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yousef: this is "bloomberg daybreak: europe." . i am yousef gamal el-din in dubai. these are the stories that set your agenda. chinese banks lowered their benchmark lending rates for the first time in 10 months. but not by as much as had been hoped, as official data shows the economic recovery is fast losing steam. asian stocks take little comfort. the u.s. and china took cautious steps towards stabilizing relations, as antony blinken's beijing visit wins praise from presidents xi jinping and biden. the european central bank governing council member says hikes may end in 2023 as recession risks rise. the uk's two year yield climbs 5% of their first time since 2008 ahead of this week think of england on see decision. -- policy decision. let's get to more action in terms of volumes as we kamara the juneteenth holiday in the

united states -- as we come out of the juneteenth holiday. the s&p mini is lower by .25%. a glut of -- global slide underway the countdown to jay powell this week. treasury yields going higher and the bond price going down. the bloomberg dollar index is flat. euro-dollar at 1.0915. we are seeing brent crude under pressure as well. i want to put the boardiet to the story here on the squeeze on u.k. finances because the two year government bond advanced to 5%, the highest level since 2008. the pain is being felt in the two year fixed-rate home loans at jumped above 6% which is close to the 14 year highs we saw at the end of 2022. the rise in borrowing costs for homebuyers for companies, the government comes out of the crucial inflation data later wednesday and then the bank of england thursday. officials are set to raise interest rates by another

quarter-point. i want to shift gears to alibaba and give you a rundown of what has been happening on the executive level. absolutely critical announcements. a new ceo comes in. this is the executive vice chairman joseph tsai takes over as a long time billionaire cofounder jack ma will take saying's position as chairman of the board. eddie wu who is now the chairman will take over as ceo of the 240 billion-dollar company. the move comes as growth sputters in the post crackdown era. the stock price year to date tells you the story of the struggle to convince investors to stay for the long-term. a quick look at the australian dollar. we are minutes out from the rba and it was a close call. that is what we are learning from this and it prompted traders to parapets -- pare bets

that the rba will hike twice by year end. we are .7% off. i want to get out to reporters around the world and help you set the scene from china cutting two more key lending rates to u.s. president joe biden hailing progress in restoring china ties and guilt back in the global spotlight. let's kick off of the chinese banks cutting the benchmark lending rate following the move by the pboc. the rates have been cut by 10 basis points and investor disappointment has driven stocks lower. for more we are joined by sofia horta e costa that hong kong. it run us through the transmission mechanism here because we are not seeing much of an impact. what happened with lpr? sofia: transmission mechanism is one of the problems really. when it comes to cutting interest rates first of all, there is a sense that 10 basis point cut was not enough, especially a five year.

that underpins mortgages and economists were calling for a 15 basis point cut but that should be enough to disappoint market this much. when it comes to whether this will have an impact on the economy, there is the efficacy concerns around the pboc's policy transmission mechanism. when you have week credit demand and that is really the problem here, it does not matter how often the pboc cuts rates or how cheap loans get and how much banks really lend or are willing to lend more to businesses and households if businesses and households don't want to take on it. markets were disappointed first because this was not a big enough cut and because they don't think it will work. yousef: let's assume and go with that description that the rate cut is sub optimal in terms of broader policy impacts. what is next in terms of stimulus? what can they work on? sofia: what the pboc can do is

add more liquidity into the financial system. they can do that with the rrr cuts which economists do. forecasts could come this week but very much likely to kick in next quarter. relate what needs to be done is on the physical side of things. that is where beijing seems to be reticent to deploy anything to do with rolling out stimulus measures for the property market. that is the biggest drag on the economy right now. getting people to buy big-ticket ticket items like cars, washing machines, dishwashers, anything related to the property market as well. also cars qe and people asking y has the pboc not done qe? we look at the balance sheet of that central bank, it is low compared to japan and that fed than the u.s.. getting the central government and getting the pboc to roll out more aggressive measures, let's

see if that is likely. yousef: thank you for the analysis. really important. so here it -- sofia horta e costa, our chief correspondence and hong kong. president biden has held progress in restoring ties as his secretary of state antony blinken wreps up meetings with president xi jinping. we are joined by bloomberg bruce einhorn in hong kong. this is being hailed as a step forward and marginal progress. what comes next? do we go from here? bruce: that is a good question. president biden was enthusiastic and said antony blinken, the secretary of state did a helluva job on his trip to beijing and the president said the u.s. and china are on the right trail as he put it. from the chinese side, it does seem that the chinese were upbeat about the status of the

talks because they did give the secretary of state a meeting with president jinping. that was not on the schedule. it was unclear whether there would be a meeting. after several days of meetings with officials, they did give a meeting to president xi jinping with the secretary of state. it was indication that things may be on the path to stabilizing the trade relationship is ukraine.

yes, you're right. lee chang, who is the the new chinese premier, the number two in the chinese leadership is is in germany. this is his first overseas trip since he took the job meeting scheduled yesterday with the german president, as well as with the german chancellor, olaf schultz. more meetings with relationship. what comes next? president biden has said he would like to meet again with president xi jinping. the two leaders have not spoken since they relationship. what comes next?

>> this stands at odds from the recent commentary we have heard from the bank of england. last month guilt sales could increase the and the second year of qt when it in september, but it goes without saying that the street is essentially worried that there is a liquidity is in the gilt market and it will pause -- because the bank of

england to have to think twice. yousef: especially given the amount of pain that homeowners and potential homebuyers are feeling. thank you for running us through some of the nuances. i want to get to some of the key things markets will be watching out for today. we start off with german chancellor olaf scholz. he will be hosting the chinese premier and the chancellor in berlin later this morning. at 11:30 a.m. u.k. time, fed president jim bullard will be speaking at a event in barcelona. and then we get fresh data on u.s. housing starts. we will do for more fed speak at 445 exam a pm u.k. time with jon williams appearing at the cultural reform conference. fedex is due to report earnings after the bell. we cannot wait to get insights on what is happening in the

world of logistics. a preview of what else is to come. an ecb governing council members says hikes may and soon with more looming recession threats. we will have the details next. this is bloomberg. ♪

yousef: this is bloomberg daybreak europe. let's get to the ecb governing council member who says the increase of rates may end this year. warning they must not cause an economic slump. we are now joined by sonja marten the chief fx strategist at dz bank. there is a fear that central banks may run the risk of over tightening. do you see this as a recalibration on the part the ecb and initial signaling? sonja: yes, many central banks

are currently in the process of fine-tuning their monetary policy. they have all hiked interest rates aggressively over the past year or so and it is now time to near the end of the cycle. it is a fine line for them to walk because inflation is still too high especially look at the core rate. you cannot just drop the ball and say we are done. there is going to have to be fine-tuning. the ecb is likely to hike rates in july. christine lagarde all but told us that is what they are going to do. there is some speculation about another hike in september but assuming inflation in used to come down, which we do, they can rest at that point. until then, they will have to sound hawkish to make sure they don't excellently trigger a renewed surge in inflation expectations. yousef: when you approach fx strategy with clients, you break it down. you have shorter-term tactical

ideas and longer-term calls as well. the euro dollar is at 1.09. where does this get best navigated? sonja: i think it was mentioned earlier that we are approaching 110 and bounced off the a little bit. it seems to be running out of steam at this juncture. the market reacted aggressively i thought to the ecb press conference, which while yes it was hawkish, it did not change the outlook for interest rates in my view. it did seem to ignore the fed a bit so i'm curious to see how the market reacts when powell speaks tomorrow. there is potential to see the dollar trading lower in the short term but definitely looking medium to longer term, we are looking at rates of 1.15 in our forecast. there is potential. i'm not convinced the timing is right now. yousef: i want to go across the channel and talk about the united kingdom specifically as

we count down to the bank of england. the of inflation data to digest in the coming hours. we talked about the break out in two year government bond yields and pain being felt all the way down the supply chain is that within the mortgage markets. how do you think the boe is going to deal with this? it sure seems it is hard to get this right. sonja: yes, i think valerie said earlier. is difficult situation because while the boe might want to talk down terminal rate expectations of almost 6%, there is risk here of suggesting to the markets that the boe is dropping the ball and that would result in higher yield surge. it is a tricky situation for the bank of england. if we are looking at what the market is expecting, the almost 6% terminal rate, one has to wonder about the economic damage that would do. i think hawkish speech yes. signaling, we are still there. i think going back to mega moves

of 50 basis points as may be a bit of a tricky business at this stage in the cycle. i'm looking at 25 basis points but would i be surprised if one of the other members voted for 50? not really. yousef: the other central bank that is in focus is the pboc. we have news out from that domain. the banks have not lived up to expectations of the market in terms of the rate cut. how does the pboc manage the peer pressure from the rest of the world versus its domestic requirements to keep a lid on the local currency? sonja: the chinese are in a very different situation because we had surprising economic recovery which was fast early on in the year. people were very optimistic then they had to realize that the optimism was misplaced. we are back to an using strategy. the market was a bit

disappointed he did not do more but there could be more in the pipeline. the focus in china needs to be not just monetary policy. it needs to be also on fiscal policy and this is where we need to see action to support the economy and provide liquidity, to support the housing market. all of these things will factor in. it is going to have to be corporation -- cooperation between fiscal and monetary policy. as the only way to go here. yousef: the bloomberg dollar index has managed to jump back off of key support lines on the technical level but as you extrapolate those moves to the rest of g10 effects, where do you see the best trade ideas? what are you recommending at this point? sonja: the current level of uncertainty because there is a lot going on at the moment. the central are recalibrating policy. the question of when they will stop tightening and will they have to do more?

i think this is not the best time to go to longer-term trades. this is an opportunity for short-term opportunities. it was a good time for euro-dollar when we were at 1.07 indefinitely at this point, i would not yet recommend going in the longer-term of the euro-dollar towards 1.15. it is tactical at the moment. the dollar-yen might be interesting. we have seen the yen we can considerably. there speculation this might get to a level now where the government and boj feel comfortable. there might be verbiage to try to support the currency. they'll be interesting to look at because we are still thinking the boj will have to change policy later on this year or early next year and that is an opportunity. i also think there is room to go with a view to thursday. we are already at high levels given the fundamental pictures that might be interesting to look at the downside here. yousef: this has been very valuable.

thank you very much for sharing latest takeaways from the research that you and your team have done. that is sonja marten, chief fx strategist at dz bank. prime minister benjamin netanyahu pushes ahead with a contentious plot to reshape the judicial system. we will discuss the latest in israel next. this is his -- this is bloomberg. ♪

yousef: this is "bloomberg daybreak: europe." i want to switch to emerging markets talk about turkeys -- turkeys treasury and finance minister was indicated he will steer towards more conventional policies as the country looks to restore investor confidence. sources are indicating that

adjustments are going to be made slowly to avoid unwanted side effects. economists expect rates to be raised steeply at thursday's central bank meeting. yesterday saw turkeys benchmark stock index get clobbered by 3.8%, the biggest drop in a month. i want to talk about israel and the currency side of things because we saw a drop of 1.4%. this is after political developments surrounding the prime minister benjamin netanyahu who is making a renewed push around some of the reforms that he has been looking to make to reshape the judicial system after fighting between israeli forces and palestinians in the west bank. the performance of the shekel is one of the worst in the world in the fx space. israeli stocks rose to pair losses on sunday. it was partly caused by netanyahu's comments. the prime minister will take practical steps as he called them to implement the plan to repair the judicial system. we will continue to monitor the intense clashes that have been going on between israeli

soldiers and palestinians in janine -- that have -- jenin on monday morning. coast guard is looking to find a submersible that investable -- diving vessel that was on an expedition to be of the titanic shipwreck. the coast guard received a call in contact have been lost with the vessel 900 miles east of cape cod. the missing submersible carries a pilot come up four crewmembers to a maximum depth of 4000 meters. let's give you a sense of equity futures in the u.s.. we talked about in normalization of volumes post juneteenth holiday in the u.s.. the s&p 500 many, there is a sense of caution. you would have thought with the rhetoric between the u.s. and china, this would be a boost but at the moment we are down .33%. nasdaq futures and yours -- euro stoxx futures or range-bound.

important story front and center is executive reshuffle of alibaba where we are seeing announcement for a new ceo. the set of names include mr. joseph tsai as chairman and mr.wu as the ceo. the stock came back from lunch break and we are priced at 88.80 a share. downside intraday on the chart to the tune of 1%. the thing that the chart does not tell you is the overwhelming conviction among analysts on the trajectory of the stock, 47 analysts covering alibaba and all of them are telling you buy it with potential upside for the next 6-12 months. still, the chinese premier's in germany as part of efforts to stabilize ties with your. we will delve deeper into the angles surrounding that.

>> good morning, this is bloomberg daybreak: europe, these are the stories that set your agenda. chinese banks cut their benchmark lending rates for the first time in 10 months following the pboc's lead in a bid to recharge the recovery. asian stocks take little comfort. the u.s. and china agreed to further high-level talks as antony blinken's beijing visit wins praise from biden and president xi. european central bank counselor says hikes may end in 2023 as recess and risks rise. the yield fund up 5% for the first time since 2008 ahead of the bank of england decision. let's head back straight to the markets where we see caution prevailed. we are still lower on both european and u.s. equity

futures. specifically looking at the downside of about a third of 1%, the global bond story is seeing weakness. we are seeing a slide in price yields are up. we are 379 on u.s. tenths, euro-dollar a bit higher at 109 and then brent crude under pressure by 3/10 of 1%. i want to get to the squeeze on u.k. finances. yes the government bonds to your advancing to 5%, the highest since 2008. the pain is being felt on every front the average two year fixed-rate home loans jumped up 6% on monday close to the 14 year highs we saw the end of 22. the rise in these borrowing costs for homebuyers, companies and the government comes ahead of the inflation data later wednesday and then the bank of england decision where the expectation is they are going to raise interest rates by quarter-point. i want to get to the big mover in the fx space which is the australian dollar. we are recalibrating about 8/10 of 1%, this is after we got

minutes from the rba. it showed there is a big debate around how to proceed. this was not a consensus decision in the close nature of that decision is prompting traders to pare back some of the bets that the rba will hike twice by year end. i want to zero in on the alibaba news because they announced a new chairman, a chief executive unveiling a surprise plan to replace daniel zhang at the helm of a company that has been bleeding market share and they have been struggling to revive growth in the post-covid era. for more we are joined by head of bloomberg intelligence asia-pacific. what is behind the shake up here? >> i think the ceo reshuffle we have seen it reflects the change in the new structure of alibaba is a holding company. bear in mind, that e-commerce which is essentially the top group, that the new ceo will be

coming from is going to see and contribute more to the holding company after we see the imminent ipos as well as the fundraising exercise for clout, for the other businesses. i don't think there are any strategic changes from this reshuffle but it is a realignment of what is to come ahead. >> in terms of what you are seeing on alibaba's balance sheets, you and your team spend a lot of time going through it page by page. are you seeing and impact of weaker chinese growth or would you say that alibaba has proven critics wrong and in terms of the bottom line is able to deliver? >> i guess the reality is that the company, the e-commerce business itself, they have been losing market share to new incumbents such as boeing which is the chinese equivalent of

tiktok. as well as other social media platforms to which they are now trying to fill in that gap and reinvest more into the business which we have heard more from the company. i think going forward with the cash coffers they have on hand they are well-positioned to defend their market share where it is right now. of course china is such a big market, there is were room for more players rather than less, this will continue to be an important player within the e-commerce space in china. >> thank you for coming on the program on short notice, a developing story works catherine lim weighing in on the alibaba updates. it let's get to president biden now because he has hailed progress in restoring u.s. china ties and it comes as secretary of state antony blinken wraps up two days of meetings in beijing including talks with president xi jinping. >> progress is hard.

it takes time and it is not the product of one visit or one trip or conversation. my hope and expectation is we will have better communications, better engagement going forward, that is certainly not going to solve every problem between us. far from it. but it is critical to doing what we both agree is necessary and that is responsibly managing the relationship. it is in the interest of the united states to do that, it is in the interest of china to do that in the world. >> then you have china's number two official who was in germany on his first overseas trip since becoming premier, it comes as beijing attempts to prevent ties as europe plunges to the lows reached with the united states. the premier will reach with the chancellor, or he met with them last night. i want to get to her germany correspondent who joins us from berlin. what is on the agenda today, what have your sources been telling you? >> lee will be arriving here at

10 a.m., there are political talks at 11 a.m. and then a press conference between the two at 12:40 local time. this is going to be more signal than substance. as we have been talking about with lincoln and china it is about opening lines of communication and restarting an initiative that began under the merkel era of the german and chinese bilateral talks that went on a three year hiatus. he comes at a time, this premier's first visit abroad. germany is its first destination the foreign ministry of china has made a point of this saying this shows how important this relationship is going forward so the question is can these leaders and people in the room turned the signal into something more of substance. it comes at a time when germany itself has been ambivalent about what the relationship with china is going forward and not always unity within the coalition about what that should look like. cracks in the background we can see the chancellor rebuilding

and in it what the tone needs to be on the economic front. what have you heard there? >> the economic talks will happen later this afternoon after the talks here conclude. they are going to go to the economy ministry where the entire german cabinet will be at also leaders in business. the mercedes ceo will be there in volkswagen will also be around. we can't lose sight of how important this relationship is to germany, 300 billion euros worth of trade between china and germany last year. it is the biggest trading partner in europe for china so substantial. the businesses need to be conscious of this de-risking approach while not cutting out what is their biggest market. it is the biggest market for the automakers, some companies have continued to invest in china but we get signals elsewhere. you see this out of the f -- astrazeneca spinning off its unit yesterday. so for business leaders making big decisions for years to come

reading these signals will be important. >> well don, thank you for that bloomberg germany correspondent oliver crook and he will be providing updates throughout the morning from berlin. here is what is coming up, credit suisse's legacy of legal headaches comes back to bite ubs. the bank now facing huge fines from regulators, we will have those details next, this is bloomberg. ♪

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>> this is bloomberg daybreak: europe, a couple of things to discuss. it start off with telecom italia they are set to be close to enter negotiations with the u.s. firm kkr over the sale of its landline network. the deal could be valid as high as 23 billion euros.

it is seen as more appealing than a rifle bid by italy's estate lender. kkr has overall asia-pacific equity team in the early stages of allocating capital from its $15 billion regional fund. this comes as the dealmaking faces headwinds while straining u.s. china relations. ubs faces hundreds of millions of dollars in penalties following investigations by several regulators into credit suisse's dealings with archegos capital. that is a report from the capital times. let's quote more from the bloomberg's agent investing capital in tokyo. warning signal coming through according to people, there is no real range that would help us understand how large these potential losses could be. >> this is just one of many cases that ubs is inheriting from credit suisse following the completion of its takeover last week.

we do know that credit suisse has been cooperating with regulators and switzerland in the u.s. and u.k.. this stems from the losses that were made a couple years ago, huge more than $5 billion worth. tied to the collapse of the family office there so regulators have been looking into this and looking into the lapses of risk management at credit suisse and why they made such outside losses in this case. now we are hearing this report from the financial times that this is going to be hundreds of millions of dollars -- 300 million the reports say from the fed and then hundred million pounds from the u.k. potential authorities. those losses that up. >> what about the ability to absorb the fines. ubs was given a lot of

assurances so that should be ok right? >> i think this is going to come as no surprise to ubs, they knew they were taking on not only the legacy of the archegos case but all the wealth of litigation that credit suisse is still embroiled in. in fact when they made this takeover they set aside for billion dollars worth of legal provisions and now analysts say they estimate the archegos related settlements will be much less than $1 billion. so this is in line with that put on top of that there are these other cases and they could stretch into the billions of dollars. there is a legal overhang there. >> one of the stories that got a lot of traction with our global audience is about citigroup's noble market strategist matt king. he has left the bank as part of cost-cutting. in many ways he represents the kind of losses in the global

spectrum, or voices that are adjusting to a new reality. >> that is right. i think matt king is a high-profile example of a lot of the pain and cuts we are seeing from wall street banks and others around the world. we don't citigroup cfo last week said their severance costs are tied to letting go of 5000 staff at citigroup including the london and new york based fx strategy and commentary team. matt king is just the latest example of that. he is the latest -- been at the bank for 20 years now and he posted on linkedin a pile of books saying he is looking on the bright side that he has a reading to catch up on but there is going to be a lot of pain with banks cutting thousands of jobs. he is the highest profile example of that. >> great to see you, thank you

for discussing the subject and a lot detail that is bloomberg's russell in tokyo. a string of hotter than forecast wage and cpi readings has brought about the dramatic repricing of u.k. interest rate expectations. it joining us now is bloomberg u.k. correspondent. bloomberg economics crunched the numbers they have been looking into 6% u.k. rates and what that would mean for the u.k. economy. what was the outcome? >> really interesting research from our senior u.k. economist at bloomberg economies -- he is the shock function on the terminal. and he finds that if rates go to 6% as some traders reckon they will hear in the u.k. there will be a 2% hit to u.k. gdp. this is not where our economists reckon rates are going to go, they reckon rates will peak at 5% in august but we have got this bank of england decision this week, the inflation data tomorrow and if we get yet

another upside inflation surprise you may get some on the committee who are tempted to vote for a half-point hike. we have this login monetary transmission but if the upside inflation surprise keeps coming it's going to be difficult for the bank of england to stop the hikes. >> there is another front you are looking at in terms of the clamor for more investment to drive u.k. growth. where will that come from? >> of course it is one of rishi sunak's top five priorities, not just having inflation by the end of the year but also to grow the economy, it's that monetary policy impact is difficult also. there is a report from the institute of public policy research that says years of underinvestment are holding back growth in the u.k.. particularly in the green industries. it uses the term investment phobia.

it comes back to this criticism from the bank of england policy maker recently, in an essay for the resolution foundation think tank she says britain is lacking the long-term thinking about the economy. it is lurching from crisis to crisis whether it is brexit the pandemic or the war in ukraine. it also jibes with the annual world competitive's ranking that is come out from the international institute for management development today. the u.k. has dropped six places the 29th out of 64 countries. it comes down to what they call government incompetence, but also increased bureaucracy despite brexit. we were promised this bonfire of brexit red tape, it seems that has gone on the bonfire itself. >> what are you seeing around the areas you live in and commute through when it comes to home prices because this is the story that is capturing the world's attention.

>> i cycle to the bloomberg office, i cycle through various neighborhoods of london. house prices in london are expected to fall where is in the rest of the u.k. they are expected to be on hold so it is a good time if you want to move to london from other parts of the u.k.. i keep encouraging my parents to do that. >> well done, i will consider your pitch for buying property in london. clearly reevaluation is taking place. let's get you a snapshot of what else is still to come. the paris air show continues and with it a flurry of massive deals. will bring you the latest next, this is bloomberg. ♪

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>> we don't have an option in terms of a fallback as we have made it quite clear with the people we are working with, we don't have leases and we can't slow down a network because we don't have a network. we absolutely have to have those aircraft delivered on time. >> we see that there is a lot of businesses that want to go and see their customers so they are flying. in the front cabins of the airplane. and at the same time there is a lot of demand for air travel. for example china. every single seat in every class and we only have two classes in my airline, is full. >> tony douglas speaking from the paris air show. speaking of aviation a couple lines hitting the terminal from the lufthansa negotiations with staff. this is around china trying to stick a deal with the union. the union is saying the payoff

is absolutely insufficient. this is according to an internal document, they are going to try to continue talks over the next week. the deadline is june 30. after that will could happen is that a strike could take place. the stakes are getting higher as we count down to the end of the month. we are also counting down to some of the other developments at the paris air show because it has already seen a massive flurry of deals including the biggest plane order in history that came from indigo for 500 airbus. that is there a320's. industry veterans are warning some airlines are at risk of over ordering. joining us now from the air show is guy johnson. what are we seeing here in terms of a potential bubble, is that really happening? >> we are seeing huge numbers of orders being placed and there is some concern amongst those that have been around this industry for a while that we could see a

bubble starting to inflate. we have seen a flurry of orders, talks about the indigo order that is come through. he is opening up a new market and expanding a market so you can understand what he wants to play such a large order but certainly there are many airlines placing orders in substantial size. there is talk that they are paying full price. there used to be this idea that you don't pay list price you would get a discount but people are paying full price. so maybe there is a little bit of a bubble beginning to inflate. at the real question is what happens next. we have just been hearing about the demand out there at the moment, this industry in the past has proven to be cyclical and as a result of rich will we see a downturn? will all of these orders actually be required, i am told the contracts are reasonably watertight. with all these things there probably is a little wiggle room. the question is how long does the current demand boon last. this is a supply constrained

market is it rational to place these orders and see what happens later? >> is there a risk that airbus and boeing will be able to make all the planes that are being ordered especially given some of the constraints throughout the supply chain. >> that i think is the other side of the argument. if you look at the demand side there is huge demand at the moment but this is clearly a supply constraint industry. you can't get the aircraft you want. we have heard from tony douglas talking about the fact he needs his aircraft, is he going to get them on time remains the question. in some ways the rational thing to do is place the orders, to get your place in line in down the road you will get the aircraft and you do require if the boon continues. we will wait and watch and see what had been's -- happens whether the boom continues. airlines are under increasing pressure to clean up their act. you need to be flying the latest

aircraft the most sustainable aircraft. that is what the argument is within the industry so that you can make some of the green criteria that will be required under the 2050 guidelines that are being imposed. there is that sustainability argument so in some ways it is rational to get your order in. it is rational to secure those for 300 -- further down the road. the economy may be starting to slow down, will demand for air travel slow down with it, at the moment nobody knows the answer to that question. >> i am pretty sure you got your order in, you strike me like a private jet kinda guy. >> my order is then, of course. i don't know exactly which aircraft i will be walking away with from the show. there are some incredible planes here. let me tell you what i think is interesting. the aircraft i see, i looked on the flight line right now.

all the aircraft ac are similar to the ones have been looking at for the last 15 or 20 years. there has not been a huge obvious leap forward. engine technology has improved, these aircraft are more efficient than they used to be. but this is an industry you feel is gearing up for a big step forward at some point in the future. >> fantastic that is bloomberg's guy johnson there with a lot of color from the paris air show. you can get all of the latest from the air show and everything happening in the french capital from our newsletter scan are qr code to sign up for the paris edition newsletter so you don't miss out on week the updates in france's finance industry. let's get your cross asset checked we are seeing caution across equity futures. and in u.s. treasuries as well. alibaba is front and center as we get the new executive announcement. coverage continues, this is bloomberg. ♪

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