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

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Speaker 2: They say's the Bloomberg Daybreak Here podcast, available every morning

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

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Speaker 2: third of June in London. I'm Stephen Carroll.

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Speaker 3: And I'm Lizzie Berdon.

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Speaker 1: Coming up today, The OECD slashes global growth forecasts, with

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Speaker 1: the US expected to be hit hardest.

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Speaker 2: Heard Fielders triggers a snap election in the Netherlands as

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Speaker 2: he pulls his far right Freedom Party out of the

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Speaker 2: ruling coalition.

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Speaker 1: Plus a deal goes down the Drain. KKR pulls out

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Speaker 1: of Thames Water's equity raising process, in a blow for

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Speaker 1: the struggling British utility.

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Speaker 4: Let's start with the round up of our top stories.

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Speaker 1: COOECD has slashed its growth forecasts due to US President

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Speaker 1: Trump's trade policies. The organization expects global economic expansion to

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Speaker 1: slow to two point nine percent this year, down from

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Speaker 1: the three point one percent it was expecting just three

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Speaker 1: months ago. Meanwhile, it sees US growth tumbling to one

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Speaker 1: point six percent, down from the two point two percent

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Speaker 1: it was full casting in March. Our senior editor Bill

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Speaker 1: Ferries says, there's one word that's driving sentiment lower.

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Speaker 5: Uncertainty takes it all. There is a wild amount of

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Speaker 5: uncertainty in global economic forecast right now, given the uncertain

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Speaker 5: trade tariff battles going on. We're in that ninety day

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Speaker 5: pause from the US reciprocal tariffs. We had US China

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Speaker 5: tariffs jump to one hundred and forty five percent before

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Speaker 5: falling down into the double digits again. Even in double digits,

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Speaker 5: they would be far higher than historical levels.

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Speaker 1: Bill Ferries speaking there, The OECD published its forecast just

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Speaker 1: as its members ministers convened in Paris for an annual meeting,

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Speaker 1: with top representatives from the US, EU and China all

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Speaker 1: scheduled to attend.

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Speaker 6: Well.

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Speaker 2: I mean while the OCD says that the UK Chancellor

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Speaker 2: Rachel Reeves will expose the economy to significant downside risk

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Speaker 2: if she doesn't create more fiscal headroom. The organization predicted

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Speaker 2: Britain will be the second fastest growing economy in the

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Speaker 2: G seven, but warrant the state of the public finances

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Speaker 2: was a signal downside risk. The Chancellor is under pressure

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Speaker 2: from her party to spend more on welfare and public

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Speaker 2: sector wage rises. The headroom Reeves has left against her

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Speaker 2: target is so tight that even small moves in borrowing

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Speaker 2: costs can erase it well.

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Speaker 1: The weakening economic outlook comes as the White House said

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Speaker 1: that President Donald Trump and Chinese President Jan Ping are

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Speaker 1: likely to speak this week. Beijing hasn't commented on the

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Speaker 1: prospect of a direct conversation. The leaders of the world's

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Speaker 1: two largest economies haven't spoken since Trump's inauguration. Meanwhile, China

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Speaker 1: says that the US has seriously undermined a recent tariff

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Speaker 1: truce with this decision to impose a range of new

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Speaker 1: restrictions on the country. Blimboke's chief geoeconomics analyst, Jennifer Welch,

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Speaker 1: is urging caution over expectations of an imminent call.

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Speaker 7: If a phone call happens this week, I think that

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Speaker 7: is a good thing for training negotiations that probably will

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Speaker 7: help restart momentum or at least clear the error in

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Speaker 7: a way in which these tensions are kind of boiling

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Speaker 7: on the back burner. But I think a call is unlikely,

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Speaker 7: And when that means is that tensions could continue to

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Speaker 7: boil because they are only being addressed really at lower levels,

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Speaker 7: and it would take a higher level engagement.

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Speaker 3: To put them to rest or at least to put

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Speaker 3: them into the.

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Speaker 7: Background to the point where they're non interfering with talks further.

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Speaker 1: Jennifer Welch from Bloomberg Economics there speaking as a private

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Speaker 1: survey showed that China's manufacturing survey had its worst slumps

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Speaker 1: ince September twenty twenty two. The kaishin Manufacturing Purchasing Managers

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Speaker 1: index fell to forty eight point three in May, as

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Speaker 1: high US tariffs took a toll on the country's smaller

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Speaker 1: exporters well.

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Speaker 2: The weaker than expected data from China comes as President

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Speaker 2: Trump's ninety day pause on his so called reciprocal tariffs

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Speaker 2: is coming to an end next month, but as the

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Speaker 2: deadline looms, the White House is struggling to secure trade deals.

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Speaker 2: The European unions preparing for another round of talks with

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Speaker 2: the US tomorrow. The blocks trying to fast track negotiations

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Speaker 2: before the July ninth deadline, when Trump said he'd hit

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Speaker 2: nearly all of their imports with a fifty percent tariff.

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Speaker 4: However, the EU has warned that it may.

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Speaker 2: Speed up it taliatory measures if the US president follows

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Speaker 2: through on his repeated threat. Despite promising that a range

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Speaker 2: of deals are just around the corner. So far, only

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Speaker 2: the UK has reached an outline agreement with the US

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Speaker 2: on tariffs, and that deal still isn't in place.

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Speaker 1: Kirt Fielders has pulled his Freedom Party out of the

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Speaker 1: Netherlands ruling coalition. The move collapsed the government and automatically

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Speaker 1: triggered a new election. Builders chose to walk away from

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Speaker 1: the government after his three coalition partners refused to agree

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Speaker 1: to his plans to curb migration. The Freedom Party had

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Speaker 1: proposed closing the border to asylum seekers, temporarily halting family reunification,

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Speaker 1: and returning asylum seekers to Syria. The aex Index egauged

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Speaker 1: tracking the twenty five largest stocks listed on the euroext Amsterdam,

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Speaker 1: fell as much as zero point five percent before pairing

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Speaker 1: some of the loss.

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Speaker 2: KKR has pulled out of plans to take a stake

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Speaker 2: in the distressed utility company Thames Water, the UK's largest

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Speaker 2: water company, announced. KKR had indicated it would not be

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Speaker 2: in a position to proceed after a completed due diligence terms,

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Speaker 2: faces out government takeover if it can't find a private

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Speaker 2: buyer willing to take on its billions in debt, so

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Speaker 2: its is telling Bloomberg.

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Speaker 4: That a rival bidder.

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Speaker 2: Scottish provider Castle Water is said to be ready to

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Speaker 2: step in and give Thames Water equity.

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Speaker 1: And Standard Charter CEO Bill Winters says that the UK

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Speaker 1: is overdoing it on regulation. Speaking to Bloomberg, the UK

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Speaker 1: Bank CEO was asked about how to drive growth and

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Speaker 1: he said, there are vast numbers of regulators in Britain.

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Speaker 8: We've aired on the side a very very extensive microprudential supervision.

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Speaker 8: We've got really huge numbers of individuals in the UK

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Speaker 8: and the PRA and the FCA who are focusing on

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Speaker 8: our business. And I think there I think one they're

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Speaker 8: too intrusive, it's too costly and too I don't think

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Speaker 8: you actually get a good return on that because at

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Speaker 8: some point the board and senior management start to think, well,

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Speaker 8: if it's okay with the regulator, it must be okay.

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Speaker 1: The Standard Charters CEO added that the cost of capital

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Speaker 1: for a bank is now significantly higher than the private

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Speaker 1: credit company. His comments come as Britain's government is debate deregulation,

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Speaker 1: including ring fencing rules brought in after the Great Financial Crisis.

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Speaker 4: Those are your top stories on the markets?

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Speaker 2: These top six hundred is three tenths lower this morning,

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Speaker 2: the fifteen one hundred and ten by two tenths of

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Speaker 2: one percent, the Dutch market four tenths lower after that

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Speaker 2: news around the collapse of the Dutch government. On Wall Street,

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Speaker 2: SMP minifutures and nasdak features both half a percent lower,

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Speaker 2: a touch of strength, and the dollar today up a

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Speaker 2: tenth of one percent after the recent weakness, the eurostraining

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Speaker 2: at one fourteen eighteen against the dollar in the tenure

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Speaker 2: Treasury eel down two basis points at four point four

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Speaker 2: to two percent.

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Speaker 1: Well, at a moment, we're going to dive into that

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Speaker 1: OECD report and the latest in Dutch politics. But first

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Speaker 1: even another story that caught our eye this morning, how

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Speaker 1: making an ideological AI might be more difficult than it seems.

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Speaker 2: Something our opinion columns Dave Lee has been writing about,

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Speaker 2: and particular in reference to grock, which is the AI

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Speaker 2: on Elon Musk's X platform, which promised to be a

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Speaker 2: non woke alternative to chat, GPT and its rivals.

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Speaker 4: A date, Dave writes, the problem with that.

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Speaker 2: Idea is is that answers at AI provides are generally

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Speaker 2: based on data it's scraped off the Internet. The technology

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Speaker 2: can be either non woke or truthful, but not both

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Speaker 2: at the same time, and he points to several efforts

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Speaker 2: that are made both with Grock but also with other

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Speaker 2: AI chatbots as well, to try and manipulate those results

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Speaker 2: or steer them in a particular direction. Essentially, it doesn't work.

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Speaker 2: Nobody ends up happy at the end of it, and

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Speaker 2: it is a challenge as we're using these sort of

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Speaker 2: chatbots more and more to see what exactly can be

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Speaker 2: I suppose what can be done with it? And there's

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Speaker 2: Dave pot said, well, appealing for some artificial selective intelligence

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Speaker 2: is of limited practical use. You can read the full

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Speaker 2: piece on Bloomberg dot com Forward Slash Opinion.

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Speaker 1: Well, let's get more on those latest forecasts from the

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Speaker 1: OECD now showing that the impact of Donald Trump's trade

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Speaker 1: policies is really having an impact on the global economy

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Speaker 1: and our markets. Report of Valerie title joins us now

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Speaker 1: for more.

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Speaker 3: Well, I want to.

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Speaker 1: Start with what the OECD says is the impact on

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Speaker 1: the US. They've slashed the growth forecasts. How does it

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Speaker 1: compare to what the FED and markets are expecting.

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Speaker 9: Yeah, so they've slashed their growth forecast, but it's really

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Speaker 9: just the same as what economists across the street and

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Speaker 9: even the FED have done in the last few months

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Speaker 9: is downgrade their outlook for US growth. I want to

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Speaker 9: say though, that the OECD numbers are still a bit

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Speaker 9: more positive on US growth than the consensus analyst estimate.

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Speaker 9: On Bloomberg, they're calling for twenty twenty five US growth

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Speaker 9: to be one point six percent. The consensus estimate at

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Speaker 9: the moment is around one point three. The Fed's estimate

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Speaker 9: is also around one point seven, but the last time

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Speaker 9: they give an estimate was back in March. They're due

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Speaker 9: to give estimates and projections at their next meeting, so

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Speaker 9: that estimate might be a little stale, but it just

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Speaker 9: goes to show that there has been a big downgrade

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Speaker 9: of US growth from kind of the exuberance that we

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Speaker 9: felt in January, all that optimism when Trump came back

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Speaker 9: into the office. You know, estimates for twenty twenty five

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Speaker 9: GDP were north of two percent, and they have been

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Speaker 9: knocked down in the last few months due to the

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Speaker 9: uncertainty that the administration has released, and also the trade

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Speaker 9: war possibly denting economic activity, and.

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Speaker 2: Of course that on Sergey some of the markets of

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Speaker 2: having to be parsing in real time as the divilopments

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Speaker 2: play out. The latest is that whether or not Donald

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Speaker 2: Trump and Cheating Thing will speak directly. The White House

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Speaker 2: says yes, China says they have no information about a

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Speaker 2: potential call.

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Speaker 4: I mean, how are markets perceiving this?

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Speaker 9: I feel like we just went through this a few

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Speaker 9: weeks ago, didn't.

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Speaker 3: We have Did they speak on the phone?

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Speaker 4: Did they not speak on the phone?

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Speaker 9: But I mean net net It would be a great

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Speaker 9: thing for risk if at risk assets generally, if Trump

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Speaker 9: and She did get on the phone and spoke and

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Speaker 9: spoke to each other.

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Speaker 3: There is a thought out there that there is.

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Speaker 9: A need for a high level call in order to

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Speaker 9: get over some sticking points and some issues in order

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Speaker 9: to start this discussion between these two world's largest economies.

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Speaker 9: We've heard from former US trade negotiator Kelly and Shaw

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Speaker 9: earlier this morning saying it's not unusual to see a

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Speaker 9: high level leader call before there is a breakthrough in progress.

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Speaker 9: But Asian markets were quite positive overnight on the fact

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Speaker 9: that the White House said that it's likely to happen

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Speaker 9: this week. So we'll continue I guess to trade headlines

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Speaker 9: and what the White House says and what the China

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Speaker 9: Foreign Ministry said. They said they had no information to

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Speaker 9: share on any Trump she call.

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Speaker 1: So that's the US China talk, so lack thereof. Meanwhile,

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Speaker 1: the US Trade Representative Jane miss and Grit is in

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Speaker 1: Paris for this SECD ministerial meeting that's happening this week.

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Speaker 1: He's got a lot of meetings potentially in his diary.

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Speaker 1: But a market's expecting progress on specifically the talks with

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Speaker 1: the EU.

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Speaker 9: I think there's a lot of pessimism about the prospect

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Speaker 9: of the US and the EU coming to some agreement

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Speaker 9: before the pause and the tariffs roll off.

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Speaker 3: Remember that date is early in July, so less than.

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Speaker 9: Yeah, yeah, around a month's time, And it doesn't seem

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Speaker 9: it doesn't seem it's hard for the market to obviously

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Speaker 9: price that in, given there's still a lot of time

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Speaker 9: between now and then, but it doesn't seem like from

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Speaker 9: what I'm reading, there's a lot of positivity around the

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Speaker 9: outlook of getting something done before that date. Remember it

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Speaker 9: was only two weeks ago that Trump had to threaten

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Speaker 9: fifty percent tariff on the EU just to get them

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Speaker 9: to write something down on paper to present to them

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Speaker 9: about what they want out of these negotiations.

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Speaker 3: So it does seem like it's come to a sticking point.

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Speaker 9: I don't know if the market's going to pay too

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Speaker 9: much attention to it. It's more focused on maybe the

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Speaker 9: more likely deals to come, that being with the Asian

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Speaker 9: nations like Japan and.

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Speaker 3: South Korea, that seem a bit closer at.

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Speaker 9: Least to getting you know, not an agreement, but something

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Speaker 9: on paper as a you know, kind of what the

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Speaker 9: EU or what the UK signed with the US a

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Speaker 9: few weeks ago.

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Speaker 2: Okay Valery title our market supporter, thank you very much

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Speaker 2: for joining us.

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Speaker 1: Now to the European politics, The Dutch government has collapsed

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Speaker 1: after the right far right leader get Filders announced that

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Speaker 1: he was pulling his party out of the coalition now.

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Speaker 1: The move comes after his three partners failed to back

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Speaker 1: his Freedom Party's plan to curb migration.

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Speaker 4: And for more.

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Speaker 1: Was joined by a mere News director Roslin Matheson. Roz,

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Speaker 1: just take us through the latest, because this has been

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Speaker 1: a fast moving story this morning.

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Speaker 10: Well, that's right, and in a way, this government has

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Speaker 10: been inherently fragile for months and there's been these bouts

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Speaker 10: of uncertainty where Wilders has threatened to walk or there's

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Speaker 10: been tension over things including migration policy, and he surprised

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Speaker 10: us a little bit this morning by actually saying that

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Speaker 10: he is going to withdraw and thereby triggering the collapse

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Speaker 10: of the government and a move to election. And it's

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Speaker 10: just been these long running tensions over his push for

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Speaker 10: quite a.

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Speaker 3: Strident plan on migration.

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Speaker 10: He wants to shut the borders, he wants to make

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Speaker 10: sure that Syrians return to Syria, he wants a temporary

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Speaker 10: pause in family reunions, and so on. It struck strife

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Speaker 10: within his coalition, which is actually a sentence and to

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Speaker 10: write coalition already, and it's just been a long running

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Speaker 10: vein through the government and so this time it seems

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Speaker 10: like he has decided to walk away. The question is

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Speaker 10: what is he hoping to achieve by this? He was

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Speaker 10: barred from being prime minister even though he performed strongly

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Speaker 10: in the last election, and he was barred from being

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Speaker 10: prime minister as part of the coalition conversation. Is hoping

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Speaker 10: by collapsing the government and triggering a new election that

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Speaker 10: he might get another go at it.

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Speaker 2: So what happens next from here? We're heading to an election?

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Speaker 10: Well, that's right, We're not exactly sure when the election

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Speaker 10: might be, but it might be within a matter of months.

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Speaker 10: In the meantime, there needs to be some sort of

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Speaker 10: continuity at least of administration in the Netherlands, and you know,

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Speaker 10: we expect that we'll get a lot of parties out

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Speaker 10: there very quickly starting to campaign. It was interesting because

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Speaker 10: Wilda's party had been fading a little bit for a while,

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Speaker 10: but it's resurgent to get in the polls just in

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Speaker 10: recent weeks because again he's been leaning really heavily on

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Speaker 10: his anti immigrant rhetoric and that seems to have given

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Speaker 10: him a pop in the polls, perhaps again a factor

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Speaker 10: in his thinking. So the question is for the Netherlands,

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Speaker 10: a country that, like many in Europe and beyond, is

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Speaker 10: grappling with some quite difficult issues around migration, and that

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Speaker 10: conversation in society is proving quite fraught. You know, does

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Speaker 10: he really amped that up going into an election and again,

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Speaker 10: what are his intentions out of that?

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Speaker 1: Well, yeah, what does this mean more broadly for Europe

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Speaker 1: and the Netherlands place in Europe, Because we've also seen

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Speaker 1: Donald tuss calling this vote of confidence after the far

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Speaker 1: right candidate there, the right wing candidate won the presidential

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Speaker 1: election in that nail biting victory. What's the balance of

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Speaker 1: power now in Europe this morning after all of this.

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Speaker 10: Well, it's interesting because the Netherlands had particular issues around migration.

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Speaker 10: Of course, you know, long running decline in things like

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Speaker 10: the shipping industry and factories in port cities like Rotterdam,

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Speaker 10: and that's kind of been fertile territory for some of

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Speaker 10: these narratives to take hold. But it's a similar story

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Speaker 10: in other countries in Europe. You've got challenges around housing

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Speaker 10: and again the migration debate seems to be rearing its

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Speaker 10: head again. And you know, as you say, in the

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Speaker 10: Polish election, we saw the result there where the nationalist

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Speaker 10: candidate won the presidency and that's going to create all

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Speaker 10: sorts of complications for the Government of Tusk going forward.

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Speaker 10: And part of it was about really bringing Poland very

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Speaker 10: much into the EU tent and similar for other countries

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Speaker 10: and whether their policies on migration go out of alignment

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Speaker 10: with the EU more broadly, and then you get all

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Speaker 10: sorts of tensions around access to funds and so on.

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Speaker 10: So it'd be very interesting to watch the debate in

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Speaker 10: the Netherlands, but as you say, there's quite a read

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Speaker 10: through to other parts of Europe.

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Speaker 2: And the question of migration, as you mentioned, central to

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Speaker 2: a last the political debate that's happening in many countries.

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Speaker 2: In Germany next to where we're seeing the current government

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Speaker 2: under Friedrich Martz also trying to change migration policy reacting

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Speaker 2: to the strong performance of the far right in the

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Speaker 2: last election there only a couple of months ago. Is

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Speaker 2: this something that we're seeing any sort of coherent policy

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Speaker 2: emerging as to how what European countries will now approach

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Speaker 2: this issue.

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Speaker 10: Well, it's interesting because it does tend to bubble up

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Speaker 10: at the same time in different countries, and you mentioned

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Speaker 10: Germany being a case in point. But there doesn't necessarily

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Speaker 10: seem to be a lot of coherence and cooperation in

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Speaker 10: the way that politicians are acting because fundamentally they're acting

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Speaker 10: out of self interest in their own country for their

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Speaker 10: own voters, and so the messaging is a bit different.

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Speaker 10: I mean, in Germany, mayors has to tread carefully. He

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Speaker 10: can't be seen to be getting too close to the

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Speaker 10: far right AfD, and he's you know, obviously very clearly

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Speaker 10: ruled out cooperating with them in Parliament, and that there

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Speaker 10: is a level of concern in Germany about taking that

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Speaker 10: narrative too far to the right. So you know, you

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Speaker 10: do get these threads that are coming up at the

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Speaker 10: same time. But again it doesn't necessarily mean that they're

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Speaker 10: all getting on the phone talking to each other and working.

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Speaker 3: Out their policies.

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Speaker 10: And interestingly, you know, the far right and the center

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Speaker 10: right in Europe isn't necessarily one big autonomous moving piece.

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Speaker 10: There's a lot of differences in those parties and sometimes

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Speaker 10: there's a lot of disagreement and they don't necessarily get

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Speaker 10: on You can see that in a you know obviously

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Speaker 10: in fronts in Italy between the pen and Maloney, for example.

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Speaker 10: So it's not necessarily coherent movement, is what I'm saying,

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Speaker 10: and differences do arise, but it's interesting because that conversation

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Speaker 10: is cropping up again in a bunch of places at

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Speaker 10: the same time.

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