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00:00This is Bloomberg Daybreak Middle East. Your top stories this morning. Stocks slump and oil from both disappointing data show a sharp contraction in China's economy underscoring concerns about the nation's Covid 0 policy. Lloyd Blankfein urges companies and consumers to prepare for a U.S. recession saying it's very very high risk. Saudi Aramco posts the highest profits since its record IPO as oil prices surge. We'll have the details. And world leaders descend on the UAE to pay tribute to the federation's late ruler as his brother succeeds him. We're live to Abu Dhabi with the U.S. delegation as they touched on in the UAE. But just gonna dim across the Amazon Manus Cranny in Dubai. And I'm used to community that right alongside your market sentiment is negative but treasuries are steady. And that's something I just want to flesh out with you in a bit more detail because what you're seeing is that there are a few brave souls in the investment world are willing to step back into this trade. Year to date down 12 percent depending on what you look at at the moment. U.S. sends a 2 8 5 0 2 4 additional color. We've put together this chart to be good for our clients. The market derived expectations of US price growth dropped from multi-year highs. Basically you're looking here at the U.S. Germany Italy and the U.K. in terms of nominal yields coming back down. And suddenly this is looking interesting 24 hours said management saying look they're pleased that yields have gone up this much. They know they're going to need them later in the cycle being why Mellon saying we're not betting that the rise in yields is going to reverse. No but the government bonds are going to play their role. They're going to do their job. And you've got the negative correlation with equities for some time. It raises the potential that yields above 3 percent may not be sustainable in the immediate future. Let's get to the wheat story in the commodity space. The standout move India restricting exports there. Wheat contracts jumping by the exchange limit. The government is suspending overseas sales to manage the food security. That's according to a notification dated May 13. Wheat intraday up at the moment four point nine percent. Price is up about 60 percent so far this year. But here's the thing. India is actually not a prominent export on the world stage of wheat. And that shows you the fragility of this market and what it means for food prices globally. Well the fragility of the stock market is laid bare again as the China data slows a showdown. So any relief rally that we had at the start of trade when we came in this morning that question of whether last week was chaos catharsis or capitulation. That is the question. Stocks are lower this morning by seven tenths of one percent in the US. Again a lot of this is to do with a collapse in economic activity in China. Let me show you the question. Self flagellation. Are we done yet. That's the question that this chart really puts to you. You've got the worst global streak of losses since 2008. Eleven trillion dollars off the board. Goldman's as you've said. Yes a very very high risk off recession according to Lloyd Blankfein. And I love what Bank of America is saying 13 consecutive weeks of outflows from risk assets. The definition of true capitulation is when investors sell everything that they love. Is that what they're doing. If so where do you hide in the dollar. Longest run of gains in the dollar since 2018. I love what Standard Chartered say. It's an asset mess. Buckshot solitary refuge among financial assets of implosion. Is the dollar. There's a non anchoring in the euro dollar and dollar yuan. The dollar is not just a consequence of financial volatility. The dollar is contributing to the volatility. Let's expand the concept. Take it to David Ingles. He's in Hong Kong. The dollar's triumph is your misery. Good morning. And in most of the region it certainly is. I mean when you look at the Chinese currency back above the 680 level and in various currencies related to the Chinese growth story to your point man is this is just simply a haven are also adding to the tightening and conditions we're seeing. And certainly the data that we're flashing on our screens right now certainly did not help. We knew the data was going to be bad out of China. We did not know it would be this bad particularly when you look at the industrial space. We knew retailers and the consumer would really take a hit. But the industrial space you know that decline we saw and I'll get to that graphic to you in just a moment here. Worse than about thirty two years. So you do understand why a lot of these risk assets and growth proxies whether that's iron ore copper or what have you. There you go. On your screens. You do understand we are at session lows. The focus now on the island and this is really this reopening plan that Shanghai has laid out these last few hours or so and how they're able to execute that as perhaps a blueprint of an exit strategy if you will to the current Covid strategy. We'll see what happens with that. OK David thank you very much. David Ingles. Well NATO has welcomed finance historic decision to seek entry into the defense alliance over the weekend. If they decide to blow this would be an historic moment. Their membership in NATO would increase our shared security demonstrated not Naples door is open and that aggression does not pay. Well for more let's bring in Bloomberg's Jon Herskovitz. Jon the timelines on this membership and the obstacles in the way. What are they. Though the timeline is pretty well. Well we're going to see this week is the parliaments in Finland and Sweden approved the measure and submit the paperwork to NATO headquarters in Brussels. After that it begins a pretty long process. Of all the 30 allies it which could take up to a year. The biggest hurdle was Turkey's objections to us. We had some concerns about Sweden for Sweden supporters some Kurds in Turkey. But as Jens Stoltenberg said it looks like Turkey is going to allow the membership to happen. So it's all on track for these two countries to join. And what we're looking at is the greatest realignment in the security situation in Europe since Russia's invasion of Ukraine. Meanwhile Germany says it plans to stop importing Russian oil by the end of the year even if the EU fails to agree on a ban. How likely is it that we're going to make any meaningful progress in the next couple of days on that front. Well we we heard from government sources that it looks like Germany is going ahead with it. They're securing deals which should solve the logistical concerns over the next six seven months that would allow them to make the shift. What we've seen so far is that Germany has really dropped its consumption of Russian oil at the time of the before the war. The consumption of Russian oil was about 35 percent of the mix. Now it's down to twelve percent. There's some difficult factors for doing this because of the amount involved in the size of the German economy. But Germany is trying to solve those. Government officials said it looks like it can do it by the end of the year according to people within the within the government. Ambitious targets for sure. At least in the estimation of quite a few experts Bloomberg Markets on her Covid being one of them. Thank you for joining us. Let's get to wheat now because it jumped by the exchange limit after India moved to restrict exports. I mentioned this at the top of the show but want to get to more details because it exposes just how tight global supplies are after the war in Ukraine threatened to drive up food prices even more. Simone Foxman joins us now from Doha. So Simona we saw the move up in terms of the markets limit. What likely are we going to see in terms of other suppliers maybe stepping in and filling in the gap. Surely there is a desire for other producers to fill the gap. The problem is not just Russia Ukraine. However if that we've seen particularly bad weather across some of the other major suppliers for the world Canada the US have faced massive droughts extreme heat waves across the European Union. And that is why we are seeing just the extreme nature of this move in the markets and why we're seeing the leaders of the G7 agriculture ministers come out and really condemn this decision by India. Yes India the world's eighth largest exporter of wheat and therefore in normal times wouldn't have a huge impact on global supply. But because of Russia Ukraine because of the weather. That's why we're seeing this massive move. A caveat for our region however which is typically so dependent on Russia Ukrainian supplies and has increasingly turned to India to try and fill that gap. Still transactions between India and certain other countries with food security needs are said to be able to go forward despite this decision. So that's why we saw Egypt's supply minister coming out yesterday and saying that it's actually absurd exempt from this decision. And Egypt still intends to get five hundred thousand tons of wheat from India this year after making India a key supplier. But the global themes that we are seeing here food protectionism amid rising prices globally and then also a likelihood that more of these food transactions are going to move to the government to government model as we see prices high as we see global concerns about food and security really dominating the space. OK. The one thing we were just chatting about this morning is that we haven't seen any major global I suppose explosion or disruption in terms of violence as you saw you Covid this of course in detail you said many years ago but we haven't seen that yet have we across the emerging markets. Thank you very much. So Mohamed El-Erian a financial center in. Yeah. OK to Saudi Arabia posting the highest profit. Saudi Aramco part of Saudi Arabia posting the highest profits since record stock market listing. That's after oil prices surged in the wake of Russia's invasion of Ukraine. Bloomberg's Matthew Martin joins us from Riyadh. Barnstorming numbers Matthew. But no big pay either. The dividend. No absolutely. I mean as you say Aramco made record profits are almost 40 billion dollars of net income free cash flow generated at 31 billion dollars. And they also over the over the quarter is completed. The sale of some of their pipeline assets have raised another 15 and a half billion dollars. So Aramco generating a huge amount of cash but they are not returning any of this to investors. They have instead opted to use it to reduce their gearing. So they have they've done that. But still the interesting thing that's also come out as well yesterday was the government announced how much money they raised in oil revenue and all of the government's oil revenue which of course all comes from Aramco and from its dividends and from its royalty and taxation that has increased by 60 percent. So you know Aramco although it's generating a huge amount of cash you know the main part. Well because the main entity which is seeing the benefits of that is the state rather than investors in the company. Matthew thank you very much for the analysis. That's Matthew Martin in Riyadh. The United Arab Emirates is in mourning and that comes against a symbolic backdrop of quite intense dust storms over the last two days. One of the most powerful people in the world laid to rest. I mean the images were very interesting to watch just in terms of the simplicity of the funeral as ships to leave was laid to rest by his family at the Albertine cemetery. It was a very private affair. And you could see the brother was very much hands on throwing dust over the grave site but it's still documented on camera for the public. And it's a chance to reflect on how Sheikh Khalifa contributed to the success. And there is of course a sense of optimism around how smooth the transition has been in terms of where Sheikh Mohammed bin Zayed now takes over formerly as president of the UAE. Well that formalization years of it as you said is very poignant images all across social media. The rest of the region going into formal mourning as well alongside the UAE. But the roll call it who is arriving to shake the new president's hand is macro his first foreign visit as Leader Johnson Boris Johnson last night. Today you are seeing the U.S. delegation. We understand that touching down Annmarie Horden is on that delegation at the moment visiting Vice President Kamala Harris and Secretary State Andy Blanc to arrive and greet the new president today. Now we'll be across those developments throughout the day. In the meantime let's run you through the first word headlines for some of the other stories we're watching starting off with Australian Prime Minister Scott Morrison. He's made an impassioned pitch for a center right government to be re-elected for a fourth term. Comes less than a week before the nation's vote. Polls currently point to an opposition victory. It's been one of the most challenging times we have ever known. But I'm here to tell you today that despite what we have faced we have remained true to the promise of Australia. And Australia has prevailed. Chinese President Xi Jinping has warned of his so-called improper accumulation of wealth because of economic risks in previously unpublished remarks by Communist Party General G and says that China needs to expand the real economy and avoid mass joblessness. Those who warned of financial and property market risks. Now the remarks were released more than five months after she made this speech. A Bloomberg scoop has revealed that Credit Suisse's board has held early stage talks on potentially replacing the CEO Thomas Goldstein as soon as this year. After a string of scandals and misfires while the board continues to publicly voiced support for Goldstein some members are said to be increasingly worried that he is not getting a handle on the bank's problems. And the FTSE reports that Goldman Sachs but allowed senior staff to take an unlimited holidays as the competition intensifies to retain talent. According to the newspaper the new policy was introduced at the start of the month. Other changes include at least two extra days off each year for the junior employees and all government staff will be required to take three weeks off each year starting in 2020. Question is could you do without us for three weeks. OK. Let's get into the first word headlines from around the world. Those where they are. Up next we're going to touch on the economic data from China. It's dampening the mood in the markets. And we'll get the analysis from Lombardi's CEO Stephan Money. That's next. This has been. Do you think we're headed towards recession. We're certainly heading. It's certainly a very very high risk factor. And there's. But I know there's a path. It's a narrow path. But I think the Fed has very powerful tools. It's hard to finely tuned them and it's hard to see the effects of them quickly enough to alter it. But I think they are. I think they're responding well. I think it's it's you know it's definitely a risk. If I were running a big company I would be very prepared for it. If I was a consumer I'd be prepared for it. But it's not baked in the cake. Goldman Sachs is senior chairman Lloyd Blankfein there with a warning to prepare for a recession. That's just the bank cut its growth forecasts for the U.S. this year and next. We also got a big missile in the Chinese activity data sparking a fresh bout of investor caution. Let's head out to find money. He's the chief investment officer at Lombardy. Stefan what are your thoughts then on the probabilities of a recession and how likely it is that we are kind of going on a fast speed train into an economic storm. A recession is very much possible in the US in 2023. You know the main reason is that there are a lot of things at play right now. The Fed has lost credibility you to by thinking that inflation will be temporary. So they need to re-establish credibility and fight against inflation. I think this is an area where we have quite a lot of visibility that been announcing their strategy. The 50 basis point rate hikes. So we are clear about that. It's very difficult for a central bank to engineer a soft landing. We have also the data in China which is quite roaring this morning. We had a very poor set of data. And you know China is an important part of the world economy obviously. And then last but at least we think that the conflict in Ukraine and Russia is going to last for quite a while. And therefore you know these sides are also some indication in terms of European growth. So a recession in the US in 2023 is not a given but it does apply to high probability. We'll come back to you on that in a moment. You mentioned China. And I'm curious I headline the Bloomberg intelligence. Is the data the plunge in activities screams for Covid relaxation. You say there's a bifurcated outcome. One is the growth rate of some 4 percent and one is normalization. When you look at this data. Do you think we're past through the worst of the eye of the storm and we will normalize by June or July. What does that do to your investment coal which is neutral at the moment. Well in terms of investment for China we are cautious still. We have reduced our exposure in terms of fixed income and more importantly on the currency we think it's quite likely that the renminbi would reach 7 against the dollar at the end of the year. And as you were saying manners there are two scenarios from here. Whether China is able to manage the Covid-19 epidemic and kind of monetary and fiscal support that they bring will allow the economy to bounce back in the third and fourth quarter in which case growth in China in 2022 could have a full handle. Or the other scenario which is a bit more pessimistic is that China is not able to to deal efficiently with this Covid wave that will micron through those euro Covid RTS and in which case it's a bit more worrying. As far as growth is concerned because really I have to go below 3 percent in 2012 to. Find one of the prominent voices on the investment landscape Mohammed an area and he is hard to pin down on any firm investment calls. Finally he's kind of put that aside and he put this out on Twitter. He's saying look given how massively underexposed I was going into this sell off I dipped a toe in this afternoon with a small handful of high beta names. Do I think the selling is over. I suspect not. Of course I don't know any more than others but I do sense some trading opportunities. I want to get to your position as chief investment officer. Are you dipping your toes in as well. A little bit. Well we were we were starting from an underweight position in risk assets and the way we achieve this underweight position was using option strategies to create a symmetric profile so that our clients are protected on the downside but do participate in the upside. And I would tend to start to agree with me on that. The fact that you know a lot of the venues have been already operated. You have the three factors that I've mentioned before the Fed ISE the China situation and the conflict in Ukraine are already embedded in the prices. So I think you know it's not unreasonable to start to rebuild you know slightly more optimistic outlook ourselves. We advise our client to have a well diversified portfolio including equities of the value and type fixed income more government or what did you credit but also to get some inflation edges such as commodities such as chips or some European real estate. Stefan there's one thing that that's very clear there's a deep anchoring in the dollar and the effects regime. People are gonna begin to talk now about perhaps a G-7 response that I think that that's where where we will go. But we're seeing this dollar which is triumphant six weeks in a row. It's are the longest winning streak since 2018. Do I hide in dollar and dollar assets. Do you buy bonds. Do you buy dollar. Is that your quayside global angst hedge. So we've been like it to be quite overweight. The US thought our going into 2022 to the tune of more than 10 per cent overweight. But recently we have decided to take some profit. And now we are only overweight 3 percent on the dollar. It's clear that it's pretty much depend on the rest of the year in terms of economic growth. You know if we go to a recession and a very difficult economic environment the dollar will stay the king NASDAQ to a large extent. Conversely you know if the economic situation improves then probably you don't really want to be such such an overweight upstart. OK. Trimming and B dexterity Stefan thank you very much Stefan Money chief investment officer at Lombard ODA. Plenty more ahead on your Monday edition of DAYBREAK Middle East. This is no. Let me just show you wants a reduction in confidence in the Chinese economy dollars pummeled economy Diane goes the oil one point six percent year of the China data was ugly according to Stephen and as the oil bears are on the prowl. So that's on the upside. On the big side of crude you got Germany. Our top story this morning Germany to stop Russian oil imports regardless of the EU sanctions. But for me it's about gas at the pumps in the US passing four dollars a barrel for four dollars a barrel four dollars a gallon. For the first time he got refining capacity outages. You know driving season's coming up. It's going to get expensive. Yeah it's going to make things really tricky for this administration going into the midterm elections later in the year on a swing to the cryptocurrency space which is stabilizing a little bit at the moment. We are lower at two point two percent. But over the weekend we kind of built back up towards the 30000 dollar mark the worst of the terror. US turmoil appears to be put aside. We were as low as twenty five thousand four hundred on Thursday when the terror us the scandal exploded and at its height the market panic engulfed 76 billion dollars. A stable coin together of course being a key cog in the broader equation there. Yeah we had the CEO of McQueen here on Friday. He said he didn't think that Coinbase actually would go bust in of itself. A quick snapshot of equities yourself. We've got a slightly risk off flavor. This has more to do with the implosion and the China data the growth the retail sales the industry production. Let's see how we shape up. This is Bloomberg Daybreak Middle East your top stories this morning. Stocks slump and oil tumbles as disappointing data shows a sharp contraction in China's economy underscoring concerns about the nation's Covid 0 policy. Blankfein urges companies and consumers to prepare for a US recession saying it's at very very high risk. Saudi Aramco posts the highest profits since its record IPO as oil prices surged. And world leaders descend on the UAE to pay tribute to the federation's late ruler. And his brother succeeds him. We'll get to Abu Dhabi in just a moment. Let's get to David Inglis in terms of the risk what a torrid set of data from the Chinese. The question is is it retrospective. And is there I suppose a hint of light at the end of this tunnel. It's it's indicative badass I'll put it this way it's indicative of what could happen to the economy if the types of lockdowns and restrictions to mobility that we had in April and you're looking at the data miss pretty much most forecasts. If if these restrictions stay in place for longer. Now when you look at what the national statistics said and also separately what's coming out of Shanghai there are efforts to try and avoid what happened in April. Certainly there was a knee jerk reaction in markets and more than most of these growth related proxies and assets are trading at session lows. But then when you look ahead and hopefully some of these plans come to fruition of course it does seem it does seem that there is a blueprint in place. And the rest of the region though when you look at assets outside China for example places like Japan for example India which are trading slightly higher as we speak it doesn't look like this really disturbed markets a whole lot. But we'll have to wait and see these next few hours. Back to you guys. OK thank you very much. David Ingles there with the very latest on the markets and other world leaders are descending on the EU to pay tribute to the federation's ruler who passed away over the weekend. The US delegation including Kamala Harris and RTS Blank and has literally just touched down in Abu Dhabi. Annmarie Horden is on that flight. She's traveling with the vice president. She joins us on the line now. So Anne-Marie we've chatted a couple of times exchanged a few messages over the weekend. Is the size and the scale of this delegation that sort of thwarts anything that we've seen from the U.K. and France. Oh yeah. That's very true. We saw many of my horn and Boris Johnson descend upon Abu Dhabi to pay their respects but this U.S. delegation and managed let me just correct you for a moment. It's been very tricky and confusing. I've been travelling just with Secretary Blinken. He was actually in Paris and Berlin. Prior to this trip we got diverted to join this delegation. Abu Dhabi and the vice president alongside Secretary of Defense Lloyd Austin the CAA saying Filburn climate envoy John Kerry along with Brett McGurk Barbara Lee are all coming as part of a very extensive very high level U.S. delegation to the Emirates. What about the news that NATO is preparing to add Finland and Sweden and Marie what is the US going to try and achieve in the coming hours to try and bolster the case and try to get this done and sealed. So this is really what the discussion was in Berlin when secretary blinking meet meeting his counterparts. He also met with the Ukrainian foreign minister Dimitri Labor before he met with his counterparts. And really the most important person you met on the margins of this NATO meeting was his Turkish counterpart. Because right now Finland and Sweden are on the path to join the alliance. But Turkey is raising concerns and NATO of course has its open door policy. But what you heard pretty directly from the secretary of state yesterday as well as Foreign Minister Angelino Burbank of Germany was that across the board. NATO almost by and large support their ascension into the alliance. But it does look like they are going to have to hammer out some details and have a lot more discussion to get this symbol on board with these two countries and two Nordic countries joining NATO. Now Amara given the complexion of the delegation that has arrived it's very well known that there are no sanctions that the UAE for in the first instance at the U.N. did not vote against the war. They've since come on on side in terms of let's move to negotiation. Let's channel diplomacy. Do you think that part of this mission will involve some side by laterals in terms of Ukraine Russia and where the UAE stands on that with their American allies. He's not saying that we spoke to you it's official. They said they are sending this big delegation because they really want to make a very strong message and an effort to show a sign of strength and the strengthening of this relation. But is coming in combination of these bilateral as we have seen already that are discussing and you're alluding to these issues most notably Russia. Given the fact that we have seen the UAE really not want to isolate Russia the same way we've seen European allies list alongside the United States. So I'm not exactly sure if there's going to be this political discussion given why they are descending upon Abu Dhabi. But clearly they are trying to show that America stands by the UAE and they want to make sure that even though there is potentially a moment of a bumpy relationship with the Biden administration most notably because they are dealing with Iran in terms of potentially entering in another JCP away agreement that this relationship is set to endorse. Amery excellent analysis as always thank you for that. Annmarie Horden is going to be of course life throughout the morning from Abu Dhabi. Let's get the comments out from the Turkish leaders. They have raised concerns that the country could be a spoiler in beds from Finland and Sweden to join need. We talked a little bit about it. Now I want to just widen out and bring in Simone Foxman for the latest developments. So I mean what stood out to you from the rhetoric that we've gotten from Turkey over the weekend. Well it really seems that Turkey is trying to exact support more support from the EU from the United States for its campaign against the Kurdistan Workers Party. That P.K. K. which is a group that's designated a terrorist organization by the U.S. and Europe and operates within Turkey but for which Turkey feels it's not. It's always been disappointed with the amount of support that's come from those countries. So it's trying to get a little more help on that side. And these allegations essentially that Sweden and Finland are supporting these groups really around a large Kurdish population in Sweden. And there are six ethnic Kurds who are in the Swedish parliament but they're not necessarily accurate. Turkey has always felt like the EU and the United States in particular the United States which supports Syrian Kurds has never done enough to help its concerns about the terrorist threats from this group. And that's why it could be trying to exert its leverage because NATO all 30 NATO members have to sign on in order to welcome new countries into the contingent. But at the same time there's a real risk for Turkey here that it could push too far. And Timothy Ash at Blue Bay Asset Management tweeted something great about this yesterday. Real risk of a break in relations with the West. If Turkey does not ultimately approve the ascension of Sweden and Finland into the group that may be why we're starting to hear these more conciliatory tones even as Turkey is trying to push for the things that it wants an exact. This leverage limited leverage that it has. And Egyptian officials tease a new plan to shore up the private sector investment. So what are the top lines on this. If this was really about pushing private sector investment including from outside the country at a time when economic concerns raging within Egypt the top lines here turn deposits by Gulf countries and billions of deposits recently into actual investments in the economy also put more stakes in companies owned by the government into the market expecting to get two army backed and 10 other companies come in to offer stakes over the by the end of this year according to the prime minister there. And then essentially just raising the size of the private sector. Currently around 30 percent of investments to 65 percent of investments that ultimately the target. And this I think an acknowledgement that the carry trade is over. We've seen 20 billion dollars and outflows from investors as real interest rates have turned negative over the course of this year. And a lot of antis believe even if you can get that number back in the black. That is not going to overcome the macroeconomic pressures. We've seen that discourage investments. So trying to map a new strategy to bring investments into the country and this important also ahead of a rate decision from the Egyptian central bank later this week we do expect it to hike interest rates. But again that less important than the overall private sector investment story. I mean that's why I was so puzzling seeing the Egyptian pound treated 1835 against the US dollar because he would have thought it would be weaker. That was a hot topic of conversation in Egypt. In the meantime inflation data in Israel came in hot again. Where does that leave the central bank. Yeah. Housing and food costs going. Pushing inflation to 4 percent year on year in April and if we jump into our GTA TV go I'll show you what the central bank is thinking here because this 4 percent year on year inflation is still higher than the 1 to 3 percent target that the Israeli central bank has. So this gives plenty of fodder for a continued interest rate hike cycle. We get the next meeting on May 20 third Monday of next week. In addition also something that is going to add to that rate hike argument. The shekel is actually the weakest against the US dollar since late 2020. The shekel strength had been a rationale not to hike interest rates but now it seems like that concern particularly the move we've seen over the past weeks no longer one. We're really going to see the central bank have to worry about. Sam thank you very much Jack. Carnage in IMF acts on the dollar strength at Simone Foxman. CAC Financial Center in Doha. Plenty more ahead on Monday mornings edition of DAYBREAK. Middle East setting the agenda. This has been the. The former Treasury secretary Larry Summers has dismissed moves by Democratic lawmakers to counter alleged price gouging by companies as dangerous nonsense. Congress will vote this week on the legislation barring excessive or exploitive food fuel prices. Summers spoke to Bloomberg's David Westin. The price gouging at the pump. Stuff. The more general price gouging stuff is to economic science. What President Trump's remarks about disinfectant in your veins was to medical science. It is dangerous nonsense. There is no material prospect that in any enduring way gouging legislation can have any substantial effect on inflationary pressure. But it can cause and contrive all kinds of shortages. It can distort a complex network of flows between crude and refined product. It can inhibit the supply responses that are what's ultimately the best way to overcome inflation. This gouging talk is a diversionary confusion. It's something that tends to happen when we have inflations but we only make progress once we move through that. And we understand that the real determinants of inflation have to do with the total level of demand that's being stimulated by policies. If politicians outside the Fed want to make a difference on inflation to the limited extent they can they should be reducing tariffs. They should be letting more immigrants into the country. They should be reducing regulatory burdens like the Jones Act that mandates that only U.S. ships can take crude oil from Texas to the northeast. They should be limiting them limiting demand by asking borrowers at a moment when they have better financial condition than any time in a very long time to pay back their student debts rather than maintaining the moratorium. Those are the things that you can usefully do to influence the inflation rate. And all those gouging talk is a pandering diversion from all of that. Let's wrap up this week with a couple of quick ripped from the headlines. One of them is cryptocurrency is in stable coins. The prices of those certainly didn't go up this week. In fact I saw others like something like turning 70 billion dollars where the market value taken away. Do we know anything at the end of the week about cryptocurrency stable coin that we didn't know at the beginning of the week. We've been reminded of something we should have known which is that fear and greed drive financial markets all financial markets and cryptos not immune from that and bank run phenomena whether it's banks whether it's money market funds whether it's repo or whether it's crypto. When you don't have backing and you lose confidence you get a big mess. And finally Larry at the very end of the week on Friday Elon Musk tweeted on the one hand that he was having some second thoughts about Twitter. And then he came back and said no no he's still committed to it's not clear. The stock certainly went down came back a little bit but it certainly went down substantially. Does this say something larger about what's going on with tech right now. We saw that the value of so many big tech companies has come down. It's possible this is actually having some buyer's remorse. Iran is I think Iran mosque is I think in some ways the Andrew Carnegie of our time a titanic innovative driving extraordinarily wealthy figure who when he has leverage uses it. And with the changes at Twitter that have already taken place in the absence of other bidders he has enormous leverage in this situation. And I suspect he's using it. You know the mosque being described as the Andrew Carnegie of our time Larry Summers speaking earlier to Bloomberg CAC. Still plenty more ahead as U.S. equity futures are called lower on the S & P 500 Mini. This is Bloomberg. Let's talk about earnings because the lower than projected profit forecasts that Nissan announced last week is quote not conservative but realistic given tough external conditions anticipated this year. That's according to the company's CEO O. Srini Gupta who spoke to Bloomberg Markets. 2020 to our forecast is in fact better than what we did in 2021 because of the fundamental fundamental transformation we have done in our operations. Having said that when we look at the external conditions the raw material the supply chain challenges which we have we tried to be realistic. I would not call it that. Our forecast is guns already. I would say it is realistic. Having said that more and more we have certain to be moving forward. Definitely our performance could be better. So 2022. On one side we have opportunities coming from the business operations. For example we have more than six months of customer orders. Right. On the other side we have these external conditions. So we have to balance both risk and opportunities. Supply chain remains a major issue for automakers worldwide. In what sense are you getting some advantage from the weakness and again as well as the ability to source at least some of those parts domestically. You know the exchange rate is important. It's not the most important factor in the business because it means back to you on short term. But what's really important is to have the business strategy which is based on mid-term and the long term. Right. We do believe that hundred thirty may have a short term benefit to us. But on the other side our objective is to have the local competitiveness in all the regions which we have for example. We have more than 40 plants and doing business in more than hundred seventy countries. We need to have local competitiveness and that's what is our medium and long term objective. For example if the exchange rate is at 130 whether it is going to change our industry's strategy to do electrification in United States. My answer is look we went ahead and we announced the investment up to 500 million dollars to do new Nissan and Infiniti electric cars. So once again foreign exchange is important but it's not the most important factor. When you talk about mid to long term strategy Ashwini you have Reno's top executives visiting Japan at the moment. Can you give us an indication of what sort of conversations are taking place. Is there talk about rebalancing the stake. I would say it first. You know thanks to the ease of travel restrictions. After two years we are meeting all together. These are all the business meetings to find more synergies in the alliance. And as you know that as part of a resolution announced the study about carving out that evey business unit as part of the design is concern. We are studying how Brennan wants to do it. And and of course Renault Nissan as alliance partner would like to support Renault towards their business strategy. Now how we support it. To what extent we support it. I think these are the discussions which we are doing now. There is no question of discussion of rebalancing agenda today. We are more focusing on the businesses which can which can benefit each of our company. Bloomberg sources say Credit Suisse's board have already had early stage talks on potentially replacing the CEO Thomas Godson after a string of scandals and misfires down guarantee. Is it is that our London HQ with the details. I caught up with them just a few weeks ago and he is saying goodbye to a lot of his colleagues that have been there for a long time now. He's under fire. Yes he has said goodbye to some of his colleagues as you have mentioned there matters. But now it seems to be as you have mentioned that he is under fire. And it is according to this Bloomberg scoop and the sources that I've been speaking to Bloomberg that gotcha thing could leave the bank as soon as the end of this year. But it is also crucial to note that the bank's board is still publicly supporting got stayed. And we did get a statement from the bank which was released. And I must read some of this out to you. We don't comment on rumors and speculation. The chairman clearly endorsed Thomas Scott Stevens. Nothing has changed in this regard. However the source is speaking to Bloomberg say some board members are becoming increasingly concerned that the CEO can not get a grip of the bank's problems. Now what are some of these bank's problems that have led to some other top talent leaving. Firstly we know that gotcha. Dean did takeover from Tidjane Thiam. That was two years ago and that was after the spying scandal that really rocked the bank at the time and really got Stein was put at the helm to steady the ship to boost profits and also stop infighting within the bank. But then it was hit by some some some other successive issues which arose. And remember a year ago we witnessed the key cost capital collapse which left Credit Suisse with about 5.5 billion dollars of debt. They've also faced a whole series of profit warnings. And as you said their madness an exodus of talent at the bank. But we do know that the management board is still publicly supporting gotcha stayed. So we'll have to see what the future has to hold. I mean he brings with him quite a track record. Thomas Goldstein has been with the bank for 23 years. He's a Credit Suisse life. For all intensive purposes. And thank you for the update. That's at Leon Gardens in London. I want to swing to the commodity space again. You have quite a bit of downside pressure in most of that space but the other players here around some of the soft commodities. So we are leading the charge. The export restrictions out of India creating some high octane headlines and triggering a price surge. But the details might prove less contentious because basically they're still allowing some exceptions to the rule. They're going to continue making grain available to nations that requested and they're going to follow through on irrevocable letters of credit that have been issued. They are going to be let through. Quick snapshot of the pond. Don't you go stand like blog. We'll pick it up in the next show. There's a real momentum in the M like blog that the UK is in danger of heading the stagflation zone and 115 to be hit on cable.

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