE DEVILISH WHEN IT CAME TO DELIVERY OF THE LONG-RANGE MISSILES, THE TOURIST MISSILES. THAT IS SOMETHING FREDERICK MAERSK RAN ON TO DELIVER THOSE MISSILES TO UKRAINE, HE HAS NOT YET SAID HE WOULD DO IT, HE HAS GET IN INTO HOT WATER, BUT THIS IS THE CHANCELLOR OF GERMANY THAT HAS TALKED ABOUT BUILDING THE MOST SIGNIFICANT, THE STRONGEST EUROPEAN ARMY, HE HAS PUT FORWARD 60 BILLION EUROS TO BUILD INTO THE MILITARY. HE HAS COMMITTED 5% OF GDP, WHICH IS CLOSE TO THAT NATO CLEANSE WE EXPECT TO GET FROM A NUMBER OF DIFFERENT ALLIES TO PUT TOWARDS DEFENSE. IN RELEASING THE DEBT BREAK. THE CONTEXT FOR THIS IS THE FACT THAT WE MAY HAVE THE BIDEN A BEGINNING TO RUN OUT AT THE END OF THE SUMMER, THAT LEAVES UKRAINE INTENSELY EXPOSE, NO MATTER WHAT WE GET FROM TRUMP, IT'S UNLIKELY YOU GET ANOTHER MULTIBILLION DOLLAR PACKAGE FROM THE UNITED STATES. FOR THE UKRAINIANS THE QUESTION IS WHERE WILL THE SUPPORT BE BUILT ON? WHAT WILL BE THE FOUNDATION OF SUPPORT AND YOU HAVE TO IMAGINE IF IT CONTINUES TO FIGHT AGAINST RUSSIA, IT HAS TO BE SUPPORTED BY GERMANY, WHICH IS ONE OF THE FEW NATIONS IN EUROPE THAT HAS THE FISCAL FIREPOWER, IT HAS COMMITTED TO BUILD UP THAT MILITARY CAPACITY AND WE WILL GET A GLIMPSE OF WHAT THAT RELATIONSHIP WILL LOOK LIKE LATER IN BERLIN WHERE WE HAVE FREDERICK MAERSK AND ZELENSKY SPEAKING HERE IN BERLIN. LIZZY: WHAT ARE YOU HEARING ON THE GROUND, IS GERMANY GOING TO SEND THOSE MISSILES? OLIVER: THAT WOULD BE A FREDERICK MAERSK COULD MAKE NEWS TODAY AND IS BASICALLY COMMITTING. HE HAS MADE SOME FAIRLY CONFUSING STATEMENTS OVER THE LAST COUPLE OF DAYS, AND THAT IS SOMETHING THAT HAS GOTTEN HIM INTO HOT WATER. HE WAS ORIGINALLY SUGGESTING ON MONDAY THAT GERMANY WAS WITHDRAWING ALL OF ITS LIMITS IN TERMS OF HOW FAR UKRAINE COULD STRIKE WITHIN RUSSIA. THE NEXT DAY HE SAID THIS HAS BEEN THE CASE FOR A COUPLE OF MONTHS. THEY HAVE SAID NOTHING ABOUT WHETHER THEY WILL DELIVER THESE MISSILES. JUST TO RECAP WHAT THESE MISSILES CAN DO, THESE ARE MISSILES THAT HAVE A RANGE OF UP TO 500 KILOMETERS. THE REASON OLAF SCHOLZ WAS SO APPREHENSIVE IS YOU COULD STRIKE MOSCOW, THEORETICALLY, FROM UKRAINE WITH THESE MISSILES. IF WE WERE TO GET A SUBSTANTIAL MOVE ON THAT, IF THE CHANCELLOR WERE TO COMMIT TO DELIVER THOSE MISSILES, THAT WOULD BE A STEP FORWARD, CURRENTLY THE CRITICISM HAS BEEN HE'S CAUSING A BIT OF CONFUSION, NOT CLARITY AND THAT MAKES THE EUROPEANS LOOK WEAK IN THE EYES OF RUSSIA. LIZZY: BLOOMBERG'S OLIVER CROOK WILL BE ALL ACROSS ZELENSKY'S VISIT TO BERLIN TODAY. STAYING IN EUROPE AND TURNING TO BANKING, THE SPANISH GOVERNMENT DECIDED TO CONDUCT ITS OWN REVIEW OF BBVA'S TAKEOVER FOR RIVAL SABADELL. AND MARKS THE LATEST CHAPTER IN THIS ONGOING SAGA TO UNITE TWO OF THE COUNTRY'S LARGEST BANKS. BLOOMBERG'S RODERIGO JOINS US NOW WITH THE DETAILS. THE ANTITRUST WALK -- TRUST WATCHDOG CLEARED IT. HOW WAS MADRID JUSTIFYING ITS OWN REVIEW? > > THEY ARE SAYING IT'S ABOUT NATIONAL INTEREST, AND THAT GIVES THEM THE RIGHT TO LOOK INTO THIS. LEGALLY THEY ARE ALLOWED TO DO THIS, BUT THEY HAVE CERTAIN RESTRICTIONS AND THEY CAN ONLY, BEYOND OR ON TOP OF WHAT THE WATCHDOG SAID. THEY CANNOT ADD NEW FACTORS INTO THEIR ANALYSIS. THE OTHER ISSUE IS WHETHER OR NOT THEY CAN ARGUE THAT THIS HAS TO DO WITH NATIONAL SECURITY. NOT ONLY NATIONAL INTEREST. THAT IS A BIT HARDER TO IMAGINE, BUT THAT IS ONE ISSUE THAT THE PARTIES WILL BE LOOKING AT BECAUSE BBVA SAYS THAT LEGALLY THEY CAN ONLY GET INVOLVED IN ISSUES WITH NATIONAL SECURITY. ON ONE HAND THEY SAY IT'S NATIONAL INTEREST, ON THE OTHER HAND YOU HAVE BBVA SAYING IT ALLOWS YOU TO STEP IN IF YOU HAVE ISSUES OF NATIONAL SECURITY. THOSE ARE THE TWO ARGUMENTS THAT ARE BEING USED RIGHT NOW TO JUSTIFY THIS. LIZZY: IF THE GOVERNMENT SETS TOUGHER CONDITIONS ON A TAKEOVER, HOW MUCH COULD THAT LIMIT WHAT BBVA WANTS TO DO? WOULD IT MEAN THE DEAL JUST ISN'T WORTH IT IN THE END? > > THERE ARE TWO CONDITIONS THEY CAN SET RIGHT NOW. ON ONE HAND THE ONE THAT'S PRETTY CLEAR IS THE GOVERNMENT HAS THE ABILITY TO BLOCK THE LEGAL MERGER. THAT MEANS BBVA COULD POTENTIALLY END UP BUYING A STAKE, EVEN OVER 50% IN SABADELL AND COULD MERGE THE BANKS. IT COULD BE A SHAREHOLDER BUT NOT THE ACTUAL OWNER. THAT'S SOMETHING THE GOVERNMENT CAN DO LEGALLY. THE QUESTION WOULD BE IS BBVA INTERESTED IN BEING A SHAREHOLDER AND ITS COMPETITOR AND HOW DOES IT AFFECT COMPETITION. BBVA HAS ALWAYS SAID THAT THEY ARE INTERESTED AND WILL STAY HERE ON THE LONG RUN. THE OTHER WAY THIS COULD PLAY OUT IS THAT THE GOVERNMENT SAID TOUGHER CONDITIONS, SUCH AS HIGHER RESTRICTIONS ON THE CONDITIONS THEY HAVE TO OFFER TO CLIENTS. INSTEAD OF DOING THESE CONDITIONS LIKE THE REGULATORY ASPECT, THE GOVERNMENT SAYS THESE CONDITIONS HAVE TO BE MAINTAINED FOR 10 OR 15 AND THAT'S WHEN BBVA COULD POTENTIALLY SAY THIS IS TOO MUCH FOR ME. THE FINAL THING IS BBVA COULD ALSO INDICATE THAT, LOOK, WE WILL PUT MONEY ON THE TABLE, WE WILL OFFER CASH TO THE SHAREHOLDERS AND THAT SUDDENLY CHANGES THE MOOD ON THIS SABADELL SIDE. THAT HAS NOT BEEN FLOATED YET, BUT IT'S A TRUMP CARD EVERYBODY HAS EXPECTATIONS AROUND. LIZZY: IT SEEMS POSITIVE SO FAR. SHOWS UP MORE THAN 40% ON BOTH THOSE BANK SO FAR YEAR TO DATE. WE THANK YOU FOR THAT ANALYSIS. COMING UP ON BLOOMBERG DAYBREAK: EUROPE, ANOTHER SETBACK FOR SPACEX AS ITS COLOSSAL STARSHIP ROCKET DISINTEGRATES MIDFLIGHT. WE WILL BRING YOU ALL THE DETAILS NEXT. THIS IS BLOOMBERG. LIZZY: WELCOME BACK TO BLOOMBERG DAYBREAK: EUROPE. 6:45 A.M. IN LONDON. ELON MUSK SPACE X HAS SUFFERED ITS THIRD STRAIGHT SETBACK THIS YEAR AFTER IT STARSHIP ROCKET DISINTEGRATED ON A JOURNEY BACK TO EARTH DURING A TEST FLIGHT. CHARLIE WELLS IS HERE ON EARTH WITH THE LATEST. WHAT WENT WRONG THIS TIME? CHARLIE: THIS IS GOTTA BE FRUSTRATING FOR SPACEX, GIVEN THAT THIS IS THE THIRD SETBACK THEY'VE SEEN THIS YEAR. WHEN YOU BREAK IT DOWN, THEY ARE ALREADY THREE BIG PICTURE THINGS THAT WENT WRONG. THE ROCKET TOOK OFF, THE SUPER HEAVY BOOSTER DISCONNECTED FROM THE STARSHIP, BUT THEN SOON AFTER THAT, JUST A FEW MINUTES INTO THE TEST FLIGHT IT EXPLODED. THAT WAS THE FIRST ISSUE. THE SECOND ISSUE IS THE GOAL HAD BEEN FOR THE STARSHIP TO DEPLOY SOME DUMMY SATELLITES. THESE ARE SATELLITES THAT WOULD BE SIMILAR TO THE STARLINK INTERNET SATELLITES THAT MUSK IS KNOWN FOR. CURRENTLY THERE WERE SOME ISSUES WITH A DOOR ON THE STARSHIP AND THOSE WERE UNABLE TO BE DEPLOYED. THEN 35 MINUTES INTO THE TEST LAYOUT 1.1 MILLION PEOPLE WERE WATCHING, THE STARSHIP ITSELF, ON ITS RETURN BACK TO EARTH, WHEN OUT -- WAS UNABLE TO HAVE A RETURNED ENTRY AND DISINTEGRATED. LIZZY: HOW DOES THAT AFFECT MUSK'S FUTURE PLANS FOR SPACEX? > > HE HAS GIVEN AN INCREDIBLY AMBITIOUS TIMELINE. HE TALKED ABOUT SENDING TESLA ROBOTS TO MARS IN A STARSHIP BY 2026. THAT'S A FEW MONTHS AWAY. WE'VE HAD THESE THREE FAILURES SO FAR. I DON'T WANT TO OVERSTATE THE SIZE OF THESE FAILURES BECAUSE SPACEX TALKS ABOUT HOW THIS IS AN ITERATIVE PROCESS, THEY LEARN EVERY TIME SOMETHING BAD HAPPENS. THEY LEARN EVERY TIME SOMETHING GOOD HAPPENS. THIS IS ADDING TO THEIR KNOWLEDGE. BUT I THINK THIS CONTRIBUTES TO THE NARRATIVE WE HAVE SEEN NOT JUST AT SPACE BUT ALSO AT TESLA. WHERE HAS MUSK BEND, HAS HE BEEN TOO BUSY INVOLVED WITH THE TRUMP ADMINISTRATION, HE TALKED ABOUT STEPPING BACK FROM POLITICAL INVOLVEMENT AND THIS FEEDS INTO THE NARRATIVE. LIZZY: THAT BRINGS ME TO THE NEXT QUESTION BECAUSE WE ARE LEARNING MIGHT -- MUSK MIGHT HAVE TO FACE A LAWSUIT RELATED TO HIS WORK AT THE DEPARTMENT OF GOVERNMENT EFFICIENCY. WHAT DO WE KNOW ABOUT THAT? > > THIS IS A U.S. DISTRICT JUDGE WHO RULED THAT MUSK HAS TO FACE THIS LAWSUIT THAT WAS FILED BY A NUMBER OF U.S. ATTORNEYS GENERAL. BASICALLY, THEY CLAIM THAT MUSK WIELDED A -- ILLEGAL POWER IN ORCHESTRATING THESE CUTS. I USE THE WORD ORCHESTRATING BECAUSE THAT'S THE KEY ISSUE. THIS GETS AT THE CONSTITUTION'S APPOINTMENTS CLAUSE. BASICALLY, IF YOU WILL BE MAKING A HIGH LEVEL CHANGES ABOUT PERSONNEL AT THESE GOVERNMENT AGENCIES, THE CONSTITUTION MANDATES YOU NEED TO BE APPROVED BY THE SENATE. THAT DIDN'T HAPPEN FOR MUSK AND MUST HAS CAP -- SAID HE'S JUST THE PUBLIC FACE OF THIS. HE WASN'T NECESSARILY EXECUTING ON THIS WAY. THE DEPARTMENT OF JUSTICE SAID THESE STATES DON'T HAVE STANDING BUT THE JUDGE SAID THERE'S ENOUGH EVIDENCE THAT THIS CASE CAN PROCEED. LIZZY: I DID NOTICE HE EMPHASIZED REPEATEDLY IN OUR INTERVIEW WITH MICHELLE SAYING THAT HE WAS IN AN ADVISORY ROLE. PERHAPS HE KNEW WHAT WAS COMING. WE TAKE YOU -- THANK YOU FOR THAT ANALYSIS. TO SOME OF THE STORIES MAKING NEWS THIS MORNING, APPLE IS PLANNING A DEDICATED APP FOR VIDEO GAMES ON ITS DEVICES AS IT SEEKS TO BOOST ITS INFLUENCE IN THE GAMING MARKET. SOURCES TELL BLOOMBERG THE COMPANY WILL PREINSTALL THE APP ON THE IPHONE, IPAD, MAC AND APPLE TV SET TOP BOX LATER THIS YEAR. APPLE IS PLANNING A MAC VERSION OF THE APP THAT CAN TAP INTO GAMES DOWNLOADED OUTSIDE OF THE APP STORE. STAYING WITH TECH. TSMC IS OPENING A CHIP DESIGN CENTER IN MUNICH AS IT LOOKS TO ESTABLISH A BIGGER FOOTPRINT IN EUROPE. THE NEW SITE WILL SUPPORT EUROPEAN CUSTOMERS AND COMPLEMENT TSMC'S FIRST EUROPEAN SEMICONDUCTOR PLANT IN DRESDEN. SET TO OPEN IN THE THIRD QUARTER OF THE YEAR BUT THE COMPANY DID NOT GIVE DETAILS ON THE COST OR REQUIRED HEADCOUNT. ELSEWHERE, CITADEL SECURITIES IS REPORTED RECORD PROFIT AND TRADING REVENUE IN THE FIRST THREE MONTHS OF THE YEAR. MARKET VOLATILITY SINCE PRESIDENT DONALD TRUMP TOOK OFFICE. BLOOMBERG UNDERSTANDS THAT THE MARKET MAKING GIANT POSTED $3.4 BILLION IN THE TRADING REVENUE IN THE FIRST THREE MONTHS OF THE YEAR BOOK FROM ROUGHLY 45% FROM THE SAME TIME LAST YEAR. THAT PUTS THEIR TRADING REVENUE AHEAD OF BOTH BARCLAYS AND UBS. THOSE ARE THE TOP STORIES THIS MORNING. PLENTY MORE COMING UP ON THE PROGRAM. STAY WITH US. THIS IS BLOOMBERG. ♪ KWUEX THE PUBLISHED DATA SHOWS AN ECONOMY VERY MUCH ON THE SAME TRAJECTORY WE'VE BEEN ON FOR THE LAST YEAR OR TWO. LOW UNEMPLOYMENT, INFLATION SETTLING TOWARD SERGEY. THERE'S A LOT OF QUESTIONS ABOUT WHAT HAPPENS WHEN THESE TARIFFS ARE IMPOSED. BUT YOU KNOW HOW IT IS. THERE'S A BUNCH OF COMPANIES THAT ADVANCED ORDERED THEIR PRODUCT. THEY HAVE MOURNED -- WARNED ABOUT PRICE INCREASES BUT THEY HAVEN'T YET PASSED ON THE PRICES. THE CUSTOMER MAKES UP THE PRICE INCREASES OR THEY MAY NOT. WE HAVE TO SEE HOW IT PLAYS OUT. I'VE BEEN DESCRIBING THIS WHEN I'M TALKING TO BUSINESSES, WHICH YOU KNOW I DO EVERY DAY, I DESCRIBED THIS AS DRIVING THROUGH FOG, IT'S VERY HARD TO DRIVE WHEN IT'S REALLY FOGGY AND BUSINESSES ARE AFRAID TO ACCELERATE BECAUSE THEY DON'T KNOW WHAT'S AROUND THE NEXT CURVE. THEY ARE ALSO AFRAID TO PUT ON THE GAS BECAUSE YOU DON'T WANT SOMEONE CRASHING INTO YOU. BY AND LARGE THEY ARE PULLING OVER AND PUTTING ON MY HAZARDS. > > TO THE POINT YOU'RE CONSTANTLY SPEAKING TO BUSINESSES, IS ANYONE MAKING BIG ADVANCEMENTS AT THIS QUARTER HIRING DECISIONS? IF YOU GET THE SENSE FIRMS ARE CLOSE TO ANNOUNCING LAYOFFS? > > ON THE HIRING SIDE YOU ARE NOT SEEING THAT. LOTS OF HIRING FREEZES OF DEFERRED HIRING AND YOU SEE THEM IN THE DATA. IN TERMS OF INVESTMENT DECISIONS, INVESTMENT MOVES THAT WERE ALREADY ON THE WAY SEEM TO BE CONTINUING. I'VE HEARD VERY FEW CANCELLATIONS BUT SOME OF THE BIG THINGS YOU MIGHT EXPECT TO HAPPEN WHEN THE TERMS OF TRADE CHANGE, I THINK PEOPLE ARE STILL WAITING TO GET WHATEVER THEY THINK IS FINAL. IN TERMS OF LAYOFFS, YOU SEE ABOUT IT AND THE GOVERNMENT SECTOR AND IN THOSE SECTORS RELATED TO GOVERNMENT SPENDING. OUTSIDE OF THAT I THINK PEOPLE HAVE THEIR HAZARDS ON. > > HOW LONG ARE COMPANIES TELL YOU THEY CAN HOLD OUT BEFORE THEY MAKE A DECISION TO INVEST OR TO CANCEL PLANS. > > I THINK PEOPLE ARE PATIENT ON THE INVESTMENTS, A LOT ARE INVESTMENTS WAITING TO SEE WHAT THE TERMS ARE. IF YOU'RE THINKING OF BUILDING A NEW FACILITY SOMEWHERE, YOU KINDA WANT TO KNOW THE RULES ARE BEFORE YOU BUILD IT. I THINK THERE'S A LOT GOING. I ALSO DON'T THINK THERE'S MUCH CASE FOR CANCELING. NOTHING HAS CHANGED IN THE ECONOMIC ENVIRONMENT, AEGIS OF POLICY AND CERTAINTY PEOPLE WILL WAIT POLICY UNCERTAINTY OUT. THEY DO THINK THERE WILL BE SOME CERTAINTY, WHETHER IT'S THE TAX BILL OR SOME OF THE TRADE TERMS, BUT I THINK THEY ARE JUST WAITING IT OUT. LIZZY: RICHMOND FED PRESIDENT SPEAKING EXCLUSIVELY TO BLOOMBERG THERE. HE SAID INVESTORS ARE DRIVING THROUGH THE FOG SO IN OUR LAST COUPLE OF MINUTES, LET'S TAKE YOU THROUGH SOME TERMINAL CHARTS TO TRY TO CLEAR UP A BIT OF THAT FOG. WE HAD THE EQUITY RALLY YESTERDAY, THIS FIRST CHART PUTS IT INTO CONTEXT, YOU CAN SEE THAT THE S & P BOUNCED OFF ITS 200 DAY MOVING AVERAGE, THIS YELLOW LINE UP THERE, AND CONTINUED TO CLIMB. SO RETURNING INTO POSITIVE TERRITORY FOR THE YEAR AND PART OF THE REASON FOR THAT BOUNCE WAS THE U.S. CONSUMER CONFIDENCE FIGURE. FOR THE BOARD OVER TO HER NEXT CHART AND YOU CAN SEE THAT IT HAS JUMPED THE MOST IN FOUR YEARS AND PART OF THAT IS BECAUSE OF THE U.S.-CHINA TRADE TRUCE. YOU SEE THE WHITE LINE, CONSUMER CONFIDENCE BEATING THE SURVEY. FLIP THE BOARD AGAIN. LOOKING FOR OUR NEXT CATALYST AND MAYBE IT'LL COME FROM THE FED MINUTES WE GET LATER ON IN THE DAY. THE FED HELD GREAT STUDY AT THE MAY MEETING. NOW WE LOOK TO CLUES FOR THE PATH AHEAD. OFFICIALS ARE LIKELY TO SIGNAL WITHOUT HOLDING RATES ARE GOING TO BE THE CASE UNTIL SEPTEMBER. FLIP THE BOARD AGAIN AND REALLY THE SHOW STEALER OF THE DAY PERHAPS WILL BE THE NVIDIA EARNINGS. WE CAN SHOW YOU IF WE FLIP THE BOARD OVER EXACTLY HOW MUCH THE IMPACT HAS BEEN OVER THE PREVIOUS EARNINGS RELEASES, THE MARKET CAP CREATED OR DESTROYED ON THE DAY AFTER NVIDIA HAS RELEASED ITS EARNINGS PREVIOUSLY. WE KEEP AN EYE ON THOSE. 9:00 P.M. LONDON TIME BUT THERE'S PLENTY MORE TO COME UP THROUGHOUT THE DAY HERE ON BLOOMBERG TV. DON'T FORGET WE'VE GOT AN INTERVIEW WITH THE NVIDIA CEO AFTER THOSE NUMBERS DROPPED. JENSEN HUANG SPEAKING A BLOOMBERG AT THE OPENING TRADE UP NEXT. STAY WITH US. THIS IS BLOOMBERG.