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Speaker 1: With Perspective Coachagabden, Senior Research economist at Aberdeen SRI. I'm
Speaker 1: absolutely fascinated by how you linked together the actions of Switzerland,
Speaker 1: Norway and now the United Kingdom. Suddenly is it a
Speaker 1: hawkish tone in Europe?
Speaker 2: I think this is clearly a hawkish tone from the
Speaker 2: UK and from Norway as well. Clearly this you know
Speaker 2: they've surprived markets Norway this morning, surprise with a fifty.
Speaker 2: There was running into this. There had been quite an
Speaker 2: intense debate. There were question marks about whether there would
Speaker 2: be a twenty five or fifty basis points from the
Speaker 2: Bank of England, also for the Norway as well, but
Speaker 2: clearly this is a surprise and just running through the
Speaker 2: statement quickly, you know, the reasons are very clear. This
Speaker 2: is something that has been signaled actually within the speeches
Speaker 2: for some time. It is the core services inflation which
Speaker 2: has been incredibly strong. Yesterday's data really did help trigger
Speaker 2: that debate about whether twenty five or fifty would be necessary.
Speaker 2: This is really a very very strong picture for the UK.
Speaker 2: If you compare the UK with other developed markets and
Speaker 2: look at that wage number, it is really really standing
Speaker 2: out with an increased wage pressures there while other countries
Speaker 2: are starting to see a bit of a stabilization or
Speaker 2: a rollover. If you look at other European countries, if
Speaker 2: you look at the BED or the US, UK really
Speaker 2: stands out from that core services and wage pressures angle.
Speaker 3: We're watching the pound strengthen in response to this surprise
Speaker 3: fifty basis point rad hike from the United Kingdom, which
Speaker 3: is a departure from what we saw for the Liz
Speaker 3: Trust era.
Speaker 4: Sree.
Speaker 3: How much is this a positive sign that shows people
Speaker 3: believe that economies can withstand higher rates to a much
Speaker 3: greater degree than they thought just even six months ago.
Speaker 3: And then it really gives confidence that you can fight
Speaker 3: inflation with higher rates without creating some sort of deep recession.
Speaker 2: I think that's going to be very challenging, to be
Speaker 2: perfectly honest. I think that you know the fact that
Speaker 2: we've moved to five percent, markets are pricing in six
Speaker 2: percent the last time I looked earlier this morning, This
Speaker 2: this is really triggering a recession. Now. Much policy works
Speaker 2: with long and variable lacks. That's something we often hear,
Speaker 2: and what we're seeing here is that that we are,
Speaker 2: you know, financial conditions have tightened significantly. There is some
Speaker 2: question mark whether the Bank of England will raise as
Speaker 2: high as six percent. There's definitely further to go potentially,
Speaker 2: but six percent will would be triggering not just a recession,
Speaker 2: but a much more severe recession than economists are currently forecasting.
Speaker 5: Now.
Speaker 2: We do feel that the monetary tightening will trigger recessions
Speaker 2: in a number of different countries. I think a soft
Speaker 2: landing is very difficult, and unemployment rates were starting to
Speaker 2: nudge higher. But the tightness in the labor market is
Speaker 2: very worrying in that the longer the recession is delayed,
Speaker 2: the more severe we could see in terms of rate
Speaker 2: hikes and recession in a later on next year.
Speaker 1: Sure we inform our American audience, which we understand the
Speaker 1: dynamics of a fully employed Ohio or Kansas versus challenging
Speaker 1: city unemployment rates. Perhaps in America the perception we have
Speaker 1: is London booming, the South blooming. I'm thunderstruck. A double
Speaker 1: digit unemployment in Aberdeen, way up in the northeast of Scotland.
Speaker 1: How uneven is this debate on monetary policy across the
Speaker 1: United Kingdom? How much of the United Kingdom is truly
Speaker 1: in recession right now?
Speaker 2: I think there is a regional issue and that's something
Speaker 2: that really needs fiscal measures to really address.
Speaker 5: Now.
Speaker 2: From a monetary policy perspective, the Bank of England are
Speaker 2: limited to what's happening to the aggregate inflation rate? What
Speaker 2: is their target and how do we get back to
Speaker 2: the target. The or divergences is very difficult to tackle
Speaker 2: without fiscal measures and structural policies to target those issues. Now,
Speaker 2: if we think about what's happening in terms of a recession,
Speaker 2: we're not quite in a recession yet. We've seen some
Speaker 2: weakness in data for Q two. We have a number
Speaker 2: of different drivers. We have strike action in the healthcare services,
Speaker 2: we had an extra bank holiday for the King's coronation.
Speaker 2: All of these issues will lead to some weakness and activity,
Speaker 2: but that's not necessarily a recession just yet. What the
Speaker 2: Bank of England need is for the economy to call
Speaker 2: so that some of the imbalances that are driving inflation
Speaker 2: to ease and you start to see more sustainable deceleration
Speaker 2: in that core services area, and we're not seeing that yet.
Speaker 1: Street, thank you so much, just really outstanding street culture.
Speaker 1: Govern did with us with Aberdeen, this truly historic moment
Speaker 1: and gyrating moment for the United King.
Speaker 3: And Terry Wiseman, global interest rates and currency strategist at mcquarie,
Speaker 3: joining us here. Terry, what do you make of that
Speaker 3: the fact that you can find out what they're going
Speaker 3: to do, but you're not going to figure out what
Speaker 3: the market response is.
Speaker 6: Going to be book.
Speaker 7: I think it takes a long time to rebuild central
Speaker 7: bank credibility once it's been destroyed. It's not an overnight thing.
Speaker 7: Even with the replacement of the staff and the decision
Speaker 7: makers there, It's going to take a while for a
Speaker 7: central bank that has avoided raising interest rates to gain
Speaker 7: the credibility of the market. The market's going to have,
Speaker 7: they're going to be doubters, and I think when you
Speaker 7: have a situation like this, it's important for the central
Speaker 7: bank to start to reassert its credibility by doing more
Speaker 7: than the market expects, not less than the market expects.
Speaker 7: I want to make a case that in those emerging
Speaker 7: markets that have tried to tackle the inflation story head
Speaker 7: on and early, you have seen a lot of success.
Speaker 7: Obviously Turkey is not one of them. But look at Brazil.
Speaker 7: They're on the verge of starting to cut interest rates,
Speaker 7: perhaps as early as August or September. Same with the Chileans.
Speaker 7: These countries were aggressive and hiking rates during the inflation upmove,
Speaker 7: and they're going to be early in cutting rates with
Speaker 7: the inflation down move that they're seeing. In these countries.
Speaker 7: Turkey is an exception here.
Speaker 3: Okay, it's an exception. However, it's piling on the hawk
Speaker 3: is hilt that we've heard from central banks around the
Speaker 3: world today, the Bank of England. We've seen the fluctuation
Speaker 3: of the pound. Has the Bank of England lost credibility
Speaker 3: as well?
Speaker 7: I think it did, But I think that's exactly the
Speaker 7: reason why it had to raise by fifty basis points
Speaker 7: instead of twenty five. Now, granted we did not expect
Speaker 7: that they were going to raise by fifty The tone
Speaker 7: coming out of the MPC members and their parliamentary testimony
Speaker 7: a few days ago did not signal a hike of
Speaker 7: fifty basis points. But at the same time you had
Speaker 7: an inflation printstance then, whereby implicitly you can make a
Speaker 7: case that the Bank of England had made a mistake.
Speaker 7: They thought the inflation was going to come in about
Speaker 7: eight point three eight point two percent, and in fact
Speaker 7: it came in closer to nine. I think it's because
Speaker 7: of implicitly, this fifty basis points is an admission of
Speaker 7: the mistake and a way to correct it, and I
Speaker 7: think that's why it happened.
Speaker 1: Alan Schwartz put this team together at ur Stearns, with
Speaker 1: your leadership own David Malbek driving the US and global dialogue.
Speaker 1: John writing as well, Terry, You've seen this so many
Speaker 1: times before. How do you link we rationalize idiosyncratic stories
Speaker 1: like Turkey or Argentina back to the central banker of
Speaker 1: the world, Jerome Powell. How do you link Powell's actions
Speaker 1: to what we're seeing unraveling here, there and everywhere.
Speaker 7: I think we have to be very cautious if we're
Speaker 7: going to assume that what Jay Powell is going to
Speaker 7: do is going to be overly dependent on what other
Speaker 7: central banks do. And I think even the vice versa
Speaker 7: case is pertinent as well. The situation in the US
Speaker 7: is not the situation in the UK, or for that matter,
Speaker 7: of the situation in the area. There is not as
Speaker 7: much labor activism and labor strikes in the US. I
Speaker 7: know that the headlines might be prominent, but we can
Speaker 7: measure this and the really the peak of labor activism
Speaker 7: in the US took place last summer. It has since
Speaker 7: died down. It makes plenty of sense. We've seen more
Speaker 7: layoff announcements in the US. The UK and Europe are
Speaker 7: very different. We're seeing a lot of labor activism now
Speaker 7: we're seeing a lot of concessions by the price its
Speaker 7: secretary governments of these higher wage demands coming out of
Speaker 7: the workers, and as a result, the UK and Europe
Speaker 7: are delayed with regard to their ability to fight inflation
Speaker 7: and bring it down. If you look at some leading
Speaker 7: indicators of inflation in the US, they are clearly coming
Speaker 7: down and much faster than they are in Europe. The PPIs,
Speaker 7: for example, the survey based indexes that we're getting from
Speaker 7: the from the Ism Services Survey, the Atlanta Fed's Flexible
Speaker 7: Price Index, they're all pointing downward for inflation in the US.
Speaker 1: I have a.
Speaker 7: Feeling and by the way, Powell even hinted at this
Speaker 7: in his testimony. Yes, Jay, I have a feeling that
Speaker 7: the back half of the year you're going to finally
Speaker 7: see that so called stickiness that we're seeing the PCE
Speaker 7: inflation Index and the CPI inflation Index start to recede
Speaker 7: and come down. And by the way, I think the
Speaker 7: market understands that, and that's why the dollar has resumed
Speaker 7: being weak again, because it sees the FED coming to
Speaker 7: an end with its rate hikes. It doesn't see that
Speaker 7: yet in Europe or the UK.
Speaker 1: Whether they're going to the midyear reviews of JP market publishing.
Speaker 1: There's this morning and they call our disinflation paths and
Speaker 1: compete getting complete. But at Macquarie, one of your great
Speaker 1: studies has to be the greater number of lesser countries
Speaker 1: really struggling. As you just mentioned, is the IMF going
Speaker 1: to come to the rescue here or is the IMF
Speaker 1: lost credibility as we talk about the Bank of England
Speaker 1: challenge by credibility.
Speaker 7: Well, if you mean the IMF coming to the rescue
Speaker 7: with regard to the debt load in the emerging.
Speaker 1: Market Argentina Peso two fifty one.
Speaker 7: Black market five, yeah, I don't think that you're going
Speaker 7: to see that happen unless these countries adopt a much
Speaker 7: more market friendly and much more Washington consensus based approach
Speaker 7: to the policy agenda. The IMF is not going to
Speaker 7: bail out countries that have made a succession of mistakes
Speaker 7: in their political economy and their policy agenda over the
Speaker 7: last few years. It will bail out those countries that
Speaker 7: it can impose on an agreeable basis, a new plan
Speaker 7: of action with regard to fiscal responsibility and monetary policy responsibility.
Speaker 3: Go back to something you were talking about that there
Speaker 3: does seem to be a real difference between the inflation
Speaker 3: dynamic in the US and the inflation dynamic in Europe,
Speaker 3: And you were talking about the labor dynamic in particular.
Speaker 3: Right now, what we're seeing are a number of central
Speaker 3: banks that paused or tried to and now are going
Speaker 3: back and hiking rates again. This is exactly what people
Speaker 3: do not want to see. What gives you confidence that
Speaker 3: the US is not going to be in the exact
Speaker 3: same position with a stickier kind of inflation, especially driven
Speaker 3: by areas like the housing market that have shown incredible
Speaker 3: resilience to higher rates.
Speaker 7: Yeah, this is These are all great questions. Let me
Speaker 7: start by saying that the way that the PEC price
Speaker 7: in dex is computed and are calculated, and the way
Speaker 7: that the CPI and Inflation Index is computed has inherent
Speaker 7: stickiness in it. About forty to fifty percent of all
Speaker 7: the prices in that basket are imputed. So to get
Speaker 7: a really good sense of what flexible prices are doing,
Speaker 7: what prices are doing that are that you can actually
Speaker 7: observe in the marketplace, you have to look at narrower.
Speaker 7: You have to look at only the basket of things
Speaker 7: for which we can observe prices, and when we do that,
Speaker 7: we see a lot more disinflation already. Just compare for
Speaker 7: example that Atlanta FED index. The flexible basket versus the
Speaker 7: sticky basket has seen a huge divergence in the last
Speaker 7: few months.
Speaker 3: What is the potential shock to longer term rates if
Speaker 3: this is somehow reversed, If somehow people are getting it wrong,
Speaker 3: and inflation does remain stickier in the US and follows
Speaker 3: the European story.
Speaker 7: Yeah, so if that's going to be the case, you're
Speaker 7: going to see the back end of the yield curve
Speaker 7: go up a little bit in the US. At the
Speaker 7: same time, it doesn't mean that the curve will get
Speaker 7: less inverted, because we could see short term rates go
Speaker 7: up as well, I should say, however, but to the
Speaker 7: extent that we're going to see longer term rates go up,
Speaker 7: it's going to be because inflation break evens go up.
Speaker 7: It's going to because that inflation expectation goes up, not
Speaker 7: because real rates go up. But yeah, that would be
Speaker 7: effectively the result inflation. Long term inflation expectations goes up,
Speaker 7: inflation break even go up, and that drags higher the
Speaker 7: ten year yield in the US.
Speaker 1: We're linking monetary policy in here into the interests of
Speaker 1: Chairman of Powell. And you mentioned as we were going
Speaker 1: on air here that you had the immense privilege seeing
Speaker 1: Jerry Garcia. I can't believe it's been twenty seven years
Speaker 1: since he died. That's the first shock. But you saw
Speaker 1: the dead when the dead was the dead and not
Speaker 1: the dead in company. Now into parlay off this, I'm
Speaker 1: going to go to what a long strange inflation this
Speaker 1: has been? What does a pandemic disinflation look like? This
Speaker 1: is an original inflation, isn't It's.
Speaker 7: Original only in so far as the Federal Reserve and
Speaker 7: a lot of central banks made the mistake of printing
Speaker 7: too much money at a time when they thought that
Speaker 7: the pandemic would not end, or at least they took
Speaker 7: the risk management view that there's a possibility that the
Speaker 7: pandemic doesn't end, and therefore they aired on the side
Speaker 7: of inflation of liquidity balances in the economy. The important
Speaker 7: thing to keep in mind is that those impulses that
Speaker 7: created the inflation in twenty twenty one and early twenty
Speaker 7: twenty two are more or less over and done with.
Speaker 7: With the possible exception of wage pressures in Europe. If
Speaker 7: you look at real monetary balances in the US, because
Speaker 7: of inflation and because of QT, they are back to
Speaker 7: trend level. They went up about fifteen to twenty percent
Speaker 7: above the trend and they've come down twenty fifteen or
Speaker 7: twenty percent back to the trend. That's a very strong indication,
Speaker 7: a very strong suggestion that the inflationary impulse that the
Speaker 7: central banks had created is no longer in play, it's
Speaker 7: no longer manifest.
Speaker 1: The longest dead concert, Terry was at the concert. He
Speaker 1: stood for six hours, the longest dead concert ever, six hours.
Speaker 1: It's on the edge of Springsteen.
Speaker 3: Yeah, they have epic concerts, and evidently they used to
Speaker 3: have even more epic concerts as older was.
Speaker 1: Terry Wiseman, Thank you so much. Pleasure today, just perfect
Speaker 1: time to have you in here. Well, the challenges that
Speaker 1: we see in Turkey today. I turned to Michael gab And,
Speaker 1: head of Economics, Bank of America's Securities. Michael, my head's spinning.
Speaker 1: There's so many trends going on here, and is Mike
Speaker 1: perfectly encapsulated. The ambiguities of the moment are immense. What
Speaker 1: is the thing at the margin you're studying subject to
Speaker 1: change about American economics. What's the part of the story
Speaker 1: that interests you.
Speaker 8: I think that there's two parts. One is what Lisa mentioned,
Speaker 8: how quickly can inflation come down even an environment where
Speaker 8: the labor market is extremely tight? For Powell's words, so
Speaker 8: can we get further diminishment in goods prices, used, car
Speaker 8: prices shelter inflation? Same conversation we've been talking about for
Speaker 8: some time. But I think the mirror side of that coin,
Speaker 8: which Powell emphasized yesterday and we and others have been
Speaker 8: picking up on more, what is the big miss really
Speaker 8: this year has not come on inflation. It's come in
Speaker 8: the labor market, where the labor force has rebounded dreamly
Speaker 8: rapidly this year. Last year, the shortfall in the labor
Speaker 8: force from kind of pre COVID projections was as high
Speaker 8: as two million in not falling. By our estimate, its
Speaker 8: down to about four hundred thousand. Now that means the
Speaker 8: probability of a softer landing or mild recession is higher,
Speaker 8: and the Fed doesn't have to lean on the labor
Speaker 8: market as much perhaps to bring inflation down. So it's
Speaker 8: that labor force rebound. From my perspective, that puts the
Speaker 8: FED in a very different spot today than it was
Speaker 8: thinking it was in maybe six to nine months ago.
Speaker 3: Michael, How does FED Chair J Powell draw this distinction
Speaker 3: at a time when his compatriots over across the Atlantic
Speaker 3: are moving in the opposite direction and are facing resurgent
Speaker 3: inflation exactly what they didn't want to see in a
Speaker 3: Burns like kind of the situation.
Speaker 1: I think this is.
Speaker 8: Where one time you fall back on the US is
Speaker 8: a large, relatively closed economy, were less affected by global
Speaker 8: trends than is the case elsewhere, and we'll make the
Speaker 8: decisions on our policy outlook based on where the domestic
Speaker 8: economy is. The upside risk on inflation in the US
Speaker 8: will come out of US labor markets and whether there's
Speaker 8: persistent tightness in the labor market that keeps services inflation elevated.
Speaker 8: So I think you just kind of fall back on
Speaker 8: the historical tendencies of the US to be much more
Speaker 8: domestically focused, services driven, and therefore we're going to set
Speaker 8: our policy based on that evolution.
Speaker 3: The other aspect of the conversation is the fiscal side
Speaker 3: versus the monetary policy side, and people are talking a
Speaker 3: lot about the fiscal impulse of having to repay student
Speaker 3: loans again starting in October. We've been debating this for
Speaker 3: a couple of days and trying to figure out whether
Speaker 3: this is an overplayed risk or an underplayed risk. Do
Speaker 3: you think that the reinstatement of having to pay back
Speaker 3: your student debt after three years of a moratorium is
Speaker 3: going to have a material impact on both growth and
Speaker 3: inflation in the United States later this year.
Speaker 1: I think we.
Speaker 8: Would come down on the side that from a macro perspective,
Speaker 8: it's unlikely to have a material effect. It should probably
Speaker 8: dent the strength of spending in say September or October,
Speaker 8: but the magnitude of interest payments is maybe about two
Speaker 8: tenths of one percent of personal income. If you fold
Speaker 8: in principal payments, that's closer to maybe half of one percent.
Speaker 8: So from the macro perspective, we doubt it has a
Speaker 8: material impact, although certainly at the individual level it may
Speaker 8: affect behavior quite a lot. It just doesn't We don't
Speaker 8: think it adds up to something macro systemic, if you will,
Speaker 8: So it's probably more about credit markets and the behavior
Speaker 8: of those as opposed to the macroeconomy.
Speaker 1: More broadly, what is a Bank of America? C Michael
Speaker 1: Gabin in your immense ability to tap knowledge on the
Speaker 1: American consumer, and I want to get granually here through
Speaker 1: the month of June. Is any indication of a slowdown
Speaker 1: of the American consumer?
Speaker 8: Yeah, there is, Tom, there is our BAA card data
Speaker 8: would suggest that consumer spending continues to slow, but at
Speaker 8: a moderate pace. And when we dig into those details,
Speaker 8: we do find that some of the revenge spending categories
Speaker 8: are starting to show softness, so airlines and lodging, which
Speaker 8: were really strong last year, those things have started to moderate,
Speaker 8: but spending on entertainment and recreation that is still strong.
Speaker 8: It maps into what we're seeing in the labor market,
Speaker 8: where two thirds of your gains and private sector employment
Speaker 8: are still coming from areas like leisure and hospitality and
Speaker 8: education and health. So there's still some catch up spending
Speaker 8: leading probably to follow through and hiring. But on the margin,
Speaker 8: it does suggest that spending is moderating. It's about flat
Speaker 8: on a year on year basis, and in some categories
Speaker 8: moving slightly negative.
Speaker 3: Michael, I have to say I'm hearing all of the
Speaker 3: noise behind you, and I'm thinking to myself, a lot
Speaker 3: of people are back in the office, and how different
Speaker 3: this is than what we have heard for so many years.
Speaker 3: Is that your experience that this has actually been this
Speaker 3: sort of sea change of reversion and the whole work
Speaker 3: from home trend has kind of died out.
Speaker 8: I mean, I think that's very industry specific and probably
Speaker 8: job requirements specific, where you know, I'm in at least
Speaker 8: four days a week sales and trading here is in
Speaker 8: five days a week. So certain roles are definitely back
Speaker 8: in the office. I see it on my regular commute
Speaker 8: as well. So and certainly Monday, Tuesday, and Wednesday or sorry, Tuesday,
Speaker 8: Wednesday and Thursday are your big peak days. So yeah,
Speaker 8: there's kind of three out of the five days it's
Speaker 8: feeling quote normal, and then it kind of tapers off.
Speaker 1: Week goes on, you know, Friday at Bank of America,
Speaker 1: moinning hands out at the summer place, gaping's in with
Speaker 1: shorts and flip flops. That's a celebration, like scary thought,
Speaker 1: Michael Gap and thank you so much as Bank of America.
Speaker 1: Everyone I talked to there is only one destination, and
Speaker 1: it is Paris. It is stunning anecdotally to see the
Speaker 1: number of people migrating to France. Leading the way is
Speaker 1: Francine Lacroix from London at an important conference of mister
Speaker 1: mccroum on climate and on the funding for poorer nations.
Speaker 1: She is in conversation with a tour director for Paris.
Speaker 1: He's on the bus telling us about the highlights Bruno
Speaker 1: La Mayer, tour director this summer.
Speaker 9: Francine, Tom, you couldn't be more right. Actually, I have
Speaker 9: to say everyone's here in Paris, not only because we
Speaker 9: have thirty heads of state here at talking about finance
Speaker 9: and sustainability and how to tackle poverty, which is really
Speaker 9: spearheaded by the President of France, but also there was
Speaker 9: fashion Week, and it does seem that every American actually
Speaker 9: in Europe has decided to descend on Paris. So congratulations
Speaker 9: first of all creating so much buzz, not only around
Speaker 9: so important tackles, but actually Paris is bussing a little
Speaker 9: bit ready today, but you know it's back with vengeance.
Speaker 10: What are you trying to achieve at this conference?
Speaker 9: So we're talking about money transfer, debt, forgiveness or keeping
Speaker 9: the momentum to really try and do a new Bretton
Speaker 9: Woods Agreement.
Speaker 6: I think the key purpose is to keep the momentum
Speaker 6: and to have a new financial architecture for the post
Speaker 6: countries of the world with pleasant placor. We don't want
Speaker 6: to post countries in the world to be confronted to
Speaker 6: a choice between fighting against extreme poverty and fighting against
Speaker 6: climate change. We want to provide all the financial means
Speaker 6: for those countries to be efficient in the fight against
Speaker 6: poverty and in the fight against climate change. This is
Speaker 6: the key purpose of this summit, and I think that
Speaker 6: the key point to key purpose would be to define
Speaker 6: a new financial architecture for the twenty first century.
Speaker 9: Minister, are you frustrated that it's taking this much time?
Speaker 9: I know the Chinese premiers here, which is a great
Speaker 9: coup because we have an actually seeing US officials and
Speaker 9: Chinese officials at this high level in a room together
Speaker 9: talking about these issues.
Speaker 10: But you've tried to push ours voting rights on the ISLM.
Speaker 10: How's that going.
Speaker 6: Big things need a long time, So I'm not frustrated.
Speaker 6: I think that we are totally totally determined with spent
Speaker 6: PACN to have a final positive outcome for this summit.
Speaker 6: I think that we are moving on the right direction.
Speaker 6: As far as debt restructuring is concerned, we want to
Speaker 6: move faster, we want to move quicker. I think that
Speaker 6: we could have a positive outcome as far as the
Speaker 6: depth of Zombia and Skidonka is concerned. It is really
Speaker 6: quite good news to have the Chinese Prime Minister here
Speaker 6: in Paris today talking with all the head of states,
Speaker 6: talking with the secrifgiality, and this is really, I think
Speaker 6: a very positive outcome. We also have the new President
Speaker 6: of the World Bank, and we are defining a new
Speaker 6: role for the multi role development banks, providing more money
Speaker 6: for the powerst country. So really things are moving in
Speaker 6: the right direction and the final outcome must be positive.
Speaker 9: I mean, I imagine that in the corridor, as they
Speaker 9: talk about trade.
Speaker 10: They talk about the fact that Sexuary Blinkoling was.
Speaker 9: In China, the fact that we have present with a
Speaker 9: rap roschma with the US.
Speaker 10: What does this mean for global works?
Speaker 6: I think it's good news because we all want to
Speaker 6: improve the relationship between the three continents between China, the US, Europe.
Speaker 6: We are totally determined to defend on economic interests in Europe.
Speaker 6: You know that the new Participle, which is now at
Speaker 6: the core of the European future has been defined by
Speaker 6: prison Pacon and it is sovereignty. Sovereignty means that we
Speaker 6: want to defend or technological assets or economic interests while
Speaker 6: talking with China, but being aware that there is a
Speaker 6: necessity to really have all the necessary tools to defend
Speaker 6: or academic.
Speaker 9: Indusrty menster given a high inflation, interest rates rising, I
Speaker 9: mean the economy is extremely complex.
Speaker 10: Do we need to attract in Europe and friends, specifically
Speaker 10: more Chinese investments?
Speaker 6: Yes, we are open to Chinese investments in France. We
Speaker 6: had yesterday a very foot full discussion between Prime Minister
Speaker 6: of the Chinese Republic and the key CEOs of the
Speaker 6: French economy, and we made very clear that there is
Speaker 6: any willingness of the Chinese government to invest more in
Speaker 6: France and more in Europe, for instance on the evs,
Speaker 6: on the electric batteries. We are welcoming those investments.
Speaker 9: We have a lot of US viewers at this time
Speaker 9: in the day, would they worry that actually that investment
Speaker 9: that could have gone to the US is going elsewhere
Speaker 9: in putting Europe?
Speaker 6: Oh, I think that you know, climate change means a
Speaker 6: lot of new investments in green hydrogen, in batteries, in
Speaker 6: evs and so on, sortar panels. So there is place
Speaker 6: for everybody. We should just be very cautious in the
Speaker 6: way we are defending our technological assets and or technologies
Speaker 6: or key technologies. But anyway to fight against climate change,
Speaker 6: we will pave the way for new investments and new innovations.
Speaker 6: And this is a really good thing that we have
Speaker 6: foot foot talks and constructive talks between the US, the
Speaker 6: EU and China.
Speaker 9: A ministry, how difficult is it to be in charge
Speaker 9: of finances of a country at a time where infest
Speaker 9: rates are going up. Inflation of course is going up,
Speaker 9: which leads higher interest rates. But at the same time
Speaker 9: we need to do economies because of huge deficits across
Speaker 9: the world.
Speaker 6: To kind of fine tuning, I would say, which means
Speaker 6: that work. Yeah, no, just to fine tuning, which means
Speaker 6: that the key priority is to get rid of inflation
Speaker 6: and to bring the prices down. This is to keep
Speaker 6: priority for the household. Of course, then you have to
Speaker 6: take into account the necessity to come back to some
Speaker 6: public finances. I just announced last Monday that we would
Speaker 6: cut in public expenses by ten billion euros at least
Speaker 6: for next twenty twenty four. So this means that we
Speaker 6: are totally determined to come back to some public finances
Speaker 6: and to stick to the path of reforms. Who just
Speaker 6: introduced two key reforms reform the level market and of
Speaker 6: course the pension reform.
Speaker 9: But given what we heard from the FED and other
Speaker 9: central banks, do you not worry that interest rate hikes
Speaker 9: will be so severe that they will almost have to
Speaker 9: crush acartomies at least put the mineral session to achieve
Speaker 9: their inflation target.
Speaker 6: That's why it's so important to keep a high level
Speaker 6: of investments and a high level of innovation. If you
Speaker 6: want to avoid recession, you have to find the right
Speaker 6: balance between coming back to some public finances and keeping
Speaker 6: a high level of investments in the fight against climate
Speaker 6: change and of course in defense. Since we have walked
Speaker 6: back on the European sid this is this balance that
Speaker 6: we want to preserve. You know that we are in
Speaker 6: the process of defining the new rules for the Upan countries,
Speaker 6: the Stability and Growth Pact. We want those new rules
Speaker 6: to keep the right balance between investments and some public financials.
Speaker 10: Do they need to be more flexible?
Speaker 6: We need flexibility of course we need the rules, we
Speaker 6: need all the countries to abide by the rules. But
Speaker 6: let's be very clear, the key factor for the twenty
Speaker 6: first century for Europe is to keep a high level
Speaker 6: of investments in innovation.
Speaker 9: Minister, thank you so much, as always for joining us.
Speaker 9: Was by the French Finance ministrant. With that time, I'm
Speaker 9: going to hand it back to you New York and we.
Speaker 10: Miss you in Paris.
Speaker 1: Friends, see, thanks so much. We wish we were here,
Speaker 1: Lisa and I. John's on an Italian island somewhere. We
Speaker 1: don't care about what he thinks right now. But for instance, Qua,
Speaker 1: thank you so much. The Prime Minister of Ukraine is
Speaker 1: a most interesting guy, with many different public duties over
Speaker 1: the years, but all working around trade and the economy
Speaker 1: of a pre war and at present war in Ukraine.
Speaker 1: In London, armor Ria today in conversation with Dennis Shmihaal.
Speaker 4: Tom good morning, and we are joined by Ukraine's Prime Minister,
Speaker 4: mister Michell.
Speaker 11: Thank you so much for being with us.
Speaker 4: We've seen each other in many conferences like this multiple times, and.
Speaker 11: I know how difficult it is for you to get here.
Speaker 4: Is this trained from Ukraine, very big country over to
Speaker 4: Poland and then a lot of security concerns about your staff,
Speaker 4: your team, yourself. So we appreciate your time. And one
Speaker 4: of the things that you always tell me is when
Speaker 4: I come to a recovery conference like this, and there's
Speaker 4: been many, I do feel or all I say we
Speaker 4: stand with Ukraine and they mean it.
Speaker 11: But a war is lung. It's expensive. Did you feel
Speaker 11: any fatigue in this run around?
Speaker 5: Thank you so much for invitation. It's a pleasure to
Speaker 5: be here with you.
Speaker 1: And morning.
Speaker 12: Oh.
Speaker 5: It's second conference for Ukrainian recovery. First one was sold
Speaker 5: in Switzerland one year ago. Today we are in London.
Speaker 5: Sixty two countries and international organizations are here. Hundreds of
Speaker 5: businesses are here, international businesses. We feel tremendous support from
Speaker 5: all of our partners. We feel financial support, sunctional military support,
Speaker 5: humanitarian support. Results of this conference have a long term consequences.
Speaker 5: We have many promises, We have many concrete agreements, declarations, memorandums.
Speaker 5: We have financial support. We have middle term program for
Speaker 5: Ukrainian support from European Commission, from European Union for fifty
Speaker 5: billion euro for the next four years. We have tremendous
Speaker 5: support from United Kingdom. We have very good meetings with
Speaker 5: our partners and with United States Secretary of State. We
Speaker 5: have very good conversations, negociations and very good results.
Speaker 4: And yet, well all this is happening, we know that
Speaker 4: back home the fighting continues on the counter offensive is going.
Speaker 11: And I do want to make something very clear.
Speaker 4: Was there at any point in this conference did you
Speaker 4: get any hint that anyone suggested the funding will depend on.
Speaker 11: The counter offensive?
Speaker 5: Absolutely? No.
Speaker 11: If it's successful, more money. If it's not, it would
Speaker 11: be less. No one told you that we.
Speaker 5: Have very very sustainable, very strong and very unwavering support
Speaker 5: from our partners. There is no dependence from results on
Speaker 5: the battlefield.
Speaker 11: They're entirely different.
Speaker 5: Absolutely, we have very strong messages, especially on that conference.
Speaker 5: Ukraine is future member of EU. Ukraine will be supported
Speaker 5: by partners. Russia must pay because of these consequences of
Speaker 5: this war, of terrible war and aggression from Russia side.
Speaker 5: So these messages from partners are very supportive, are very promising,
Speaker 5: and now we continue our contrafensive. This is not easy walk.
Speaker 5: This is not Hollywood movie. As our president wild Merzelenski
Speaker 5: said yesterday.
Speaker 4: Yesterday he seemed a little bit exasperated. This is not
Speaker 4: a movie. It takes time, it tastes patience. Is that
Speaker 4: what you feel at times too? This is not Hollywood,
Speaker 4: it's it's it's real people.
Speaker 11: And it's lives.
Speaker 5: Yes, and every life is very important for us. And
Speaker 5: we are not Russia. We are not Soviet style army
Speaker 5: when they bring their lives to the fire of the war.
Speaker 5: So we are very careful, we are very smart. We
Speaker 5: use NATO standards in this war because we are fighting
Speaker 5: according to NATO standards. We are fighting for weaponry of
Speaker 5: NATO countries and contravansive. It's multiple operations, it's offensive, it's
Speaker 5: defensive operations, it's tactical pauses. So it will take time.
Speaker 5: But we have first.
Speaker 4: Results purely to make an assessment, that's what you say.
Speaker 5: We have first results of our contrafensive. Eight villages are liberated,
Speaker 5: more then one one hundred thirteen square kilometers is liberated.
Speaker 5: Seven kilometers go into the head from the front line.
Speaker 5: So it's very important results for the two weeks and
Speaker 5: we will continue.
Speaker 4: And so of course now you have your Bloomber TV.
Speaker 4: Of course you have the investment community that's watching the center.
Speaker 4: But we also have a lot of taxpayers, some of
Speaker 4: whom are very sympathetic to Ukraine too, but they say
Speaker 4: we want to see vally for money, but also this
Speaker 4: idea of corruption at times, I remember President Selenski said,
Speaker 4: my government will crush the oligarchs.
Speaker 11: We will be a before and after moment in Ukraine.
Speaker 4: Is that the moment or the message that you're sending
Speaker 4: to people thinks are changing in Ukraine?
Speaker 5: Ukraine is changing absolutely, President, our government we have zero
Speaker 5: tolerance to the corruption.
Speaker 4: You will ditch people that are corrupted if you find anyone.
Speaker 5: We finished formation and creation of our anti corruptional infrastructure
Speaker 5: together with our partners. We are absolutely transparent, accountable and opened.
Speaker 5: And this anti coruptional infrastructure is work now and we
Speaker 5: demonstrate to all the world that we are fighting with
Speaker 5: a corruption country and we will have results. We continue
Speaker 5: our reforms, we continue digitalization. We take off a state
Speaker 5: and public services from persons and go to the digital space.
Speaker 5: And this is very very effective way to fight corruption.
Speaker 5: Just don't let people to be corrupted because digitalization brings
Speaker 5: new technologies and new possibilities.
Speaker 4: And can I ask you your meeting with mister Blinkn,
Speaker 4: the US Secretary of State. He was here, and I
Speaker 4: know you had a one to one meeting. There's an
Speaker 4: election coming up in the United States.
Speaker 11: Is that something that worries here? Digital in the United
Speaker 11: States is in for the long haul. This is about
Speaker 11: values for the US.
Speaker 5: United States is very important partner, is the biggest supporter
Speaker 5: for Ukraine. So we discussed all the important issues. We
Speaker 5: discussed first of all financial support, and mister Blinken unknownst
Speaker 5: the next one point three billion dollars support financial support
Speaker 5: for Ukraine, for our reforms, for our recovery, for our
Speaker 5: energy sector. It's very important for us. We also discuss
Speaker 5: all other issues very important in sense of development of
Speaker 5: my country despite the war, demining activity, sanctions against Russia,
Speaker 5: development of energy sector in Ukraine and other many other
Speaker 5: very important issues.
Speaker 11: So the middle and well.
Speaker 4: And I also wonder, however, with the average American and
Speaker 4: maybe watching that's true and it's thinking, but Ukraine is
Speaker 4: a far way off. I don't know anything about this country.
Speaker 4: What's going on with my money? What's your message?
Speaker 11: What would you say?
Speaker 5: Just because what First of all, we are very grateful
Speaker 5: to American people, to United Kingdom people, to all our
Speaker 5: partners who support US military financially. By sanctions. It's crucially
Speaker 5: important because we are fighting not only for our land,
Speaker 5: for our families, for our people, are fighting for democratic
Speaker 5: and for civilized values. It's crucial and because of this,
Speaker 5: all democratic world support Ukraine. Why because this is about
Speaker 5: global security system and it's very important. Don't let any
Speaker 5: aggressor to have a free thinking about future possible aggression.
Speaker 4: If Russia were to win this as a hypothetical, then
Speaker 4: would you say it would be the moral collapse of
Speaker 4: the West. If will let that happen, it would be
Speaker 4: the moral collapse of the West.
Speaker 11: I think that you don't even contemplate Russia winning.
Speaker 5: It's impossible. It's impossible, and I think that I'm sure
Speaker 5: that civilized world will not let Russia win this war
Speaker 5: because it's about existential things, it's about the world security system.
Speaker 5: And from my side, I should say that Ukrainian have
Speaker 5: no intention, no imagination that we may lose this war
Speaker 5: because it's about our existence. War with war, crimes with
Speaker 5: war against humanity, was henocide against Ukrainian nations. So if
Speaker 5: Russia will win this war, it will mean that Ukraine
Speaker 5: and Ukrainian nation is not exist anymore. So from our side,
Speaker 5: we understand that we will liberate our country and the
Speaker 5: borders as on the nineteen ninety one, and.
Speaker 11: It is existential.
Speaker 4: That's a word I heard the most last time I
Speaker 4: was in Ukraine, that this was existential for the country now.
Speaker 4: And I want to ask you, however, another existential question
Speaker 4: perhaps is the NATO summit. You said in this conference,
Speaker 4: for a strong economy, you need a strong country and
Speaker 4: that means security. What's going to happen in that meeting?
Speaker 4: Presidence Selenski said, my people have shed blood for a
Speaker 4: timeline now to NATO. What's going to happen in a
Speaker 4: month time?
Speaker 11: In that meeting?
Speaker 5: I may repeat, we are fighting according to NATO standards.
Speaker 5: We are fighting by weaponry of NATO.
Speaker 11: Why is it so scary for some?
Speaker 5: In fact, our army is NATO army right now. We
Speaker 5: are fighting for the same principles for which NATO was created.
Speaker 5: So I'm sure that membership of Ukraine in NATO it
Speaker 5: will be a very win win situation, very mutually beneficial situations.
Speaker 5: So we are waiting so that this summit in Wsinos
Speaker 5: will be very strong summit and we will hear very
Speaker 5: concrete and very strong messages about Ukrainian membership and NATO,
Speaker 5: and we hope that partners will do this. We have
Speaker 5: twenty twenty allies which are supporting, which are supporting Ukraine,
Speaker 5: which signed declarations. We discussed with some skeptical allies, but
Speaker 5: we have sure inside of our hearts that everything will
Speaker 5: be going.
Speaker 11: And very briefly.
Speaker 4: Sometimes you hear people say just sit down and talk
Speaker 4: to Vladimir Putting. When you hear the name Latimir Pudding
Speaker 4: doesn't trigger anything, and you really just go this is
Speaker 4: in the past.
Speaker 11: I'm not interested in Latimir Pudding.
Speaker 5: Putting is the biggest crimer of our times, of twenty
Speaker 5: first century. We don't believe that he may do something
Speaker 5: to bring peace in Ukraine. So only one his step
Speaker 5: to stop shot and take off Russian army from Ukrainian
Speaker 5: territory may stop this war and bring peace back on
Speaker 5: the European continent. But he has this possibility since to
Speaker 5: one hundred and fourteen. So when the stands of this
Speaker 5: now impossible, and.
Speaker 11: For you you say it's now impossible, it's too late.
Speaker 11: Prime Minister. Thank you so much, appreciate it.
Speaker 4: Always very good to see you in Bloomberg, and thank
Speaker 4: you for being here with us in London.
Speaker 5: Thanks, Thank you so much.
Speaker 1: Tom Maria today, Thank you so much for a piercing conversation,
Speaker 1: ending with comments of Ukraine. I'm a leader of Russia.
Speaker 1: Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and
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Speaker 12: From the Bloomberg Interactive Burgers Studios. This is Bloomberg day
Speaker 12: Break for Thursday, June twenty second.
Speaker 13: Coming up today, Crouz race to find the missing sub
Speaker 13: near the Titanic before the air runs out.
Speaker 12: The US and India strength and military and economic ties.
Speaker 14: Rates in focus.
Speaker 13: As Jay Powell appears before Congress again and the Bank
Speaker 13: of England makes a policy.
Speaker 12: Decision, I mean bring you an exclusive interview with the
Speaker 12: CEO of Deutsche Bank.
Speaker 15: New York Mayor Adams announced his new guidelines after lithium
Speaker 15: ion battery fires, plus a New York City board votes
Speaker 15: for increases in rent stabilized apartments. I'm Michael Barr.
Speaker 14: More ahead, I'm.
Speaker 16: John Stanish, Edwards Swartz, the Yankees in three home runs
Speaker 16: and a widower see Adam. The Mets lost in Houston.
Speaker 16: The NBA Draft takes place tonight in Brooklyn.
Speaker 17: That's all straight ahead on Bloomberg day Break, the business
Speaker 17: news you need to start your day in just one
Speaker 17: fifteen minute podcast each morning on Apple, Spotify, the Bloomberg
Speaker 17: Business app, and everywhere you get your podcasts.
Speaker 13: Good morning, I'm Nathan Hager.
Speaker 12: And I'm Karen Moscow. Here are the stories we're following today.
Speaker 13: First, we want to keep you updated on the search
Speaker 13: for that missing submersible near the Titanic. Crews from around
Speaker 13: the world are zeroing in on underwater noises detected over
Speaker 13: the past two days. Former Coast Guard Commandant Thad Allen says,
Speaker 13: filtering out the signal from the noise is a tough task.
Speaker 1: There's animal life, there are other noises that are out
Speaker 1: there. There are ships operating.
Speaker 17: In the area, so the question is to localize it
Speaker 17: and try and understand.
Speaker 1: What it is.
Speaker 13: Former Coast Guard command on Thad Allen says, the situation
Speaker 13: is growing more desperate for the five people on board
Speaker 13: the Titan. The vessel left Sunday with about ninety six
Speaker 13: hours of air. At this point, they may have just
Speaker 13: a couple of hours left.
Speaker 12: Well, Nathan, we turn to geopolitics now. In an important
Speaker 12: moment in the US relationship with India, President Biden is
Speaker 12: hosting India's Prime Minister Narendra Modi for his first ever
Speaker 12: stayed visit to the White House. Senior US officials say
Speaker 12: the two leaders will announce a series of defense and
Speaker 12: commercial deals aimed at improving military and economic ties. They'll
Speaker 12: also hold a brief adjoint news conference, a rare toy
Speaker 12: for the Indian leader, before Mody addresses Congress this afternoon.
Speaker 13: Meantime, in Florida, Karen, the federal government's case against Donald
Speaker 13: Trump is moving forward. Prosecutors are now turning over evidence
Speaker 13: to the former president's legal team. Amy Morris has details
Speaker 13: from our Bloomberg ninety nine to one newsroom in Washington.
Speaker 18: Evidence is being headed over to the defense as both
Speaker 18: sides get ready for the August fourteenth trial date. The
Speaker 18: grand jury testimony of witnesses set to testify at trial,
Speaker 18: a twenty twenty one recording of the former president discussing
Speaker 18: having classified information, other public statements made by Trump, an
Speaker 18: FBI interview of Trump's personal aid and co defendant, and
Speaker 18: pictures of boxes of records at mar A Lago. Both
Speaker 18: sides are prevented from publicly sharing the evidence that's been
Speaker 18: turned over, and Trump's attorneys are working on getting security
Speaker 18: clearances to review any classified material. In Washington. I'm Mamy Morris,
Speaker 18: Bloomberg Daybreak.
Speaker 12: Right, Amy, thank you well. Elsewhere in Washington, the House
Speaker 12: is voted to censure Adam Schiff. Lawmakers voted along party
Speaker 12: lines to center the California Democrat over comments made during
Speaker 12: investigations at Donald Trump's ties to Russia. Schiff was defy
Speaker 12: and a head of the vote, calling out House Speaker
Speaker 12: Kevin McCarthy.
Speaker 19: McCarthy would spend the nation's time on petty political payback,
Speaker 19: thinking he can censure or find Trump's opposition into submission,
Speaker 19: but I will not yield, not one inch.
Speaker 12: Adam Schiff becomes the twenty fifth House lawmaker to be censured.
Speaker 12: He was the lead prosecutor and former President Trump's first
Speaker 12: impeachment trial.
Speaker 13: Karen Let's turn from politics now to financial markets. Jay
Speaker 13: Powell is back in focus as the FED chair prepares
Speaker 13: for day two of congressional testimony. Yesterday, Powell told the
Speaker 13: House Financial Services Committee more interest rate hikes are on
Speaker 13: the way.
Speaker 20: Almost every single of the sixteen of the eighteen participants
Speaker 20: on the FMC wrote down that they do believe it'll
Speaker 20: be appropriate to raise rates, and a big majority believes
Speaker 20: razor rates twice this year. And you know, I think
Speaker 20: that's a pretty good guess of what will happen if
Speaker 20: the economy performs about is expected.
Speaker 13: And Pale's comments come after the Fed pause drate hikes
Speaker 13: last week for the first time in fifteen months.
Speaker 12: Well, Nathan, not all FED officials are on board for
Speaker 12: more rate increases. Atlanta Fed Bank President Raphael Bostick says
Speaker 12: he supports holding at the current level for the rest
Speaker 12: of this year. We get more from Bloomberg's Charlie Pellett.
Speaker 21: Bostick says it is prudent to give time for inflation
Speaker 21: to ease. In response to past moves. In an online commentary,
Speaker 21: Bostick said, quote, letting restrictive policy work for a while
Speaker 21: is prudent because the Podlsey has been truly restrictive for
Speaker 21: less than a year, and it takes time from monetary
Speaker 21: policy changes to meaningfully influence economic activity. In a later
Speaker 21: Yahoo Finance interview, bostics said, quote, my baseline is that
Speaker 21: we should stay at this level for the rest of
Speaker 21: the year. In New York, Charlie Podett Bloomberg Daybreak.
Speaker 13: Thank you, Charlie. Central banks are also in focus overseas
Speaker 13: this morning. The Bank of England is expected to raise
Speaker 13: rates again today, and we get the details from Bloomberg's
Speaker 13: Uwan parts in London.
Speaker 22: Central banks were meant to get boring this summer, but
Speaker 22: Britain's red hot inflation may force the Bank of England
Speaker 22: to press hard on the breaks today. Economists and investors
Speaker 22: expect the Monetary Policy Committee to push ahead with another
Speaker 22: cause point increase in the base rate to four point
Speaker 22: seventy five percent. What would be the thirteenth rise in
Speaker 22: the hiking cycle, but core inflation at a thirty one
Speaker 22: year high. It means money markets now placed a forty
Speaker 22: percent chance on a bigger half point increase. It's an
Speaker 22: anxious backdrop. So a mortgage market which has already seen
Speaker 22: soaring rates this month in London, immune pot's been back daybreak.
Speaker 14: All and you and thanks.
Speaker 12: So we have some other central bank decisions in Europe
Speaker 12: to tell you about this morning.
Speaker 18: Switzerland hiked rates by twenty five.
Speaker 12: Basis points and that amounts to the smallest increase since
Speaker 12: the SNB started tightening policy last year. And Norway when
Speaker 12: even further, hiking rates by fifty basis points, that's the
Speaker 12: largest increase since the central bank's current tightening cycle.
Speaker 13: Staying in Europe, Karen Deutsche Bank's CEO, is out with
Speaker 13: an optimistic outlook. Christian Saving says he expects trading results
Speaker 13: to improve in the second half as clients navigate a
Speaker 13: complex and challenging economy. Speaking exclusively to Bloomberg, the Deutsche
Speaker 13: Bank CEO said there are also challenges facing the business.
Speaker 23: With regard to the investment bank, we always said that
Speaker 23: we had a record year. We had an extraordinary strong
Speaker 23: year in the fig business in twenty twenty two. I
Speaker 23: still think that actually in Q one and Q two
Speaker 23: we have done well, but the overall market is a
Speaker 23: bit weaker than in the record year of twenty twenty two.
Speaker 13: And again, that was Deutsche Bank's CEO Christian Savings, speaking
Speaker 13: exclusively with Bloomberg State Tuned for more of that conversation
Speaker 13: coming up shortly, and for that look at other stories
Speaker 13: making news in New York and around the world. We
Speaker 13: are joined by Bloomberg's Michael Bark Morning.
Speaker 14: Michael, Good Morning, Nathan.
Speaker 15: A deadly tornado hit a small town in northwest Texas
Speaker 15: last night, leaving significant damage in its wake. The mayor
Speaker 15: of Matadoras says at least three people had been killed
Speaker 15: in the storm, which also damaged and destroyed homes and businesses.
Speaker 15: The dangerous heat wave across the South is turned deadly.
Speaker 15: The US Postal Service confirmed a letter carrier in Dallas, Texas,
Speaker 15: died while delivering mail in the heat. Multiple cities are
Speaker 15: shattering all time heat records. South of Houston, crews are
Speaker 15: racing to repair roads that buckled under the heat. Texas
Speaker 15: Department of Transportation spokesman Danny Perez says workers safety is
Speaker 15: being monitored closely, making sure.
Speaker 24: They're staying hydrated, making sure that they're aware of the situation.
Speaker 13: And making sure that they're not staying out longer than
Speaker 13: they need to.
Speaker 15: Near Corpus Christy, it felt like one hundred and twenty
Speaker 15: seven degrees. Tenants in New York City's roughly one million
Speaker 15: rents stabilized apartments will face increases of three percent for
Speaker 15: one year leases after a tense meeting filled with protesters.
Speaker 15: The city's rent Guidelines Board also voted yesterday for two
Speaker 15: year leases. Rents will increase two point seventy five percent
Speaker 15: in first year and an additional three point two percent
Speaker 15: in the second year. The rents are expected to increase
Speaker 15: October first. Another lithium ion battery fire in New York.
Speaker 15: At least two people were hurt in the blaze last
Speaker 15: night in Bensonhurst, Brooklyn. The fire that was quickly extinguished
Speaker 15: comes just hours after Mayor Eric Adams says that New
Speaker 15: York is taking action after four people were killed from
Speaker 15: a fire and an e bike repair shop in Manhattan
Speaker 15: earlier this week. Adams announced a new action plan to
Speaker 15: speed up investigations about potentially hazard his conditions involving lithium
Speaker 15: ion batteries and bike shops.
Speaker 24: We need real action not only on the state level,
Speaker 24: but on the federal level. They have been over one
Speaker 24: hundred and eight lithian ion related battery fires in this
Speaker 24: city this year alone.
Speaker 15: Mayor Adams also announced an outreach and education campaign aimed
Speaker 15: at shop owners about the dangers regarding the batteries. The
Speaker 15: New York State legislature has passed a bill to protect
Speaker 15: abortion providers against being sued from states where the practice
Speaker 15: is banned. The bill would legally protect doctors, ensuring medical
Speaker 15: providers in the state will be able to provide telehealth
Speaker 15: services to patients who do not live in New York.
Speaker 15: Global News twenty four hours a day, powered by more
Speaker 15: than twenty seven hundred journalists and analysts in over one
Speaker 15: hundred and twenty countries. I'm Michael Barr. This is Bloomberg, Nathan.
Speaker 13: Thank you, Michael. Time now for the Bloomberg Sports Up.
Speaker 13: Take good morning, John Staneshaw A good morning, Nathan and Yankees.
Speaker 13: Of course some big name, high priced guys, they were
Speaker 13: not the ones that led them to victory at the stadium.
Speaker 13: Johnny Brido got the start up for the Miners. He
Speaker 13: pitched it to the sixth inning, did not allow a run,
Speaker 13: gave up just two hits. Yanks had only five hits,
Speaker 13: but three of them left the yard.
Speaker 21: Here's the payoff.
Speaker 14: He's not running in the pitches.
Speaker 25: Swung on and ahead of the edity right that falls high,
Speaker 25: that is far there, it is gone. It's a two
Speaker 25: run home run by the Yankee of ours, and that's Jake.
Speaker 14: Bauerfa and six home run for Bowers.
Speaker 16: Billy mckinning other than left handed hitting outfielder just stuck
Speaker 16: from Scranton hit his second as many nights and later
Speaker 16: the tenth of the season for the rookie Anthony Volpa.
Speaker 16: Yankees beat the Mariners four to two, and they go
Speaker 16: for the sweep.
Speaker 14: Tonight.
Speaker 16: The Mets lost in Houston ten to eight. This game
Speaker 16: is nine to six. Still in the fourth inning, Tyler
Speaker 16: McGill gave up five runs. Anthony and Leoni followed got
Speaker 16: only four. House gave up four more runs in defeat.
Speaker 16: Twenty third home run for Pete Lonzoa. The Mets have
Speaker 16: now lost thirteen their last seventeen. Cincinnati has won all
Speaker 16: it's last eleven, the Red's longest winning streaking sixty six
Speaker 16: years and the Giants won again.
Speaker 14: They've won their last ten. Big NBA trade just.
Speaker 16: Ahead of tonight's draft, It takes place at the Barkley Center.
Speaker 16: Three teen deal saw the Celtics acquire the ex Nick
Speaker 16: christophs Porzengis coming in from Washington. It cost them Marcus Smart,
Speaker 16: a Celtic for nine years two seasons ago, the NBA's
Speaker 16: top defensive player, he goes to Memphis. The draft will
Speaker 16: begin with San Antonio taking Victor Wembiniama the French penal.
Speaker 16: The Nets have back to back picks in the first round,
Speaker 16: twenty first and twenty second. The Knicks have stockpiled picks
Speaker 16: in later years, but tonight, barring a Trey, the Knicks
Speaker 16: will not have a pick.
Speaker 14: John Stashwin Bloomberg.
Speaker 26: Sports from coast to coast, from New York to San Francisco,
Speaker 26: Boston to Washington, DC, nationwide on Sirius xam, the Bloomberg
Speaker 26: Business app in Bloomberg dot Com. This is Bloomberg day Break.
Speaker 26: Good morning, I'm Nathan Hager.
Speaker 13: There's momentum in the business, so says Deutsche Banks CEO
Speaker 13: Christian Saving. Then, while he warns of a decline in
Speaker 13: trading revenue this quarter. He expects results to improve in
Speaker 13: the second half, pointing to clients currently navigating a complex
Speaker 13: and challenging economy. Christian Savings sat down for an exclusive
Speaker 13: interview with Bloomberg's Guy Johnson. Let's listen into that conversation.
Speaker 27: Now, the macro uncertainty that has driven markets so much recently,
Speaker 27: do you get the feeling that that is beginning to received,
Speaker 27: Do you get the impression that you are increasingly on
Speaker 27: more solid ground.
Speaker 23: Well, first of all, I think we all have to
Speaker 23: admit that if you look what has happened over the
Speaker 23: last twelve to fifteen months in the macro. On the
Speaker 23: geopolitical side, I think economies have really shown how resilient
Speaker 23: they are. Because a year ago, a lot of people
Speaker 23: would have said there is a quite material recession in Europe,
Speaker 23: in Germany, potentially also in the US. And if we
Speaker 23: now look back, I think we see that the answer
Speaker 23: we have given is actually showing that we fared quite
Speaker 23: well over the last twelve to fifty months. Now, I
Speaker 23: think the situation remains complex. I do believe that with
Speaker 23: a very persistent inflation, interests will further go up on
Speaker 23: both sides of the ocean, And I also do believe Guy,
Speaker 23: that the interest will then stay a little bit longer
Speaker 23: elevated than potentially a lot of people think. And that
Speaker 23: means that I still believe that there is a chance
Speaker 23: of a mild recession in the US at the end
Speaker 23: of twenty three early twenty four, as well as in Europe.
Speaker 23: You see that Germany is in a technical recession, has
Speaker 23: been in a technical recession. So I don't believe that
Speaker 23: we will see a material recession, but I do think
Speaker 23: that uncertainty still prevails, and hence we need to watch out.
Speaker 23: And the second half of twenty twenty three is for
Speaker 23: sure a half which is still complex and is still challenging.
Speaker 27: So does that mean that the Q two guidance that
Speaker 27: your CFO gave a few days back was just a
Speaker 27: was just a blip? He was talking about fixed income
Speaker 27: being down fifteen to twenty percent. You talk about the
Speaker 27: fact that the second half is going to see significant uncertainy.
Speaker 27: That's a good environment for fixed income. So therefore, was
Speaker 27: the Q two guidance just a blip? And do you
Speaker 27: still believe that the fullier numbers are going to be
Speaker 27: better than the numbers that James gave well, let's.
Speaker 23: Start with your world bank, and there we see a
Speaker 23: good momentum. That is the strategy of Deutsche Bank. Then
Speaker 23: we says we need a more balanced bank. That was
Speaker 23: exactly what we wanted to achieve in twenty nineteen when
Speaker 23: we called out the transformation of Deutsche Bank. And we
Speaker 23: see the results. We have a very strong corporate bank,
Speaker 23: a very nice developing private bank, and therefore we can
Speaker 23: confirm our twenty eight to twenty nine billion of revenues
Speaker 23: for this year. We see the momentum. We see a
Speaker 23: Q two to be honest, Q two twenty twenty three
Speaker 23: from a revenue point of view, which is higher than
Speaker 23: Q two twenty twenty two. So overall, I would say
Speaker 23: this bank is faring well. The strategy is paying off.
Speaker 23: With regard to the investment bank, we always said that
Speaker 23: we had a record year. We had an extraordinary strong
Speaker 23: year in the fake business in twenty twenty two. I
Speaker 23: still think that actually in Q one and Q two
Speaker 23: we have done well, but the overall market is a
Speaker 23: bit weaker than in the record year of twenty twenty two.
Speaker 23: But I do believe with some uncertainties, for instance, the
Speaker 23: dead ceiling issue going away in the US then with
Speaker 23: the still complex situation which is in front of us,
Speaker 23: I do believe that in Q three and Q four
Speaker 23: there is momentum in the business on.
Speaker 14: The fix side.
Speaker 23: But for us, as a strategy of Deutsche Bank, it's
Speaker 23: important that we've further balance out the investment bank or all.
Speaker 23: We have a very strong fake business, we have a
Speaker 23: very strong DCM business. What we really wanted to achieve
Speaker 23: is that also the owen A business is further s
Speaker 23: frankstened and hence we've put a lot of investments into that.
Speaker 27: So just to wrap this part of the conversation up,
Speaker 27: it is going to be it's going to be an
Speaker 27: operating environment for the fake business that is likely to
Speaker 27: be less good than next year than last year. Q
Speaker 27: two may or may not be a blip. You still
Speaker 27: see uncertainty in the second half of the year, which
Speaker 27: could provide opportunity. So on balance, the numbers are likely
Speaker 27: to be slightly better than the fifteen to twenty percent
Speaker 27: that James guided to.
Speaker 23: That's what I would say for the coming months and weeks.
Speaker 27: Again, Q two was.
Speaker 23: Also a particular quarter given the situation also which we
Speaker 23: had in the US. We can already see also now
Speaker 23: in June on the most recent days that there is
Speaker 23: a that there is momentum in the business. So I'm
Speaker 23: overill quite comfortable also with the Fig business. And again
Speaker 23: Q two was a particular quarter. I would say that
Speaker 23: the Fig business in Q three and Q four I
Speaker 23: think there was a slight recovery.
Speaker 27: You are very good at keeping secrets. Let's talk about
Speaker 27: the new Mist acquisition for those of us to follow
Speaker 27: the bank. It caught us all by surprise. I understand
Speaker 27: you'd been working on it for quite some time, but
Speaker 27: it definitely caught us by surprise. Was the offer just
Speaker 27: too good to refuse? Was the price just too good
Speaker 27: to refuse? Where did it come from? Where did where
Speaker 27: did your decision to go in this direction the advisory
Speaker 27: business come from?
Speaker 23: Well, I just said it in my previous answer. You know,
Speaker 23: I'm a big believer, and the whole management team of
Speaker 23: Deutsche Bank is a big believer that we need balance business,
Speaker 23: not only for the overall bank. That was the reason
Speaker 23: why we did the transformation four years ago. Stable, well
Speaker 23: balanced set up with four businesses. In each of those
Speaker 23: business I again want to be balanced, and we have
Speaker 23: a very strong thick and DCM business. Where we wanted
Speaker 23: to further invest is in the ONA business. And you know,
Speaker 23: we looked at Numis for a long long time, and
Speaker 23: yes we kept the secret quite well, and we think
Speaker 23: it's an optimal addition to our business mix and to
Speaker 23: our offerings in Europe and in particular in the UK.
Speaker 23: The UK is from a fee market pool, it's the
Speaker 23: most lucrative European market. We are adding one hundred and
Speaker 23: seventy top corporate lines and it fits beautifully to our
Speaker 23: global house bank concept. Everybody is only thinking about the
Speaker 23: investment banking offering, and yes that's obviously something we are
Speaker 23: very much interested in and it fits to our existing
Speaker 23: positioning in the UK. But we have a really well
Speaker 23: functioning corporate bank. So we have one hundred and seventy
Speaker 23: additional clients with Numis now and we can offer our
Speaker 23: corporate banking product and at the same time we have
Speaker 23: a private bank where I think we can also do
Speaker 23: the one or the other things. So the over global
Speaker 23: houseback concept is fitting very well to Numous and therefore
Speaker 23: we looked at it very carefully. I'm very glad about
Speaker 23: the job Fabrizo and the team have done and now
Speaker 23: we concluded this and now we need to make the
Speaker 23: final steps.
Speaker 14: Right.
Speaker 27: Are you keeping more secrets from me?
Speaker 21: Are there?
Speaker 27: You talk about the other divisions and the fact that
Speaker 27: you want to you want to have balance. Are there
Speaker 27: other deals in the offering, even another great opportunity came along.
Speaker 27: Are you still interested or is the dry powder gone?
Speaker 4: No?
Speaker 23: I would say, look, I think we are very careful
Speaker 23: and cautious planning team. But of course we always said
Speaker 23: that after restructuring and positioning this bank, we are up
Speaker 23: for growth, and we always says we want to grow
Speaker 23: in more capital led products, which is for instance, the
Speaker 23: o NA business in the m and a business in
Speaker 23: the advisory business. But you have also seen that we
Speaker 23: have done senior hires again in corporate finance, but also
Speaker 23: in the wealth management business. So we think that we
Speaker 23: can further balance out the business at some point in
Speaker 23: time over two three years. You know, we want to
Speaker 23: also and we need to plan for a situation that
Speaker 23: ANII is at some point in time again coming down.
Speaker 23: We need then additional income streams, and this bank is
Speaker 23: planning for that and is investing for that right now.
Speaker 23: And hence a I wouldn't tell you about secrets because
Speaker 23: you just said we are good at it at keeping it,
Speaker 23: but that there is a clear growth strategy in parts
Speaker 23: like wealth management, origination advisory. Yes, we are focusing on
Speaker 23: that and with the recent hires we've seen.
Speaker 27: That you talk about HighRes on the well side, though,
Speaker 27: do you see the growth they're being organic? Do you
Speaker 27: see it being via acquisition of talent rather than acquisition
Speaker 27: of businesses?
Speaker 23: Well, it's it's it's both. But I do believe that
Speaker 23: we have now such a nice positioning and such a
Speaker 23: nice structure that we really do believe that if you
Speaker 23: have a chance to acquire and get good and great
Speaker 23: talent in all kinds of regions, this is a really
Speaker 23: good way in step by step growing your business. Claudio
Speaker 23: DeSanctis has done that very successfully in Asia in other
Speaker 23: parts of southern Europe. So that is the first way
Speaker 23: of growing.
Speaker 27: If Commons Bank ever came back, would you be interested
Speaker 27: in that acquisition. They have got a huge deposit base,
Speaker 27: which in this environment is hugely attractive.
Speaker 23: Well, we also have a huge deposit base.
Speaker 27: Together it will be even bigger.
Speaker 26: Yeah.
Speaker 23: But I think we have shown also during the recent
Speaker 23: volatilities in the market, how firm and how stable. Our
Speaker 23: deposit base is so that is not a reason to
Speaker 23: actually think about further enlarging it or acquiring somebody else.
Speaker 23: I think the full focus of Deutsche Bank is now,
Speaker 23: after successfully delivering transformation over the last three or four years,
Speaker 23: is now growing into an area where we have a
Speaker 23: return on equity of larger than ten percent in twenty
Speaker 23: twenty five. We are in a good way of achieving that.
Speaker 23: The first quarter of twenty twenty three has clearly shown
Speaker 23: the strength of Torche Bank, and we can control it
Speaker 23: by ourselves. We can achieve that by ourselves, and that
Speaker 23: is all focused.
Speaker 13: This is Bloomberg Daybreak Today, your morning brief on the
Speaker 13: stories making news from Wall Street to Washington and beyond.
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Speaker 18: And I'm Karen Moscow.
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