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

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Speaker 2: This is the Bloomberg Day Bake You At podcast, available

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Speaker 2: every morning on Apple, Spotify or wherever you listen. It's Monday,

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Speaker 2: the seventeenth of June in London. I'm Caroline Hepkam.

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Speaker 1: And I'm Stephen Carroll. Coming up today.

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Speaker 3: France's election increasingly looks like a battle between the extremes,

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Speaker 3: as markets remain on edge.

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Speaker 2: Watching out for the vigilantes. Why this shadow of Liz

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Speaker 2: trus looms large over European politicians, policy pledges.

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Speaker 3: Plus the irrepressible dollar. Bloomberg finds that a third of

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Speaker 3: all capital flows have headed to the US since COVID.

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

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Speaker 3: French far right leader Mariine Lepenz says she'll work with

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Speaker 3: current President Emmanuel Macron if her party wins the upcoming

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Speaker 3: parliamentary elections. The National Rally politician told the Figure On

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Speaker 3: newspaper that she was not calling for institutional chaos, while

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Speaker 3: Macron's Economy and finance minister Bruno la Mayer says the

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Speaker 3: country is also at risk from the left wing Popular

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Speaker 3: Front alliance, which is dominated by the far left party

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Speaker 3: France unbowed, and.

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Speaker 4: So I appeal to the social Democrats who have less

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Speaker 4: pride than Francois along rejoin the center block.

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Speaker 1: Pay attention to what's happening.

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Speaker 4: This is France unbowed, anti Semitic, hostile to workers in

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Speaker 4: the work in class. This popular front is neither a

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Speaker 4: front nor popular. It is profoundly disunited and will do

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Speaker 4: harm to the French people.

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Speaker 1: Brunoda.

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Speaker 3: They're speaking through a translator to the French radio station

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Speaker 3: France Antire parties submitted their final lists of candidates for

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Speaker 3: a deadline on Sunday, after negotiations among parties to form

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Speaker 3: alliances to bolster their chances in the two round ballot.

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Speaker 3: The far right National Rally is leading in the polls

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Speaker 3: with the alliance of left wing parties and second, ahead

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Speaker 3: of President Macrol's party in third.

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Speaker 2: Now, French and Swiss finance firms are more likely to

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Speaker 2: have former politicians as board members in their European peers.

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Speaker 2: According to a study by Ernst and Young, a third

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Speaker 2: of financial services company headquartered in Switzerland and thirty percent

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Speaker 2: of those in France have at least one board member

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Speaker 2: with ministerial or parliamentary experience. In comparison, just eleven percent

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Speaker 2: of UK firms. Both the same former politicians are increasingly

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Speaker 2: in demand on the boards of companies as businesses navigate

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Speaker 2: election fueled political uncertainty in the UK Richi scenax.

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Speaker 3: Conservatives are headed for a wipeout in the July fourth

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Speaker 3: general election, according to three new Polls Servations survey sees

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Speaker 3: the Tories getting only seventy two seats, which would be

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Speaker 3: their worst election performance in two centuries. One of the

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Speaker 3: reasons for their slide in the polls has been the

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Speaker 3: emergence of the right wing Reform UK led by Nigel Faraj.

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Speaker 3: The party is launching its manifesto later today. For former

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Speaker 3: Tory defense Acatreliam Fox says voting for Reform UK is

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Speaker 3: counter productive. The price for what they think is a

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Speaker 3: protest vote would be a labor government that would do

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Speaker 3: the very things for example in the referendum that they

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Speaker 3: voted against.

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Speaker 1: It is completely illogical.

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Speaker 3: Despite Fox's words, Reform UK overtook the Conservatives in the

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Speaker 3: polls for the first time over the weekend.

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Speaker 2: The United States has mopped up almost one third of

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Speaker 2: all the global investment flows since COVID analysis by the

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Speaker 2: International Monetary fund requested by Bloomberg News shows that the

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Speaker 2: US's share of financial flows have climbed, with high US

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Speaker 2: interest rates a major draw for overseas investors. The US

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Speaker 2: has also pulled in a fresh wave of foreign direct investment.

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Speaker 2: That's despite all the angs over the dollars dominance and

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Speaker 2: one off events like a shortage of dollars in twenty

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Speaker 2: twenty that spook to global investors. But there may be

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Speaker 2: challenges ahead from FED rate policy and a divisive presidential

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Speaker 2: election in November, which could affect the fiscal deficits.

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Speaker 3: China's industrial expansion slowed in May at the same time

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Speaker 3: as retail sales picked up. The mixed picture suggests the

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Speaker 3: country's domestic market is beginning to catch up on its

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Speaker 3: export driven recovery. The exports are likely to come under

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Speaker 3: pressure undergrowing strain rather as major partners erect new trade barriers.

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Speaker 3: China's premier Lea Chiang is in Australia today talking up

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Speaker 3: the benefits of their trade partnership.

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Speaker 5: We will deliver our respective strengths operations, energy, mining, new

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Speaker 5: energy vehicles, screen development and can We agreed to provide

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Speaker 5: each other with multi entry visas for tourism, business and

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Speaker 5: the visiting members facilitated exchanges.

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Speaker 3: Premierly spoke there via translator on the first Australian visit

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Speaker 3: a senior Chinese official has made since twenty seventeen.

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Speaker 2: And just lastly, England has beaten Serbia one nil in

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Speaker 2: their first game at Euro twenty twenty four in Germany.

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Speaker 2: Twenty year old Jude Bellingham's first half header proved to

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Speaker 2: be the difference between the two teams. Goalkeeper Jordan Pickford

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Speaker 2: also made some crucial says late on for Gareth Southgate side, please.

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Speaker 1: That we had to show different side, that we had

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Speaker 1: to show that resilience to defend our box because I

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Speaker 1: think as a group that really builds a huge spirit.

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Speaker 2: Southgates England team is currently top of Group C after

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Speaker 2: that one all draw between Denmark and Slovenia in the

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Speaker 2: other group game. The Euro's Final is being held on

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Speaker 2: the fourteenth of July in Berlin. Now in a moment,

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Speaker 2: we're going to discuss the interplay between the bond markets

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Speaker 2: and elections in France and the UK. The very serious

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Speaker 2: matter of elections which have really uphended a lot of thinking,

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Speaker 2: certainly about there being a weeker dollar this year that

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Speaker 2: seems to be the opposite of what is happening. But

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Speaker 2: before we get into all of that, something perhaps lighter

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Speaker 2: and quite interesting. I mean, the inflation story has been

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Speaker 2: quite severe, but if you look at the cities in

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Speaker 2: the world that are the most expensive places to live

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Speaker 2: if you're an expat, London has leapt up the list,

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Speaker 2: but Hong Kong and Singapore are now the priciest cities

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Speaker 2: in the world for expats, and.

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Speaker 1: It's higher ends that are driving this.

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Speaker 3: It's the latsupport from Mercer's twenty twenty four Cast of

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Speaker 3: Living reports. So the thing that propelled Singapore and Hong

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Speaker 3: Kong over the likes of Zurich, Geneva, Basl and Burn

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Speaker 3: also traditionally quite expensive cities, is the fact that rents

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Speaker 3: have gone up by so much, and that's what's been

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Speaker 3: leading to this reshuffle. Inflation is such a big theme

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Speaker 3: in this report this time around as well, because it

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Speaker 3: means that companies that are relocating staff, which is basically

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Speaker 3: what this report is aimed at, do need to be

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Speaker 3: that much more conscious of the inflationary trends in the

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Speaker 3: places that they're relocating people too, and that's impacting, of course,

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Speaker 3: what those pay expectations are for those workers who are

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Speaker 3: moving as well.

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Speaker 2: Yeah. Absolutely, Look maybe it's just me, but personally, the

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Speaker 2: pull of the Middle East also seems to be rising,

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Speaker 2: doesn't it when you talk to people in London. So

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Speaker 2: I was quite interested to see that Actually Dubai and

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Speaker 2: the UAE is ranked fifteenth, So I don't know, I

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Speaker 2: mean London's ranked eighth. It's still pretty expensive actually, or

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Speaker 2: perhaps increasingly expensive also to head to the Middle East. Anyway,

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Speaker 2: you can find the list of all the thirty cities

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Speaker 2: that have been tracked on the Bloomberg terminal this morning.

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Speaker 3: Well, let's turn back to some of the election news

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Speaker 3: out of France over the weekend, as that campaign is

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Speaker 3: heating up there as well.

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Speaker 2: Yeah, absolutely so. The far right leader Marine la Penn

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Speaker 2: saying in a newspaper interview that she would work with

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Speaker 2: Emmanuel Macon if her party wins the parliamentary election. Seven

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Speaker 2: very interesting comments from Marine La Penn, given her party

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Speaker 2: is in the lead in the polls, and.

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Speaker 3: This appears to be an appealed to moderate voters and

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Speaker 3: also perhaps two investors as well. Some Marin La Penn

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Speaker 3: speaking to the Figure on newspaper talking about how she's

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Speaker 3: respectful of institutions and isn't calling for institutional chaos. She

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Speaker 3: says she won't call for Macron to resign if her

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Speaker 3: party wins, and that there will, in her words, simply

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Speaker 3: be cohabitation if that happens. This is a situation where

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Speaker 3: you have a prime minister from one party and a

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Speaker 3: president from another. The last time it happened in France

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Speaker 3: was in nineteen ninety seven. This coincides with the latest

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Speaker 3: polling where we looking at the national rally, on thirty

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Speaker 3: five percent of the vote, the left wing Popular Front

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Speaker 3: so we've just been hearing about, would come second according

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Speaker 3: to this poll at twenty six percent. Macrons Renaissance Party

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Speaker 3: in third at nineteen percent as well. It's worth remembering

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Speaker 3: that France has a two round electoral system, so what

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Speaker 3: actually might be interesting looking at these polling results is

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Speaker 3: many of those runoff contests could actually exclude Emmanuel Macron's

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Speaker 3: party altogether, and voters may in the second round be

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Speaker 3: given a choice of the far right and the left

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Speaker 3: wing alliance as well. This campaign is obviously still playing

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Speaker 3: out at a high tempo. We had protests over the

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Speaker 3: weekend as well, tens of thousands of people taking to

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Speaker 3: the streets across France to protest against La penn stance

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Speaker 3: on things like human rights, the environment and the economy.

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Speaker 1: That left wing alliance looking pretty fragile already.

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Speaker 3: We've seen some high profile MPs from parties being left

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Speaker 3: off the electoral lists that's were finalized on Sunday night.

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Speaker 3: There's also still upheaval in the center right party. There

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Speaker 3: are public can as well over their leader who'd initially

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Speaker 3: promised an alliance with the far right and then rolling

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Speaker 3: back in the party trying to oust him at the

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Speaker 3: same time, as well, legal challenges underway there. This is

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Speaker 3: a campaign that really is heating up there.

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Speaker 2: Yeah, I mean it's quite incredible. Markets find it very

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Speaker 2: difficult to think about elections and to think about political

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Speaker 2: risk and how voters are going to make their decisions.

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Speaker 2: But I think it's just even more tense now. I

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Speaker 2: mean India was quite surprising. Mexico also we saw surprising

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Speaker 2: results in the markets, and last week the spread between

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Speaker 2: French and German bondias widening the most on records. So

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Speaker 2: actually great deal of tension about the direction of these votes.

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Speaker 3: Well, let's bring in our markets live asor team leader

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Speaker 3: Garfield Ronalds for more on the market side of this story,

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Speaker 3: Garfield talk us through just what's been happening to French

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Speaker 3: bonds since the snap election was announced.

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Speaker 1: Carolyne mentioned the spreads there.

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Speaker 6: Yeah, it really is all about the spreads here. If

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Speaker 6: you look at the just look at French bond yields

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Speaker 6: rows three basis points on the ten year last week,

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Speaker 6: you wouldn't think that there was anything much going on,

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Speaker 6: but that meant that they gapped twenty eight basis points

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Speaker 6: wider or so relative to German borns. That's the biggest

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Speaker 6: jump in the spread on record in daily going back

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Speaker 6: to nineteen ninety. So that's an extraordinary indication of just

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Speaker 6: how serious the bond market is taking this and how

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Speaker 6: you know, investors are really not sure what to make

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Speaker 6: of the decision by Micron to call the staff election,

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Speaker 6: the polls that are showing his party will do very poorly.

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Speaker 6: You know you were outlining took you quite a while,

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Speaker 6: the outlined the potential that what might go on with

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Speaker 6: French elections. So investors are going to be watching a

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Speaker 6: lot of that, and a lot of them look like

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Speaker 6: they want to be on the sidelines while they wait

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Speaker 6: to see what comes out because the moment they've got

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Speaker 6: to feel like the best case scenario is that, you know,

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Speaker 6: Macron ends up retaining some level of control, but he

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Speaker 6: will have lost a lot of credibility and lost a

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Speaker 6: lot of traction. Even when Lapan is talking about cohabitation,

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Speaker 6: you know, the question is going to be who who

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Speaker 6: gets to have the greatest say on where things go.

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Speaker 6: So you've got a lot of concern about that. In

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Speaker 6: the bond market, you're going to go on at least

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Speaker 6: having a widespread to German yield. You've got France at

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Speaker 6: the moment trading as though it is Spain or Portugal,

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Speaker 6: which was something you wouldn't have thought you would have

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Speaker 6: seen some time back, given those those economies histories. You

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Speaker 6: also have the CDs for France gapping wider as well.

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Speaker 6: It jumped by the most since March twenty twenty when

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Speaker 6: the pandemic was going on, and it's now very close

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Speaker 6: to going above the CDs for the US. So maybe

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Speaker 6: investors are worried you're going to see lots of government

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Speaker 6: spending and political gridlock in France, which is very much

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Speaker 6: the expectation for the United States.

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Speaker 2: Yeah, absolutely, So, then what do you think investors are

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Speaker 2: watching out for, in particular from the parties. Probably more detail, surely, Yeah, I.

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Speaker 6: Mean more detail, I think, more than anything else, a

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Speaker 6: sign that they're willing to compromise you to pursue something

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Speaker 6: close to politics as usual. I mean, any manifesto promises

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Speaker 6: that might make you have to take you with a

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Speaker 6: grain of salt, because your politics has shown you're never

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Speaker 6: quite sure what people will do once they're actually in

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Speaker 6: power versus what they say they will do once they're

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Speaker 6: in power, and a lot of that depends on what

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Speaker 6: the outcomes are. You look at Mexico, you're just recently

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Speaker 6: where the election went mostly as expected. It's just that

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Speaker 6: Schlimbaum ended up doing too well, so well that investors

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Speaker 6: there found it difficult to trust that she would carry

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Speaker 6: out measured policies in the way that they would like

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Speaker 6: to see. So I think in a lot of ways,

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Speaker 6: it's going to be the way they talk rather than

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Speaker 6: what they actually say, that investors will pay mode attention to.

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