it's an amazing thing when you show generosity of spirit to someone. and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything. ♪ >> good morning, this is bloomberg daybreak europe. hsbc ceo noel quinn is retiring.

a surprise announcement as they unveiled a 3 billion-dollar buyback. japanese stocks rally, a wild 24 hours for the yen. chinese stocks edge lower. inflation numbers including ecb rate cuts. top corporate's report. we focus on autos and airlines. the numbers crossing when it comes to mercedes, scrutinizing the margin. first quarter adjusted earnings before interest and tax below estimates. it's famous. we knew it would be challenging. estimates had been for 3.7 one billion.

they see full-year cars adjusted 10 to 12% so they maintain guidance in terms of the margin. estimates had been for 11.1 so they range between 10 and 12%, they struggled. were going to try to get more details. cost inflation has been a challenge that hit volumes. looking for supply constraints, they are again coming through. adjusted earnings below estimates. estimates are for 3.71, so let's switch focus to the airlines. german airlines struggled with industrial action. profit has been hit by strikes and first quarter revenue is a

miss. just below 7.4 billion. estimates had been for 7.53, so it is a miss. we knew it would be challenging, they have faced action challenges. any updates on the deal to buy steak and the impact, the crisis, they have reduced and suspended flights including tel aviv. it is ams. 7.39 billion euros. they are looking to start new projects. keeping our eyes on her, another big day. checking in on your markets, in terms of the inflation story in

the dater out of china which was positive. nonetheless, chinese equities have studied. -- studied. modest gains, keeping across the hsbc story. nasdaq futures are flat. let's get the details and the surprise that noel quinn is stepping down. a search for a successor and pretax profit beat estimations. an additional $3 billion. what is the significance of the announcement? charlie: this was dramatic, not expected by anyone. focusing on drama, that is the adjective that characterizes his time.

he was interim ceo taking over for john flint. he was named after a search and the height of covid. he oversaw time where there were genetic tensions between east and west. hsbc is a bridge between east and west. tensions have ramped up and he really kind of helped the pit it to asia and he started, his first job was digging holes at a building site the pivoted into a bank acquired by hsbc. quite an interesting time. he is looking to build a portfolio career. interesting to find out why he left his post. >> he had been at the helm for

about five years, really consequential. they continue that search for his successor. the buyback stood out. what other details? charlie: it's surprising were seeing this change at a time when the bank has been performing well. we saw net interest margin was a needs, but their forward guidance was in line with what they talked about in be wary and that may disappoint. there's been the hope they can diversify away from being reliant on net interest income and we are seeing positive signs like they are having a positive story on wealth management, really important. the hope is that we see strength

in transactions. tom: a major spanish lender, what are the details? charlie: they reported net income that missed analysts, but underneath they had a positive story. loan loss provisions were better. that income was better than expected and the story of european banks has been positive. santander's share price is up 53%. european bank shares have been performing. serious gains in europe. so let's see how markets respond. on loan loss provisions, better than expected. tom: charlie wells breaking down earnings, thank you indeed.

we will be speaking to the ceo and president in the next hour at 7:00 a.m.. also coming up, our conversation with a ceo after the lender posted first quarter results. hsbc. it let's see how chinese banks are faring and bring in avril hong with a check on markets and what is playing out for chinese lenders. >> next bag if you look at their performance and trade today. the takeaway is being called upon to support chinese economy, really showing up as a cost. take a look at what we are seeing across major indices. today was a day where we got pmi

from china and nonmanufacturing was a miss. factor activity was better than expected was a gain and expansion for second month. there are quarters of the market who think this recovery has legs. probably why we are seeing the hang seng erasing gains along with csi 300 did into negative territory, not quite convinced traders here. also seeing in the asia-pacific japan is back from their holiday, running higher. not by much. we will see if apple and amazon earnings keep up momentum for indices. let's take a look on chinese lenders. icbc, bank of china, china construction, major lenders called upon to cut lending rates to support chinese economy.

profits drop and margins squeezed. we had the likes of bloomberg intelligence sayings risk could include margin contractions and provisions as they make account for all real estate woes in the country. it's take a look at other movers in the asia-pacific. we got earnings from the chip business, coming back to profitability first time since 2022, helped along by the ai boom. this is why we are seeing it outpaced sk. it is down and the rival is one that has the edge in memory. the other big gain or is mitsubishi electric, thanks to its full-year forecast higher than average estimates. let's look at dollar-yen because

i'm sure you're keeping your close eyes on it. something to note as we weigh each whether the finance ministry stepped into the market is we saw huge swings, volatility and this mirrors may of 2022 when the finance ministry did step in. something to consider as we await confirmation. tom: avril with a check on the asian markets, thank you. indeed. we will stay with the asian markets. japan's government will need to work given the economic forces and case for depreciation, yield differential between debt and the treasury story. let's bring in mark cranfield. stability and the yen, less

inventory. our traders convinced? >> no. it is a much tougher situation for the japanese authorities to try to stabilize the yen compared to 2020 two. partly from their own making. the japanese people responsible fumbled a lot of the messaging and have not had help from bank of japan. we had the governors saying the yen was an important factor considered for monetary policy and yet, he backed away from it barely mentioned it. he shied away from the yen, no help from that side. japanese authorities raw or concerned. we've seen 160 already.

it is like the dog that does not bite. lots of mumbling, yesterday we get a big number. traders may have decided that is sufficient. there are moves that are suspiciously like intervention. we are going to need moves to reach our messaging. the fed could upend everything. tom: is that the expectation? we think about boj impact, clearly there will be those in japan watching with an eagle i as many will be. is the hawkish pivot expected? mark: to an extent, but the whole idea that the federal

reserve has three cuts on the table, most people is missing that is being way too optimistic . inflation numbers came out last week. still way too hot. he's going to dial back further as time runs out. we are on the verge of may, almost half the year gone. the time to cut is running out. whether he can justify wants in the final quarter is in doubt. he needs to sound cautious. how cautious could be further than the market expects, which will impact the treasury market. dollar-yen could be back where we saw her at the beginning of the week. tom: mark cranfield tying a bell on that story. what happens with the fed and a

rhetoric change compared to december. thank you very much indeed. here is what else to put on your docket indeed, on your agenda indeed. we get vw coming in at 6:30 a.m. u.k. time. it's expected to be challenging. will they come through with a miss from mercedes? volkswagen 6:30 a.m.. macro data is out at 10 a.m.. expectation that the ecb will cut in june. will this change the response to inflation? that a major story from the u.s., amazon, reporting aftermarket. the lens should be aws cloud service given demand from

microsoft and alphabet. they will be scrutinized. get a roundup of the stories you need in daybreak. terminal subscribers go to dayb for the details on that. and we got all the around the ceo noel quinn retiring and search for successor. coming up, cease-fire talks in the middle east as campus protests call for an end to violence from the u.s. to europe. later, we continue the days earnings with vw and adidas. does the turnaround continue to be modest optimism? that company will report in the next 20 minutes. the details and analysis, this is bloomberg. ♪

tom: most come back. let's turn to south africa's election, one month away. the party expects to be in

government and raise additional state revenue by increasing inheritance tax. let's get more from jennifer in johannesburg. you interviewed a spokesperson, a man wrapped up in different controversy's. what are their expectations? jennifer: if you are in south africa, he is in the media because of support from the population. we got a poll showing eroding support for the ruling anc, the party jacob was a part of. consolidating 40%. the mk party getting north of 8% based on the pole.

oh only spoke to the spokesperson, he has a different perspective, take a listen to what he told us. >> the anc will not get more than 30%, that is the reality. and what we see is a resounding response of change. these are landmark elections and what we are seeing is the outcomes of inevitability. jennifer: that was talking about the support. he believes the mk party could get two thirds support. a lot is coming from jacob's home promise. -- home province. but the jury is still out on what we should expect.

tom: this is a political party that could become a kingmaker post election. tell us about some of the policies. jennifer: it is fascinating. they are focusing on post apartheid it deconstruction when it comes to economic policies and many describe the party as populist, gaining support as i mentioned in small provinces. it is due to the fact that they are putting jacob zuma at the helm and saying because he has been there and done it before, he should be reelected. a number of policies include nationalization of central bank, one big proposal is appropriation of land, a point of contention. in a number of policies are focused on developmental

policies such as free education and basic salaries for job workers. we asked yesterday how they're going to pay for it and they said their focus is on capital gains or excuse me, capital taxation instead of labor taxation. we will have to see how support moves for the party and others going forward. tom: bloomberg's jennifer, thank you indeed. one of the contenders within the selection. catch and -- africa amplified on friday for a special program on what to expect in south africa's election. plenty more coming up with a focus on adidas and vw. the details as they crossed. stay with us, this is bloomberg. ♪

>> welcome back to bloomberg daybreak: europe. university of columbia is suspending students for refusing to leave an encampment protesting the israel gaza war. more than 100 protesters were arrested sparking a domino effect across the nation. talks are ongoing and police have moved in france to clear up demonstrations. protests have been held at an elite university in paris. bloomberg learning that the u.s. and allies have begun diplomatic effort to dissuade icc from issuing arrest warrants for

israeli officials. they're concerned it may jeopardize hopes of a cease fire with thomas. let's get the details. what do we know about the potential of the criminal court warrant, what it could mean? dana: good morning. the u.s. and allies are concerned any arrest from icc could get israel to opt out of talks going on for months. now there is a prospect they would reach a breakthrough. arrest warrants would potentially be against israeli officials and hamas. the warning sign is reports that netanyahu could be on the list of arrest warrants. in the u.s. is going on a diplomatic push to convince the court to not go ahead with this

in order to give more time for the cease fire talks to materialize. tom: ok, thank you very much indeed. and the rest of the team will be monitoring those cease fire talks indeed. there is optimism around that cease fire conversation of course and negotiations being led by qatar and egypt. we monitor that for you throughout the day. plenty more, this is bloomberg. when i was your age, we never had anything like this. what? wifi? wifi that works all over the house, even the basement. the basement. so i can finally throw that party... and invite shannon barnes. dream do come true. xfinity gives you reliable wifi with wall-to-wall coverage on all your devices, even when everyone is online. maybe we'll even get married one day. i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. that's wall-to-wall wifi with xfinity.

change to tom: good morning, this is bloomberg daybreak: europe. i'm tom mackenzie. hsbc co is set to require.

the lender making the surprise announcement as it reports a slight beat and unveils a $3 billion buyback. mercedes earnings plunge 34%, weighed down by model changes in asia and sluggish demands for electric vehicles. the path the potential rate cuts. gdp at a friends growing 0.2% in the first quarter. slightly above the estimates. we bring in the earnings story. first quarter earnings and revenues for adidas. that's a 5.46 billion in that's up 3.5% year on year. we are also getting operating margin for adidas of 336 million euros versus 60 million euros year on year. a company that's undergoing a

reshaping given the challenges around the particular influence and celebrity. first critter margins coming through, 51.2 percent for adidas. above what we saw previously. 44.8% year on year. an increase in terms for the margins coming through for adidas. they continue to make progress on this front. we could city to watch in terms of the pipeline of new products coming through for this retail, the fashion retail. they still see for operating profits. they see it between 700 million, that is the estimate. first the estimate is 988 million. they are reiterating their view around for your operating profits of around seven hundred million euros. top line coming through from adidas, first quarter in terms of the margin story, 51 point 2%, in improvement coming through from adidas. in terms of the inventory in the first quarter, it is a miss for

adidas in terms of those inventories. we switch focus to the automaker vw after a miss from mercedes. we scrutinize the chinese market. it sees full-year operating profit return on sales to 7% to seven -- 7% to 7.5 percent. that's a red headline for vw. the earnings falling 20%. 20% on softer sales and higher costs. we get the details in the analysis with bloomberg's oliver crook who's standing by. what stands out to you on these vw earnings? what is the pressure point coming through for the -- from the german automaker? >> when you haven't dropped a earnings for 20%, it's hard for it to not stand out. it was flagged. we saw vehicle sales were struggling in the first quarter. we knew it would be a challenging quarter for volkswagen on the car industry. earnings down 20% year on year. the industry is suffering from

the first quarter of last year. it's more than what's expected. what you brought up, the red headline they were flagging, the margin is still expecting a 7% to 7.5 percent margin for the full year. when it actually came in at at this quarter is 6.1%. it is lower than what their target is at lower than what analysts expected at 6.4 percent. they have confirmed their outlooks, vehicle sales came in line for the quarter. overall, they say this year will be in line with what they had expected, but this is a tough quarter and they are hoping this will be a low point and it's overseeing across the industry right now. tom: mercedes was a challenge and part of it is because they are struggling with supply chain issues, there is a broader story about the slowdown around the ev's and the sluggishness generally across this auto sector.

to what extent are we seeing echoes of a similar story at mercedes? like three things are happening with mercedes. there's the cyclical downturn within the auto industry, which every company is suffering from. great story, economic outlook story, the second part is the ev story. mercedes and volkswagen had ev sales that fell in the first quarter. that's not good when you deal with what will be the growth engine of the future of your business. bmw outshined them. the first story from mercedes and we sought from porsche, the luxury train is no longer intact. this is what we talked about with the issues for inflation. we saw the passenger and mass vehicle market being squeezed. the luxury trade was intact. mercedes is struggling to sell higher price vehicles. in china, we saw the same thing with porsche. questions about profitability. they say it's a trough, but we

have to see a healthy economic develops. tom: and whether investors buy into the view. clearly the challenges are pretty acute for german automakers. oliver crook breaking down those numbers. full-year operating profit of about 700 million euros below the estimates on 980 8 million euros. full-year operating profits estimates coming through from adidas. quite below the estimates. first gdp coming in slightly higher than the estimates. we also have inflation data coming out of the euro zone. it will stay as we build up to expectations of the ecb cutting in june. will any of that data change that view. let's bring in zoe for the details in the take away. what do take away from this gdp print at a friends, slightly better-than-expected. >> economists were expecting

0.1%. moreover, if you dig into the data, the consumer spending numbers accelerated. overall, good news. just as a reminder, the euro area was in a shallow recession and the second half of last year. all the data and brands are good news that the euro area will have exited that recession grown in the first quarter. tom: what do we expect for the prado europe -- broader euro areas? >> the euro area we expect 0.1. before that we get that out of spain, italy, and germany. germany is the one we watched closely. germany had a contraction in the fourth quarter. initially we thought they also would be contracting. they changed and said it would

be slight growth in economists are expecting that slight growth. the economy with the stronger growth will be spain. we get that data in just over an hour's time. those are expected to be 0.4. that is a slowdown for the previous quarter, but it's a very strong member, zero .4. tom: spain has been outperforming many in the euro zone. in terms of inflation, is there anything out of the data that could move the dial for the ecb at this point? >> the inflation data is interesting for april. if economists are to be trusted, the first time of this year, inflation slowdown will have stalled. economists are expecting the same number in march. that won't change the june cuts. it is more or less baked in an has to be huge shield --

geopolitical uproar with a huge move in oil. what it does influence is the path after june cut. some of the devilish policy are pushing for back-to-back rate cuts and the hawkish ones, just last night, the vice president said we need to be very careful after june. inflation slowdown stalling is just that kind of number that will support the arguments of the more cautious policymakers. tom: zoe with a set up a of that inflation data in the tape coming through. slightly stronger than estimated in the preview around spanish growth as well. speaking of spain, pedro sanchez announcing he won't resign as spain's prime minister, vowing to stay on to defend democracy as he drew a five day national guessing game to an uncertain clothes.

>> i have decided to continue, even with greater strength, if that's possible, leading the presidency of the spanish government. tom: let's get more with roderigo. what exactly happened with this political crisis. was this a play by sanchez as he looks to those elections in catalonia and europe? where do things stand now? >> what happened is extremely confusing and bizarre. we have an analyst with one of our story saying it was ridiculous. he came on wednesday, surprised everybody and said i need five days to think and reflect about my future, which indicated he may step down. it's very uncommon for a had a state or prime minister to say i will take five days to think. the reason was because there were reports that a lot of people are saying are flimsy on his y business dealings.

this led an organization linked to the far right to file a criminal complaint and the judge open an investigation in this really hit with him. this is what unsettled him and pushed him to make the decision. five days later after everyone was left in the dark, he says, actually, i will stay. this was the last scenario anyone expected. there was a feeling he could call alexion, seek a confidence vote. but everyone expected him to step down. he said i will stay and keep on governing. people were scratching their head saying, what's going on. then he came out with this narrative that what's needed in spain is to regenerate democracy and fight against fake news and the use of ports to go after certain politicians. the opposition says he is playing the victim card and that there isn't any regeneration that is actually needed.

tom: what next for sanchez and his government? >> he is going on a semi media blitz. he had a long interview on state television, he's going on pro-government radio to explain what he sees, but the key dates are may 12 when there's a big election in catalonia, which is important for spain because it's a very strong movement, which has been around for six years. it's a very big election because either he is thinking of when it could win. that's a big date for him. we have the june 9 european elections, which in spain are key. they are seen as a vote or a ballot on his government. those are the two big landmarks he has going forward. after that, we will see what he does.

his government is weak and he needs to garner all the support that he can. tom: i just wonder what you and the team, the connections in the sources you speak to within the investor and business community, how much concern as they're about the political drama that we are seeing? >> within the business community there is concerned about stability and the erratic movements, some people call him a bit of the bipolar relationship with business, he wants to be seen as business friendly, he wants to be seen as a centrist with a fluid relationship with the business community. a lot of his policies over the years have not gone down well with business types. also, he's out the problem or he comes out over the years when he gets angry with one or another

business stance. he has come out and named business executives by name and called it a name by the prime minister. any more of this erratic behavior as we solve those last few days doesn't help. then there are three or four situation in which the government is looking to buy stakes or intervene in big operations. tom: appreciate the take coming through out of our madrid bureau on the politics of spain and what it means for business and investor flows into the country. a bit of a subdued day. european futures lower. we've had the earnings picture coming through in the german corporate supposing a challenge to this equities story. lufthansa coming through with a miss. mercedes and volkswagen painting a picture of a challenging auto sector. we have the amazon story in that

detail out after the close. s&p futures lower by 2/10 of a percent. nasdaq futures are currently pointing at 17,800 80, lower by 24 points. i believe we have across asset board. the yen, more stability in the session around the japanese currency. the volatility that we saw yesterday, which was pronounced, 150 six, currently 75 on the japanese yen. euro-dollar down as we build up to the inflation data that will cross out of the euro zone. u.s. two year came in and dropped five basis points yesterday. 496 at the front end. go, 2300 32. brent at $88 a barrel. an eye on the cease-fire debate and conversation that continues to transpire in the middle east.

a strong quarter for adidas. we dig into the numbers for that company. a bit of a mixed picture but they have the turnaround story as they try to reinvent themselves after the challenges of the yeezy brand. that is next. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. id'd is coming out with numbers 20 minutes ago or so. first quarter revenue coming in just shy of 5.5 billion euros. that was a three and a half million increase in terms of gross margins coming in at 51.2%. an improvement in terms of the margin story for adidas year on year. 336 million euros versus 60 million. that's year on year comparison, first quarter operating profit, in improvement for adidas. natasha has been looking at the numbers for us. what is the top line that comes through for you on these results for adidas? >> you have a revenue beat, in increase in expected operating profit in almost all regions are performing well, including a rebound in china where we had issues with international brands being boycotted. on the downside, a weak quarter

for north america. there's a slight miss on inventories. we recently found out that the prime minister was -- so i don't count that. tom: that might be a drag. there is a bit of a divergence with nike than. a role reversal, is that what we see? >> i think if you look over the last five years, the majority of that time, nike would be trading at a premium and in recent years it has been the cooler of the two and adidas has suffered with problems with kanye west and the yeezy's getting out elegantly given how bad it was by still selling his stock. that's an environmental point. donating some of the money to diversity causes.

now we see adidas trading at a premium to nike, but what's interesting is they are both faced with very similar problems. there are a lot of competitors in smaller companies, niche products that offers something really special. both these brands rely on something like adidas originals are easy's being popular. then you don't know when it will turn, you don't know when an unpopular prime minister will suddenly plummet the product. they have to have a constant conveyor belt of these products in be spotting, as adidas has done increasing supply to meet spikes in the band. tom: when you come and sporting them, we will know the turnaround has been complete for adidas. let's switch focus to the tech sector were samsung's topped estimates. a boom in a i demand helping reverse losses in its chip

division. probably standing by with the details. what stood out to you for the samsung results? >> there are only two divisions that matter to investors in one of smartphone on that delivered seller numbers with a pretty upbeat outlook, depending on the sell through into the year-end. more importantly i think people's eyes were on the memory chip business. that was a very challenging year last year but the core drivers of that being flash memory chips that swung back into traffic, driving that business into profit, and subsequently the company offered a pretty upbeat outlook into the end of the year with ai delivering a little bit of icing on the cake perhaps. the numbers were solid, the outlook was solid, what's not to like, i guess. tom: we move from samsung to

amazon. what are you going to be scrutinizing? >> three core focuses with the amazon numbers, core of their businesses add related. as we saw an alphabet, ads given underlined strengthen u.s. economy is holding up nicely. i would imagine it's a train -- a trend we will see confirmed. secondly is the e-commerce business. the inherent strength of the u.s. economy to benefit them there. and for those countries that celebrate easter, it was an early easter. that should help them. the market expectation is probably the revenue for business as a whole should come at the top end of expectations. there be the interest on ai with amazon web services with service a corporate service or an increment ai revenue coming through. i think going into these numbers, expectations are high but i would say justifiably so by this time.

tom: senior analyst at bloomberg intelligence with the preview of what to expect from amazon. we will bring you more in the next couple of minutes, including lines dropping from hsbc's ceo. stay with us. this is bloomberg. ♪

tom: welcome back to bloomberg daybreak: europe. surprise coming through from hsbc. an announcement with the ceo who will be stepping down, retiring looking internally and externally from the candidates. he's been speaking with the media on a conference call saying it is time for new leadership at hsbc. he is going on to build out a portfolio career. he has been at hsbc, largest lender for about 37 years and

has been the ceo for five years. the stock is up a little over 20% since he took over and has worked through a number of challenges for the bank and streamlined it to some extent. taking out the silicon valley bank u.k. with that tilted technology. that was the big surprise announced an increase in an additional $3 million buyback. the news of course that the ceo of europe's largest lender. we will speak to the ceo and the next hour. that conversation starts at 7:10 u.k. time. markets today is up next. this is bloomberg. ♪

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anna: this is bloomberg markets today. i'm anna edwards alongside guy johnson. here's what you need to know. hsbc ceo is set to retire. the lender making the surprise announcement as it unveils a $3 billion buyback. we will speak to executive fo