WEBVTT - Daybreak Weekend: US PCE, London Climate 0:00:02.279 --> 0:00:05.000 This is Bloomberg Daybreak Weekend, our global look at the 0:00:05.000 --> 0:00:07.600 top stories in the coming week from our Daybreak anchors 0:00:07.640 --> 0:00:10.479 all around the world. Straight Ahead on the program, we 0:00:10.520 --> 0:00:13.360 look to the Fed's preferred gauge of inflation how it 0:00:13.360 --> 0:00:16.960 could affect policy going forward. I'm Nathan Hager in Washington. 0:00:17.160 --> 0:00:19.960 I'm callin kit here in London, where we're looking ahead 0:00:19.960 --> 0:00:21.599 to London Climate Action Week. 0:00:21.800 --> 0:00:24.319 I'm Derek Prisner looking ahead to the latest reading on 0:00:24.440 --> 0:00:26.600 consumer inflation for Australia. 0:00:27.560 --> 0:00:31.600 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:31.600 --> 0:00:35.320 eleventh three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:35.840 --> 0:00:40.840 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syria 0:00:41.120 --> 0:00:44.640 XM one twenty one, and around the world on Bloomberg Radio, 0:00:44.680 --> 0:00:46.840 dot Com and the Bloomberg Business App. 0:00:51.320 --> 0:00:54.000 Good day to you. I'm Nathan Hager. We begin today's 0:00:54.040 --> 0:00:56.720 program with some key economic data in the US, and 0:00:56.760 --> 0:00:58.800 we are getting a lot of it this week. The 0:00:58.840 --> 0:01:02.640 Federal Reserves prefer Gage of Inflation comes out this Thursday, 0:01:03.000 --> 0:01:05.440 along with an updated reading on economic growth at the 0:01:05.480 --> 0:01:07.720 start of the year, along with a slew of other 0:01:07.760 --> 0:01:10.399 readings to help us get set for the flood of data. 0:01:10.880 --> 0:01:15.000 We're joined by Stuart paul Us, economists for Bloomberg Economics, 0:01:15.040 --> 0:01:17.360 and I'd have to think Stuart, after what we heard 0:01:17.440 --> 0:01:20.039 from the new Fed cherk Kevin Warsh last week about 0:01:20.080 --> 0:01:24.320 the commitment to price stability, the PCEE has got to 0:01:24.360 --> 0:01:26.959 be really top of mind. Is that how you see 0:01:26.959 --> 0:01:27.600 things right now? 0:01:28.040 --> 0:01:30.680 The pce will be top of mind. What's good though, 0:01:30.760 --> 0:01:35.119 is that CPI and PPI are used as the primary 0:01:35.120 --> 0:01:38.920 input for pce inflation. So even going into last week's 0:01:39.000 --> 0:01:42.959 FOMC meeting, central bankers had a pretty good feel for 0:01:43.280 --> 0:01:46.360 what we're likely to see in this upcoming personal income 0:01:46.400 --> 0:01:50.480 and outlays and PCEE inflation report. And frankly, all the 0:01:50.560 --> 0:01:53.320 data that are going to be included in this report, 0:01:53.600 --> 0:01:57.120 which covers everything from income to spending to consumer price 0:01:57.160 --> 0:02:02.680 inflation based on the person consumption expenditures basket, all of 0:02:02.720 --> 0:02:05.760 that data is basically going to affirm the relatively hawkish 0:02:05.800 --> 0:02:08.520 stance that we heard from Kevin Walsh and that we 0:02:08.600 --> 0:02:11.959 saw in the dot plot released by the broader FOMC. 0:02:12.320 --> 0:02:15.600 Okay, So for those who might not be closely keeping 0:02:15.760 --> 0:02:20.000 score on what's fed into PCE. I think from the 0:02:20.040 --> 0:02:23.040 CPI and PPI data you alluded to, we are still 0:02:23.560 --> 0:02:26.800 well above target when it comes to the fed's two 0:02:26.880 --> 0:02:28.280 percent rate that it's shooting for. 0:02:28.440 --> 0:02:32.520 Right absolutely, so we're expecting to see about zero point 0:02:32.639 --> 0:02:37.120 five percent monthly headline PCEE inflation. That's going to boost 0:02:37.120 --> 0:02:41.600 the annual PCE inflation rate to about four point one percent. Now, 0:02:41.639 --> 0:02:44.560 core inflation is a little bit more tame, about zero 0:02:44.600 --> 0:02:47.800 point four percent core inflation on the month, and that'll 0:02:47.840 --> 0:02:50.560 boost the year on year rates about three point four percent. 0:02:50.600 --> 0:02:55.200 So still a significant overshoot even by the FED preferred measures. 0:02:55.240 --> 0:02:58.680 Okay, so how are we looking then at the trajectory 0:02:59.200 --> 0:03:03.200 for inflame right now? Now that we have something of 0:03:03.200 --> 0:03:06.840 a resolution in the Middle East, the oil is starting 0:03:06.880 --> 0:03:08.800 to flow through the strait of horror moves, does that 0:03:08.880 --> 0:03:12.160 affect how you as an economist are thinking about the 0:03:12.200 --> 0:03:14.600 overall trajectory of inflation at this point. 0:03:14.760 --> 0:03:17.520 I actually think that the May inflation readings and the 0:03:17.560 --> 0:03:21.120 PC inflation rating is the last real inflation reading for 0:03:21.120 --> 0:03:24.200 the month of May. I think that those May numbers 0:03:24.200 --> 0:03:26.520 are basically going to be the local peak that we 0:03:26.600 --> 0:03:30.120 see for inflation I'm expecting to see some disinflation coming 0:03:30.280 --> 0:03:35.360 in June and thereafter. And as you mentioned, you know, 0:03:35.400 --> 0:03:38.200 the Memorandum of Understanding, the reopening of the Straight of 0:03:38.200 --> 0:03:41.720 Horror moves both help. It should reduce the energy price 0:03:41.840 --> 0:03:45.600 pressures that have been boosting headline inflation and even bleeding 0:03:45.640 --> 0:03:48.440 into the core a little bit. But beyond that, it 0:03:48.480 --> 0:03:52.000 looks like we're past peak tariff passed through. If you 0:03:52.120 --> 0:03:56.080 rewind the clock a year, it feels like a lifetime ago. Yeah, 0:03:56.080 --> 0:03:59.000 But we were thinking about Liberation Day, we were thinking 0:03:59.000 --> 0:04:01.720 about the implementation of tariffs. We saw a major spike 0:04:01.800 --> 0:04:05.120 in the average effective tariff rate, which had been boosting 0:04:05.240 --> 0:04:08.840 core goods prices over the last year. But now it 0:04:08.920 --> 0:04:11.560 seems like that's starting to fall out of the year 0:04:11.640 --> 0:04:14.600 on year inflation measures. We're starting to see some moderation 0:04:14.720 --> 0:04:17.920 in core goods prices. We're also seeing firms face a 0:04:17.960 --> 0:04:21.080 little bit of pushback when they try to pass through 0:04:21.440 --> 0:04:24.520 higher core goods prices to consumers. So all told, we 0:04:24.560 --> 0:04:29.080 have those two factors in play, mostly on the good side, 0:04:29.520 --> 0:04:34.560 where falling energy prices in June and favorable base effects 0:04:34.600 --> 0:04:38.120 as we pass through peak tariff pass through are going 0:04:38.160 --> 0:04:42.840 to result in a little bit of disinflation in starting 0:04:42.839 --> 0:04:45.680 in June and then probably continuing throughout the second half 0:04:45.680 --> 0:04:48.159 of the year. That's so, with course, barring any sort 0:04:48.200 --> 0:04:51.640 of escalation or re escalation of the war in Iran. 0:04:51.680 --> 0:04:55.880 Certainly, I mean that's a key wild card. But with 0:04:55.960 --> 0:04:58.200 all that said, Stewart, I think one of the last 0:04:58.200 --> 0:05:02.120 times we spoke, you were thinking that the FED could 0:05:02.240 --> 0:05:06.279 have a pretty significant room to stay on pause, if 0:05:06.360 --> 0:05:09.760 not cut, in the months to come. After what we 0:05:09.880 --> 0:05:14.360 heard from the Chairman last week. Is that still your view? 0:05:14.839 --> 0:05:16.240 Look, I think that the FED is going to do 0:05:16.279 --> 0:05:18.440 their best to sit on their hands. We definitely saw 0:05:18.560 --> 0:05:21.360 from the dots we saw from the forecasts included in 0:05:21.400 --> 0:05:24.440 the summary of economic projections. We also heard it in 0:05:24.480 --> 0:05:27.760 the Chairman's voice and his near singular focus on price 0:05:27.800 --> 0:05:31.440 stability rather than employment. All of those looked at a 0:05:31.440 --> 0:05:34.159 little bit hawkish. That's certainly the case. I'll have to 0:05:34.200 --> 0:05:37.200 concede that point. But one thing that I want everybody 0:05:37.240 --> 0:05:40.400 to be aware of, to really fully understand that it's 0:05:40.440 --> 0:05:42.760 not clear to us, and it's certainly not clear to 0:05:42.839 --> 0:05:46.960 policymakers whether we're seeing a lot of cyclical strength driving 0:05:47.040 --> 0:05:51.599 economic activity or where it's mostly just structural transformation. So 0:05:52.080 --> 0:05:55.479 if we're looking at the totality of the data, layoffs 0:05:55.520 --> 0:05:59.240 and unemployment are low, but hiring is really concentrated in 0:05:59.279 --> 0:06:04.119 industries that structural tailwinds, like healthcare for example. Investment is hot, 0:06:04.520 --> 0:06:06.839 but that's mostly in industries that are focused on on 0:06:07.000 --> 0:06:11.720 shoring and participating in the AI buildout. Residential construction for example, 0:06:11.800 --> 0:06:13.920 is really crummy. We saw that just last week with 0:06:14.000 --> 0:06:18.440 housing starts. Inflation pressures, as I mentioned, mostly downstream of 0:06:18.520 --> 0:06:21.160 Tariff's chips, shortages of the Iran war, and so the 0:06:21.240 --> 0:06:26.440 disinflation that we're getting there again, it's mostly because of 0:06:26.760 --> 0:06:29.400 shifts in the landscape more so than any sort of 0:06:29.440 --> 0:06:33.479 like cyclical factors. So all of those more structural factors 0:06:33.480 --> 0:06:35.920 that are affecting the dynamics of the economy rather than 0:06:36.240 --> 0:06:41.880 extraordinary cyclical strength, actually do keep the door open for 0:06:42.920 --> 0:06:45.000 you know, a cut. I would not be surprised to 0:06:45.000 --> 0:06:48.560 see a cut next year. And it all really depends 0:06:48.560 --> 0:06:50.520 on the trajectory of the labor market in twenty twenty 0:06:50.600 --> 0:06:51.400 seven when that's the. 0:06:51.360 --> 0:06:54.880 Case thanks to this Stuart, as always, that's Stuart paul 0:06:55.080 --> 0:06:58.600 Us economist with Bloomberg Economics. Let's take a look now, 0:06:58.640 --> 0:07:01.200 add some stocks making news the week ahead. I'm Nathan 0:07:01.200 --> 0:07:05.000 Hager here with Bloomberg Equities reporter Avalon Purnell, a head 0:07:05.000 --> 0:07:07.920 of a few pretty interesting earning stories in the coming week. 0:07:07.920 --> 0:07:11.480 We're gonna hear from Carnival cruise lines on Tuesday. It's 0:07:11.480 --> 0:07:13.520 gonna be really interesting to hear from them, especially with 0:07:13.600 --> 0:07:15.800 so many of the headlines around the Middle East driving 0:07:15.840 --> 0:07:18.280 cruise stocks over the last several months. 0:07:18.360 --> 0:07:21.840 Avalon absolutely, I mean, the potential end of the Iran 0:07:21.880 --> 0:07:24.640 war and fuel costs will definitely be top of mind 0:07:24.680 --> 0:07:27.240 for investors as Carnival heads into its second quarter earnings 0:07:27.240 --> 0:07:30.400 on Tuesday. Carnival shares have been on a roller coaster 0:07:30.600 --> 0:07:33.840 ride alongside other traveling cruise names, to say the least, 0:07:34.120 --> 0:07:37.120 since the war started in February. But now with the 0:07:37.240 --> 0:07:40.080 US and Iran saying that they've reached an interim agreement 0:07:40.080 --> 0:07:42.800 to reopen the Strait of her Moves, sentiment is again 0:07:42.960 --> 0:07:46.160 rising in this hard hit sector. Worth mentioning that Wall 0:07:46.160 --> 0:07:49.720 Street still remains cautiously optimistic about the stock Schiefel may 0:07:49.720 --> 0:07:51.960 have put it best at analyst saying that trading cruise 0:07:51.960 --> 0:07:54.680 stocks is beyond difficult because you're trading your view of 0:07:54.720 --> 0:07:56.960 whether the Middle East war will end or not. But 0:07:57.120 --> 0:07:59.480 they remain buyers of Carnival into their earnings because they 0:07:59.480 --> 0:08:02.160 believe the come But he hasn't witnessed any deterioration in 0:08:02.200 --> 0:08:05.880 customer spending Bloomberg Intelligence highlighting that investors will look for 0:08:05.920 --> 0:08:09.360 insight on booking since March, when Carnival reported that eighty 0:08:09.360 --> 0:08:11.480 five percent of capacity had been sold. 0:08:11.840 --> 0:08:14.080 Well, like you said, the stock has kind of been 0:08:14.120 --> 0:08:16.600 all over the map since the start of the year. 0:08:16.640 --> 0:08:18.800 What are we expecting from the options market when it 0:08:18.800 --> 0:08:21.080 comes to how the stock could trade off the back 0:08:21.080 --> 0:08:21.640 of earnings. 0:08:21.840 --> 0:08:24.080 Yes, option data that we are seeing at the moment 0:08:24.160 --> 0:08:27.239 is currently implying about a six percent move after those results. 0:08:27.760 --> 0:08:30.560 Okay, so we'll be keeping an eye on Carnival Cruise 0:08:30.560 --> 0:08:34.920 Line on Tuesday, along with FedEx. Obviously a pretty strong 0:08:34.960 --> 0:08:36.959 bell weather for the economy as a whole. But I mean, 0:08:36.960 --> 0:08:39.960 this stock has been through quite a few changes lately. 0:08:40.000 --> 0:08:43.000 So how's that affecting investor sentiment? 0:08:43.360 --> 0:08:45.160 Yes, I mean FedEx, to say the least, we'll be 0:08:45.320 --> 0:08:48.000 entering a new era when it reports fourth quarter earnings. 0:08:48.000 --> 0:08:51.520 On Tuesday, Justice Mond FedEx completed the spinoff of its 0:08:51.679 --> 0:08:54.559 freight division, and it will also be the first earnings 0:08:54.600 --> 0:08:58.000 call for Claude Russ, who became interim CFO after John 0:08:58.000 --> 0:09:01.120 Dietrich surprise investors by now that he was stepping down 0:09:01.120 --> 0:09:03.839 at the start of this month. Investors expect FedEx to 0:09:03.960 --> 0:09:08.600 continue executing despite inflationary pressures and rising fuel costs tied 0:09:08.640 --> 0:09:11.760 to that war in Iran. Barclay's analysts are expecting solid 0:09:11.800 --> 0:09:16.000 retail performance and also industrial expansion this quarter given strong 0:09:16.120 --> 0:09:21.320 macro transportation indicators, though it is worth noting that Bloomberg 0:09:21.320 --> 0:09:23.720 Intelligence highlighting with the spinoff in the rear view mirror, 0:09:23.760 --> 0:09:26.600 FedEx can potentially begin to focus on its longer term 0:09:26.640 --> 0:09:30.320 financial targets, like pushing its higher margin businesses and also 0:09:30.360 --> 0:09:33.160 improving European results to lift earnings above its twenty twenty 0:09:33.240 --> 0:09:33.720 nine target. 0:09:34.080 --> 0:09:36.880 And yeah, so it'll be interesting to see how that goes. 0:09:36.920 --> 0:09:39.120 But I mean, this stock in particular has been on 0:09:39.240 --> 0:09:42.760 a pretty solid run since even before the start of 0:09:42.800 --> 0:09:46.200 the year. When you have the FedEx freight business in 0:09:46.240 --> 0:09:48.680 the rear view, how is that expected to affect the 0:09:48.720 --> 0:09:50.079 performance going forward? 0:09:50.360 --> 0:09:52.959 Well, going forward, They're hoping that this will allow FedEx 0:09:52.960 --> 0:09:56.360 to hone in on the really quality areas of its 0:09:56.400 --> 0:09:59.800 business and help to expand margin. And also worth noting 0:09:59.800 --> 0:10:01.840 that options data at the moment is currently implying a 0:10:01.880 --> 0:10:04.760 nearly seven percent move after those results, although we will 0:10:04.800 --> 0:10:07.640 also hear from that spinoff later that week as well, 0:10:07.720 --> 0:10:09.680 so we'll see how the two go head to head. 0:10:09.920 --> 0:10:12.800 Oh wow, So even more reason to keep an eye 0:10:12.880 --> 0:10:17.600 on FedEx and FedEx Freight. Not only that, on Thursday, 0:10:18.080 --> 0:10:20.640 we're going to hear from Darden Restaurants. I mean, every 0:10:20.720 --> 0:10:23.360 time I think about Darden, I think about all of Garden, 0:10:23.440 --> 0:10:27.080 but I mean I'm always surprised by how many restaurants 0:10:27.080 --> 0:10:30.200 are under the Darden umbrella, not just for casual dining, 0:10:30.240 --> 0:10:31.320 but fine dining as well. 0:10:31.679 --> 0:10:34.520 Yeah, you're absolutely right. Darden is the parent company behind 0:10:34.520 --> 0:10:38.320 popular chains like Rufe, Chris Longhorn Steakhouse, and my dad's 0:10:38.320 --> 0:10:40.160 personal favorite Cheddar Scratch Kitchen. 0:10:40.640 --> 0:10:42.120 But nice. 0:10:42.320 --> 0:10:44.720 We will be gaining some more visibility on the American 0:10:44.760 --> 0:10:48.840 consumer Thursday when Darden reports for quarter earnings, Worth noting 0:10:48.880 --> 0:10:50.680 that they do continue to outperform the S and P 0:10:50.760 --> 0:10:54.280 five hundred consumer discretionary sector and investors are expecting the 0:10:54.320 --> 0:10:57.240 print to keep that trend going. City Analysts writing that 0:10:57.320 --> 0:11:00.640 they expect another solid quarter marked by comparative girl continuing 0:11:00.720 --> 0:11:05.079 to outpaced industry. Raymond Jane's expecting a strong fourth quarter, 0:11:05.240 --> 0:11:08.960 noting that solid casual dining segment trends in recent months, 0:11:09.400 --> 0:11:11.880 and also worth noting that options data at the moment 0:11:11.920 --> 0:11:15.000 is currently implying about a four percent move after those results. 0:11:15.200 --> 0:11:17.640 Okay, so maybe a little bit of a pop there. 0:11:17.640 --> 0:11:19.800 But you have to wonder, when you know, there's so 0:11:19.880 --> 0:11:23.240 much talk about a K shaped economy, whether consumers are 0:11:23.240 --> 0:11:25.640 thinking about pulling back some on some of the more 0:11:25.960 --> 0:11:30.280 discretionary sides of the economy, whether a company like Darden 0:11:30.600 --> 0:11:33.400 could see a hit from something like that if people 0:11:33.440 --> 0:11:36.760 are thinking, well, you know, maybe I would rather stay 0:11:36.760 --> 0:11:39.760 and home and cook for myself rather than go out 0:11:39.760 --> 0:11:41.920 for a nice meal for a change. 0:11:42.240 --> 0:11:44.520 Absolutely, and I mean it's also not just that. We're 0:11:44.559 --> 0:11:48.920 also thinking about the impact of GLP ones on various restaurants. Obviously, 0:11:49.040 --> 0:11:52.800 fast dining fast food is going to be very impacted 0:11:52.800 --> 0:11:55.559 by GLP ones, especially as they continue to grow in 0:11:55.600 --> 0:11:59.720 popularity in the US, But for companies like a Darden, restaurants. 0:12:00.000 --> 0:12:01.840 Analysts have said they're really looking for some of these 0:12:01.920 --> 0:12:05.400 chains to launch more smaller plates, more chicken options for 0:12:05.520 --> 0:12:07.440 customers who are looking for a healthier option on the 0:12:07.440 --> 0:12:10.480 menu and are really conscious about protein, and so that 0:12:10.520 --> 0:12:12.920 will also be something to be interesting to keep an 0:12:13.000 --> 0:12:15.920 eye on as we see the report later this week. 0:12:16.080 --> 0:12:19.840 That's Bloomberg Equities reporter Avalon Pernell coming up on Bloomberg 0:12:19.920 --> 0:12:23.400 day Break weekend. We'll look ahead to London Climate Action Week. 0:12:23.559 --> 0:12:37.080 I'm Nathan Hager, and this is Bloomberg. This is Bloomberg 0:12:37.160 --> 0:12:39.880 Daybreak weekend, our global look ahead at the top stories 0:12:39.880 --> 0:12:43.199 for investors in the coming week. I'm Nathan Hager in Washington. 0:12:43.320 --> 0:12:45.120 Later in the program will get you set for some 0:12:45.160 --> 0:12:49.160 important economic data coming out in Australia this week. But first, 0:12:49.240 --> 0:12:52.000 the world's facing an uptick in extreme weather events, and 0:12:52.120 --> 0:12:55.200 Europe is no exception. While one of the hottest World 0:12:55.200 --> 0:12:58.120 Cups on record is underway on this side of the Atlantic, 0:12:58.160 --> 0:13:01.400 Europe is enduring a fresh wave of weather warnings and 0:13:01.440 --> 0:13:04.880 it's having an impact on climate, resilience, energy security, man 0:13:05.000 --> 0:13:07.920 everyday life. For more. Let's go to London and bring 0:13:07.920 --> 0:13:10.559 in Bloomberg Daybreak you're a banker, Caroline hepger. 0:13:10.440 --> 0:13:13.079 Nathan, would you believe it's the UK, which is rarely 0:13:13.120 --> 0:13:16.360 known for hot weather, now faces its second heat wave 0:13:16.440 --> 0:13:19.080 in a matter of weeks. Yellow weather warnings have been 0:13:19.120 --> 0:13:22.240 issued across Europe and here in London. It's spurring a 0:13:22.360 --> 0:13:26.120 national debate about renewable energy, housing policy and even the 0:13:26.200 --> 0:13:29.600 role of air conditioning. While the Iraan War has already 0:13:29.640 --> 0:13:33.320 spurred inflation across the continent and focus minds on our 0:13:33.400 --> 0:13:37.080 collective dependence on fossil fuels, Europe and the world must 0:13:37.120 --> 0:13:41.640 now grapple with another cost, the twenty trillion dollars which 0:13:41.640 --> 0:13:45.480 Bloomberg Intelligence estimates will have to be spent on extreme 0:13:45.600 --> 0:13:49.559 weather over the next decade. Initiatives like the upcoming London 0:13:49.600 --> 0:13:53.520 Climate Action Week will look to harness the power of 0:13:53.600 --> 0:13:57.600 London for global and local climate action. Sherry Hickock is 0:13:57.640 --> 0:14:01.920 the CEO of Climate Impact Partners and says that the 0:14:02.120 --> 0:14:05.720 kind of engagement from local government and the business world 0:14:06.120 --> 0:14:10.000 is needed more now than ever before. Despite some political 0:14:10.080 --> 0:14:14.000 backlash to the idea from opposition political parties, she says 0:14:14.040 --> 0:14:17.800 there's actually been a surge in corporate climate investing. 0:14:18.440 --> 0:14:21.760 I think what we see in the continued growth in 0:14:21.800 --> 0:14:25.560 the commitments is that it isn't a short term gain. So, 0:14:25.600 --> 0:14:29.240 as you said, corporate commitments are up seventy two percent. 0:14:29.320 --> 0:14:31.880 We have now seventy two percent of the global fortune 0:14:31.920 --> 0:14:34.760 five hundred with at least one climate goal. That's three 0:14:34.880 --> 0:14:36.360 times since twenty nineteen. 0:14:36.800 --> 0:14:40.600 That was Sherry Hiccock, the CEO of Climate Impact Partners 0:14:40.600 --> 0:14:43.760 there speaking to Bloomberg. But will that be enough to 0:14:43.840 --> 0:14:48.720 combat the panoply of looming threats from heat waves to drought, 0:14:48.920 --> 0:14:52.760 to flood risks and food shortages. Tooting me now to 0:14:52.800 --> 0:14:57.360 discuss is Bloomberg's weather and climate reporter Joe Wurtz and 0:14:57.680 --> 0:15:01.160 Bloomberg's Green reporter Olivia Rudgar. Welcome to both of you, 0:15:01.240 --> 0:15:04.600 and thanks for taking the time to speak to us. Joe, 0:15:04.760 --> 0:15:07.760 let's start by thinking about the heat wave looming in 0:15:07.840 --> 0:15:10.200 Europe right now. What does it mean for the environment 0:15:10.520 --> 0:15:12.200 and for the economy? 0:15:12.600 --> 0:15:15.000 Right So, that heat wave is building right now in 0:15:15.040 --> 0:15:18.400 France really is kind of where things are really starting 0:15:18.440 --> 0:15:21.480 to cook over there. And this is a one of 0:15:21.520 --> 0:15:25.040 these high pressure systems that we saw earlier in late May, 0:15:25.120 --> 0:15:27.720 so a very similar setup and they are looking at 0:15:27.760 --> 0:15:31.600 some really scorching temperatures, and also day after day after 0:15:31.680 --> 0:15:34.840 day of really warm nights too. They call these tropical nights. 0:15:34.840 --> 0:15:37.800 These are when temperatures don't dipple of twenty degrees at night. 0:15:38.360 --> 0:15:40.800 We could be in for days of that in France 0:15:40.800 --> 0:15:43.440 and in Paris there, and you know, we're already seeing 0:15:43.600 --> 0:15:46.600 some market ripples from this. You know, the rivers in 0:15:46.600 --> 0:15:49.120 France are starting to get warm. They use those rivers 0:15:49.120 --> 0:15:52.920 to cool nuclear plants, and when those river temperatures get hot, 0:15:53.000 --> 0:15:55.920 they can't produce as much nuclear energy and they have 0:15:55.960 --> 0:15:59.000 to limit outputs. So EDF and France has already said 0:15:59.240 --> 0:16:02.320 they might have to start limiting power at these plants, 0:16:02.480 --> 0:16:05.280 and so the effects of this heat are already starting 0:16:05.320 --> 0:16:06.600 to trickle in. 0:16:06.920 --> 0:16:10.440 Yeah, gosh, that is surprising, isn't it that the impact 0:16:10.560 --> 0:16:13.320 is so significant. I mean, we know that productivity drops, 0:16:13.320 --> 0:16:15.960 for example, when it gets very hot. There's also the 0:16:16.040 --> 0:16:20.800 risk of fire of wildfires in Europe, which we often 0:16:20.840 --> 0:16:23.120 see over the summer, and then deaths, you know, increase 0:16:23.200 --> 0:16:25.560 as well because of the heats. There are lots of consequences, 0:16:25.560 --> 0:16:28.480 aren't there for people. There's also there've been quite a 0:16:28.520 --> 0:16:32.360 lot of talk about the al Ninia effect. Now that 0:16:32.480 --> 0:16:34.920 is actually not very familiar to a lot of people 0:16:35.000 --> 0:16:37.240 in Europe. It's something that affects other parts of the 0:16:37.280 --> 0:16:41.680 world more. That could shave trillions of you know, very 0:16:41.720 --> 0:16:44.920 fragile global economy. It's expected to be really really strong 0:16:45.000 --> 0:16:46.640 this year. Why and what is it? 0:16:47.440 --> 0:16:49.920 Yeah, this is a lot of people aren't familiar, really 0:16:49.920 --> 0:16:52.840 thin because it's actually pretty far away geographically from Europe. 0:16:52.880 --> 0:16:56.000 This is an area of the Pacific Ocean that is 0:16:56.560 --> 0:16:59.120 warming up. It warms up on these kind of seasonal cycles, 0:16:59.160 --> 0:17:01.360 and we're in for one of these seasonal cycles. But 0:17:01.400 --> 0:17:04.160 it's happening on top of warming that has already occurred 0:17:04.400 --> 0:17:07.360 as the climate's getting warmer and through climate change. And 0:17:07.560 --> 0:17:10.800 the projections are that this only could be you know, 0:17:10.840 --> 0:17:14.960 potentially unprecedented. This we're looking at a potential record breaking heat. 0:17:15.119 --> 0:17:19.080 And this weather pattern, even though it's cyclical, you know, 0:17:19.600 --> 0:17:23.760 it has global ramifications. It affects weather patterns all over 0:17:23.800 --> 0:17:27.840 the world. It shifts rainfall, increases heat in some areas, 0:17:28.240 --> 0:17:30.400 makes it less rainy in some areas and more rainy 0:17:30.400 --> 0:17:33.280 in others. But this is happening on top of inflation 0:17:33.359 --> 0:17:36.840 that's already occurring largely due to the war in the 0:17:36.840 --> 0:17:40.600 Middle East, and you know, big impacts especially in food 0:17:40.640 --> 0:17:45.840 systems and agriculture, drought, wildfire, severe flooding in some areas. 0:17:45.880 --> 0:17:48.760 So yeah, the last one, the one in the last 0:17:48.800 --> 0:17:51.879 big one in twenty fifteen and twenty sixteen was like 0:17:52.080 --> 0:17:56.360 seven point six trillion dollars you know to the economy here. 0:17:56.400 --> 0:17:59.560 So yeah, we're approaching that now and it's officially on 0:17:59.600 --> 0:18:01.160 and one peak for months to come. 0:18:01.440 --> 0:18:05.280 So this is the backdrop then to London Climate Action Week. 0:18:05.800 --> 0:18:08.679 I'll also add that the backdrop of course is the 0:18:08.720 --> 0:18:12.480 World Cup as well, and there's expected to be very 0:18:12.600 --> 0:18:16.040 very high heat at many of those matches. Again that's 0:18:16.640 --> 0:18:21.160 difficult for some European football playing nations, and a lot 0:18:21.200 --> 0:18:24.200 of weather warnings there too. But I wanted to pick 0:18:24.280 --> 0:18:26.960 up with the Olivia on what Joe was saying there. 0:18:27.040 --> 0:18:29.600 It's not just about heat, it's also about water and 0:18:29.640 --> 0:18:32.440 it's about flooding. And we've been writing a lot about 0:18:32.680 --> 0:18:35.760 the unseasonable weather that we've been having here in the UK, 0:18:35.960 --> 0:18:37.919 but it's kind of an example of what is happening 0:18:37.920 --> 0:18:41.720 in many countries. We've had this record setting May in 0:18:41.840 --> 0:18:45.119 terms of the temperatures, but now very very wet June. 0:18:45.600 --> 0:18:47.679 It's not just kind of heat waves and air conditioning 0:18:47.800 --> 0:18:50.040 we're thinking about. It's also the flood risks too. 0:18:50.960 --> 0:18:51.160 Yeah. 0:18:51.160 --> 0:18:52.720 Absolutely, And I think the thing that you see in 0:18:52.720 --> 0:18:55.120 the UK is what was historically a sort of very 0:18:55.119 --> 0:18:58.480 temperate climate that moved within you know, specific parameters most 0:18:58.480 --> 0:19:01.400 of the time, to something that's a little bit more dramatic. 0:19:01.480 --> 0:19:03.960 So we see these much bigger swings from you know, 0:19:04.000 --> 0:19:07.200 we had over thirty degree temperature heat waves I'm sorry, 0:19:07.320 --> 0:19:09.160 I'm in Celsius rather than fary high. 0:19:09.480 --> 0:19:10.119 We'll forgive you. 0:19:10.200 --> 0:19:13.520 Yeah, in May, which is very unseasonally hot, and then 0:19:13.600 --> 0:19:15.440 you know, it swings away again and we get really 0:19:15.440 --> 0:19:19.320 really heavy rainfall. And that is climate driven because you know, 0:19:19.359 --> 0:19:22.760 for every degree of extra warming in the atmosphere, it 0:19:22.800 --> 0:19:24.719 means that it can hold that much more moisture. And 0:19:24.760 --> 0:19:27.960 so when we do get those summer downpours, they are 0:19:28.000 --> 0:19:30.920 heavier than they historically would have been. And the other 0:19:30.960 --> 0:19:33.080 thing I think that's interesting in the UK and also 0:19:33.119 --> 0:19:34.960 you know other places that we're not used to this 0:19:35.080 --> 0:19:38.280 type of dramatic climatic shift, is that our infrastructure and 0:19:38.320 --> 0:19:42.320 our buildings are not well adapted to this level of 0:19:42.359 --> 0:19:45.240 heavy rainfall. So you see the risk of surface water 0:19:45.280 --> 0:19:48.239 flooding is rising really significantly at the same time as 0:19:48.240 --> 0:19:51.480 we're paving over a lot more land, and that increases 0:19:51.520 --> 0:19:54.240 that risk on top of the extra rainfall, and this 0:19:54.359 --> 0:19:58.159 is something that insurers increasingly are very concerned about. You know, 0:19:58.160 --> 0:20:01.000 it comes down to even a garden level, thinking about 0:20:01.000 --> 0:20:05.200 how people are managing their own garden space. Increasing the 0:20:05.240 --> 0:20:08.240 people are paving over, you see more astroturfh around, putting 0:20:08.240 --> 0:20:11.360 in driveways, which maybe makes their life easier, but insurers 0:20:11.400 --> 0:20:14.000 are actually very concerned about that as a risk. That 0:20:14.200 --> 0:20:17.520 accentuates the impact of surface water flooding and can cause 0:20:17.560 --> 0:20:21.120 you know, really significant property damage and really traumatic experiences 0:20:21.200 --> 0:20:22.840 as well for people affected by it. 0:20:23.040 --> 0:20:26.520 Yeah, I've been very interested to read your climate change newsletter, 0:20:26.840 --> 0:20:30.360 the content that you put out regularly on those issues. 0:20:30.400 --> 0:20:32.880 The paving over of front gardens in London. I mean, 0:20:33.240 --> 0:20:36.440 it's down to the micro level, but this is where 0:20:36.480 --> 0:20:39.840 you see kind of a climate change really large. 0:20:40.480 --> 0:20:40.880 Joe. 0:20:41.000 --> 0:20:44.280 Another area that has been fascinating when we're talking about 0:20:44.520 --> 0:20:46.800 how unusual it used to be to have air conditioning 0:20:46.840 --> 0:20:49.959 in London, but now it's becoming much more common, and 0:20:50.000 --> 0:20:52.560 maybe this is also something that in many more cities 0:20:52.640 --> 0:20:55.879 is becoming more common. I mean, AC in the United 0:20:55.880 --> 0:20:59.680 States takes up a huge chunk of energy consumption. It's 0:20:59.720 --> 0:21:02.200 become much more common across Europe and elsewhere. 0:21:02.600 --> 0:21:05.080 You know, it is becoming more common here, It's becoming 0:21:05.359 --> 0:21:09.480 more common across Europe. We've seen installation rates across Europe. 0:21:09.640 --> 0:21:13.880 Adoption of AC installed in homes and businesses is low 0:21:13.920 --> 0:21:16.960 in the UK, but people's interest in cooling down when 0:21:17.000 --> 0:21:19.439 these heat waves hit is very high. We saw a 0:21:19.520 --> 0:21:23.280 huge jump in purchases of these portable air conditioning units 0:21:23.280 --> 0:21:26.360 and fans, you know, at retailers here in the UK, 0:21:26.720 --> 0:21:29.399 you know, at Curryes saw like a twenty seven hundred 0:21:29.440 --> 0:21:33.480 percent increase in portable air conditioning sales year over year 0:21:33.600 --> 0:21:36.359