ASML Raises Full-Year Sales Forecast Again — Daybreak Europe 7/15/2026

[00:00:00] Oliver Crook: Live from Brussels, this is Bloomberg Daybreak Europe. I'm Oliver Crook with your top stories. The blockade is in, the fee is out, and the bombing continues. President Trump keeps the world guessing as fighting Iran escalates. And a no-tolerance Fed. Chairman Warsh is unmoved by the first monthly decline in U.S. consumer prices in six years. The market weighs a dovish print with a hawkish message from the Fed. And a slowdown in China. The growth unexpectedly falls below target to its weakest level in three years, fueling pressure for stimulus from Beijing. Good morning, good morning. This Wednesday morning, let's bring you across the market action across the world here. We are watching what we're watching for futures in the United States and Asia Pacific already. We've got a solid trade going up about 2% this morning. Looking at the European futures this morning, looking a little bit flatter to the green, but also looking very critically there at Nasdaq futures that are trading up 5/10 of 1%. But, of course, our focus is also on the futures markets within the Brent market. We're looking at Brent that has broken through $85 a barrel, something we're watching very critically ahead of what we've been watching in Iran. The escalations there, of course, the dollar index and full focus. And, of course, that U.S. two-year yield falling almost 10 basis points yesterday after what we saw, heard from Kevin Warsh, and, of course, what we saw from that all-important CPI print from the United States. As we sort of take our attention further to the day, the risks events we're watching, 1:30 p.m. in the U.K. U.S. PPI will be also watching Warsh this time in front of the Senate, giving his testimony, and, of course, the U.S. Fed Beige Book at 7 p.m. tonight. Well, good morning. We're getting some breaking news this morning from ASML, one of the biggest companies here in Europe, and, of course, one of the most important companies to that tech trade and, of course, the AI build-out, making those lithography machines across the world. Let's get through some of the numbers that we're getting crossing the wires right now. We're looking that they're raising their 2026 view. That's something we were watching for and that was expected by the market. ASML seeing third-quarter net sales of 11 billion euros to 12 billion euros. The estimate was for 10.3 billion. We also see full-year net sales of 43 billion euros to 45. They saw previously 36 billion to 40. So that is a material increase there for ASML. And we should just say ASML, one of the most important companies here in Europe, probably the one in Europe that has the greatest stranglehold and greatest influence on that sort of global AI story. So something we'll be watching and we'll be getting into a little bit later in the show. But in the meanwhile, we're watching oil prices that are climbing this morning for a third straight day this morning as U.S. completes another round of strikes against Iran after reimposing its blockade on Iranian ships through the Strait of Hormuz, even as President Trump climbed down on his calls for vessels to pay the U.S. toll. Speaking to Fox News, Trump threatened further military escalation against Iran. The strikes were seen this week against Iran will expand. Are you considering hitting energy targets or other locations inside of Iran? [00:03:28] Speaker 2: I'll save the energy targets for last, but ultimately we'll hit energy targets, yeah. But we're going to hit them very hard tonight. We're going to hit them very hard tomorrow night. We're going to hit them very hard the night after. And then next week it gets really bad for them because next week comes the power plants. Next week comes the bridges. [00:03:55] Oliver Crook: For more, let's bring in Bloomberg Horizons Middle East and Africa anchor Abir Abu Omar. From the president of the United States, we have had both escalation. We've had stepping back on some things, and we've had some threats into the future. Bring us up to speed this morning. [00:04:11] Abir Abu Omar: Good morning, Ali. Yeah, it's all a little bit confusing. In the span of 24 hours, President Trump came out and said that he will reinstate the blockade on Iranian ports in the Strait of Hormuz. That has happened and is continuing to happen. And then he said that he will impose a 20 percent fee on all cargo ships that are non-Iranians going through the Strait of Hormuz, only to back out of that yesterday saying, actually, he's not a fan of this fee and that he got pledges from Gulf Arab states in the GCC saying that they will make further investments in the United States if the president revokes that 20 percent fee. Now, our own sourcing, Ali, suggests that at least one regional government in the region had not agreed to making further investments. Now, just bear in mind that only a couple of years ago, when President Trump visited the GCC, those countries made pledges of hundreds of billions of dollars, if not even trillions at some point. And so, at least one government is telling us that is not going to happen. In the meantime, the Strait of Hormuz, the traffic there, is still at a trickle. We're seeing ships at a standstill at some points. Iran continuing its retaliation in the region, in Kuwait, in Bahrain. Kuwait, for example, reporting overnight that four naval personnel were injured. That follows attacks in the Strait of Hormuz, where Iran, a couple of days ago, hit two UAE flagships, killing one person, injuring several others. But at least for the time being, we know that this notion that was brought up by markets over and over about the taco trade or about President Trump going back on his words has returned. So the 20 percent fee is no longer going to happen. We're also not clear if those investments will make their way through to the United States. And we all are keeping an eye out on whether the technical negotiations are set to continue. We have no clarity on whether those are expected to recommence. The expectation for the time being is that we're seeing this kinetic back and forth coming back to the table, but the wider negotiations are still expected to be mediated by the likes of Qatar and Pakistan over the next few weeks. We're keeping an eye out on the August 20th timeline that is approaching very fast. Ali, that is, the end of the 60-day negotiation period over the MOU that was signed in Switzerland. So markets are reacting a little bit more steadily towards the flood of news that we've been getting all week, Brent, at around $85 a barrel. So a steadying in the action there. [00:06:45] Oliver Crook: Well, Labir, Abu Omar, thanks again for keeping us across what is a very escalating and quickly moving story there in the Middle East in the Strait of Hormuz. I'd like to bring you a little bit more news out of ASML, the biggest company here in Europe, almost twice the size of the company that is the second biggest in Europe. That is the fact that Intel is apparently, the ASML says, has begun to use its most advanced lithography machine for chip production, showing that this new equipment that the company has now put out is ready for widespread adoption. You'll remember that Taiwan Semiconductor Manufacturing, TSMC, whose factories produce the most advanced chips in the world. They had said that the latest generation of ASML machines were too costly for mass production. So this will be seen potentially as yet another boon for ASML, who, again, has these numbers out today. And we can give you a little bit more of those numbers. Their four year gross margin margins expected to be at 54 to 56 percent. Previously, they had seen 51 to 53 percent. So again, a pretty bullish story from ASML today. Again, they were expected to raise their forecast. So we'll see if this is enough for the market when we get that opening trade a little bit later. But meanwhile, stocks in Asia are gaining. The U.S. futures are pointing higher as the AI trade is gathering fresh momentum. Let's get more from Venram, our cross asset strategist over at Bloomberg MLive. So, Venram, tie this all together. Obviously, we've got the broader theme. We've got the Fed. We've got this tech rally this morning. But, of course, now we have these numbers from ASML, which, from what I can see so far, seem pretty bullish. [00:08:14] Speaker 4: Yeah, they're absolutely mind-blowing numbers, as you just pointed out, Oli. But I think that, you know, this is not anymore about fundamentals. Of course, the fact that ASML has come out and guided markets higher is going to bore its sentiment. And, of course, the overnight tech rebound also plays into this. And we see that the cost fee is up yet again today. But what it is, it's a very vicious rotational play led by leverage, single name leverage stocks. That is at the center of all that is happening at the moment. And if there is pressure and, you know, if there is, after the market's run up a whole lot, there is a tendency, because these are highly leveraged products, people tend to take money off the table. And that kind of prompts margin calls and all kinds of vicious things. So it's a very vicious rotational play. Investors are colluding with different investors are colluding with different timeframes. Some are there in the market for a long time, some are there with very short timeframes, trade timeframes. And that is something that investors should watch out for. But I think that, you know, this, as long as this tech story, the narrative plays out that AI is going to be a winner, I think we are going to see these immense rotational plays, albeit that Nasdaq itself is trading around fair value. So it's not about aggregate market valuations. It's about the focus on single name stocks. [00:09:39] Oliver Crook: Well, Ven, thank you very much for your analysis this morning, keeping us again across all the moves in the tech space. And again, sort of giving us a perspective on those ASML numbers that we just got. And then Ram cross asset strategist at Bloomberg MLive and traders have cut their bets now on a July Fed rate hike after a softer than expected CPI print from the United States. They now see an under 20 percent chance of a move higher this month, down from almost 50 percent yesterday, while a September hike remains in the balance. The repricing comes as Kevin Warsh delivered the first congressional testimony as chairman warning against complacency on inflation. [00:10:14] Speaker 5: Well, it's one data point. The reason I create a task force on data is I don't want to overread or cherry pick data. There might be some that look at this morning's data and say, oh, mission accomplished. Everything is swell. That is not my view. [00:10:31] Oliver Crook: Let's get a little bit of perspective here and bring in Bloomberg senior editor Alistair Boll for some analysis on what we got out of the United States yesterday. So we got a fairly dovish print in terms of CPI and prices. We got a fairly hawkish chair over at the Federal Reserve. How do the markets parse this? [00:10:51] Speaker 6: I think they've passed it correctly, Ali. Good morning, by the way. So, I mean, the soft CPI print takes the pressure off Warsh to push for a rate hike in July. But it doesn't remove the potential for needing to tighten monetary policy against the background of persistent elevated inflation that's been above 2% for nearly five years. And with Warsh continuing to sound hawkish, well, without actually saying what he's going to do and avoiding explicit forward guidance, at some point he's going to have to match words with deeds unless the data does continue to go in his favor. So he said it's just one data point if he gets a series of softer prints that may remove the necessity to tighten again. But there's an awful lot of uncertainty out there. And with the renewed conflict, renewed tensions in the Gulf, there's headwinds from higher energy prices. So I think that's why the market correctly anticipates that the question about rate hikes is going to remain on the table, certainly for the next few months, Ali. [00:12:02] Oliver Crook: So, of course, one of the questions, of course, is the rate path. That is the thing that we're most sort of immediately focused on in the short term. But there is also a focus on a sort of new regime at the Federal Reserve. What the sort of Warsh communication policy is, balance sheet policy is. What did we learn on that side of things? [00:12:19] Speaker 6: He kept his cards pretty close to his chest, but he did promise to be transparent about it. He said his task forces will provide regular updates and he hopes to have conclusions by the end of the year. But he didn't get ahead of them, which is, I think, a position that we would have anticipated. He's been careful to say that they have an open page or in a discovery phase and he's not going to prejudge and offer his own priors. So I think we're going to have to wait and learn. He says everything is on the table and I think we'll take away his word, at least for the time being, Ali. [00:12:55] Oliver Crook: Right. Well, Bloomberg's Alistair Bull, thank you so much for your analysis this morning and for ahead of, well, another testimony from the Fed chair before the Senate a little bit later today. Still ahead, though, and taking it to the bank, exuberance across equity trading drives records on Wall Street, a very strong backdrop, but with a few warnings on the risks ahead. But first, pressure on policymakers as China's growth slows to its weakest in more than three years. More on that next, and this is Bloomberg. Welcome back to Bloomberg Daybreak Europe. Well, China's economy slowed more than expected last quarter, growing 4.3 percent from a year ago. That's the weakest growth in more than three years that we've got out of China and below the country's official target range. So let's bring in Bloomberg China economy and government editor Alan Wong for a little bit of analysis in terms of what we got this figure. So, Alan, let's look at this figure, 4.3 percent. What actually led within that to the slowdown? [00:14:07] Speaker 7: Yeah, first of all, 4.3 is not a number we typically associate with China's GDP growth. It's slower than expected. In fact, only one economist that we surveyed predict a lower number than that, and then we surveyed dozens of them. So it goes to show just how unexpected that slowdown was for the second quarter. So a couple of factors that I play here. One story that we've heard over and over again is just how weak domestic demand is. And that is, and that weakness is with both consumer willingness to spend and also with investment. We actually saw investment fell in the first six months of the year compared to the same period last year. And that's unusual in a country that's still very much building new bridges and factories. But seeing that fall, it's a rarity in the last couple of decades of rapid growth for China. And then on top of that, we've also seen some signs of the home market continuing to deteriorate. Prices fell in the month of June compared to the previous month, even though the fall eased off a little bit. [00:15:18] Oliver Crook: Yeah, well, listen, 4.3 percent, probably not quite crisis territory, but you're painting a slightly gloomy picture. Are we going to expect any kind of reaction from Beijing, from government officials in order to turn that growth figure around? [00:15:34] Speaker 7: So the Statistic Bureau's official attributed some of the slowdown to temporary factors, such as the energy shock from the Middle East. And there's no sign of panic in the room, and it just means that China may well accelerate its implementation of previous promises to stimulate the economy. But there is no fresh stimulus inside based on the conversations we've had with different economists. They may expect some work to do on the fiscal front. The government may spend more in general. They may accelerate investment in infrastructure, which is a very well-used playbook by China. But in the immediate time horizon, we're not seeing any signs of big stimulus coming along. The other thing to watch out for is later this month, China's top Politburo is going to meet, and then they'll most likely discuss economic policymaking. And so this quarter's print is likely to loom very largely in their mind as they figure out what to do with the economy. [00:16:34] Oliver Crook: Great. Well, Alan Wong, our Bloomberg China and Economy government editor, thanks so much for your time and your analysis this morning from that important printout of the Chinese economy. Coming up next, Chancellor Rachel Reeves says there's still work to do to protect the UK's economy. I think that's what we call British understatement. In what is set to be her final Mansion House speech, we'll have her comments next, as well as the analysis from the BOE governor, Andrew Bailey. That's next, and this is Bloomberg. [00:17:04] Speaker 8: The resumption of hostilities in the Middle East in the last few days has shown that our economic resilience will continue to be tested. And the market response to those changes shows that there is still work to do to ensure that our economy and our country is protected against a volatile global economic landscape. [00:17:34] Oliver Crook: The analysis there from UK Chancellor Rachel Reeves speaking at the annual Mansion House dinner last night when Bank of England Governor Andrew Bailey addressed the city. He called the incoming government to prioritize economic growth and to maintain fiscal discipline. For some analysis from what we've heard on the UK economy, we're joined now by Matt Bunney. He is the UK economist at Bloomberg Economics. So listen, let's start first with what we heard from Andrew Bailey at the Bank of England. What were your takeaways from what he had to say? [00:18:07] Speaker 9: So Bailey's speech was largely focused on the importance of solid regulation in supporting economic growth. There wasn't a lot of material new information there for markets or for the outlook of monetary policy. I mean, he did also mention cyber security risks associated with AI and the potential threat that poses to financial stability, which has become an increased focus for the Bank of England recently. I'd point to kind of the bigger issue for the Bank of England we've seen recently is the re-escalation in the US-Iran conflict. Indeed, the increase in energy prices that we've seen means that markets have upped their bets for rate hikes from the Bank of England this year to one and a half by the end of the year, underscoring just how closely tied the outcomes in monetary policy and the Iran conflict are. It's worth saying that inflation expectations at this stage remain well anchored. And also, we're still expecting the labor market to soften over the back half of the year. So altogether, that's going to help likely prevent this inflation problem becoming more persistent. So that is why we're still expecting rates to remain on hold, unlike markets. [00:19:18] Oliver Crook: And we also heard from him saying that the next government should prioritize economic growth and maintain fiscal discipline. We're still largely in the dark in terms of what to expect from Andy Burnham in terms of economic policy. Can we expect fiscal discipline and prioritization of growth? [00:19:35] Speaker 9: I mean, certainly, Andy Burnham has underscored that he wants to maintain fiscal discipline after those famous remarks about that being we're too in hock to bond markets. I mean, we can shape out the kind of we can we can get a sense of the broad contours of Burnham's policy based on recent public statements from him and his circle and also his performance during time as mayor of Manchester, where the region saw a period of particularly strong economic growth. So we're looking at things like moving powers away from Westminster towards the regions, greater public control of essential services and also more council house building. So, I mean, whether that can deliver growth and whether Burnham can push through these policies is the key question. What is telling is that at this stage, reports are indicating that Burnham still does not know who his pick for chancellor will be. So that will be an important signal for the direction of economic policy. [00:20:40] Oliver Crook: And thinking about economic policy, which is obviously in the UK, is obviously what you spend a lot of your time thinking about. Does any of the sort of parties, as we have all this debate about reform and the Tories and Lamber, does anyone seem to have a formula to turn the UK economy around, something that would be favorable, at least from the market perspective? [00:20:57] Speaker 9: I mean, politicians have been talking for a long time, as have economists, about how best to drive up growth. We saw the previous Labour government made it made a good crack at this by really trying to push up investment. And that will likely help over the long term, but clearly it hasn't been enough to get growth up in recent years. And in particular, the issue that is facing Rachel Reeves and Keir Starmer is that living standards in the UK haven't really budged that materially since they've been in power. So the kinds of things that markets would like to see would certainly be a pickup investment to address long term potential growth issues. Obviously, this is weighed against the need to maintain fiscal discipline, given the UK's already elevated debt burden. [00:21:49] Oliver Crook: Yeah, well, Matt Bunney, thank you so much, UK economist at Bloomberg Economics, for his analysis and the latest of what we can expect for this new government. Now to some other stories that we're following this morning. A new package of Russian sanctions from the United States, which was spearheaded by the late Senator Lindsey Graham, would target the top five purchases of Russian crude and gas, including China and India. The legislation, which has been backed by the president, would give him the authority to hit them with the tariffs of up to 100 percent. The bill still needs to be passed by the Senate, but the timeline for a vote is unclear. And shares in IBM fell by the most in nearly six decades after preliminary second quarter revenue missed estimates. The CEO says IBM was caught off guard as customers shifted spending towards servers, storage and memory. The company says it's reviewing its books and the final results set to post next week may be slightly different. And Bloomberg understands that OpenAI is planning its first push into consumer devices with a mobile, screen-free, smart speaker, smart speaker. Sources say the product, which is still being developed, is meant to serve as a human-like AI companion that lives in the home. It will help control smart home appliances, play media, answer questions and tap into a range of capabilities offered by ChatGPT. And payment processing firm Stripe and Advent International have offered to buy PayPal in a deal valuing the company at more than $53 billion. That's according to Reuters. The offer represents a 28 percent premium to PayPal's closing price on Tuesday. The report says two suitors would jointly own PayPal with equal stakes and don't plan to break up the company. So that's some of the news that we're watching. Coming up next, the dollar slips as traders pair July rate hike bets from the Federal Reserve to help us reprice the dollar and all the currencies, of course, across the world. We will speak with Jane Foley. She's the head of FX strategy over at Rabobank. That's next. And this is Bloomberg. Bloomberg. [00:23:42] Speaker ?: Bloomberg. [00:24:12] Oliver Crook: Live from Brussels, this is Bloomberg Daybreak Europe. I'm Oliver Crook with your top stories. Europe's most valuable company hikes its full-year sales forecast for a second time this year as a surge in AI spending drives demand at ASML. And the blockade is in, the fee is out, and the bombing continues. President Trump keeps the world guessing as fighting escalates in Iran. And a no-tolerance Fed. Chairman Warsh is unmoved by the first monthly decline in U.S. consumer prices in six years. The market weighs a dovish print with a hawkish message from the Federal Reserve. Good morning this Wednesday morning. Let's get a check on the markets across the board here. What we're seeing is a very sort of large reversal to what we saw earlier in the week with that sort of sell-off across tech. That really turning around today. You can see it represented there in the MSCI Asia-Pacific Index up 1.8% this morning. Eurostox's 50 futures, on the other hand, down by about a third of a percent. And, of course, NASDAQ 100 futures, you can see it there, up almost seven-tenths of 1% going into the session in the United States. Of course, we take a cross-asset as we do every day. And, of course, watching very closely, Brent crude up over $85 a barrel there, up about eight-tenths of 1% at 85. 40 is where we find Brent this morning. The U.S. dollar index down by about one point there, down by about one-tenth of a percent. And, of course, watching the U.S. rate story, all importantly, after the commentary you heard from Kevin Warsh. And, of course, that sort of softer CPI print that we got yesterday, U.S. yields yesterday really sort of plummeting on the U.S. two-year. You can see it there, they're trading relatively flat, 4.1997% is what you get on your two-year yield this morning. Time now for your front pages and what we're watching across the world and across the news outlets, starting with the Financial Times, which reports that Ukraine is being allowed to use EU funds to buy Chinese drones and parts. The paper says it exposes Europe's reliance on Beijing for critical parts as it struggles to build its own defense industry. And the Wall Street Journal says the bull market is being put at risk by blockbuster stock sales by companies including SpaceX and XK Hynix. The paper says investors are growing wary of the rise in stock and bond issuance as it could outstrip demand. And El Pais celebrates Spain's World Cup victory over France with the headline, a prodigious Spain, captures another final. Of course, that would be the prospector from El Pais. But I could tell you that particularly on Bastille Day, this was something that stung particularly over in France. And you can catch a roundup for all the stories you need to know to get your day going. In today's edition of Daybreak, terminal subscribers go to D-A-Y-B-GO. And we're getting some headlines and some news and some earnings out of one of the big luxury houses here in Europe, Richemont first quarter sales at a constant FX are up 20%. That is almost doubling what the estimate was for 11.2%. First quarter sales coming in there at 6.4 billion euros. That again, beating the estimate of 5.9 billion. And watching very closely, of course, the jewelry sales that seem to be up about 24%. And so it's seemingly another sort of bullish set of numbers there following ASML from Richemont this morning. And the dollar slips for a second day as expectations for the Fed rate hike this month are paired following that U.S. inflation data that we've been talking about. Traders now look to U.S. producer prices later today as the Federal Reserve Chairman Kevin Wurst signaled in congressional testimony that he is rethinking how the central bank communicates with the markets. [00:27:48] Speaker 5: The last 63 months, maybe 64 months of high inflation above the Fed's objective suggests that it is immediately important to think about reforms, including in communications. And that's what we're going to do. I don't expect any of the changing communications to be about hiding the ball. [00:28:11] Oliver Crook: So we've got a lot to break down from that testimony yesterday. We're very pleased to do so with Jane Foley, who is the head of FX Strategy over at Rabobank. So I'd like to just begin parsing, I think, what the markets are parsing today, which is a sort of more dovish print over on the CPI side, coming in less hot in a way that sort of a direction that the government probably in the United States would like to see, while at the same time a slightly hawkish message from the chairman of the Federal Reserve. [00:28:38] Speaker 10: Well, to be honest, I think Wurst is doing the sensible thing. He's really trying to buy his credibility. And the market, of course, just a couple of months ago thought that he might be a lot more dovish because he was Trump's appointee. But actually, that's not been the case. But really, that is a very clever strategy because, of course, you know, once a central bank or a central bank governor were to lose their credibility, it's very difficult to fight that back or to win that back. So he really is asserting his inflation-fighting credibility right now. And then we'll have to see what the economic data brings further down the line, whether or not he can step back on that. So that's what we've got from Wurst. Of course, the CPI data did bring us a reprieve. A reprieve is a word that I've seen in quite a lot of commentary this morning because, of course, with the conflict on again in the Middle East, then it is likely that the July CPI data won't bring us, you know, quite such good news. [00:29:36] Oliver Crook: And so how difficult is it to outlook at now? I know that's sort of an unfair question. Of course, there was a 50-50 that you get a hike this month. That obviously now seems to be off the table, potentially now one hike coming to the end of the year. You know, how much, you know, how reliable are our forecasts going to be at this time? Should we just sort of forget about trying to forecast it and just wait to see what happens in Iran? [00:29:58] Speaker 10: Well, you know, that will be a significant part of the story. Now, of course, oil prices are significantly higher than they were just a couple of weeks ago. But we're not seeing the above $100 prints, at least for now. And that is, of course, because, you know, the market tends to look at this with a glass half full outlook. They are still hoping that there will be negotiations. They are still hoping that both sides, of course, want to bring an end to this conflict. So for now, yeah, there's a lot of tension there. There's a lot of concern. But the market, at least for now, isn't as concerned as perhaps it was. But what's really interesting with respect to the dollar is that it didn't go up yesterday morning when the market was anticipating an interest rate hike potentially as soon as July. And that does suggest that for now, those long positions in the dollar, perhaps a little bit saturated. [00:30:50] Oliver Crook: And thinking also about some of the other things that we're supposed to be getting from Kevin Worscht, this obviously new regime at the Fed, so-called. He's a fan of the task force. We've learned that as well. Did we learn anything, you think, material that could drive the dollar yesterday from his testimony and things apart from his view of rates? [00:31:06] Speaker 10: No. I mean, he has already signal that he doesn't want to give us too much in the way of forward guidance. He knows, we know he's not a fan of forward guidance. So he told us, you know, there would be more reform and communication. But to be fair, that's no big surprise that we know that he does want to do these task force. Communication will be part of that. Indeed, I think we have an ex-Bank of England governor involved in that or will be going forward. So I don't think we had anything particularly new in terms of what he's going to do. But, you know, what we do know right now is that he is a little bit more hawkish than many people had anticipated that he would be. That in itself should help keep a lid on inflation expectations and perhaps make it easier over the medium term for him to actually cut interest rates, if that's what the economic data do begin to suggest. [00:31:57] Oliver Crook: So it seems Kevin Warsh making it a little bit easier for himself to practice monetary policy. I want to go, though, from the United States to the United Kingdom. We've had some commentary from the chancellor yesterday and, of course, also from the Bank of England governor, Andrew Bailey. Have a listen to what he had to say. [00:32:12] Speaker 11: Lower productivity growth means lower growth in incomes and lower growth in living standards. It means fewer resources are available for households, businesses and public services. So reversing this trend and continuing to reverse this trend must be a national priority. I strongly agree with the chancellor on this and on what she has been doing. [00:32:34] Oliver Crook: So, Andrew Bailey, will be the sort of continuity going into next week when we're expected to get a new government from the United Kingdom. How are you expecting that to affect cable and the pound more broadly, this new government? [00:32:47] Speaker 10: Well, you know, over the last month or so, Sterling has actually been performing quite well, suggesting that the market is willing to give the new prime minister, Burnham, assuming that's what we're going to get on Monday, maybe a honeymoon period. But there is likely to be room for attention further down the line. Now, the first thing is that we don't know who his choice of chancellor is going to be. Rachel Reeves last night at the Mansion House perhaps had one last ditch attempt to keep her job. But that is not what the market is expecting. Now, if we go towards the left with Miliband, the market isn't likely going to enjoy that. They're going to be a little bit frightened of extra guilt supply. But if we look at, for instance, the Financial Times this morning, it's suggesting that Miliband will not get that job. And that perhaps will be a little bit of a relief to the market. So choice of chancellor, important for the market as a first test, if you like. But then we need to know how Burnham will fund his job. Clearly, we've got a very high tax burden already in the UK. The electorate won't like more taxes. But at the same time, gills won't like more supply. So there's going to be room for attention further down the line. [00:33:59] Oliver Crook: Well, Jane, we can't let you go yet until we get your perspective on what we've been seeing on the yen and the rate story in Japan. Obviously, there's been a sort of a bit of a battle, shall we say, between the government and what the market has sort of been indicating. Who do you think is going to win that battle? And where do you see that driving this sort of the yen in the next coming coming few months? [00:34:17] Speaker 10: You know, this is the interesting thing. I think the yen certainly is undervalued. What is very difficult to work out is what's going to be the trigger that could turn it around. And I think there's got to be various different things coming together. Now, the first thing is that the market continues to be concerned about the government's fiscal policy. And I think there needs to be more reassurances about JGB supply. The second thing is, of course, there's a lot of expectations. Perhaps that Bank of Japan has been behind the curve a little bit on inflation. Now, CPI or core CPI inflation is within targets. So perhaps that's a little bit unfair. But I think we do need to see the Bank of Japan signaling potentially that they can accelerate the pace of interest rate hikes. That could be another factor. But it has been interesting over the last few sessions about the government, the Ministry of Finance, potentially changing tack a bit and talking about repatriation from buy or Japanese funds back into JGBs. That's going to be something really interesting to watch. [00:35:18] Oliver Crook: Well, Jane Foley, thanks very much for that. Head of FX Strategy at Rabobank taking us across the world on the Forex forecast and, of course, what will be driving those exchange rates in the months to come. Well, Wall Street's biggest bank shattered equity trading records in the second quarter. Goldman Sachs led with a $7.42 billion haul, the highest ever posted by any bank in a single quarter. Bloomberg, JPMorgan Chase CEO, Jamie Dimon, credited a surge in market activity for his bank's record profit while cautioning that it may not last. [00:35:51] Speaker 12: I just think we're in a very healthy, active exuberant market with very high prices and very high volumes. We benefit from that. We just don't know how long it will continue. Could it get a lot better than this? It can get better. But, you know, how much better? I don't know. [00:36:08] Oliver Crook: Well, for more, we're joined by Bloomberg editor Balazs Pence. So, obviously, we were expecting a blockbuster revenue record here for the trading desk across Wall Street. Was there anything in this that really stood out to you? I mean, you look at some of the moves on the stocks. Goldman up 9 percent, Citi down 5. Obviously, the market was surprised by something. [00:36:28] Speaker 13: Yes, I think if there was a surprise, it was just how good and how exuberant those numbers are. We did expect a near record. We got something even more than that. We got trading revenues that surpassed even that record first quarter. In Citi's case, maybe not as much as some of the other competitors. But the lesson here is that in times of volatility, in times of heightened trading, it's the bank that always wins. Investments can go up and down. Investors can suffer some losses sometimes. But when there's volatility, when there's an increase in trading activity, that's great for the banks. We see that at these trading desk. It was a very volatile period in stock markets. A lot of people wanted to get in to make money. And that's what we are seeing in these revenue numbers. When Jamie Dimon says he doesn't know how much better it can get, that tells you it's pretty, pretty good for them. [00:37:18] Oliver Crook: Yeah, well, Balas, I mean, I was also struck by this. Obviously, there was a lot of exuberance, a lot of euphoria. But you heard it in the tones of David Solomon, of Jamie Dimon. There's not something that I would really qualify as fear, but really being like we are in a sort of the high watermark. There is real concern that this cannot endure. And there is real concern that things could turn around really quickly. Though the bank always wins, we are hearing some concern from some of these executives. [00:37:45] Speaker 13: Yeah, so there are two reasons for that. I think one is when you get this high, when you set record after record every quarter, it just has to creep into your mind. As Jamie Dimon said, you don't know how long it's going to last, right? You know, the only way down from here, is it the only way from here? Is it down or can you notch another record in the next quarter? So you've got to be cautious. You maybe got to manage expectations a little bit. The other reason is a lot of banks are talking about increasing costs. And part of that is the competition for the business, the competition for the talent, especially when it comes to deals, when it comes to IPOs and M&A activity. Banks have been spending a lot of money to attract talent, to retain talent, to kind of get these star traders and star dealmakers from each other. They are setting more money aside for that. That increases their costs. So there's probably some caution seeping into the tone from that as well. [00:38:39] Oliver Crook: Well, Balazh Pence from Bloomberg there, sort of making us smarter on the U.S. bank earnings. I'm sure we'll be speaking to you throughout the week as we get more from the United States and from Wall Street. So you get those blockbuster numbers out of U.S. banking. But coming up next, another blockbuster set of results from Europe's most valuable company as it lifts its full year sales forecast again. We'll dig into ASML's numbers. That'll be next. And this is Bloomberg. Welcome back to Bloomberg Daybreak Europe. Now, ASML is moving higher on Tradegate ahead of the open. And that comes after Europe's most valuable company has boosted its full year sales forecast, not for the first time, but for the second time this year after revenue comfortably beat estimates in the last quarter. For more, let's bring in Bloomberg's Charlotte Hughes-Morgan in Amsterdam. So listen, let's get your takeaways on these earnings. Are we able to call this a blowout quarter in forecasts? [00:39:45] Speaker 14: Thanks, Oliver. Well, yeah, as you said, the main thing is that full year guidance increase again, even after increasing at Q1, ASML is saying, look, now we're seeing total net sales for the full year, 43 to 45 billion euros. I mean, that is a big leap from what they were guiding for before, 36 to 40. So investors who are already expecting some kind of increase may be surprised by the scale of it. And what it tells us, essentially, is that demand for AI semiconductors, demand for this AI infrastructure rollout, it's really unrelenting. Now, remember, ASML is the only company in the world capable of making the most sophisticated lithography machines that make the most advanced semiconductor chips that basically power the AI boom. It works with all the major chip makers, you know, TSMC, Samsung, Intel. And what we're seeing from this set of results with beats across the board is that demand from these customers continues unabated. They are ramping up their capex. And ASML is the beneficiary of that. And something investors were looking at very closely going into this set of results was whether ASML could ramp up capacity quickly enough to meet the soaring demand. And ASML, if you look through the statements and the CEO comments today, are being very explicit in trying to give reassurance to the market and saying, look, we understand that we need to ramp up supply. And we're looking ahead at 2027. We're looking at a 30% capacity increase in our EUV machines. And looking even into 2028, we're also investigating a 30% increase as well. So ASML being very clear, they're looking long term, they're working with their customers long term to ramp up output. [00:41:25] Oliver Crook: So obviously we're looking at some of these numbers, again, I got to the revenue across the margins. These are the kind of numbers and the blunt instruments that are going to be very positive for investors. But investors are always also going to be looking for texture. And in terms of the conversations and when we have those conversations with the CEO, what texture will investors be looking at in the questions that they pose? [00:41:45] Speaker 14: I think it's, you know, a really interesting time for the AI market overall generally, you know, it's been a volatile last few trading sessions kind of globally. You know, there's so expectations are so high for these companies. So I guess the question, you know, that will be on the mind of the market of investors is, is this increase, is this capacity increase, this raise, is it enough really to meet the demand? You know, or were people actually expecting ASML to come out with more? So I think that's the question that we'll really be looking at as, you know, the stock opens and as we go into investor calls, you know, is this 30% capacity increase enough? Does ASML anticipate kind of, you know, further boost down the line? I mean, I think something that's also worth raising is obviously alongside results, we had a release saying Intel, a major customer, is now using a high NA EUV machine, one of ASML's most sophisticated products for production of their advanced chips. And the reason this is a win for ASML is because this, these most sophisticated machines were previously touted as being, you know, a bit too costly to run for mass production, criticised as being, you know, too expensive. I think TSMC said they'd wait to a future date to roll them out. So Intel coming out alongside this set of results and saying, you know, we're, we're using this, this advanced machine already. Now that's really important for ASML because these sophisticated machines are kind of integral to their growth story as we go into the next few years. [00:43:20] Oliver Crook: Well, Bloomberg, Charlotte Hughes, Morgan, thank you so much for that analysis on what I think we can probably call one of the most important, certainly the biggest company here in Europe. And terminal users can follow the developments on all these ASML earnings. We're running a live blog right now. Just go to T-L-I-V-E-G-O to get that information, the very latest from ASML. Now to some other stories that we're watching this morning. Uber is in advanced negotiations to buy German fast delivery company, a Delivery Hero, in a deal that would allow the ride-hailing giant to better compete with rival DoorDash outside the United States. Delivery Hero has confirmed that discussions are in progress, while Uber offering a potential bid of about 40 euros per share, valuing the company at more than 12 billion euros. And Spain are into their first FIFA World Cup since the winning the tournament in 2010 after a comfortable 2-0 victory over France. It was obviously a disappointing performance for the favorites, France, whose star-attacking lineup managed just three shots on target. Spain will now meet either England or Argentina on Sunday's final. We've got plenty more coming up in the rest of the show. We'll be talking a little bit more about that growth figure out of China that came in, slightly weaker at 4.3%. We'll have some final analysis, obviously, on the Federal Reserve and everything we're watching there. And this is Bloomberg. [00:44:54] Speaker 15: The perspective there of Bloomberg opinion columnist and former New York Fed President Bill Dudley, and that is, of course, exactly where we're going to take it here. [00:45:21] Oliver Crook: In some of the charts that we're watching here as we close out the show, the Fed, the repricing we've seen across the board after that CPI print that came in, lower than anticipated the forced decline in monthly consumer price index in the United States in a number of years. And as you can see there, there's been a real repricing in terms of what to expect from the Federal Reserve, despite a more hawkish tone from what we heard from the Fed chair speaking before the House. We're expecting him to speak a little bit later before the Senate there. But you saw there was potentially a chance of a hike this month. That seems to have completely dissipated after those comments and that print that we got yesterday. We're also watching very closely China, or I should say bank earnings. We'll get to China in just a moment there. We've been talking about Goldman Sachs. We've been talking about the outperformance in terms of the retail trading desk. But you can really see it there illustrated in the stock price of Goldman Sachs moving 9% yesterday in a single session after blowout numbers, setting a record in terms of equity trading for any bank in any quarter. And you can see it there really pulling ahead of the S&P 500 financials by a fairly large margin. Of course, going to China, an important story this morning. Growth out of China disappointing 4.3%, which is significant because it is below the range that we expect from China. They put out 4.5 to 5%, so coming in lower. But of course, also paying some attention to the deflator, which is turning positive for the first time in years out of China. We'll be watching a number of risk events ahead. We'll be talking about Kevin Wersh, who will speak before the Senate a little bit later today. And of course, the Beige Book from the Federal Reserve at 7 p.m. And this is Bloomberg.