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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the BlueBag

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Speaker 1: Day Bacurate podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Friday, the thirteenth of September. Here

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Speaker 1: in London. I'm Caroline Hepkip. Coming up today. European investors

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Speaker 1: search for ECB rate cut clues as Legard refuses to

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Speaker 1: commit to a path. Vlasimir Putin warns that letting Ukraine

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Speaker 1: use Western missiles inside Russia would directly involve NATO in

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Speaker 1: the war plus one and done. Donald Trump rules out

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Speaker 1: a second presidential debate with his Democratic rival Kamala Harris.

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Speaker 1: Let's start with a roundup of our top stories. The

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Speaker 1: European Central Bank gave few clues on when it would

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Speaker 1: next cut interest rates after policymakers lowered the key deposit

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Speaker 1: rate by a quarter point on Thursday. Following the cut

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Speaker 1: the bloc second this year, the ECB Christine Leaguard, was

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Speaker 1: vague about what's to come well future.

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Speaker 2: I'm tempted to quote you know, Spanish, because we have

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Speaker 2: consistently said, and we repeat again that we shall remain

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Speaker 2: data dependent, and that is particularly justified in view of

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Speaker 2: the uncertainty that.

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Speaker 1: Abounds Christine Legard that are speaking at the press conference

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Speaker 1: following the rate decision. The ECB's new growth and inflation

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Speaker 1: forecast showed a downgrade to output in the next three years,

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Speaker 1: whilst the outlook for underlying inflation nudged higher for this

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Speaker 1: year and twenty twenty five. Traders have paired bets on

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Speaker 1: the ECB lowing rates next month, with a cut priced

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Speaker 1: in for December. The Bank of England's former Chief economist

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Speaker 1: to Andy hal Dane says that the Chancellor's claim of

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Speaker 1: a twenty two billion pound black hole in government finances

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Speaker 1: in the UK is unnecessary, unhelpful and a bad idea.

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Speaker 1: Within weeks of taking off, Rachel Reeves warned that next

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Speaker 1: month's budget would be a painful mix of spending cuts

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Speaker 1: and tax rises, but hal Dane says that the remarks

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Speaker 1: have spooked businesses and investors.

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Speaker 3: Been much better to say nothing until you provide solutions

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Speaker 3: to filling the black hole, as well as revealing it

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Speaker 3: as it was that's generated your fear and foreboding.

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Speaker 1: Andy Haldane's comments come after the UK's official forecaster, the

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Speaker 1: Office for Budget Responsibility, warned that public debt will exceed

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Speaker 1: two hundred and seventy percent of GDP in fifty years

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Speaker 1: unless the government can revive productivity growth and tackle the

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Speaker 1: challenge of an aging population. Prime Minister Kirs Starmer has

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Speaker 1: arrived in Washington ahead of a meeting with President Biden.

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Speaker 1: Sources have told Bloomberg that the US and UK are

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Speaker 1: discussing allowing Kiev to conduct strikes inside Russia using British

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Speaker 1: cruise missiles backed by US US navigational data. Speaking yesterday,

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Speaker 1: Russian President Vladimir Putin warned against the move as this will.

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Speaker 4: Be their direct participation and these of course will significantly

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Speaker 4: change the very essence, the very nature of the conflict.

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Speaker 4: These will mean that natal countries, the US and European

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Speaker 4: countries are a more with Russia.

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Speaker 1: And the words of Vladimir Putin the spoken VRA translator.

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Speaker 1: Responding to that warning, Kirs Starma insisted the UK isn't

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Speaker 1: seeking conflict with Russia, but that Ukraine has a right

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Speaker 1: to defend itself. The discussion comes after the US confirmed

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Speaker 1: that Moscow has received shipments of ballistic missiles from Iran.

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Speaker 1: Chinese President Hijinping has called on officials at all levels

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Speaker 1: to achieve the country's annual GDP goal, as economists increasingly

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Speaker 1: suggests the country could miss its five percent growth target.

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Speaker 1: China's bond traders meanwhile, defied signs of intervention to push

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Speaker 1: yields to a record low, setting the stage for a

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Speaker 1: showdown with authorities who are seeking to tame the blistering debt. Rally,

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Speaker 1: the yield on the most actively traded ten year sovereign

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Speaker 1: notes slid to two spot zero seven five percent as

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Speaker 1: traders sought to get their hands on the safest assets

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Speaker 1: in the face of a slowing Chinese economy. A car

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Speaker 1: lobby is calling on the EU to delay its emissions

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Speaker 1: targets for automakers by two years. Bloomberg has seen a

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Speaker 1: draft report from the European Automobile Manufacturers Association warning of

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Speaker 1: billions in fines coming down the road. Bloomberg's James Walcock

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Speaker 1: has more.

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Speaker 5: As low demand for EV's and foreign countries as subsidizing

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Speaker 5: rivals unfairly. That's the essence of the manufacturer's arguments. Their

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Speaker 5: draft report says emissions rules coming into force next year

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Speaker 5: could end up finding the industry sixteen billion euros or

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Speaker 5: hold the production of two million cars. A consumer lobby

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Speaker 5: responded to Bloomberg's reporting, saying these targets were set six

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Speaker 5: years ago and it's to sign the industry has not

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Speaker 5: prepared well for the green shift In London, James Wilcock

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Speaker 5: Bloomberg Radio.

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Speaker 1: Donald Trump has ruled out a second debate with Kamala Harris,

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Speaker 1: two days after polls suggested he lost the first. A

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Speaker 1: CNN stat pole showed viewers thought the Vice president performed

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Speaker 1: better than Trump and that her odds of winning rose

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Speaker 1: in betting markets after the debate. In dueling rallies yesterday,

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Speaker 1: the two presidential candidates argued about a rematch. As everyone

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Speaker 1: saw two nights ago, we had a monumental victory. So

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Speaker 1: because we've done two debates and because they were successful.

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Speaker 4: There will be no third debate.

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Speaker 1: Trump also lashed out at the ABC News moderators, calling

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Speaker 1: them low lifes and accusing them of bias. Kamala Harris,

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Speaker 1: on the other hand, is keen on a second clash.

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Speaker 3: Donald Trump is not fit to be president of the

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Speaker 3: United States and should.

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Speaker 6: Never again occupy our nation's highest office.

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Speaker 7: I believe we are like to the voters to have

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Speaker 7: another debate.

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Speaker 1: The vice president and her team began calling for a

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Speaker 1: second debate before the candidates has even left the stage

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Speaker 1: in Philadelphia. Polls have found Trump and Harris generally running

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Speaker 1: neck and neck in surveys of the seven swing states

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Speaker 1: expected to decide the US election. And open Ai is

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Speaker 1: releasing a new AI model capable of performing some human

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Speaker 1: like reasoning tasks, known internally as Strawberry. The company says

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Speaker 1: that it can handle complicated maths and coding problems. A

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Speaker 1: preview version of the model will be available through open

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Speaker 1: AI's popular chat bot chat GPT to paid plus and

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Speaker 1: team users. It comes as Bloomberg revealed that the startup

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Speaker 1: is currently in talks to raise six and a half

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Speaker 1: billion dollars from investors, valuing the company at one hundred

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Speaker 1: and five fifty billion dollars. And lastly, just in breaking

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Speaker 1: news this morning, Boeing factory workers will strike from midnight,

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Speaker 1: potentially crippling manufacturing across the planemakers Seattle Commercial Jet Hub

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Speaker 1: after members of its largest union rejected a contract offer

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Speaker 1: and voted to strike. Those are our top stories for

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Speaker 1: you this morning. But first, how many sick days did

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Speaker 1: you take last year? Was it the average eight days

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Speaker 1: that workers here in the UK took, or perhaps the

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Speaker 1: meager two days last year that US workers took off

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Speaker 1: when they were unwell, or was it Morkin to the

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Speaker 1: situation in Germany, workers there are taking at least fifteen

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Speaker 1: days off per employee per year for sick leave, some

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Speaker 1: even twenty days per year. That's the highest rate across Europe.

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Speaker 1: Bloomberg Opinion columnist Chris Bryant has been writing about that

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Speaker 1: Desperate employers apparently are introducing all sorts of incentives for

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Speaker 1: workers to take fewer sick days, even both. Perhaps that's

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Speaker 1: a bit of a slippery slope, he argues, but it's

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Speaker 1: also a kind of last result, especially when you note

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Speaker 1: that economists say that if attendance was better, Germany could

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Speaker 1: have actually avoided a recession last year. It's one of

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Speaker 1: the interesting stories that I was reading before coming on

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Speaker 1: Earth this morning. I have a look at it Chris

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Speaker 1: Bryant on the Bloomberg terminal. You can catch it just

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Speaker 1: by typing opin on the terminal, or also look at

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Speaker 1: the Bloomberg dot co dot UK websites. Now, the European

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Speaker 1: Central Bank cut its key deposit rate by a quarter

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Speaker 1: point on Thursday, as expected, with new projections showing how drastically.

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Speaker 1: The economy is expected to deteriorate over the next three years,

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Speaker 1: but there were few clues from Christine Legarde about the

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Speaker 1: future path full rates. Joining us now to discuss this

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Speaker 1: is Bloomberg's ECB watcher in Frankfurt, Janna Randau. Good morning, Yana,

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Speaker 1: great to speak to you as ever, So a second

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Speaker 1: cut this year? What was the reasoning behind that?

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Speaker 6: Yes, a second cut, and the reasoning was clearly that

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Speaker 6: inflation is making progress to the ECB's two percent target.

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Speaker 6: The policy makers received updated projections this week that showed

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Speaker 6: the target, the two percent target, being reached by the

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Speaker 6: end of next year, and Loguard went out of her

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Speaker 6: way saying, this is the fifth forecast round where that scenario,

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Speaker 6: that baseline was actually confirmed. So confidence is rising that

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Speaker 6: their policy is making a difference, that they're on track,

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Speaker 6: and so they're dialing back the restriction to make sure

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Speaker 6: that the economy doesn't suffer more than necessary.

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Speaker 1: And so what a market's predicting now for the end

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Speaker 1: of the year, of the October meeting and beyond.

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Speaker 6: So October is a bit of a strange one because

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Speaker 6: markets actually paired bets after listening to Loguard who, unlike

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Speaker 6: at past meetings, did not give anything away. So she

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Speaker 6: was invited several times to give some sort of a

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Speaker 6: nodge as to what happens in October, which which by

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Speaker 6: the way, is just five weeks away that but she

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Speaker 6: politely declined and said, look, what data dependent. We're going

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Speaker 6: to look at what's coming in and then we're going

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Speaker 6: to take our decision. But yeah, the market took it

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Speaker 6: as a signal that maybe it's too short a time

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Speaker 6: period and paired beds. So the next step that they're

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Speaker 6: looking at is December. Then, you know, we spoke to

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Speaker 6: a few of our sources, of course, and they said, yeah,

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Speaker 6: you know, it's a likely scenario. But they did not

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Speaker 6: want to take October off the table, and that obviously

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Speaker 6: has to do with the fact that they got burned

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Speaker 6: before by giving guidance and then had to follow through

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Speaker 6: when in fact the situation changed and they would have

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Speaker 6: preferred a different outcome. So maximum flexibility from the ECB

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Speaker 6: for now on. But but yeah, we're looking at December realistically.

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Speaker 1: Yes, it's okay, very interesting. Also Bloomberg, speaking of course

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Speaker 1: to ECB policy bakers Nagle and Simcus on a good

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Speaker 1: course to reach the inflation target. Inflation is calming down,

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Speaker 1: a couple of comments from the ECB policy bakers, But

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Speaker 1: it's all a prelude, isn't it a little bit? Can

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Speaker 1: I just put it that way, a prelude to the

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Speaker 1: Fed's potential FIRS cut next week. Briefly, the expectations there, Yana, Yes.

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Speaker 6: So expectations. I mean, it's unusual for the Fed, you know,

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Speaker 6: to have this uncertainty whether they're going to go twenty

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Speaker 6: five or fifty basis points. You can hear voices in

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Speaker 6: either direction. And that's probably also why the UCB doesn't

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Speaker 6: want to say too much on where they are going,

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Speaker 6: because despite all the talk about we're setting monetary policy

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Speaker 6: independently and for the region, of course, it makes a

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Speaker 6: difference what the Fed does.

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Speaker 1: Yeah, absolutely, Yana, Thank you so much for your time

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Speaker 1: this morning. Bloomberg's European economics reporter, Yana Randau. Now to Ukraine,

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Speaker 1: which has made urgent please to lift restrictions on how

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Speaker 1: US and UK weapons can be used in the war

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Speaker 1: with Russia. The US and UK governments are discussing the issue,

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Speaker 1: but you heard the Russian President Vladimir Putin earlier on

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Speaker 1: the program with his warning that NATA would be at

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Speaker 1: war if they allowed longer range weapons to strike inside Russia.

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Speaker 1: Joining me now as our Russia Economy and Government editor

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Speaker 1: Tony halping Tony, good morning. Firstly, just what additional weaponry

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Speaker 1: and capabilities are being discussed for Ukraine?

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Speaker 7: Yes, good monie.

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Speaker 8: Well, it seems that the attention is focusing most at

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Speaker 8: the moment on what called British storm Shadow cruise missiles,

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Speaker 8: and it appears to be focusing around a combination of

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Speaker 8: allowing these missiles to be used by Ukraine with support

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Speaker 8: from US GPS tracking data that would enable them to

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Speaker 8: strike their targets with a high degree of accuracy. Until now,

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Speaker 8: the US hasn't been willing to allow that data to

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Speaker 8: be used. The British has supplied storm Shadow to Ukraine

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Speaker 8: in the past, but they've been used more or less

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Speaker 8: within the battlefield zone in Ukraine itself, so the discussion

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Speaker 8: there is about allowing those missiles to be used at

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Speaker 8: a greater range.

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Speaker 1: How seriously, though, is the warning from Putin being taken well?

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Speaker 8: I think anytime a major nuclear power warns that it

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Speaker 8: may be a war, everyone soberly assesses the risks. Putin

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Speaker 8: has said that He's also said on a number of

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Speaker 8: occasions that steps taken by the Allies to support Ukraine

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Speaker 8: would amount to an escalation to which Russia would respond,

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Speaker 8: and so far, at least those warnings have proven unfounded.

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Speaker 8: The CIA director Winning Burns said last week in fact,

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Speaker 8: that the West should take note of Putin's warnings but

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Speaker 8: shouldn't be intimidated by them.

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Speaker 7: I suspective that's the approach they will take.

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Speaker 1: Okay, the US presidential election is looming. How much of

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Speaker 1: this is being driven by that date?

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Speaker 8: Yes, I think in part it is because there'll be

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Speaker 8: a degree of policy paralysis. I can put it between

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Speaker 8: the election date and whoever wins the election and takes

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Speaker 8: office in January. It's partly driven also imagined by the

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Speaker 8: question of who wins that election. Donald Trump, in the

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Speaker 8: election debate this week, was much less categorical than Kamala

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Speaker 8: Harris about whether he'd support Ukraine winning this war. So yes,

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Speaker 8: in part, the election is driving this discussion. But also

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Speaker 8: winter is coming and it's much more difficult in winter

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Speaker 8: conditions to take advantage of tactical gains in the war,

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Speaker 8: So that's also driving this that if something's going to happen.

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Speaker 7: It should happen before winter sets in.

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Speaker 1: Lastly, with all your experience and the people that you

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Speaker 1: speak to, what's your assessment of Putin's mindset? I mean

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Speaker 1: hugely difficult question.

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Speaker 8: Yeah, well, he's in a difficult place because you know,

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Speaker 8: this was a war that was supposed to last a

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Speaker 8: few days, a couple of weeks, and it's now deep

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Speaker 8: into its third year, and the allies that support Ukraine

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Speaker 8: are showing no sign of weakening in their support. So

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Speaker 8: on top of that, he now faces having to expel

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Speaker 8: Ukrainian forces from Russian territory in his curse region, which

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Speaker 8: is at the very least embarrassing and reflects poorly on

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Speaker 8: his image as a strong leader for Russians. So he's

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Speaker 8: clearly got mounting odds against him. The challenges are growing,

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Speaker 8: But at the same time, there doesn't seem to be

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Speaker 8: any sign that he's preparing to make concessions or to

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Speaker 8: come to the negotiating to over.

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Speaker 7: I suspect he's waiting for the results of that election.

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Speaker 9: Street and beyond.

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