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tv   Bloomberg Daybreak Europe  Bloomberg  October 26, 2021 1:00am-2:00am EDT

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♪ >> good morning from bloomberg's european headquarters. 6:00 a.m. in london. i'm dani burger. this is daybreak europe. here is what you need to know. we'll speak with the c.e.o. in an hour's teep. another record for the s&p 500. equities rally underpinned by a strong earnings season. futures and asian stocks push
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higher. facebook rises in late trade. user growth picks up. good morning to you. it might be records in the equity market and u.b.s. earnings but the backdrop of all of that are inflationary fears. there are warning signals in this bond market. it look like larry summers agrees as well. he het out at treasury secretary yellen over her views inflation is likely to be there at the start of year and fade later on. until the fed and treasury fully recognize inflation reality, they are unlikely to deal with it successfully failure from the fed to react to fully and
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persistent inflation constitute the biggest policy mistake in years. when will they have to acknowledge inflation? at least the market bleefs it is here to stay. that is what the break-even rates are telling us. the 10-year at a nine-year high. we're still getting an equity market able to hit records. leets dive in and look at what these equity markets are congress to. we have novartis hitting third quarter e.p.s. coming in beyond estimates. 1.71e.p.s. the stepped was for $1.64.
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they are looking at auctions for the review. this is a business they are ago at retaining the business, or possibly separating it. their guidance is unchanged. it is a beat for the third quarter, e.p.s. we are getting lines crossing. let's get to the hydroearnings as well. metal hugely important to them. we're looking at a slight miss when it comes to third quarter revenue. the estimate had been for 36.75. their underlying eeb -- ian: that miss estimates. their 2021 target they are
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listing. this is usually what gets markets excited. higher metal prices, volume s that aimproving is helping to offset the hire raw material costs. the market for 2021 is expected to be in a deficit. we'll be talking to the c.e.o.s. i'll be speaking to this over an hour, the c.e.o. of novartis. speaking of earnings. let's dive into the tech earnings picture. it is a big week for tech. facebook with record earnings. >> there has been negative news leading up to the earnings.
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analysts wanted to see what facebook was going to do. revenue came in slightly below expectation. $29 billion for the fourth quarter coming in at $31.5 billion. the lower range of the expectations. active users broadly in line. facebook was up 1.7%. year to date a bullish forecast, up 20% but a 14% drop from the september peak. what was interesting looking through the earnings. facebook announced they are going to be buying back $50 billion of shares going forward. you can see the privacy change is here. that impacted facebook negatively. that was one of the main reasons
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due to the miss on revenue. what is unique is investment is virtual reality. remember the ray ban smart glass that can take pictures and videos. facebook is investing in a universe that we haven't heard at this stage. i spoke with one investor yesterday and for him, facebook is trading inexpensively 18 times forward earnings. he said it is a growing market. it is going to be replaced by an advertising bill. it is about volume and price. ultimately increase the price they charge for advertising access. >> it slows some of the regulatory fears. thank you so much. let's check how markets are
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faring in asia. off the back of record highs in the u.s. market, what does the pickup from asia look like? >> you had laura talking about facebook earnings. corporate earnings are diving sentiment in asia. we're league a rally led higher by japan. we have other markets in the green as well. the hang seng index is being led lower by the property index. this is because of concerns about the real estate sector. after we heard from modern land. it failed to make a bond payment that was due monday. you can see where the outperformance is coming in japan today. it is a multisect orally. all indexes are trading higher. this is led by specific stocks as well including the like of
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panasonic. dani? >> thank you. let's stick with that story as well with tesla now worth more than $1 trillion in market value. that means that elon musk's personal fortune jumped by $36 billion as well. it is the biggest one-day gain in the history of bloomberg's billionaire index. walk us through how this came to be, the $1 trillion market cap. >> the numbers are mind-boggling. it started with hertz putting in that 100,000 vehicle order. that is worth $1.4 billion for tesla. there is no discount on those cars, even though there are so many. that propelledded tesla's market
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above $1 trillion. up there with the like of apple, amazon, microsoft and alphabet. it is the second fastest company to get to $1 trillion, behind facebook. it sounds crazy in a way. it is trading at 178 times estimated 2021 earnings. it means that musk himself is worth almost $288 billion. that is about $100 billion more than jeff bezos on the bloomberg rich list. musk could become the world's first tril nair. -- trillion nair. the way it is going at the moment, it sounds crazy to say
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somebody could be worth a trillion dollars. it may not be so unlikely or improbable that he can get there. >> already richer than the market value of nike. thank you so much. let's get over the the bloomberg first word news. >> the sun warning the world is still headed for catastrophic levels of global warming. the report says without stronger targets, the world will warm 2.7 degrees by the year 2100. president erdogan has dropped
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his demand for 10 western ambassadors to be expelled from turkey. erdogan said the envoys including the u.s. ambassador issued a statement to undo the slander caused by demand for turkey to release businessmen and government krittings. janet yellen spoke on the phone about the macro economic situation. china's commerce ministry said the conversation was pragmatic, candid and constructive and the two sides agreed on the importance of strengthening communications. global news 24 hours a day on air and on bloomberg quick take in more than 120 countries. this is bloomberg. >> thanks so much. coming up as the prices heat up,
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so too does the debate. blowout results for u.b.s. the bank reports its best quarter since the financial crisis. we'll speak with the c.e.o. in an hour's time. this is bloomberg. ♪
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dani: welcome back to "bloomberg: daybreak europe." let's turn our attention to the markets in more detail as the inflationary debate heats up. thank you so much for joining us. you're joining on a day just
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after larry summers took to twitter basically saying to janet yellen that she is ignoring the reality on the ground of inflation. as the inflation conversation continues on, to what degree is that idea priced into markets? >> good morning. this is the big question hanging over macro debates at the moment. the big 2021 question. a different environment structural for inflation. we're coming from a period which is unprecedented such as the post pandemic shock and then a period where we're seeing huge pumping of fiscal stimulus. that's why markets, the biggest theme has been -- and so we're thinking that is
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now reflected, you were highlighted earlier the fact that we're at levels which are probably the highest in the last 15 years plus a little inversion in that curve and we're in terms of pricing interest rates, particularly for the fed getting to levels which are quite in line with a typical hiking cycle. we're thinking that the recent flattening of the long end of the curve is something we want to take profits on and move further along the curve in the u.s., the 10-year and five-year. dani: would it be fair to say we perhaps priced too much into the belly of the curve? >> we think right now, it is fair in terms of hikes from the
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fed. it is difficult for the fed to deliver over and above given the structural issues that we face. when we have debates about inflation, we pin ourselves back to the market structures which have driven the rates lower over the past few years. we're actually thinking we're at the top of the range now. it makes sense at this you can juncture. dani: it is an interesting debate what the market is pricing in here. we have seen higher expectations for rate rises, for some of the e.m. countries or the u.k. we're seeing currencies underperform. perhaps stagflation and getting priced in at higher rates.
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>> we think if it turns out to be one that is going to drive central banks banks to -- and that is what we're pricing and some of the inflation is -- to the income inequality debate, then clearly stagflation than much more of weaker growth and inflation further down the line. we're actually much more on the -- to take the a risk now are more tilted to the downside. dani: we watched brent yesterday go above $84 a barrel. it is just lower than that now. how does that process into your allocations? >> for us, the hedges and
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commodity currencies and this is something we have been -- of late, commodities this year have now been -- we're not making predictions. there are reasons for it to do so. at this juncture, we think it is embedded in evaluations and positioning and also in terms of it starts to eat into it. some of the activity data soft engine europe. dani: are we goaght a point where we need to be more worried about consumer sentiment? we have seen only of the readings come in. this is what you need for a recessionary environment. are you at a point where you too
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are concerned about consumer sentiment? >> we're starting these a little bit across the world. didn't see much of a pick-up in china. you mentioned the u.s. retail sales in the u.k. have been weew months now. we're not seeing huge evidence of that happening. it could be a possibility going forward. dani: i want to ask one more question on the fed. you mentioned the break-even rates as well bumping up to 2.5. at what point do policy makers need to check a their tone in order to accommodate what the markets are doing.
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at what point do they have to pay more attention? >> i would argue the other side for that, we saw inflation that came on the higher side in the spring and the fed reacted. i would say we will see that reaction, a change from the fed. the fed does worry about inflation expectations. at 2.5%, it is in line with their long-term projection. should it get out of hand here, we could expect a more hawkish stance or shift from the fed. that would be our expectation. dani: so wonderful to have you on this morning. thank you. coming up, the s&p saw another record yesterday underpinned by a solid earnings season. big tech fueling those gains. we'll have more on that next.
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this is bloomberg. ♪
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dani: the sapp saw another record yesterday. one move came from tesla valued at over $1 trillion. new records. what do you make of that? >> a lot of optimism from the tech sector. if you want to pick one thing that is extraordinary for this market, it is tesla. not just the big order from hertz but the fact that tesla outsold other european car
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makers last month to be the best selling car in europe is extraordinary. that is a major statement on intercept from an electric vehicle company to beat europeans on their own ground. $1 trillion, nothing less than extraordinary but it shows you that people are already going for electric vehicles and tesla provides a great boost for the whole tech market and sector. each when value wailingses are relatively expensive, people are excited about the possibilities in the tech world. >> it wasn't just the hertz story. it was the tesla model 3, the best selling car in europe. we're looking at oil price. how does that play out across markets and specifically foreign
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exchange markets? >> you have your usual suspects like the pound and canadaian dollar but the star is the norwegian kroner. the way it is crushing the euro. for the last couple of months it has been flatting the euro week after week. if oil gets to $100 and this trend for the currency can continue. the norwegian central bank likely will raise interest rates again before the end of the year. it is going to be dovish again. there is a long way from ever thinking about raising interest rates. the norwegians can afford to take their foot off the brake a bit. they can afford to sit back and let the oil price drive the norwegian kroner higher.
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it shows the velocity between move is almost unstoppable. dani: supply chain disruptions. how will those bottlenecks affect assets? >> the bond market is one watching closely. we will be looking at what central banks say over the next couple of days. we'll have the e.c.b., the beang of japan, the fed, people watching the wording very closely to see if they consider the supply chain to be very important for the inflation story. if they put the two together, that is really going to be damaging to the bond market. if it hurts the bond market, it could spill over. they will say there are those that can -- work towards growth. dani: thanks so much for joining
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us. coming up, we talk banks. a blowout quarter for u.b.s. that is next. this is bloomberg. ♪ (announcer) if you've struggled to lose weight, you might think you were born with a slow metabolism, but what you may have is insulin resistance. fat becomes trapped inside your body and it becomes very difficult to lose weight. now there's golo. golo works to reverse the effects of insulin resistance, increase metabolic efficiency, and targets stubborn belly fat. join over two million people who have found a smarter way to lose weight and get healthier. go to golo.com and change your life. that's g-o-l-o.com.
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dani: good morning. from bloomberg's european headquarters, 6:30 a.m. in london. i'm dani burger. this is "bloomberg: daybreak europe." blowout earnings for u.b.s. its best quarter since the financial crisis. another record from the s&p 500. equities rally underpinned by a strong earnings season.
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facebook rises in late trading. facebook announces a buy-back as much as $50 billion. are we starting to see some flashing warning signals? larry summers hitting out at janet yellen over twitter. every day experience in terms of inflation has widened in recent months. until the fed and treasury recognize the inflation reality, they are unlikely to deal with it correctly. he called it disturbing expectations data. does the treasury need to take more notes in terms of what the earnings calls are telling them. this is already priced into the market. perhaps this is the piece for some of these reads and it might
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be time to take profits as yield curves flatten. let's check in on these markets after we saw the u.s. hit a new record yesterday. we are looking at the s&p 500 up another quarter of a percent. perhaps some of the euphoria can continue here. still the euphoria in techs is ongoing. up half a percent. that was by some of the regulatory concerns over facebook. the earnings have everyone excited. we're looking at high numbers on the 10-year yield. let's goforth to first word news. >> the u.n. is warning the world is heading for catastrophic levels of global warming after national climate pledges. they said the world will warm
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2.7 degrees celsius by 2100. australia finally agreed to a plan to zero out carbon emissions by 2050. president erdogan has dropped his demand for 10 western ambassador to be expelled from turkey. that deescalated the row that had shaken the lira. he had issued a statement to undo the slander called for turkey to release a businessman and government critic. russia's gazprom has maintained its outlook. they it is in line in forecasts from april before the energy crisis took hold. that will be roughly in line
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with splice last year. below the limit in 2018. the u.s. has issued new travel regulations requiring proof of full vaccination against covid-19 along with a recent negative test. however people with low vaccine supplies will be exempt. the new rule effective november 8 lifts severe travel restriction on china, india and much of europe. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani: thanks so much. let's focus on the big bank earnings. we have seen big blowout results from u.b.s. the best quarter since the financial crisis handily beating
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estimates. we're joand by the head of financials at -- joined by the ode of financials. we had the strongest quarter for u.b.s. since the financial crisis. yesterday we had hsbc strong results as well. are you a buyer on the stronger earnings so far? >> yes. good morning. for first time, it is very -- with u.b.s. come in a lot lower than expected. some of the investment banks -- very positive. 4 there is a capital return. european banks have been lagging
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on the capital return. the regulator over here has been concerned about dividends, making is that your the banks were -- dani: sorry to jump in there. on that point of capital returns, to what degree is that priced into european banks. they are the best performing sector this year in the stoxx 600. >> some of the banks, they are ready -- trading well, in some cases, up to 30%, 35% of the share of the -- will be return for shareholders. uncertainty in terms of the
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capital. the comfort level for the share buybacks. dani: a question that frequently gets asked is about trading for these banks. i'm looking at u.b.s. results. the fixed income trading was done. equity is up. the picture lags the u.s. do you think u.s. banks are starting to grab more of the trading market share from europe? >> a little bit in between because they also have a very powerful engine which is the private
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it should be contained. dani: interesting you it up. is this still an issue lingering over banks? >> lingering over banks. the banks -- they try to take risks in a -- controllable manner.
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the confrontation -- the commercial side wants to give more loans. that want to have more control and understand and try to -- those. some banks manage that very well. a little bit to the commercial side. dani: a fascinating balance proving they can take risks, deliver returns and satisfy regulators. it has been so great to have you onto get your take. from banks to e.v., coming up. tesla's market evaluation surpasses $1 trillion. elon musk's personal wealth
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surges. this is bloomberg. ♪
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dani: welcome back to "bloomberg: daybreak europe." i'm dani burger in london. 6:45 a.m more people are using the facebook app than analysts protected. there were reports that the company is losing young users and struggling to prevent misinformation and hate speech. a picture that zuckerberg
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described. >> using leaked documents to paint a false picture of our company. dani: ivan, a very defensive mark zuckerberg there. we saw after the facebook papers were released, facebook dipped a little bit but were still able to end higher post earnings. why are they so resilient? >> a central player in the digital economy. they reported 2.8 billion active users, more than expected. even with all of the revelations coming out, users still flock to them. dani: what is their role? what are they trying to do to change the narrative? >> zuckerberg is saying there is a coordinated effort out to get us.
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we'll put our efforts elsewhere, hyping up a digital virtual world. they are taught their efforts to increase engagement among younger users. they are trying to shift the attention. dani: at some point i need you to explain to me what the metaverseis. i don't understand it. we had snap reporting earnings. facebook faced the same issues. it hurt their results as well. why didn't that hurt theirs? >> for a while facebook has been warning that the changes from apple are going to impact its advertising business. at snap it was more of a surprise and there was an element of the supply chain disruptions as well. as much as facebook faces issues from the files that are coming out, the advertising issues they
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face, the apple and google changes add much focus to the business. it wasn't so much a topic. dani: there is an idea for investors, this is snap. is this still an issue lingering over the ad giants? >> i think it is an open question. i think so people will want to hear what google thinks about it as well. now it is below the radar. dani: i know it is a busy week for you. hope you have plenty of caffeine. now to tesla, worth more than $1 trillion and elon musk's personal fortune jumped $36 billion at one time. joining me now is bloomberg editor. peter, thanks for joining me
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once again. these are mind-blowing numbers. are we discounted from reality at this point? >> yeah, they are mind-boggling numbers. it puts tesla in some rarified air. the $1 trillion market cap is usual think cap of the technicals, microsoft, google, amazon. this is the second fastest to get to that milestone behind only facebook. it means that tesla is now its market cap is more than all the other major automakers combined which sounds given its production numbers pailg to the like of g.m., ford and v.w. it does sound a little bit hard to sort of take. dani: yeah. definitely. any way you slice it. it certainly is a really breath
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taking number. another way to slice it is elon musk had a pretty good day as well yesterday. didn't he? >> yeah, up $36 billion in a day. he is in even rarer air. the world's richest person and has been for some time. his personal net wealth just over $288 billion. almost $100 billion of number two, amazon's jeff bezos. morgan stanley came out earlier and said musk could become the world's first trillionaire. at the time, it seemed unreal. he is a quarter of the way there. maybe it is not that crazy. dani: all right, peter. thanks so much for joining us. coming up, thousand world's leading cities for career women leaving them in big ways. .
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dani: welcome back to "bloomberg: daybreak europe." i'm dani burger in london. time for the bloomberg big take. go to big take on your terminal. for millons of working women, daily life is often shaped by what they cannot do and how they are excluded. how 15 global cities rank, each failing in several ways. joining me is the woman behind that story doing all of the reporting, ruth david. such a fantastic story. i encourage everybody to go out and read it. let's start with this index. what does it do and who are the
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biggest winners and losers on it? >> thank you, dani. we decided to look at the world's 15 leading cities. we chose that number because this was the first time we were doing something like this, so it seemed manageable. our criteria, they should be hubs in the respective regions they are in and most of them attract immigration, attract workers from other parts of the world who think this is a great place to live in. we looked at safety, mobility, maternity provisions, equality in the workplace and outside as well as as the agenda r pay gap. the big winners were toronto and sydney and beijing. sao palo came in last. of all of the city, we came up with women were unhappy with pay
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division. dani: a very important topic in the u.k. ruth, one of the reasons why this piece is so great, often we get these types of reports from individual countries. this really is the first time we have an aggregate look how these different cities are faring. what does it look like when you look at the data you have gathered. what does gender equality around the world look like? >> the cities were seen as cities where you would think because they are doing so well, because they are such regional hubs, the state of gender equality might be better there. we found that was not case. the other problem we saw was
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that to get uniform data across the globe, and i have spent the last seven month months doing it, it is very, very difficult. in some instance, it is almost impossible. let me give you crime. what is considered a crime in beijing may not be considered a crime in paris or vice versa. the other thing is big cities like singapore, dubai, hong kong, which are faring high when it comes to the data that is shown in terms of equality. then we spoke to the world bank and they said well, actually, they have women workers that come in as immigrants but they are not counted in the labor force data because in a lot of instances, they are informal workers so the inequality you see there in terms of wages or legal provisions is often not
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getting captured. we spoke to women in each city. we surveyed them and heard their voices to tell you the story that at the might be missing. i went and my idea was i want to find out what working women want. we found out. dani: you have been working on this for seven months. it has been dominated by the pandemic. what impact has the pandemic had on gender equality in the cities that you looked at? >> so far it is not looking good. one of the points was in the last financial crisis, the jobs that were affected were mainly male-dominated jobs, whether that is construction, finance, and these industries you saw male workers take a big hit. whereas this time in the pandemic, it is lower wage jobs
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and informal sctor jobs, where there is a much higher percentage of women in the workforce. you're seeing that play out in terms of women losing their jobs and in terms of entrepreneurs where there are less women but women are getting affected more or for instance if you don't have child care, you will find nine times outs of 10, the person who steps back from the workforce to handle the children is a woman, not a man. this pandemic has set back gender inequality by many years but we are still waiting to see all to have data come out and in addition the coming months we'll have a better sense around that. dani: thank you so much for this reporting. fantastic work. check out the stories. let's take a look at some of the key vents we're going to be covering today. we have the virtual bloomberg equality summit this halloween,
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give us an idea despite it was led by tech, many things hit all-time records. the 10-year yield up on the board there. trading just below 164. we're almost at a bases points higher. break evens continue to hit multi-year records as well. there is that fear of inflation simmering in the background amid this earnings season. one of the they think so correcting to those inflationary fierce of course are the moves in crude. we're looking at crude at 83.7. $83.70. we saw 2014 high on that measure yesterday. i also want to go over u.b.s. we're going to be speaking with the c.e.o. of u.b.s. a really standout quarter for the company. the best income since the financial crisis.
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joining their wall street peers when it comes to wealth investment banking earnings. we had a wealth managements division that brought in $18.8 billion of net generating assets. manus cranny spoke with the u.b.s. ralph hamers on the results. take a listen. >> we have -- >> 2% for the last quarter a year ago. with that, our profit before tax is up to two point -- 2.9 billion. the strategy is paying off. the momentum of the market is still there as well. >> are the clients still risk on? >>

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