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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This says the Bloomberg Daybreak Eroate podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Wednesday, the

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Speaker 2: twenty first of August in London. I'm Stephen Carroll.

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Speaker 1: And I'm Francin Laqwall. Coming up today, Bond traders take

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Speaker 1: on a historic level of risk as they ramp up

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Speaker 1: bets on radcuts from the federal reserve.

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Speaker 2: Barack Obama takes to the stage of the Democratic National

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Speaker 2: Convention as Harris's candidacy stirs hopes for a peat of

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Speaker 2: two thousand and eight.

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Speaker 1: Plus no deal. America's top diplomat leaves the Middle East

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Speaker 1: without a ceasefire agreement as Hamas and Israel failed to

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Speaker 1: agree on the latest proposal.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: Bon traders are taking on a record amount of risk

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Speaker 1: on federal reserve rate cut bets now, the number of

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Speaker 1: leverage positions and treasury futures sits at an all time high.

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Speaker 1: Ahead of the Central Bank Symposium in Jackson Hall, Wyoming

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Speaker 1: this week. At the event, the Fed cher J. Powell

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Speaker 1: is set to give further insight into monetary policy paths

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Speaker 1: as expectations of a treasury market rally grown. Vanessa McMichael,

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Speaker 1: head of Corporate and Public Entity Strategy at Wells Fargo,

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Speaker 1: says investors are convinced lower borring costs are imminent.

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Speaker 3: It seems like our corporate investors have now accepted that

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Speaker 3: we are very close to the first FED funds cut.

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Speaker 3: We're actually we're seeing clients accept this, and we've spoken

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Speaker 3: to a number of clients over the past few months,

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Speaker 3: corporate clients where we were having this conversation and they

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Speaker 3: finally have implemented like a bond ladder, and this is

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Speaker 3: a conversation we've been having with them over the past year.

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Speaker 1: Well Fargo Vanessa McMichael. There now, traders have been betting

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Speaker 1: on a wide variety of Fed scenarios that could play

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Speaker 1: out this year. Currently about thirty basis points of cuts

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Speaker 1: our price for next month.

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Speaker 2: Barack and Michelle Obama have delivered speech as painting Vice

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Speaker 2: President Kamala Harris as the heir of their political legacy.

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Speaker 2: In speeches to the Democratic National Convention in Chicago, both

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Speaker 2: pivoted between blistering critiques of Republican nominee Donald Trump and

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Speaker 2: calls for unity Although Harris has a slim lead in

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Speaker 2: national polls, Barack Obama made clear that he believes the

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Speaker 2: party needs to reach out beyond its base. We need

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Speaker 2: to remember that we've.

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Speaker 1: All got our blind spots and contradictions and prejudices, and

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Speaker 1: that if we want to.

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Speaker 4: Win over those who aren't yet ready to support our candidates, we.

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Speaker 5: Need to listen to their concerns and maybe learn something

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Speaker 5: in the process.

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Speaker 2: While Barack Obama drew parallels to his own historic victory,

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Speaker 2: the former First Lady drew rapturous applause when she took

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Speaker 2: aim at Trump's promise to deliver more quote black jobs.

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Speaker 2: Who's gonna tell him?

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Speaker 6: Who's gonna tell him that the job he's currently seeking

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Speaker 6: might just be one of those black jobs.

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Speaker 2: Harris's team is hoping to rebuild the multi ethnic, multi

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Speaker 2: generational coalition that elected Obama twice, turning out black voters

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Speaker 2: and drawing support from suburban, white and independent voters.

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Speaker 1: The British tech entrepreneur Mike Linch is one of six

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Speaker 1: people feared dead after a storm sank the luxury yacht

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Speaker 1: they were on off the coast of Sicily. Morgan Stanley

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Speaker 1: International Chairman Jonathan Bloomer is also among those missing. Clinch's

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Speaker 1: friend David Tabaza says it's a distressing time for friends

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Speaker 1: and family of the businessmen.

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Speaker 7: His integrity is intelligence, his sense of fun meant all.

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Speaker 7: We've all got a very soft spot for this man.

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Speaker 7: He's a legend and the somebody that's been through his

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Speaker 7: last twelve years. I'm just heartbroken for him and his family,

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Speaker 7: and I I hope there's a miracle about to a caer.

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Speaker 1: David Tabizel, co founder of the software company Autonomy, with

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Speaker 1: Mike Linch. The group on board the yacht were celebrating

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Speaker 1: Lynch's recent acquittal from fraud charges associated with the twenty

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Speaker 1: eleven sale of the firm to Hewlett Packard. While the

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Speaker 1: Italian Coastguard says it will continue the search of the

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Speaker 1: sunken wreckage, six other passengers and nine crew members have

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Speaker 1: been rescued.

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Speaker 2: The European Union is planning to introduce a nine percent

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Speaker 2: tariff on tassela is imported from China, its latest response

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Speaker 2: to Beijing's ev subsidies. That's lower than the double digit

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Speaker 2: levees on Chinese manufacturers like saic Or BYD. Auto Investment

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Speaker 2: grower Bill Russo says there's a clear message behind the

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Speaker 2: different tariff levels.

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Speaker 4: What the EU is signaling is they don't want made

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Speaker 4: in China at sports. They would rather have the Chinese

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Speaker 4: supply chain and the Chinese capacities moved into the European Union. Tesla,

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Speaker 4: you've got a factory in Berlin, why not build your

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Speaker 4: cars here? B to id, You're going to build a

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Speaker 4: factory in Hungary. You like that, you get a lower

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Speaker 4: speeding ticket. So it's actually an invitation for Chinese companies

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Speaker 4: to bring their capacities closer to the European Union.

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Speaker 2: That's the CEO of Automobility Bill Russo, speaking to Bloomberg.

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Speaker 2: Officials say the relative good news for Tesla is because

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Speaker 2: the car giant was judged to be benefiting less from

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Speaker 2: subsidies than other firms. China claims the measures are protectionist

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Speaker 2: and threatened to retaliate.

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Speaker 1: The UK government is pledging funds and staff for a

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Speaker 1: migration crackdown after the far right riots earlier this summer.

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Speaker 1: The plan aims to tackle migrant workers being employed illegally

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Speaker 1: and people smuggling gangs, all Bloomberg extremes. Wilcock has more.

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Speaker 8: Home, Secretary of ek Cooper has set a target she

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Speaker 8: wants to deport more illegal migrants in the next six

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Speaker 8: months than the previous government managed in any six months

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Speaker 8: since twenty eighteen. That means nearly fifteen thousand people. It's

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Speaker 8: a key focus of the new government, which wants to

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Speaker 8: prove it can do better than Richi's next for around

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Speaker 8: the scheme and sees immigration as a key test to

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Speaker 8: win over voters. But migration has been a problem successive

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Speaker 8: British governments have promised and failed to fix. In London,

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Speaker 8: James Wilcock Bloomberg Radio.

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Speaker 2: The UK's new Transport Secretary says she plans to support

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Speaker 2: local authorities who want to introduce twenty mile per hour

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Speaker 2: speed zones, cycle lanes and low traffic neighborhoods. Louis Haig

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Speaker 2: says she wants to end the culture wars over transport policy,

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Speaker 2: after the Conservatives had sought to paint laborers waging a

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Speaker 2: war on motorists. While evidence suggests the twenty mile par

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Speaker 2: arizones reduce accidents, polling fines, they are deeply unpopular now

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Speaker 2: at a moment, we'll bring you more on how bond

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Speaker 2: traders are gearing up for Jay Powell's comments at Jackson

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Speaker 2: Hole later this week, plus the latest on the ceasefire

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Speaker 2: talks in the Middle East. But found another story that

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Speaker 2: caught my eye this morning about sending high school students

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Speaker 2: looking for a high school student in finance essentially is

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Speaker 2: the story. These are seminars in Hong Kong being offered

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Speaker 2: to fifteen to eighteen year olds to give them a

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Speaker 2: taste of what working in finance is like.

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Speaker 1: Yeah, join us at five amsber It's a great story.

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Speaker 1: Our Calighuchen has actually been writing about these events. We're

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Speaker 1: fifteen to eighteen year olds undergo two days of free

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Speaker 1: training which ends with a simulation where they're managing a

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Speaker 1: twenty million dollar proper.

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Speaker 2: That sounds quite fun, but actually if you read it,

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Speaker 2: it sounds quite stressful. So I mean because they're essentially

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Speaker 2: being given the full pressure of what it's like to

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Speaker 2: do these jobs as well. It's part of the war

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Speaker 2: for talent. Of course, the big financises are looking for

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Speaker 2: to try and get those you know, young bright minds

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Speaker 2: as early as possible. They normally these seminars are normally

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Speaker 2: run for university students, so the idea is to try

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Speaker 2: and get high schoolers and first give them a taste

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Speaker 2: of it and then see if they want to go

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Speaker 2: on to the later courses, which are the ones that

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Speaker 2: are meant to get them into the internships in in

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Speaker 2: the Morgan Stanleys or the Citadels. But it's a great

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Speaker 2: piece because it speaks to some of the young people

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Speaker 2: who are actually doing them and their ambitions for it

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Speaker 2: as well. And there's some interesting stuff in there as

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Speaker 2: well about kind of while also showing the excitement of it,

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Speaker 2: showing the pressure that's involved in how you need to

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Speaker 2: love it if you're going to do it.

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Speaker 1: Yeah, I don't. Do you want to go into a

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Speaker 1: job knowing that there's a lot of pressure? Do you

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Speaker 1: want to build it up? I mean, I know I'm

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Speaker 1: getting all fool out, but.

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Speaker 2: This is the excitement excitement slash pressure dynamic, right, It's

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Speaker 2: you know, part of what makes a job exciting is

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Speaker 2: if you have to do things quickly.

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Speaker 5: Says Bran and I.

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Speaker 2: Looking at each other sheepishly this hour of the morning

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Speaker 2: early that there.

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Speaker 1: Yeah, exactly, but it's good. I mean, it's a word

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Speaker 1: for talent. But also you need to recruit the right people.

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Speaker 1: So I guess giving him a heads up of how hard.

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Speaker 1: It can be exactly the only way that you then

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Speaker 1: retain people will stay with you for twenty years.

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Speaker 2: True, and get people that are really interested in it

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Speaker 2: as well. Let's bring you more though now on how

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Speaker 2: bond traders are positioning ahead of fair trades around power.

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Speaker 2: Speaking at Jackson Hole later this week our am Life Structures,

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Speaker 2: Mark Cranfield joins us from more and morning to you. Mark,

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Speaker 2: can you talk us through the shifts then that we've

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Speaker 2: seen in risk taking by bond traders. What are they

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Speaker 2: batting on and what's the scale involved?

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Speaker 9: Yes, good morning, Huge is the scale. It's particularly leverage traders.

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Speaker 9: So there's weekly data which comes out from American exchanges

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Speaker 9: and it shows that positioning has never been bigger than

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Speaker 9: this in the treasury market now. It's not just because

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Speaker 9: people are getting confident that the Federal Reserve is moving

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Speaker 9: close towards its first interest rate cut in this cycle.

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Speaker 9: That's part of the story, but also within the treasury curve,

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Speaker 9: there's a lot of movement going on between different parts

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Speaker 9: of the curve, between the short end, the medium and

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Speaker 9: the longer end of the curve. So we still have

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Speaker 9: this inversion between the two years and ten years, which

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Speaker 9: has been in place for almost two years now. But

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Speaker 9: then there's also the strange king where the thirty year

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Speaker 9: yields are much higher are in the tens or the

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Speaker 9: five year sector of the curve. So traders' professional traders

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Speaker 9: that is, who have a lot more information and are

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Speaker 9: willing to bet a lot bigger numbers. They're willing to

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Speaker 9: take positions against the short end versus the long end

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Speaker 9: and different parts, so movements within that. Even if the

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Speaker 9: Federal Reserve didn't actually lower interest rates as quickly as

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Speaker 9: they expected, there will still be shifts between the short

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Speaker 9: and the ending of the curve which they can still

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Speaker 9: make money from. So that partly explains why positioning is

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Speaker 9: so big and probably will stay big for quite a

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Speaker 9: while yet.

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Speaker 1: Yeah, the problem with that is that and good morning,

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Speaker 1: is that it can be on the wrong side of

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Speaker 1: the bets. You know, Jepaw in the past has given

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Speaker 1: huge policy things that Jack and holl Or he hasn't

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Speaker 1: said much at all. Is there a worry that actually

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Speaker 1: treasuries will not move in the direction they're hoping?

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Speaker 9: There is certainly a risk that we see a sudden

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Speaker 9: backup in yields after Dering Power speaks because he he

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Speaker 9: might be reluctant to endorse all of the interest rate

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Speaker 9: cuts which are priced into the curve. So if you

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Speaker 9: look at the derivatives curve in America, they're pretty much

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Speaker 9: expecting the Federal Reserve to begin lowering rates in September,

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Speaker 9: but then to continue pretty much through the middle of

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Speaker 9: next year. Now, mister Power might be uncomfortable with that

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Speaker 9: because he has said many times the Fed is data dependent,

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Speaker 9: and of course he doesn't know how all the data

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Speaker 9: is going to play out for the next year. So

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Speaker 9: will he may well get people ready for the fact

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Speaker 9: that the yes, that we're going to make our first

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Speaker 9: move in September, but he will try and get people

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Speaker 9: to think, well, it's not certain that we are going

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Speaker 9: to follow up immediately with another rate cut and continue

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Speaker 9: to do so for some time. He'll probably want to

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Speaker 9: put some doubt into people's mind. Now, given how much

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Speaker 9: is already at stake, how much people have invested, there

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Speaker 9: is certainly room for Treasury reels to jump up a

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Speaker 9: little bit higher, at least for a while after he speaks,

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Speaker 9: But then, of course the data will start to kick

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Speaker 9: in again. We still have one more very important employment report,

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Speaker 9: and we have another inflation report to come before the

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Speaker 9: fad actually meet in September.

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Speaker 2: Yeah, there's plenty to come between now and then. As

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Speaker 2: you say, lots can happen. A week is a long

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Speaker 2: time in the markets, as we know. Mark, thank you

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Speaker 2: very much for joining us. That's our m live strategus.

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Speaker 2: Mark Cranfield joining us now as we're looking ahead those

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Speaker 2: speeches at Jackson Hole. But also, of course another central banker,

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Speaker 2: the banker Japan Governor Kazuoidias, speaking to the Japanese parliament

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Speaker 2: on Friday as well. So plenty for traders to digest

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Speaker 2: on that front. Two, let's turn next to the Middle East,

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Speaker 2: where the US Secretary of State Anthony Blincoln has left

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Speaker 2: the region with few visible signs that has ceased. FI

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Speaker 2: dealer is imminent, he says, ISRAELA signed up to a

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Speaker 2: so called bridging agreement, and he hopes and expects that

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Speaker 2: Humas will do the same. Our head of Middle Eastern

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Speaker 2: North Africa coverage, Stuart Livings to Wallace, joins us now

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Speaker 2: for more, Stuart, thanks for joining us. Blincoln spent yesterday

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Speaker 2: meeting Egyptian and Katari officials. No signs of further progress

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Speaker 2: from there, can we expect any now.

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Speaker 5: No, I mean the visit didn't go desperately well, I mean,

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Speaker 5: nor is it a complete as uster. I don't who

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Speaker 5: say that, but just in terms of let's start with Egypt,

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Speaker 5: I mean, yes, he did meet some senior officials. Didn't

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Speaker 5: feel like anything much came out of that, so there

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Speaker 5: was certainly no progress on that front. And Egypt had

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Speaker 5: already in any case been involved in the sort of

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Speaker 5: this bridging agreement or the formulation of it. In any case.

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Speaker 5: He then flew whatever it was three and a half

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Speaker 5: hours to Katar, and most meetings that were on the

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Speaker 5: schedule never really happened, So he was supposed to meet

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Speaker 5: the near that didn't happen. I think they're going to

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Speaker 5: try and do something by phone in the next couple

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Speaker 5: of days, and in fact, I don't think he actually

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Speaker 5: ever left the airport, so that was not an enormous success.

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Speaker 5: But again, Katar had been deeply involved as one of

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Speaker 5: the mediators, so no great surprise that there was no

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Speaker 5: progress there. I think what was the most frustrating about

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Speaker 5: the visit from the US side was Metayaho in that

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Speaker 5: it felt like he had signed up to this bridging agreement,

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Speaker 5: but then said some comments publicly that Billy irritated a

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Speaker 5: lot of people, and it did feel like he was

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Speaker 5: saying one thing to one audience, another thing to another audience,

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Speaker 5: and then a third thing to another audience. So it's

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Speaker 5: very hard to sort of pin down what exactly his

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Speaker 5: position is. And then on the her math side, it

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Speaker 5: does feel like there's some flexibility there, but again it's

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Speaker 5: not entirely clear what they're objecting to and to what

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Speaker 5: extent that might scuffer a deal.

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Speaker 1: Suah, good morning. We also heard, I think about fifteen

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Speaker 1: twenty minutes ago, that Iran is said to be calibrating

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Speaker 1: an Israel response to avoid impacting the ceasefire. I don't

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Speaker 1: really know how to take that well.

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Speaker 5: I mean, I think there's a couple of things going

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Speaker 5: on here. So I mean, the first and foremost, you

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Speaker 5: can argue that by holding off, that is to some

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Speaker 5: extent psychological warfare, you know, and the idea being that

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Speaker 5: if you keep threatening an attack, then your opponent is

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Speaker 5: going to feel increasingly nervous. Now, I think the reality

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Speaker 5: on the grand in Israel, or at least our reporting,

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Speaker 5: showed that actually people I mean, I wouldn't say they're

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Speaker 5: not bothered. Clearly they are, but there's no sense of

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Speaker 5: panic with an Israel. Yes, some additional preparations are being

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Speaker 5: made for a possible retaliatory attack, but I think there's

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Speaker 5: also great confidence both in their own defenses and the

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Speaker 5: fact that the US has been moving so much weaponry

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Speaker 5: into the region to head off any potential attack. I

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Speaker 5: think the second thing to think about in terms of

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Speaker 5: how Iran's calibrating this is what might it get from

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Speaker 5: global powers if it does hold off completely, and what

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Speaker 5: might it achieve by holding off an attack, because the

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Speaker 5: risk is always as we saw in April when it

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Speaker 5: sent this barrage at about whatever it was, three hundred

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Speaker 5: missiles and drones across directly to Israel. The more or

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Speaker 5: less were knocked out the sky. So the risk on

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Speaker 5: one side is that you end up looking we have

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Speaker 5: many missiles and drones across number two, one of them

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Speaker 5: goes off target and hit something really, really bad, so

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Speaker 5: civilian population something along those lines, and then Israel is

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Speaker 5: forced in terms to escalate. And Iran, if nothing else,

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Speaker 5: has always been very careful of out trying very hard

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Speaker 5: not to escalate things because there's not a lot in

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Speaker 5: it for Aram, for a full scale Wark Stuart.

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Speaker 2: Of course, as all of this is happening, there are

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Speaker 2: still more is rarely strikes on Gaza, more death reported

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Speaker 2: yesterday as well. What do we know about the situation

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Speaker 2: there now?

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Speaker 5: I mean, I think it continues to be a very

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Speaker 5: very difficult situation. So we've basically effectively moved into a

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Speaker 5: new phase of the war, and that happened some time ago.

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Speaker 5: So from the sort of the full scale, the sort

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Speaker 5: that we saw in the early months, you know, moving

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Speaker 5: further south down towards the Rafa crossing of Egypt, and

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Speaker 5: now it feels much more sort of a more targeted

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Speaker 5: response to outbreaks of violence. So you've seen, for instance,

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Speaker 5: this Operation Harmen Newness in the center of Kaza. That

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Speaker 5: again is you know, is a much more targeted series

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Speaker 5: of attacks. However, you can't understate the devastation that takes

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Speaker 5: place in Gaza and what has taken place Gaza. I'm

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Speaker 5: golurage everyone to go and read the very nice and

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Speaker 5: large piece that we did over the weekend showing the

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Speaker 5: extent of the damage and more importantly, what it's going

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Speaker 5: to take and how long it's going to take to

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Speaker 5: try and repair that. When hopefully the war is over.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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