WEBVTT - Daybreak Weekend: Tesla Earnings, ECB Decision, Japan Election 0:00:00.280 --> 0:00:07.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:10.600 --> 0:00:13.040 This is Bloomberg day Break Weekend, our global look at 0:00:13.080 --> 0:00:15.080 the top stories in the coming week from our Daybreak 0:00:15.080 --> 0:00:17.599 actors all around the world. Straight Ahead on the program, 0:00:17.600 --> 0:00:20.560 we'll look at upcoming housing data, along with earnings from 0:00:20.560 --> 0:00:24.440 eb Giant Tesla and the latest on its CEO Elon Musk. 0:00:24.880 --> 0:00:26.439 I'm Tom Busby in New York. 0:00:26.720 --> 0:00:29.240 I'm Karen Hecke here in London, where we're asking what 0:00:29.360 --> 0:00:31.640 the European Central Bank we'll do next. 0:00:32.080 --> 0:00:34.879 I'm dek Krisner taking a look at the upcoming national 0:00:34.920 --> 0:00:36.159 election in Japan. 0:00:38.479 --> 0:00:42.520 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.560 --> 0:00:46.240 eleven three zero, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.760 --> 0:00:51.879 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Sirius 0:00:52.040 --> 0:00:55.560 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.640 --> 0:00:57.840 dot Com and the Bloomberg Business App. 0:01:02.560 --> 0:01:03.320 Well, good day to you. 0:01:03.480 --> 0:01:05.960 I'm Tom Busby, and we begin today's program with some 0:01:06.080 --> 0:01:09.400 key US housing data as we wrap up the critical 0:01:09.520 --> 0:01:12.760 spring home buying season. Existing home sales for June out 0:01:12.760 --> 0:01:16.039 on Wednesday. New home sales for that same month on Thursday, 0:01:16.160 --> 0:01:19.360 for more on what to expect the impact of sky 0:01:19.440 --> 0:01:24.080 high home prices, elevated mortgage rates arise in existing home inventories, 0:01:24.120 --> 0:01:26.520 and the Trump tariffs and all that. We're joined by 0:01:26.560 --> 0:01:30.720 Drew Redding, Bloomberg Intelligence US home building Analysts. Well, Drew, 0:01:31.000 --> 0:01:33.120 thanks so much for being here. I want to start 0:01:33.120 --> 0:01:35.720 with what you're expecting to see in these reports, and 0:01:35.760 --> 0:01:38.400 then we'll break down what's behind those numbers. 0:01:38.959 --> 0:01:41.760 Sure, so let's start on the existing home side. Obviously, 0:01:42.400 --> 0:01:45.039 the resale market has been stuck in the mud. You know, 0:01:45.040 --> 0:01:48.400 we're expecting sales will be down modestly on a sequential basis, 0:01:48.440 --> 0:01:50.400 but you know, should be up a little bit from 0:01:50.480 --> 0:01:53.880 last year's three point nine million annualized rate. Keep in 0:01:53.880 --> 0:01:56.240 mind that was the lowest pace in about fifteen years, 0:01:56.320 --> 0:01:59.440 so some modest improvement, but the market's still down over 0:01:59.560 --> 0:02:03.480 twenty sent from more normalized levels. We've kind of been 0:02:03.480 --> 0:02:06.440 hovering around this four million annualized rate of sales for 0:02:06.480 --> 0:02:09.079 a while now. But it does appear to us that, 0:02:09.440 --> 0:02:12.080 at least from a volume perspective, the market as troth. 0:02:12.240 --> 0:02:15.440 You have to realize there's some level of underlying demand 0:02:15.440 --> 0:02:17.440 out there. In the market given people have to move 0:02:17.480 --> 0:02:19.480 for one reason or another, and you do you think 0:02:19.520 --> 0:02:21.640 you'll see a little bit of growth this year and 0:02:21.680 --> 0:02:24.400 perhaps stronger growth next year off that low base. Now 0:02:24.440 --> 0:02:26.080 it's a little bit of a different story in the 0:02:26.120 --> 0:02:29.520 new home market. Sales are expected to be down from 0:02:29.639 --> 0:02:32.480 last year. Some of the higher frequency data we've seen 0:02:32.639 --> 0:02:35.720 on purchase application showed a little bit of improvement, so 0:02:35.720 --> 0:02:39.079 there are some conflicting signals. We've also been hovering in 0:02:39.440 --> 0:02:41.800 a range for a part of two years now. But 0:02:41.880 --> 0:02:44.280 what we do know is that builders are having to 0:02:44.280 --> 0:02:46.840 fight harder for every sale, and they continue to discount 0:02:46.880 --> 0:02:51.160 heavily to maintain their sales space. There's some evidence that 0:02:51.400 --> 0:02:54.560 these incentives that they've been using or having diminishing returns, 0:02:55.120 --> 0:02:57.760 they're just not as effective at a certain point. So 0:02:58.160 --> 0:03:00.600 you know, builders are turning the base price. We've heard 0:03:00.600 --> 0:03:02.480 that from Lennar and KB Home, so I think that's 0:03:02.520 --> 0:03:03.639 probably the path forward. 0:03:03.919 --> 0:03:06.799 Well, I think that's the biggest sticking point is the price. 0:03:06.880 --> 0:03:09.040 The price not only on new homes of course, but 0:03:09.080 --> 0:03:12.280 on existing homes. They are still rising. The growth is 0:03:12.320 --> 0:03:13.800 starting to slow though, correct. 0:03:13.960 --> 0:03:16.000 Yeah, that's a great point, and the resale market, prices 0:03:16.000 --> 0:03:18.920 are definitely still climbing. The latest data we've seen from 0:03:19.000 --> 0:03:21.960 Redfin showed about a two percent increase in mid July, 0:03:22.480 --> 0:03:25.560 but as you mentioned, prices are rising at a slower pace. 0:03:26.080 --> 0:03:28.400 Part of that reflects, you know, the obvious shift to 0:03:28.440 --> 0:03:30.639 more of a buyer's market where sellers are getting a 0:03:30.680 --> 0:03:33.960 little bit more realistic in terms of listing prices. So 0:03:34.040 --> 0:03:36.680 it has started to help the monthly payment on the margins, 0:03:37.160 --> 0:03:40.160 you know, like we've seen with inventories, the stories really 0:03:40.400 --> 0:03:42.880 at the local level where we have a lot of 0:03:42.880 --> 0:03:46.080 markets across the country that are actually already seeing price decline. 0:03:46.120 --> 0:03:50.000 So you know, you talk about markets in Florida, like Tampa, 0:03:50.120 --> 0:03:53.840 also Atlanta, al So it really varies by market, and 0:03:53.880 --> 0:03:56.200 it's going to be dependent on supply. You know. In 0:03:56.520 --> 0:03:59.160 the new home market, we've already seen prices come down 0:03:59.160 --> 0:04:03.200 more significantly and one of the reasons obviously builders have 0:04:03.200 --> 0:04:05.520 been aggressive in the use of incentives, but they're turning 0:04:05.560 --> 0:04:08.040 more to base price cuts as well. And if you 0:04:08.080 --> 0:04:12.000 think about, you know, how builders account for incentives, it's 0:04:12.040 --> 0:04:14.360 reflected as a reduction in the average selling price, so 0:04:14.880 --> 0:04:17.200 to the extent that inventory continues to puddle up, they 0:04:17.320 --> 0:04:19.800 keep their foot on the gas in terms of incentives. 0:04:20.120 --> 0:04:22.720 We think you see further net pricing pressure in the 0:04:22.760 --> 0:04:23.640 new home market as well. 0:04:23.839 --> 0:04:26.479 And those inventories of new homes the highest in almost 0:04:26.520 --> 0:04:27.760 two decades, right. 0:04:28.080 --> 0:04:31.200 Yeah, it's certainly an interesting dynamic right now. Remember over 0:04:31.240 --> 0:04:34.240 the last couple of years, the lack of for sale 0:04:34.320 --> 0:04:36.960 inventory in the existing home market had been a key 0:04:37.000 --> 0:04:40.760 part of the investment thesis for home building investors. You know, 0:04:40.880 --> 0:04:42.360 you had a lack of options, so it helped the 0:04:42.360 --> 0:04:44.960 funnel buyers over to the new home market, who were 0:04:45.000 --> 0:04:47.359 also able to help with the monthly payment. But you know, 0:04:47.400 --> 0:04:49.640 as you mentioned, that's that tailwind has turned into a 0:04:49.680 --> 0:04:52.200 headwind as more listings come onto the market and homes 0:04:52.200 --> 0:04:55.159 are sitting for longer. On the resale side of things, 0:04:55.240 --> 0:04:59.159 inventories are about thirty percent from last year, and you know, 0:04:59.160 --> 0:05:02.280 we're still ten percent below twenty nineteen. But looking at 0:05:02.279 --> 0:05:06.000 the national data, I think really blurs the picture. At 0:05:06.000 --> 0:05:09.760 this point. We now have ten states where resale supply 0:05:09.880 --> 0:05:12.719 is higher than it was in twenty nineteen, and a 0:05:12.760 --> 0:05:14.960 lot of that's in some important markets for the builders, 0:05:15.000 --> 0:05:19.480 think of Florida, Texas, markets out west like Colorado and 0:05:19.520 --> 0:05:22.520 Arizona certainly a big risk out there, And as you mentioned, 0:05:22.560 --> 0:05:25.000 it's not just resale market, but it's also in the 0:05:25.040 --> 0:05:29.320 new home market where completed inventories have really risen. And 0:05:29.360 --> 0:05:31.520 the reason for that is over the last couple of years, 0:05:31.520 --> 0:05:34.080 when there wasn't supply in the resale market, builders stepped 0:05:34.080 --> 0:05:36.600 in to fill that void, so they got more aggressive 0:05:36.600 --> 0:05:40.280 in their use of specs. Now that build an inventory 0:05:40.560 --> 0:05:42.600 was met with a rise in rates and a drop 0:05:42.600 --> 0:05:44.920 in demand. So now they're left sitting with all that 0:05:44.960 --> 0:05:48.120 inventory on their books. I think we ultimately that leads 0:05:48.200 --> 0:05:52.520 to is a pullback in production, so fewer housing starts. 0:05:52.560 --> 0:05:55.000 We're starting to see it on the building from its side, 0:05:55.080 --> 0:05:57.120 so it's something that they're going to have to work 0:05:57.160 --> 0:05:59.600 through before they start to put more more units in 0:05:59.640 --> 0:06:00.760 the got. 0:06:00.640 --> 0:06:01.880 To clear out that inventory. 0:06:02.760 --> 0:06:05.679 Let's talk about interest rates, So you just mentioned still 0:06:06.000 --> 0:06:10.000 stubbornly near seven percent. You know, that's probably why mortgage 0:06:10.000 --> 0:06:12.880 applications just last week took a tumble down ten percent. 0:06:13.440 --> 0:06:16.000 Now the Fed meets again about ten days from now, 0:06:16.360 --> 0:06:18.840 no indication the Central Bank is ready to lower those 0:06:18.839 --> 0:06:22.440 benchmark lending rates. So how big a concern are rates 0:06:22.520 --> 0:06:23.400 to the housing market. 0:06:23.480 --> 0:06:26.400 Right now, We've talked about one piece, which is home prices, 0:06:26.400 --> 0:06:29.800 and the other important piece is obviously where the thirty 0:06:29.880 --> 0:06:33.160 year rate is. Right now, we're about six point eight percent. 0:06:33.200 --> 0:06:36.520 We had seen a little bit of improvement, but now 0:06:36.520 --> 0:06:40.719 maybe some concerns reigniting with inflation pushing things back up. 0:06:41.040 --> 0:06:43.920 I think one of the main issues with rates is 0:06:44.760 --> 0:06:48.120 not only the absolute level, but just the volatility. You know. 0:06:48.160 --> 0:06:49.800 I think if we could get rates into the low 0:06:49.880 --> 0:06:53.240 six high five percent range for more of an extended 0:06:53.240 --> 0:06:56.360 period of time, it gives you know, home shoppers a 0:06:56.360 --> 0:06:58.440 little bit more comfort of what their payment might be 0:06:58.480 --> 0:07:02.000 as they're going through the application process. So rates are 0:07:02.040 --> 0:07:04.640 certainly a very important piece of the puzzle. And you know, 0:07:04.760 --> 0:07:07.520 there's not a whole lot of indication that things are 0:07:07.520 --> 0:07:09.800 going to get significantly lower anytime soon. 0:07:10.000 --> 0:07:11.440 Oh boy, it's a lot to take. 0:07:11.480 --> 0:07:14.480 In June, existing home sales out on Wednesday, new home 0:07:14.560 --> 0:07:17.240 sales for that same month on Thursday. Our thanks to 0:07:17.360 --> 0:07:21.520 Drew Redding, Bloomberg Intelligence US home building analyst. We move 0:07:21.640 --> 0:07:24.760 now to earnings at Tesla. It's out with second quarter 0:07:24.800 --> 0:07:28.280 results this coming Wednesday. Has the ev maker bounced back 0:07:28.280 --> 0:07:32.000 from a troubling first quarter. What has CEO Elon Musk's 0:07:32.000 --> 0:07:34.440 renewed focus on the company meant after he left his 0:07:34.680 --> 0:07:38.760 Trump Administration cost cutting duties, and what will the pending 0:07:38.840 --> 0:07:41.760 rollback of clean energy tax credits mean for the company. 0:07:41.800 --> 0:07:44.640 For more on what to expect, we're joined by Steve Mann, 0:07:44.680 --> 0:07:50.080 Bloomberg Intelligence Global Autos and Industrials Research Manager. Well, Steve, 0:07:50.160 --> 0:07:53.080 thank you so much for joining us. After a disappointing 0:07:53.120 --> 0:07:56.280 first quarter results. Will there be good news in Tesla's 0:07:56.360 --> 0:07:58.280 upcoming second quarter report? 0:07:58.680 --> 0:08:02.040 Yeah, I think the vestor will be more focused on 0:08:02.200 --> 0:08:05.240 what Elon must is going to talk about in the 0:08:05.280 --> 0:08:08.600 remainder of the year and beyond. In terms of earnings, 0:08:08.640 --> 0:08:12.960 we actually expected to report in line with consensus, but 0:08:13.680 --> 0:08:16.560 a few things that are on investor's mind, like you know, 0:08:16.640 --> 0:08:20.080 the Robotaxi, like the new models that they're rolling out 0:08:20.120 --> 0:08:23.480 they're planning to roll out, and even Elon himself, you 0:08:23.480 --> 0:08:26.320 know he's tweeted a few things around politics. You know 0:08:26.520 --> 0:08:29.280 what does he thinking around that and how it's going 0:08:29.360 --> 0:08:30.280 to impact the company. 0:08:30.600 --> 0:08:32.920 Let's start with those models. Well, the Model three is 0:08:33.000 --> 0:08:35.720 still the bread and butter for revenue, right, But how 0:08:35.760 --> 0:08:40.040 about the revamped model Why Juniper Suv. What does that mean? 0:08:40.559 --> 0:08:44.320 The ramp up has been going fairly well. It probably 0:08:44.360 --> 0:08:47.959 disappointed some investors that they didn't ramp up as fast 0:08:47.960 --> 0:08:50.880 as they thought, but it seems like the second quarter 0:08:51.320 --> 0:08:55.480 it came in nicely. Is some initial data on China sales, 0:08:55.520 --> 0:08:58.840 which is right now is probably like close to forty 0:08:58.880 --> 0:09:02.360 to fifty percent of their sales now. They're also planning 0:09:02.400 --> 0:09:05.720 to launch an extended version, a longer version of the 0:09:05.760 --> 0:09:08.480 Model Y in China, and I think that's going to 0:09:08.559 --> 0:09:11.960 resonate with the clients over there fairly well. 0:09:12.400 --> 0:09:15.560 How does it compete against the byds and the Cherries 0:09:15.640 --> 0:09:19.400 and the other very very low cost Chinese rivals. 0:09:19.880 --> 0:09:24.360 Yeah, it's tough. Launching FSD full self driving in China 0:09:24.520 --> 0:09:29.360 earlier this year will help, But BYD did cut prices 0:09:29.480 --> 0:09:32.520 quite a bit early in the year by a magnitude 0:09:32.559 --> 0:09:36.360 of thirty percent, and Tesla it doesn't want to play 0:09:36.440 --> 0:09:40.080 in that low cost, low price market. I think they're 0:09:40.120 --> 0:09:43.360 going to be medium price to high price market, and 0:09:43.720 --> 0:09:47.920 I think launching the extended version will actually help drive 0:09:48.000 --> 0:09:51.280 sales for the company over there into next year. 0:09:51.600 --> 0:09:53.920 Now, last month you mentioned this elon Musk rolled out 0:09:53.920 --> 0:09:57.839 as long delayed robotaxi unit in Austin, Texas. How far 0:09:57.880 --> 0:09:59.760 away is that service really for making any kind of 0:10:00.280 --> 0:10:00.840 on the company. 0:10:01.280 --> 0:10:04.200 It's a pretty exciting development. He's been talking about it 0:10:04.240 --> 0:10:08.120 for a while. It's it's finally here. It's it's still 0:10:08.120 --> 0:10:11.840 a slow go. I think he's very focused on safety, 0:10:12.320 --> 0:10:15.600 not a surprise, and and that's where he should be 0:10:15.600 --> 0:10:20.080 focused on to make sure the long term reputation of 0:10:20.120 --> 0:10:24.520 that business stays positive. And we think, you know, no 0:10:24.640 --> 0:10:27.640 meaningful revenue or profit in the next couple of years 0:10:28.280 --> 0:10:30.400 is probably going to come through in twenty twenty seven, 0:10:30.720 --> 0:10:34.320 so we haven't baked in that that business as a 0:10:34.320 --> 0:10:37.960 meaningful contributor to to the bottom line. But it's a 0:10:38.160 --> 0:10:41.200 it's a big market, so there's a number of players, 0:10:41.720 --> 0:10:45.480 Waymo being probably the largest at the moment. But I 0:10:45.520 --> 0:10:47.960 think the market's going to grow to a point where 0:10:47.960 --> 0:10:51.520 he's gonna be able to absorb a new competition like 0:10:51.640 --> 0:10:55.520 Tesla and even even Uber like. Uber announced that they're 0:10:55.559 --> 0:11:00.599 partnering with Lucid to develop automous vehicles for their robotaxi business. 0:11:01.080 --> 0:11:04.360 You mentioned something earlier, and that is safety concerns, especially 0:11:04.360 --> 0:11:07.360 with the full self driving. I mean they've had quite 0:11:07.400 --> 0:11:10.360 a few problems, a lot of litigation. 0:11:11.080 --> 0:11:13.800 I would say that's kind of normal mode of operation. 0:11:14.240 --> 0:11:18.320 I think there will be some safety concerns, there will 0:11:18.360 --> 0:11:23.360 be accidents. I think the investors should be aware. No 0:11:23.880 --> 0:11:28.400 engineering feat like this goes smoothly, so it's going to 0:11:28.640 --> 0:11:32.079 have some hiccups. So that's why it's very important for 0:11:32.640 --> 0:11:35.920 not just Tesla, but weimol to really hone in on 0:11:36.000 --> 0:11:41.280 safety and making sure the consumer, the users of ROBOTAXI, 0:11:41.720 --> 0:11:44.120 feels confident with this service. 0:11:44.520 --> 0:11:46.880 Now I want to talk about something I think that 0:11:46.920 --> 0:11:49.679 the shareholders are going to be very interested in what 0:11:49.760 --> 0:11:52.040 Elon Musk has to say, and that's the expiration of 0:11:52.080 --> 0:11:55.840 the seventy five hundred dollars EV tax credits. That deadline 0:11:55.880 --> 0:11:59.240 is coming soon September thirtieth. Now we know how Elon 0:11:59.360 --> 0:12:02.439 must react to that Trump bill that removes those clean energies, 0:12:02.480 --> 0:12:05.679 and it was not pretty. How will Tesla respond, How 0:12:05.679 --> 0:12:06.840 will the company respond? 0:12:07.760 --> 0:12:11.080 It's a double edgh sword. I think on the surface 0:12:11.400 --> 0:12:15.760 it is negative. It is negative because obviously they have 0:12:16.360 --> 0:12:19.160 generated quite a bit of revenue and profit from the 0:12:19.280 --> 0:12:23.240 selling these credits. If you look on the bottom line, 0:12:23.320 --> 0:12:26.120 it's minimal. It's probably like five percent, maybe less than 0:12:26.160 --> 0:12:30.280 five percent of profits. So it's going to have an 0:12:30.280 --> 0:12:35.240 impact on earnings definitely in the fourth quarter and well 0:12:35.280 --> 0:12:36.280 into the next year. 0:12:36.480 --> 0:12:37.720 Well, a lot to look forward to. 0:12:37.880 --> 0:12:40.920 Tesla Q two earnings out this Wednesday after Wall Street's 0:12:40.960 --> 0:12:44.960 closing bell Our thanks to Steve Man, Bloomberg Intelligence Global 0:12:45.040 --> 0:12:48.520 Autos and Industrials Research Manager, and coming up on Bloomberg 0:12:48.600 --> 0:12:51.280 day Break weekend, we'll look ahead to the next monetary 0:12:51.280 --> 0:12:55.160 policy decision from the European Central Bank. I'm Tom Busby 0:12:55.280 --> 0:13:08.920 and this is Bloomberg. This is Bloomberg day Break weekend, 0:13:08.920 --> 0:13:11.199 our global look ahead at the top stories for investors 0:13:11.200 --> 0:13:11.920 in the coming week. 0:13:12.120 --> 0:13:13.640 I'm Tom Buzzby in New York. 0:13:14.080 --> 0:13:16.520 Up later in our program, we look ahead as Japanese 0:13:16.520 --> 0:13:19.280 citizens head to the polls for an Upper House election. 0:13:19.480 --> 0:13:22.960 But first europe Central bankers will vote on their next 0:13:22.960 --> 0:13:25.640 move when it comes to interest rates. The Governing Council 0:13:25.720 --> 0:13:28.480 decision comes at a time of heightened trade tensions fueled 0:13:28.480 --> 0:13:31.400 by the back and forth with the US. How will 0:13:31.440 --> 0:13:34.640 policymakers respond For more Let's go to London and bring 0:13:34.679 --> 0:13:37.920 in Bloomberg daybreak. Euro banker Caroline hepger. 0:13:38.000 --> 0:13:43.480 Tom the Bundesbank president and DCB policymaker Joakim Nagel has 0:13:43.600 --> 0:13:47.000 urged caution over the European Central Bank's next move on 0:13:47.080 --> 0:13:50.840 interest rates, telling a newspaper that it requires a steady hand. 0:13:51.240 --> 0:13:55.560 His comments come as policymakers have cut rates eight times 0:13:55.800 --> 0:13:59.040 between June twenty twenty four and June twenty twenty five, 0:13:59.120 --> 0:14:01.920 down to two percent. Economies and markets are now betting 0:14:01.960 --> 0:14:05.319 on a pause in July. The final release of EU 0:14:05.480 --> 0:14:08.880 Area inflation for June also confirmed that the headline measure 0:14:09.240 --> 0:14:12.200 accelerated to two percent year on year from one point 0:14:12.320 --> 0:14:15.480 nine percent in the previous month, but still fairly well 0:14:15.480 --> 0:14:18.640 anchored in terms of inflation in Europe. So the focus 0:14:18.720 --> 0:14:22.040 is also going to be on the ECB September meeting 0:14:22.120 --> 0:14:26.160 when we get new ECB economic projections, and that may 0:14:26.200 --> 0:14:30.400 give officials more clarity on the economic backdrop. But with 0:14:30.560 --> 0:14:34.160 US President Donald Trump's on again, off again tariff policy 0:14:34.200 --> 0:14:38.240 clouding the outlook, Nagel says that the impact on inflation 0:14:38.480 --> 0:14:42.920 is extremely uncertain and in Europe, member states are urging 0:14:43.240 --> 0:14:46.920 the Council to do more to support the economy. French 0:14:46.920 --> 0:14:50.680 Premier frostwy Beiru said his country's facing the same challenges 0:14:50.720 --> 0:14:53.640 as the US, but without the strong dollar that he 0:14:53.800 --> 0:14:57.120 says gives the Federal Reserve the option to create money 0:14:57.160 --> 0:15:01.360 to fuel quote optimism in the economy. It's an issue, 0:15:01.400 --> 0:15:05.960 France's finance Minister Eric Lombard outlined, speaking to Primpaks and 0:15:06.160 --> 0:15:08.920 Edward's critique Cup and Mark Cardmore. 0:15:08.720 --> 0:15:12.280 France as an issue of a large public debt and 0:15:12.760 --> 0:15:17.840 two large public deficit, and we are tackling the issue, 0:15:17.960 --> 0:15:21.000 I believe very seriously. The plan is a plan of 0:15:21.480 --> 0:15:27.840 forty four billion euro of savings and revenue increases. Forty 0:15:27.840 --> 0:15:31.720 four billion euro that will bring our deficit below the 0:15:31.760 --> 0:15:36.080 five percent threshold next year to four point six percent, 0:15:36.440 --> 0:15:39.760 and we are aiming at a deficit below three percent 0:15:40.160 --> 0:15:43.600 in twenty twenty nine. The bulk of the plan is 0:15:43.640 --> 0:15:49.880 to cut public spending. There are thirty billion of savings 0:15:49.920 --> 0:15:54.040 of cuts in public spending, whether for the state of 0:15:54.040 --> 0:16:00.200 a social security, which is absolutely important but manageable. There 0:16:00.240 --> 0:16:03.960 will be ten percent of revenue increases and four billion 0:16:04.040 --> 0:16:07.400 more because French people will have to work more, two 0:16:07.560 --> 0:16:12.600 days more, because we will cut to making holiday next 0:16:12.680 --> 0:16:15.920 year and the years after. So it's a very easerious plan. 0:16:16.080 --> 0:16:18.320 Forty four billion euro okay. 0:16:18.040 --> 0:16:20.760 And you think that this is enough to reassure investors, 0:16:20.960 --> 0:16:24.240 What about getting the support of all of the lawmakers 0:16:24.240 --> 0:16:27.360 in France, because that seems to be very difficult. You'll 0:16:27.400 --> 0:16:31.360 need the support of a number of parties. Which parties 0:16:31.400 --> 0:16:34.200 are you going to talk to to try and get support? 0:16:34.200 --> 0:16:37.600 Here are the socialists at the top of your list, 0:16:37.640 --> 0:16:39.800 because I think the far right and the far left 0:16:39.840 --> 0:16:43.040 have already found serious problems with this budget plan. 0:16:43.640 --> 0:16:43.920 Well. 0:16:43.960 --> 0:16:46.840 For first, let me remind you that with the same 0:16:46.920 --> 0:16:50.280 parliament we had an approval for the twenty twenty five 0:16:50.320 --> 0:16:54.200 budget which is currently being implemented, which is already a 0:16:54.240 --> 0:16:58.160 budget which is a very serious budget bringing down the deficit. 0:16:58.640 --> 0:17:01.240 We will talk to all parties because it is an 0:17:01.240 --> 0:17:04.160 issue of national interest. We believe it is the best 0:17:04.240 --> 0:17:07.800 interest of France to put its public finance right before 0:17:07.840 --> 0:17:11.399 the next presidential election of twenty twenty seven, and we 0:17:11.440 --> 0:17:15.200 will talk to all parties. Having said that, the first 0:17:15.200 --> 0:17:18.560 reaction of opposition parties is quite normal because it's a 0:17:18.640 --> 0:17:22.120 huge plan. So the first reaction is negative. We will explain, 0:17:22.280 --> 0:17:26.639 we will discuss we will improve the plan and obviously 0:17:26.760 --> 0:17:32.000 there are probably more possibilities to reach an approval with 0:17:32.400 --> 0:17:36.360 the Socialist Party. They are still a party in the opposition, 0:17:36.960 --> 0:17:39.879 but they allowed the budget to pass for twenty twenty 0:17:39.920 --> 0:17:44.400 five and if we have a fair discussion with them, 0:17:44.440 --> 0:17:47.240 and we will have a fair discussion with the Socialist Party, 0:17:47.560 --> 0:17:51.800 hopefully they can support the government for the budget. But 0:17:52.040 --> 0:17:54.919 again we will talk to all parties and we hope 0:17:54.960 --> 0:17:58.720 to have wider support because again it's an issue of 0:17:58.840 --> 0:17:59.639 national interest. 0:18:01.520 --> 0:18:03.960 Eric, good Morning. Part of the plan is to raise 0:18:04.000 --> 0:18:09.040 revenues through selling selling down stakes in companies without losing influence. Apparently, 0:18:09.880 --> 0:18:12.040 what kind of sectors do you expect to see those 0:18:12.119 --> 0:18:14.399 kind of revenue gains? Are there any sectors off limits 0:18:14.440 --> 0:18:17.160 for selling down stakes and how much do you expect 0:18:17.200 --> 0:18:17.800 to raise through that? 0:18:19.840 --> 0:18:23.680 Well, obviously, you know the French state owns many companies, 0:18:23.880 --> 0:18:27.240 some of which are listed, so I won't be very 0:18:27.240 --> 0:18:32.879 talkative on that point. So we are working on it. Obviously, 0:18:33.200 --> 0:18:37.600 the large public sector companies like La post or like 0:18:37.760 --> 0:18:41.120 EEDF are not on the plane, but there are many 0:18:41.160 --> 0:18:44.040 options and we will work on it ultimately. 0:18:44.640 --> 0:18:48.639 The investor community, I think the initial reaction is not 0:18:49.040 --> 0:18:52.520 a lot of faith that the trajectory of this budget 0:18:52.520 --> 0:18:56.359 plan and the governments is much better than it was, 0:18:56.760 --> 0:18:58.440 you know, six months or a year ago. And I 0:18:58.480 --> 0:19:00.800 think there's a lot of worry about the government again 0:19:01.400 --> 0:19:03.879 Will will kind of struggle to get the budget passed 0:19:03.880 --> 0:19:06.120 and will kind of suffer on that. But we saw 0:19:06.200 --> 0:19:08.919 last year the investors move on. Are you more worried 0:19:09.200 --> 0:19:11.159 about how the investor reaction this time or do you 0:19:11.280 --> 0:19:13.199 not think that we're yet at a critical period for 0:19:13.280 --> 0:19:15.680 investor pressure to cand of really force something to get done. 0:19:16.440 --> 0:19:18.520 I'm not worried, but thank you to give me not 0:19:18.560 --> 0:19:21.479 part need to talk to them. I want first to 0:19:21.520 --> 0:19:25.359 reassure them on the twenty twenty five budget execution, because 0:19:25.359 --> 0:19:29.040 you know, public finance is something which is very operasional. 0:19:29.400 --> 0:19:33.040 We put a budget for this year cutting the deficit 0:19:33.200 --> 0:19:37.520 to five point four percent, and we follow the budget 0:19:37.600 --> 0:19:42.000 execution on a monthly basis. I gather all minister's General 0:19:42.040 --> 0:19:45.879 secretary every month, and I can tell you beginning of July, 0:19:46.119 --> 0:19:48.480 a middle of July, while we are today that we 0:19:48.520 --> 0:19:52.800 are totally online in the review of spending. We are 0:19:52.800 --> 0:19:56.040 on plan on spending after I must say ten billion 0:19:56.119 --> 0:19:58.760 cuts that we did in the first quarter in the 0:19:58.800 --> 0:20:02.320 second quarter, but after ooskuts we are totally on NINER 0:20:02.960 --> 0:20:07.360 and on the revenue where the vty income tax, corporate 0:20:07.400 --> 0:20:10.040 tax we are also online. So we are monitoring the 0:20:10.080 --> 0:20:13.119 execution of twenty twenty five very closely. We have a 0:20:13.240 --> 0:20:17.119 very ambitious target for twenty twenty six. I'm confident it 0:20:17.160 --> 0:20:20.280 will be approved, it will be executed, and that France 0:20:20.520 --> 0:20:23.800 will put itself back on track, which is absolutely key 0:20:24.080 --> 0:20:26.320 in order to play our role in Europe and. 0:20:26.400 --> 0:20:27.000 In the world. 0:20:27.760 --> 0:20:30.800 That was the French Finance Minister Eric Lombard there speaking 0:20:30.800 --> 0:20:33.960 to Blombergs and Edward's critique cup To and Mark Cudmore. 0:20:34.480 --> 0:20:37.400 The plight of France and other European countries in similar 0:20:37.400 --> 0:20:40.639 positions will be on the minds of policymakers as they 0:20:40.680 --> 0:20:43.879 make a decision about the ECB's immediate rate path in 0:20:43.920 --> 0:20:47.160 the days ahead. It's something I've been discussing with Bloomberg's 0:20:47.160 --> 0:20:53.320 ECB reporter Jana Randall. Yana, France's situation is one all 0:20:53.400 --> 0:20:57.960 too familiar to EU member states. High debt and stalling growth. 0:20:58.359 --> 0:21:00.879 How can the EU mitigate. 0:21:01.000 --> 0:21:05.840 Well, Mostly it's France's responsibility right, passing a budget that 0:21:06.000 --> 0:21:10.240 puts the government on a path towards sustainable public finances, 0:21:10.640 --> 0:21:13.320 and of course it has presented plans on how to 0:21:13.440 --> 0:21:17.560 narrow the deficit next year, which mainly look at austerity 0:21:17.600 --> 0:21:21.920 measures including freezing welfare pensions as well and acting to 0:21:22.080 --> 0:21:25.440 public holidays. As a matter of fact, whether that will 0:21:25.480 --> 0:21:29.000 do the trick, whether that'll fly we of course I'll 0:21:29.119 --> 0:21:31.440 remember what happened in France at the start of the year. 0:21:31.920 --> 0:21:35.240 We won't know until September because that's when lawmakers come 0:21:35.320 --> 0:21:39.760 back and will properly engage and vote on This debate 0:21:39.880 --> 0:21:42.960 surely will also be colored by the outcome or the 0:21:42.960 --> 0:21:48.080 state of trade negotiations, because that affects growth in France 0:21:48.080 --> 0:21:50.680 but also across the region. And that's of course where 0:21:50.720 --> 0:21:53.080 the EU then comes in, because it's up to the 0:21:53.119 --> 0:21:56.280 EU to engage with the US on trade. Good deal 0:21:56.320 --> 0:22:00.560 has the potential to live confidence, thus demand investment and spending, 0:22:00.640 --> 0:22:04.760 consumer spending across Frants but also across the region. And yeah, 0:22:04.800 --> 0:22:06.240 I don't need to tell you what a bad deal 0:22:06.640 --> 0:22:07.080 will do. 0:22:07.600 --> 0:22:10.239 But it's the French Prime minister writer to ask for 0:22:10.359 --> 0:22:12.320 interest rate cuts in the near future. 0:22:12.400 --> 0:22:16.840 Then I find it always difficult when politicians tell central 0:22:16.880 --> 0:22:21.639