Stocks Gain on AI Optimism Despite US Inflation Concerns

[00:00:00] Speaker 1: and live from Berlin this is Bloomberg Daybreak Europe I'm Chad Thomas and now let's get to your top stories tech leads gains as global stocks push higher a beat from neocloud core weave reassures investors as anticipation builds for Anthropik's blockbuster IPO a hot US inflation print and hackish Fed commentary fuel bets on a rate hike sending the bond market into a tailspin short-term treasury yields surging the most in 19 months plus Siemens energy steps on the gas with a 10 million dollar buyback we'll speak to CEO Christian Bruch in just about 15 minutes time and now let's take a look closer look at what's happening on the equity markets this morning Asian equity markets climbing for a third day led by gains in Taiwan and South Korea with tech stocks in the region being the biggest contributor to those gains we can see European stocks futures up it's up across the board this morning green arrow all the way and futures in the US on the Nasdaq jumping this morning off the back of bet those better than expected earns from AI computing provider core weave after the US close a lot to get to this morning let's get started all right let's start now with some breaking news we have the results from Siemens Energy coming in Siemens Energy saying they see 2027 profit margin at 14 to 16 percent Siemens Energy's 4Q orders estimate EU 14.82 billion slightly below the the estimate from the market Siemens Energy's 4Q profit before special items also at EU 1.54 billion that is beating estimates and of course they also announced that big share buyback last night I'll be speaking to the Siemens Energy CEO Christian Bruch in just about 15 minutes time at 615 London 715 right here in Berlin well tech stocks fueling a third straight day of gains in Asia let's see how the markets are faring there with Winnie Hsu in Hong Kong Winnie how's it looking [00:02:18] Winnie Hsu: good morning Chad well as you mentioned rising for a third day and it is a lot of positivity in the Asia session today especially being driven by the better than expected earnings result as well as that raise in a revenue forecast from core weave plus the FT's report that anthropics bankers are considering raising the valuation of the company so you can see that tech heavy gauge here really driving gains with Taiwan's high index here up about 3.6 percent followed by South Korea's Kospi index also up by more than two percent as foreign investors finally turned to net buyers and of course Japan's Nikkei 225 also following those gains now flip aboard we take a look at the tech stocks in the move because here we have TSMC really the biggest contributor to the gauges gained today up by almost five percent and of course just now we talked about core weave but we also had TSMC yesterday reported monthly sales jumping by 60 percent so that really goes to show how the demand for AI remains very strong and interestingly the company is saying that it's also going to invest 500 million dollars each to anthropic and open AI so that is also raising sentiment there well interestingly we are seeing soft bank group here fluctuating quite a bit it was up sorry it was down as much as 11 percent earlier today when it reported the net loss very first time in about two years or so with a 3.7 billion dollars of write down from the data center projects but those concerns are pretty much being offset by the optimism around core waves result we're seeing a bit of a fluctuation when it comes to the rest of the memory chip makers with some downgrades from Morgan Stanley highlighting that the demand for the older generation memory chips doesn't seem to be as strong so you're seeing a little bit of a divergence when it comes to the memory chip movers chip maker movers in the region now flip aboard we take a look at the macro picture because it's again all about the expectation for the federal reserves rate hike and of course with the hotter than expected us cpi we are seeing further expectation for the fed to tighten more aggressively and hence you're seeing the yields overall in the region across curves um up by about six basis point or more tracking those moves that we saw in the u.s treasuries overnight and when it comes to japanese yen seeing further weakening and in fact weakened to the weakest in more than a month after a bit of a strength coming through from the u.s dollar as well back to you chad [00:04:52] Speaker 1: wendy shu with all the action for us this morning in asia thank you wendy it's been a bruising stretch for the neoclouds but core weave is pushing nasdaq futures higher this morning after topping expectations for more let's bring in matt bloxam from bloomberg intelligence matt there was a lot of pressure on [00:05:09] Speaker 3: these results from core weave what did we actually learn yeah i think a small piece of good news for the company we saw q3 revenue and profit slightly beat market expectations but perhaps more significantly there's a fairly significant increase to the full year revenue and profit outlook comfortably beating market expectations and i think perhaps beyond that some reassuring commentary from the ceo about their sources of funding now this is a heavily indebted company burning through a huge amount of cash as it expands its capacity the ceo talking about expecting something like nine billion dollars of customer prepayments over the coming three month period which is kind of helping to ease concerns about how they're going to fund that roll out and not have to tap into incredibly expensive debt and matt meanwhile despite [00:06:01] Speaker 1: this recent ai sell-off anthropic is reported looking to increase its valuation what are we learning there [00:06:09] Speaker 3: yeah so you may remember maybe even a month or two back um uh there are suggestions that the company may fetch as much as two trillion dollars and that went all the way back to maybe 1.2 to 1.3 trillion and it's again initiated its ipo marketing with a target valuation major about 1.4 trillion maybe hoping to get that up to about 1.5 trillion or so obviously what's really key now is the road show they're on which started yesterday there's a big set piece presentation on friday with jp morgan ceo jamie diamond and so it's really up to management to convince people on the fundamentals of this business to help raise that valuation uh back upwards so you know it's all to play for i don't think the the ipo is expected to price until next wednesday um so you know lots could change but you know certainly there's some optimism there from on the part of the company and it's bankers that they can move that valuation up towards a 1.5 trillion [00:07:00] Speaker 1: dollar valuation and matt of course their main rival open ai their valuation also is remaining a key topic and we've had some new revenue figures from them to digest what did we learn there [00:07:11] Speaker 3: yeah that's right so q q3 revenue came in at about 10 billion dollars and they they talked about an annualized run rate revenue about 50 billion dollars um you know similar to anthropic that q3 revenue was up about 50 percent sequentially but they are still trailing anthropics at anthropics q3 revenue is about 17 billion dollars so you know open ai has been trying to make a bigger pivot into the enterprise space they've got a more diversified revenue pool uh than anthropic but the enterprise market's really the hot opportunity and those numbers do suggest that they are starting to gain some traction with their latest models so i think people will be encouraged by that but obviously you know it's a smaller business right now uh and unless there's something you know that different that comes into the ipo uh valuation expected um next year uh year you would imagine the valuation will sit somewhere below [00:08:04] Speaker 1: anthropic matt blocks i'm from bloomberg intelligence matt thank you so much for joining us this morning well global bonds under continued pressure after yesterday's session saw the u.s two-year yield climb by the most in 19 months on hawkish fed commentary and in hotter than expected cpi print chicago fed president austin goolsby says officials will have to address these price pressures [00:08:29] Speaker 4: it's another distressing report borderline disturbing so we've we've got a real inflation issue on our hands that has been developing and and we're going to have to deal with that [00:08:44] Speaker 1: well let's bring in mark cranfield from markets our markets live team uh mark what could the feds path look like from here is a 50 basis point move now in the cards for december [00:08:57] Speaker 5: that's unlikely but the we've had a slew of voices in the past 24 hours mr goldsby was just one of about five or six speakers that we had from federal reserve all pointing in the same direction helped of course by that cpi report they're all very much saying that there's more work to be done inflation is uncomfortably high and that they're very much putting december back on the table i think as much as anything they're trying to remind investors that it was a mistake just because equity markets were weak bond markets were doing well for a little while and people were dialing back on their expectations that there would be an interest rate increase in december that is not something that these fed speakers want the market to understand they want to be quite clear that is very much on the table we should expect an increase in interest rates before the end of the year that's being repriced back into the market now the idea it goes 50 basis points probably isn't going to happen but that helps people to look ahead into the first quarter of next year where there could be the possibility of even another interest rate hike after that if the inflation data stays firm certainly goldman sachs today put out a new report suggesting there could be three interest rate hikes in this cycle december possibly january and one more by the end of the third first quarter next year so definitely the messaging is very clear to investors don't expect any pullback from the fed for the time being it's going to be quite a while before the economic data cools down enough for them to consider taking a pause even though some other central banks around the world may want to take a pause that's not the case from the federal reserve and traders should be expecting that we get higher short-term rates before the end of the year [00:10:40] Speaker 1: and mark do you see these inflation pressures undermining the haven demand that we've seen for bonds amid the ai uncertainty of course [00:10:51] Speaker 5: that's really got a lot more to do with what happens in the equity market really rather than the inflation numbers over the past few weeks we've seen fluctuations in oil it's currently lower but it's been high as well we've seen the inflation numbers coming a bit stronger as well but really but the main theme that we've seen over the past few weeks is a shift in portfolios which were very heavily skewed in the equity direction at some point this year people were talking about 80 20 in favor of equities compared to the old style 60 40 that's really being rained back in a long way moving very much more in favor of the fixed income space there's been a few adjustments over the last couple of days but essentially people are getting a bit more defensive now as we're going towards the end of the year hedge funds in particular don't have much firepower here they're not going to be taking a lot of new positions we're hearing horror stories october was a terrible month morgan stanley had another report out today suggesting as one of the worst months ever in the hedge fund industry so they're not going to be compelled to want to take a lot of new risk before you're in that means people stay defensive if you're in that mode bonds are likely to be your holding place much less volatile equities people will be steering away apart from certain specific plays maybe anthropic is one of them but certainly the idea that bonds are taking up a bigger portion of portfolios that is likely to remain right the way through to the end of the year mark cranfield from our markets live team mark [00:12:18] Speaker 1: thanks so much for joining us well still ahead positive comments so far from the us and ukraine on trilateral talks to end the rush ukraine war we'll bring you the latest on that but first siemens energy tops expectations on the global surge in energy demand we'll discuss all of that with the company's ceo coming up next and this is bloomberg welcome back to bloomberg daybreak europe well siemens energy beat expectations in the fourth quarter as it continues to benefit from the global surge in energy demand the company says profit margins will swell to as much as 22 percent by 2030 well let's bring in ceo christian bruce christian uh tell us uh to begin with sort of the this uh rollout that we've seen do we expect these good times to continue [00:13:23] Speaker 6: yeah good morning chat and thanks very much for having me first of all i have to say 2026 we concluded a record year for siemens energy and that is obviously fantastic um we increased the margins year over year by 640 basis points and sit now on 164 billion euro profitable backlog for the time ahead of us and i have to say absolutely we do see a continuous build out in electricity there's multiple drivers for it clearly have to say it's not just ai there's obviously general electrification other needs like cooling and and air conditioning battery electric and there is an increasing demand for more resilience and depending on the region so we look also with confidence really in the next years to come [00:14:10] Speaker 1: and when we look at sort of the ai trade and we see these market gyrations of the big drop last week the bounce back this week does that affect you at all does do your customers react to that at all [00:14:25] Speaker 6: look we see it in the share price more than actually we see it with our customers the customers have a very let's say um decent discussions in terms of executing it and we still also see this continuous demand on build out keep also in mind i mean it's infrastructure physical infrastructure which we build and we build it at a much higher speed than in the years before and this takes time step after step so so far the discussions with our customers are intact and absolutely continue on this build out sometimes i find the market a bit too hectic in that regard so i would not see a fundamental change in my view on how the market on the data center side is developing [00:15:09] Speaker 1: and christian you announced a big share buyback last night as well an extension of a buyback that you were already doing why did you decide to go with the buyback as opposed to using that money to reinvest somewhere [00:15:25] Speaker 6: you know first of all we have multiple levers to pull right i mean we are generating very strong cash flow uh close to nine billion euros cash flow in 2026 and we see great cash generation going forward and there are three main areas for capital allocation one is really return to shareholders dividend and share buybacks and this is what we also want to convey to our shareholders you can plan with us and you will obviously see the return in terms of value the second point is really investing organically into our own infrastructure we are on a record spend in terms of expanding our own factories or building new factories and absolutely we also have dry firepower for potential other things to do so i think we are really trying to balance it well between on the one side shareholder returns and at the same time putting enough money into the business to continue to grow [00:16:21] Speaker 1: christian turning to the us we had a huge democratic win in the midterms uh last week and part of that had to do with pushback on ai data centers do you think that projects there are going to end up slowing [00:16:36] Speaker 6: as a result of these election results yeah first of all i always believe there is a certain maximum speed you can have in the implementation simply because you physically need to build all this infrastructure we see obviously communities struggling with it and we see communities supporting that and that is something which will determine a bit the pace in terms of implementation i don't see a fundamental change to what we originally expected because i think also some of the expectation how fast you can build infrastructure have been a bit overrated but fundamentally will we see increasing data center needs and with this increasing electrification absolutely yes and i have a question about orders so [00:17:25] Speaker 1: you obviously have a huge order backlog to what degree do you believe that those orders actually really turn into revenue in other words how concrete are those orders when they're made [00:17:38] Speaker 6: no they are let's say they're very solid these orders so this is our planning base for the revenue we have not seen cancellations on these backlog orders also to put this into perspective because you were asking about data centers less than 10 percent of this backlog is related to data centers and the fundamental backlog backlog is really classical infrastructure electrification normal needs of utility companies this is what we are building on and this is why we are confident to be able to plan the revenue going forward in the next years to come [00:18:12] Speaker 1: and to what degree is your data center business is that relying on the big u.s tech companies for that business [00:18:23] Speaker 6: it is it's a mixture right i mean we're talking to different customers not all of them are related to data centers obviously some come more from the really operator side but it's a i would say two handful of customers which we select very carefully to make sure that we go with projects where we have a high certainty that the projects really get implemented what we do see over the last i would say six to 12 months is also in other regions of the world an increasing demand also for electricity infrastructure for data centers because you see an increasing discussion around sovereign infrastructures we have seen it in the middle east we see it happening now in europe so there's also more than just the us on data center side [00:19:13] Speaker 1: and i was also wondering about sort of this renewed interest in nuclear christian and wondering if that to any degree threatens the longevity of the gas turbine cycle or do you think that any new nuclear is so far out that it really isn't playing uh doesn't play into the picture for you [00:19:32] Speaker 6: look nuclear today is around 10 percent of electricity generation globally and i think this level gonna stay which means nuclear gonna grow with the electricity market going forward and that's a good thing i think we do need nuclear in the system however it does not replace the gas generation it is complementary and in that regard obviously both things will have their growth paths obviously also a lot of the nuclear installations will take more time to install so it's something also for 2035 and thereafter but it will not the one will not exclude the other [00:20:11] Speaker 1: and christian uh given that both of us we're sitting here in germany i'm wondering if you can talk to me a little bit about the german economy and paint a picture for uh our viewers of the state of the german economy currently [00:20:25] Speaker 6: yeah thanks for the thanks for the question first of all for everybody not being in germany i would say the picture is uh with all criticism more positive than people sometimes believe we have generated or we have built uh 1600 jobs newly last year on top of our existing workforce in germany we have invested around a billion in germany in our existing infrastructure absolutely the country has to do reforms we have to do reforms on the pension side we have to do uh reforms definitely also to increase more productivity in the system but we also have to see that we have a lot of strong companies where also i would include siemens energy at the same time you see obviously the automotive industry not in an easy situation so it's a big transformation process also for the country but i would say step after step and but if i look on what we have been doing as a company over the last 12 months in germany and on our german [00:21:25] Speaker 1: sites it has been successful christian brooke the ceo of siemens energy christian thank you so much for joining us this morning well coming up uh treasury secretary scott besant hails stronger ai dialogue with china as president trump prepares for a high profile trip a roundup of some of the stories we're following and that is coming up next this is bloomberg [00:22:04] Speaker 7: we are establishing direct channel to ensure that either nation can promptly alert the other to serious incidents involving its si models as si advances so will the need to engage in new areas of risk management and to demonstrate how our two great nations can reconcile the demands of competition with the responsibilities of leadership [00:22:30] Speaker 1: u.s secretary of state scott besant on ai dialogue with china the treasury secretary's comments came as he hailed improving relations with china ahead of president trump's visit to the country next week besant saying he expects further discussions between the two countries on evaluating and testing the latest models before their release house republicans have blocked an effort to impeach defense secretary pete hagseth over u.s military actions in the middle east and latin america the measure was sent to the judiciary committee after a procedural vote effectively killing the effort until democrats take over congress in january bloomberg has learned andy burnham's government won't accept automatic alignment of uk financial service rules with the european union we're told ministers see the issue as a red line as they see closer ties with the bloc in other sectors with talks ongoing ahead of a uku summit later this month well coming up u.s secretary of state marco rubio touts productive talks between russia and ukraine we'll have all the details on that and be talking to one of our colleagues tony helpin about it uh just after the break and this is bloomberg [00:23:48] Speaker ?: welcome back live from berlin this is bloomberg daybreak europe i'm chad thomas and you're [00:24:09] Speaker 1: here's a look at your top stories tech leads gains as global stocks push higher a beat from neocloud core weave reassures investors as anticipation builds for anthropics blockbuster ipo a hot u.s inflation print and hawkish fed commentary fuel bets on a rate hike sending the bond market into a tail spin short-term treasury yields surging the most in 19 months plus siemens energy beats expectations in the fourth quarter as it continues to benefit from the global surge in energy demand and now we want to get to some breaking news on nissan uh nissan 2q net loss 43.47 billion yen they had been estimating analysts have been estimating a profit of more than 2 billion yen nissan 2q operating income at 2.12 billion yen uh and nissan still seeing full year net income at 20 billion yen and of course uh the ceo there has been working on a uh turnaround effort cutting lots of models closing factories and cutting jobs but uh again nissan posting a loss uh in these earnings that just came out well now let's take a look look at what's happening on the markets this morning uh asian equity markets climbing for a third day and it's green arrow across the board those asian gains led by taiwan and south korea with tech stocks uh in the region being the biggest contributors to those gains european stock futures up as well and futures in the us on the nasdaq jumping this morning off the back of those better than expected earnings that we've been talking about from core weave and those core weave results came after the close in the u.s well turning now to geopolitics u.s-led peace talks between ukraine and russia are resuming for a second day with ukrainian president vladimir zelinski saying the discussions have been quote constructive and quite substantive u.s secretary of state marco rubio described the meeting as productive and reassured europe [00:26:27] Speaker 8: about its role in the conversations our goals are the same we want the war to end and we want there never to be a war again so that requires the not just ending the war but also ensuring that ukraine never again feels threatened for its security we all share the same goal and then the question is how do you construct that how do you come up with something that achieves both of those goals and they're interrelated so i think we share the same goal and i think the one thing i would point to is that you and i heard from my colleagues there's always this concern in europe that they're going to be left out that america's gonna cut some deal with russia and leaves europe out of the equation well europe's at the table [00:27:03] Speaker 1: and let's get more from anthony helpin who leads our coverage of russia's economy and government tony so good to see you again this morning ukraine's european allies have stressed the importance of credible security guarantees as part of any deal to end the war uh do we know what those might look like at this point [00:27:22] Speaker 9: morning chad well along with the issue of territory that this is one of the hardest questions still to be resolved understandably ukraine wants very clear responses from its allies from europe from the us about what would happen in the event of russia resuming attacks on ukraine what kind of defense they could expect what kind of support they could expect and what guarantees they would have that they would get that response in the event of any attack russia on the other hand is adamant that it doesn't want western troops in ukraine to provide any sort of support to ukraine so that's one of the key issues i think that they'll be trying to thrash out when the talks resume today there's also a broader question from russia's viewpoint they want to engage the us in in talks about what they say is a wider european security architecture that's something the europeans are very nervous about because they say they already have one it's called nato and they don't really want to get involved in that kind of discussion until the war is ended and that requires russia to stop fighting and tony is russia saying much [00:28:27] Speaker 1: at this point about the talks themselves and where they're going [00:28:33] Speaker 9: no not really they were making fairly positive noises at the start of the talks yesterday saying they hoped it would lead on a path to peace they haven't commented on the first day's events yet president putin is due to hold a summit of former soviet leaders in moscow today and we'll be watching carefully to see if he has anything to say about the progress of the negotiations there [00:28:54] Speaker 1: bloomberg's tony helpin joining us this morning uh tony uh great to see you as always ecb policy makers are considering their next move as they grapple with continued inflation pressures and assess the impact of a sharp drop in energy prices as hopes grow for the us iran deal after the midterm elections the bundesbank president jochi nago spoke to bloomberg's mark shores who asked whether the ecb's inflation projections make a december hike the most likely outcome [00:29:26] Speaker 10: i'm not sure about the five percent but what i know is that three percent for germany four percent for for the eurozone this is too high so it seems to be let me say a rather obvious outcome that we have to do something on top of what we did already we hike two times we will see each other again in december for the next governing council meeting this meeting is often high importance because the first time we will get numbers for um 2029 so it's a new projection forecast after that i guess with this new numbers we have clarity and then we have to decide on the new numbers as always i will not speculate on first of all what we have to do and which dimension maybe is is necessary in the past and this is my learning curve over the last four years since i'm in the governing council we are all committed to fulfill our mandate price stability coming back to two percent it looks like that the medium term outlook where the inflation rate is going to seems to be still pretty well anchored around our target of two percent this is good news but we have to prevent that there are second round effects so we are committed we will do what is necessary in our december meeting well i think this is an could serve as a kind of an eye opener that complacency is definitely not what what we are in more or less so we have to be very vigilant in here in a way and coming back to what i said reiterating on my point we are committed we do [00:31:08] Speaker 1: what is necessary to bring inflation back here that was bundesbank president joachim nagel speaking exclusively to bloomberg meanwhile the latvian central bank governor has told bloomberg that further monetary policy tightening may be necessary if energy prices remain high in risk spilling into [00:31:28] Speaker 11: broader inflation inflation inflation inflation so far is very much energy inflation and of course monetary policy decisions are made to try to maintain this breadth of inflation so that it does not spill over not only to indirect effects but most importantly into second round effect so in my view the monetary policy still has to have some hawkish edge and and that is important to contain inflationary expectations and also the risk of inflation spilling uh into services for instance it is so far still largely the story of energy inflation not much more yet but energy inflation has remained quite high for quite a long period of time that means that the risks uh for inflation are clearly on the upside and one has to be cautious and uh of course the the risks are on both sides you know the higher inflation higher energy uh prices as such of course are likely to weigh down on uh on growth uh and one has to be cautious to balance those things because uh in my view of course the major mandate and our aim is inflation two percent medium term currently we see inflation significantly above our target um but you know it does take time and uh the decisions of monetary policy that we take now will have the full effect in year year and a half so i would say that those trade-offs are going to become more nuanced going forward because at the end of the day we have to deliver inflation but also not at the cost of harming economy too much if the current situation uh in terms of uh energy prices uh carries on then some further tightening might be necessary and that was the latvian central bank governor speaking [00:33:33] Speaker 1: to bloomberg in riga well coming up we'll bring you our exclusive conversation with emirates president tim clark that's a little bit late in the program and this is bloomberg [00:33:55] Speaker 12: uh part of this plan is not only uh addressing our energy transition goals but also addressing our energy independence goals because we are living in an age of uncertainty crisis after crisis so we are also trying to become less dependent on imported resources this is the one of the critical area for our economy turkey pays 70 billion dollars 80 billion dollars in some years almost 100 billion dollars for energy import we need to reduce this [00:34:44] Speaker 1: turkey's energy minister speaking to bloomberg as the country hosts the cop 31 summit negotiators from almost 200 countries are gathering at the event the cop agenda is narrower than at any other major climate conference in the past decade amid signals that the ambition to tackle rapidly rising temperatures is waning that topic is the focus of today's bloomberg's big take story our climate reporter laura milan is in india and india turkey laura uh what are you seeing from this cop so far and could we see global energy pressures and ai demands spurring new climate action [00:35:24] Speaker 13: it is unlikely that we will see new big goals set at this cop the same tensions uh geopolitical tensions wars trade tensions and energy crisis that are playing out that are in everyone's minds these days are also present here at cop there are political tensions uh happening inside the negotiating room so that's why we are unlikely to see new and big goals at this cop but there are some uh targets that the presidency the turkish presidency is pursuing including uh electrifying 35 percent of energy sources by 2035 this is the current goal and what what the turkish presidency is doing at the moment is trying to encourage countries to join that target [00:36:09] Speaker 1: and to sign up to to their agreement and laura if we don't see goals that everybody agrees to is there a possibility then that there's maybe some bilateral or groups of countries getting together to discuss particular targets that they might work on [00:36:26] Speaker 13: that's it the way that climate diplomacy is going now is unlike the paris agreement which was approved and accepted by all countries over 10 years ago now what we are seeing is groups of countries that are maybe more progressive on climate joining specific targets specific objectives so one of the most important is countries transitioning away from fossil fuels which all countries agreed to do uh cop 28 in dubai uh three years ago now a group of countries is starting to develop roadmaps and to explain how they plan to do that exactly so we are expected to see we're expecting to see more of these deals in which smaller groups of countries take part and participate at this scope including electrification transitioning away from [00:37:13] Speaker 1: fossil fuels and deforestation and laura you've been writing about the challenges of climate modeling tell us more about what you found there [00:37:26] Speaker 13: yes we looked into the very basis of planning for climate change and these are climate models these are thousands of data points on humidity temperature that scientists use to create scenarios in which they simulate what climate change what the man-made greenhouse gas emissions that are accumulating in our atmosphere might do to sea level rise to sea ice to temperatures humidity all across the planet and for most of the times these scenarios are accurate the simulations correspond to reality but we've what we found a handful of cases in which that doesn't happen and this is important because this is what then governments and companies use to decide where they will allocate resources to adapt and to protect people and assets against the impacts of climate change so some of the examples that we found are heat in europe heat in europe is accelerating faster than the models were expecting and we saw that this summer with the heat waves across europe that caused over 50 000 deaths we are also seeing models predicting that arid areas in the world including the us southwest would get more humid with climate change instead they are getting drier so we see the us southwest implementing cuts in the cuts for water allowance in the colorado river basin which results in over 200 million dollars in losses for farmers all of these we are seeing and when talking to scientists they told us while the models are getting better slowly getting better these glitters are being fixed but the gaps are worrying because again in a world with limited resources companies and governments need this information to figure out where to allocate where it is more urgent to allocate money and and to protect people and assets as one of the the scientists told us different show at the university of chicago who really helped us put this together she said there's no way to know how good the models need to get because the climate change is advancing so fast it's accelerating so we just don't know how good they need to get uh to to be able to protect [00:39:33] Speaker 1: all of these assets and these people laura so good to see you thanks for joining us our climate reporter laura milan at cop 31 in antalia the iran conflict continues to cause major turbulence for airlines but some carriers like dubai's emirates appear to be faring better than others the company's president tim clark spoke exclusively to bloomberg's benedict kamil about performance under pressure [00:40:00] Speaker 14: the airline uh and the and the city has has continued to excel i'm not saying that because i am where i am in the position that i am i'm simply saying that if we have 92 of our capacity in place as compared to prior to the war starting the conflict i should say and we're running at about six to eight percentage points below where we would have been had the conflict ultimately which is quite amazing because a lot of people believe that they re people will not crisscross the region or even come to the region various government uh advisories etc but uh actually dubai is um is is growing at pace continues to grow the airline um is more constrained by the cost of fuel or the absence of the fleet and the metal that we need to do the things that we need to do um so that eight percent shortage of and capacity it's not a result of this it's result of aircraft not having engines so you would actually [00:41:03] Speaker 15: say the bigger risk as it were to growth is not so much the demand picture but rather your lack of [00:41:08] Speaker 14: capacity or lift this is the primary irritant for us is that the supply chain even into us primarily on propulsion is not where it needs to be um and that is depriving us of vital capacity particularly as we're now we're moving into the end of the year the holidays one way or the other uh we've had diwali recently the indian uh celebration so as we move forward we are desperately short of capacity has the competitive [00:41:37] Speaker 15: environment changed in any way obviously you have the local players yourself qatar etihad but then you also have turkish which doesn't seem to have quite the same issues obviously as those in the region and then since the conflict started you've also had players like lufthansa and ba pile into capacity that you had to leave on the table as it were how has that changed well it kind of works both ways [00:42:01] Speaker 14: look the the the absence of the european carriers and the asian carriers into the middle east has now gone on for eight or nine months so none of them are there at the moment ba came back in about three days ago from london lufthansa is still not there and won't be there sq and all the others so on the one hand there is a bit of that and then maybe they believe that by removing the capacity from the middle east and putting it onto the longer hall routes this is almost like a manner from heaven for them but i would counsel that perhaps they should have been there in the first place one and two when we do come back watch out the time is not right to uh be predatorial about your strategies as short term as they are one needs to look out where as a european carrier they need to be going forward once this is all over um frankly there's been quite a shortage of the abilities of some of these uh well we're a legacy carrier now but some of the legacy thinking with regard to asia uh oceania africa south america i think there's kind of a wake-up call here that maybe they need to do more in that area so if that helps and their bottom line is better good luck how are you thinking about your comeback obviously that's [00:43:16] Speaker 15: been going on for a while but how do you rekindle demand is it through discounting you introduced other things like insurance to get people like what can you do to change the narrative well we [00:43:26] Speaker 14: we will not be discounting and i'm i'm i'm frankly it's it's it's difficult to have that kind of conversation in this environment here we are in berlin and any kind of pricing mention is is liable to bring the wrath of the judiciary upon you but that is not our mantra the the the problem as i said earlier is getting to the many many cities that we want to fly to with the capacity that we need that's where we're going it is interesting that some of the legacy carriers have had these epiphany moments where they suddenly realize oh perhaps we ought to have a better you know business class cabin maybe you would have suites and doors and we need to do this and improve our quality because hello there's a lot of people with money who are prepared to pay that and that's the epiphany moment which we have we have we look at slightly askance because we've been on that for so it's so fundamental to what we do so when we took the 380s and we put bars and showers and all that kind of thing it was with a calculated four decimal place uh assumption that things would respond to us as they did [00:44:36] Speaker 1: that was emirates president tim clark speaking exclusively to bloomberg's benedict camo here in berlin well coming up we'll be looking at some of our favorite terminal charts of the morning that's right after the break and this is bloomberg and welcome back to bloomberg daybreak europe we want to look at some terminal charts now this morning uh we're going to start off with a look at the inflation concerns in the u.s after that october data released yesterday short showed core cpi rising more than expected and that's of course united debate among officials fed officials about swifter action uh this chart here shows quite clearly how rate hike bets have surged this month and not just for a hike in december but at upcoming uh meetings in into next year as well okay let's flip the chart uh this chart caught our eye this morning as we see here the complete reversal that has taken place this week in market sentiment with the vox fear index which has shot which has shot up last week with that huge sell-off we saw now dropping just as fast as equity markets have quickly rebound and that has led to an inverse relationship with the bond markets okay let's flip the chart again and here we can see very clearly the impact on bond yields with the two-year treasury yields surging 17 basis points yesterday for their largest single day move since april of last year all right let's take a look at some of the key risk events now that we're looking at uh today at 7 a.m uk we'll have german final inflation at 9 45 uk we'll have the ecb president christine lagarde speaking in riga and at 10 a.m uk we'll have the opec monthly oil report the opening trade is coming up next that's it for us here at bloomberg day rake europe uh have a good day