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

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

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Speaker 1: wherever you listen. It's Thursday, the nineteenth of September in London.

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Speaker 2: I'm Caroline HEPK and.

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Speaker 3: I'm Stephen Carroll. Coming up today is the first cut,

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Speaker 3: the deepest. The Fed ops for fifty as it delivers

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Speaker 3: its first rate reduction in more than four years.

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Speaker 1: Israel diverts troops to its border with Lebanon as a

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Speaker 1: second wave of communication devices explodes.

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Speaker 3: Plus, we have exclusive reporting on the global shadow network

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Speaker 3: transporting sanctioned Russian gas.

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

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Speaker 3: The Federal Reserve has cut its benchmark lending rate for

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Speaker 3: the first time in four years. Policymakers voted to lower

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Speaker 3: the rate by fifty basis points as they shift focus

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Speaker 3: to concerns over the strength of the US economy and

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Speaker 3: jobs market. Speaking after the announcement, Federal Reserve Charger Own

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Speaker 3: Powell used his press conference to push back against the

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Speaker 3: notion that the oversized cut was to make up for

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Speaker 3: lost time.

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Speaker 4: A broad set of indicators suggests that conditions in the

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Speaker 4: labor market are now less tight than just before the

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Speaker 4: pandemic in twenty nineteen. The labor market is not a

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Speaker 4: source of elevated inflationary pressures. I do not think that

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Speaker 4: anyone should look at this and say, oh, this is

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Speaker 4: the new pace. You know, you have to have to

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Speaker 4: think about it in terms of the base case. Of course,

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Speaker 4: what happens will happen. If the labor market were to

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Speaker 4: slow unexpectedly, then we have the ability to react to that.

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Speaker 4: We have greater confidence now that inflation is moving down

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Speaker 4: to two percent, But at the same time, our plan

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Speaker 4: is that we will be at two percent.

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Speaker 3: Despite Pile's positive spin at multiple moments during his press conference,

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Speaker 3: the half point cut was not a unanimous decision. Michelle

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Speaker 3: Bowman cost a vote in favor of a smaller quarter

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Speaker 3: point cut, the first descent by a fat governor since

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Speaker 3: two thousand and five.

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Speaker 1: The decision to opt for a half point cut led

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Speaker 1: traders to rampop bets on the pace of US ray reductions.

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Speaker 1: The market is now pricing in around sixty five basis

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Speaker 1: points of easing at the fed's two remaining meetings this year.

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Speaker 1: That's despite officials forecasting just fifty points of further cuts

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Speaker 1: in twenty twenty four, Bloomberg Intelligence is Chief Interest Rates

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Speaker 1: trash is are a Jersey says he expects the Fed

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Speaker 1: to stick to that pace, but it's what happens after

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Speaker 1: that which is more significant.

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Speaker 5: When you think about November and December's meeting, you know,

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Speaker 5: they made it pretty clear that unless something significantly changes

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Speaker 5: with the trends in the economy and inflation, that you're

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Speaker 5: likely to see, you know, modest cuts going forward, so

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Speaker 5: you know, twenty five basis points over the next couple

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Speaker 5: of meetings. But I think that's less important to me.

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Speaker 5: What I was focused on was what they said they were,

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Speaker 5: where they said they were going to ultimately, and where

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Speaker 5: they think they're going to even with the economy not

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Speaker 5: hitting into a recession, is all the way down to

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Speaker 5: under three percent on the FED funds.

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Speaker 1: Rate Bloomberg Intelligence Chief Interest Rates trashes are a Jersey,

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Speaker 1: referring there to the fomc's median forecast for the end

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Speaker 1: of twenty twenty six for rates to be just below

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Speaker 1: two point nine percent. The move caps months of uncertainty

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Speaker 1: over the timing and scale of the Fed's first rate cut.

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Speaker 1: Now the focus shifts to the pace of reductions ahead well,

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Speaker 1: the Bank.

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Speaker 3: Of England doesn't focused today as it announces its decision

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Speaker 3: on rate. It's thought of the patient approach to reversing

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Speaker 3: the most aggressive policy tightening in decades will be maintained.

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Speaker 3: Our UK correspondent Lizzie Burden has more.

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Speaker 6: It's decision day on thread Needle Street, but economists and

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Speaker 6: investors are expecting policymakers to stick to the status quo,

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Speaker 6: holding the benchmark rate at five percent. However, wages are

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Speaker 6: increasing on a faster Bank of England cutting cycle ahead

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Speaker 6: after invation readings came in lower than Central Bank forecasts.

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Speaker 6: In July and August, Attential will be focused on Governor

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Speaker 6: Andrew Bailey for hints that borrowing costs could be lowered

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Speaker 6: again in November after committee members voted narrowly to end

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Speaker 6: their sixteen year high last month. Traders are also awaiting

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Speaker 6: news on the speed of quantitative tightening, a decision which

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Speaker 6: could prove pivotal for new Chancellor Rachel Reeves's October budget.

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Speaker 6: Will have full coverage of the announcement to do at

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Speaker 6: twelve pm London time on Bloomberg in London, Lizziebird and

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Speaker 6: Bloomberg Radio.

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Speaker 1: Now to other news Israel has declared a new phase

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Speaker 1: in its regional war with Islamist groups. The country's defense minister,

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Speaker 1: you Have Gallant, also said that troops would be diverted

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Speaker 1: to the Lebanese board up, where Israel has been exchanging

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Speaker 1: rocket far with HESB militants. His comments come after exploding

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Speaker 1: telecommunications devices in Lebanon killed twenty six people over two

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Speaker 1: days and wounded more than three thousand, according to Lebanon's

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Speaker 1: Health ministry. Lebanon's government has blamed Israel for the attack.

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Speaker 1: The U S Secretary of State Anthony Blincoln says that

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Speaker 1: the US had nothing to do with the assault.

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Speaker 7: The United States did not know about, nor was it

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Speaker 7: involved in these incidents, and we're still gathering the infram

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Speaker 7: and gathering the facts. Broadly speaking, we've been very clear

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Speaker 7: and we remain very clear about the importance of all

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Speaker 7: parties avoiding any steps that could further escalate the conflict.

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Speaker 1: Anthony Blincoln, US Secty of State speaking, The shift in

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Speaker 1: Israeli military operations to the north of the country has

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Speaker 1: spoked fears of a wider war. As the US tries

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Speaker 1: to calm the situation.

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Speaker 3: European car sales dropped by sixteen and a half percent

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Speaker 3: last month, with over seven hundred and fifty seven hundred

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Speaker 3: and fifty five thousand sales. Total deliveries were dragged down

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Speaker 3: by Germany and France as sales of electric vehicles cratered.

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Speaker 3: EV sales dropped by sixty nine percent in August to

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Speaker 3: just over twenty seven thousand. The UK was the only

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Speaker 3: major market where EV sales rose, gaining ten point eight percent.

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Speaker 3: The data comes from the European Automobile Manufacturers Association, the

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Speaker 3: Industry Group, which is now calling for urgent action from

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Speaker 3: the US European Commission ahead of twenty twenty five emissions

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Speaker 3: targets that could potentially cast billions of euros and fines.

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Speaker 1: Leading think tanks are calling for more ambitious reforms from

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Speaker 1: the UK government. The Resolution Foundation says that Prime Minister

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Speaker 1: Kirstarma is only halfway towards his target of making Britain

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Speaker 1: the fastest growing economy in the G seven.

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Speaker 2: Bloomberg's James Orcock has more.

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Speaker 8: Slow growth, mysteriously poor productivity, and a contagion of worklessness.

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Speaker 8: The problems of the British economy have been well charted,

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Speaker 8: but now there's a flurry of policy solutions which think

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Speaker 8: tanks and lobbyists are trying to get the new government

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Speaker 8: to look at the Resolution Foundations say, on top of

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Speaker 8: everything Labour has done so far, it needs to get

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Speaker 8: its workers' reforms right, create better trade relations with the EU,

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Speaker 8: and step up investment if it wants to achieve its

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Speaker 8: growth pledges. On the investment side, the left leaning think

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Speaker 8: tank has an unlikely ally in the City of London

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Speaker 8: thinks the UK could attract as much as seven point

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Speaker 8: seven billion pounds more investment by twenty thirty if it

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Speaker 8: did a better job of attracting foreign sovereign wealth in London.

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Speaker 8: James Wilcock Bloomberg Radier.

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Speaker 3: Turning next to the United States and the chair of

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Speaker 3: the Security and Exchange Commission, says the way markets are

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Speaker 3: using AI risks heartbreak. Gary Gensler is warning that too

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Speaker 3: many traders are relying on the same models, potentially causing

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Speaker 3: a next future market meltdown. He compared it to the movie.

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Speaker 9: Her Like Scarlett Johansson, was that romantic interest in her

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Speaker 9: and then when she went offline, all eighty three hundred

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Speaker 9: and sixteen of her romantic partners were heartbroken. I don't

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Speaker 9: want that to happen in the financial sector.

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Speaker 3: Gensler added that he thought automation was still a good

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Speaker 3: thing overall. The SEC made a proposal last year to

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Speaker 3: require brokers and investment advisors to mitigate conflicts of interest

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Speaker 3: in their use of AI tools that might put their

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Speaker 3: interests before clients at a moment. Will bring you more

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Speaker 3: on the FED decision plus are exclusive reporting on the

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Speaker 3: Shadow fleet of ships exporting Russian gas. But first, another

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Speaker 3: story that caught our eye this morning, how AI is

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Speaker 3: bringing back dead celebrities and they're making millions from it.

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Speaker 3: This is our colleague Mea Dowkins has been writing about

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Speaker 3: how the estates of the likes of James Dean, Judy Garland,

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Speaker 3: and Burt Reynolds, among others, have signed up to an

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Speaker 3: AI voice cloning startup called eleven Labs, which can use

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Speaker 3: their iconic tones to narrate books or other materials.

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Speaker 1: Yeah, I think this is I mean, we've seen some

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Speaker 1: of this, haven't we, especially in London.

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Speaker 2: Abb of Voyage.

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Speaker 1: I went to see that, of course, which is kind

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Speaker 1: of a hologram image.

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Speaker 3: As an eldest version to cod Yes.

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Speaker 2: Exactly, that's coming soon.

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Speaker 1: So me did a really nice piece of kind of

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Speaker 1: deep dive into this about the financial implications, it's quite complicated, actually.

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Speaker 3: It's kind of and look, there are some in the

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Speaker 3: industry who say it's a great thing and points to

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Speaker 3: the que amounds money can Others aren't so convinced, and

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Speaker 3: she's spoken to both sides on this as well. She

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Speaker 3: spoke to one industry player who talked about this being

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Speaker 3: a trend a kin to the nft fad as well

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Speaker 3: as somebody to think about that. Of course, there are

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Speaker 3: ethical concerns involved her as well, and you mentioned Abba Voyage.

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Speaker 3: She spoke to the co producer of that show as well,

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Speaker 3: saying that AI can't replace the emotional connection that people

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Speaker 3: have to arts. There are limits to this as well,

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Speaker 3: but it's a fascinating read on Bloomberg dot com and

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Speaker 3: on the terminal.

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Speaker 2: Okay, good stuff.

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Speaker 1: Let's think about then, the Fed's decision, now, shall we

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Speaker 1: to cut interest rates by fifty basis points? Will change

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Speaker 1: your own Pal says that future moves will be based

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Speaker 1: on how the US economy performs in the months ahead.

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Speaker 1: And let's bring in bloom Big Opinion columist Daniel Moss,

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Speaker 1: who joins us now for more on this Good morning.

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Speaker 2: Daniel in the end.

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Speaker 1: What message you think Powell actually sent with this cut

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Speaker 1: and then the press conference afterwards, this jumbo cut in

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Speaker 1: the end.

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Speaker 10: Well, I'm not so sure we should call it jumbo.

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Speaker 10: Don't forget when the head was was hiking, it did

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Speaker 10: a couple of seventy five basis point moves in the

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Speaker 10: other direction. That was jumbo. I think the message that

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Speaker 10: were sent today was if we were perceived to be

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Speaker 10: late as inflation was climbing, we're not going to be

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Speaker 10: lacking for forcefulness as unemployment begins to rise. Now, you know,

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Speaker 10: it's all very well for j. Powell to say it

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Speaker 10: is press conference, Oh, don't take this as a future sign.

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Speaker 10: Don't take this as like meaning that we're going to

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Speaker 10: do fifty to fifty to fifty to fifty. That's fine,

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Speaker 10: But he would know that by starting with fifty, which

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Speaker 10: the Fed rarely does absent a crisis, and this is

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Speaker 10: not a crisis, he is laying down a marker for expectations.

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Speaker 10: Does really a sense he's trying to have.

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Speaker 11: It both ways?

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Speaker 3: Well, I mean, what do you make of how the

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Speaker 3: markets are interpreting that? Than the pricing in about sixty

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Speaker 3: five basis points are further easing this year. What does

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Speaker 3: it tad That's about why the fad goes for the

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Speaker 3: rest of the air.

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Speaker 10: It tells you that there's a couple more cuts coming.

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Speaker 10: But you know, look, this can oscillate based on data

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Speaker 10: and based on commentary. Don't forget It's like, only five

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Speaker 10: business days ago the consensus was that fifty would be

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Speaker 10: a stretch. Yet by the time that press release came

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Speaker 10: at two o'clock yesterday afternoon, people had coalesced around fifty,

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Speaker 10: So things can changed, and emphasized his data dependent on

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Speaker 10: all the rest of it. But look, there's a marker

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Speaker 10: being laid down here. We're going to respond forcefully to

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Speaker 10: signs of emerging softness in the labor market. And by

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Speaker 10: the way, inflation heading toward two percent gives us the

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Speaker 10: flexibility to do so. It was interesting, he added, just

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Speaker 10: by way almost of clearing his throat at the end

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Speaker 10: of his sense. Of course, you know we still think

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Speaker 10: we'll get to two.

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Speaker 1: Yes, which is interesting of itself, where the new normal

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Speaker 1: post pandemic actually is. What did you make of a

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Speaker 1: descending vote from Michelle Bowman?

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Speaker 2: Is that significant?

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Speaker 10: Well, you know, when I first saw it, Central banking

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Speaker 10: geeks like me. You know, I got pretty surprised about

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Speaker 10: that because I'm always asking people when was the last

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Speaker 10: time a FED governor dissented, and prior to yesterday, the answer,

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Speaker 10: of course was two thousand and five John Olsen in

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Speaker 10: the aftermath of Hurricane Katrina. So this was interesting from

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Speaker 10: a geeky perspective. Then again, when you look at it closely,

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Speaker 10: it's not like Michelle Bowman favored no cut at all.

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Speaker 10: She was dessenting on the size of the cut, not

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Speaker 10: the cut per se. The other thing I would say

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Speaker 10: is when it comes to monetary policy, she's not particularly influential.

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Speaker 10: I believe her background is as a community banker. Community

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Speaker 10: bankers have a lot of clout in DC. Congress always

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Speaker 10: likes to see a community banker on the foe. See.

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Speaker 10: I think the vote that Paw really wanted for fifty

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Speaker 10: and that he got was Chris Wall.

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Speaker 3: What about looking ahead? We've got a decision from the

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Speaker 3: Bank of England today, We've got the Bank of Japan tomorrow.

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Speaker 3: How much will policymakers in London and in Tokyo be

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Speaker 3: eyeing the fad decision?

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Speaker 10: Well, again, we're at that point. Everyone will say, well,

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Speaker 10: you know, we don't just follow the FED. You know,

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Speaker 10: we act in our own domestic situation. Da da da

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Speaker 10: da da da da. But they're all responding to the

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Speaker 10: same trends. And I would put the Bank of England

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Speaker 10: in that category. I mean, the Bank of Japan is

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Speaker 10: the outlier in this whole conversation. What's going to be

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Speaker 10: very interesting is whether the Governor Kazuo Waider can back

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Speaker 10: the hawkishness that he exhibited back in August with language

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Speaker 10: like this on Friday, or does he you know, is

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Speaker 10: he perceived to be walking away? You know, my colleague

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Speaker 10: garaud Ready and I have written that one of his

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Speaker 10: weaknesses is as a longtime academic figure, we'll answer questions

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Speaker 10: on their merits, and sometimes it seems like he's given

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Speaker 10: giving secondary thought to the message he seeks to convey. Well,

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Speaker 10: that's a very interesting point. No, no, no, it's not

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Speaker 10: necessarily a signal. But this is the danger for Wader.

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Speaker 10: He was forceful with hawkishness in August. You know which

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Speaker 10: Wader shows up Friday.

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Speaker 1: Okay, we shall wait that interesting question. Daniel, thank you

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Speaker 1: so much for your time this morning. A big opinion

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Speaker 1: that columnist Daniel Moss. Then, as we think about that

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Speaker 1: fifty basis point rate card. So we had the vote.

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Speaker 1: It was eleven to one, of course, to reduce the

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Speaker 1: rates to arrange now of four point seventy five to

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Speaker 1: five percent after the FED of course held for.

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Speaker 2: More than a year.

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Speaker 1: And in terms of the projections, you've got ten out

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Speaker 1: of nineteen officials favoring lowering rates by at least an

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Speaker 1: additional half point over the next two meetings.

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Speaker 2: So that's ahead.

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Speaker 3: Yeah, of course, plenty to read more from Daniel and

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Speaker 3: as colleagues are Bloomberg dot Com, Forward, Slash Opinion. I

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Speaker 3: would also point and John Othis's referenced and his piece

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Speaker 3: just out this morning as well as Bimberg Opinion has

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Speaker 3: a FED day soundtrack and there's a Spotify playlist that

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Speaker 3: you can click through on his piece. The first song

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Speaker 3: on the list, the first cut, is the deepest. Let's

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Speaker 3: go to a different story now. This morning some exclusive

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Speaker 3: Bloomberg reporting on how Russia's weaving a global web of

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Speaker 3: shell companies to create a shadow fleet to export liquefied

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Speaker 3: natural gas. This is an effort to circumvent US energy

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Speaker 3: sanctions over the Russian invasion of Ukraine. We've got Bloomberg

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Speaker 3: Stephens Staptinski with us for more. It leads our team

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Speaker 3: of energy reporters in Agist even great to have you on.

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Speaker 3: We've reported previously on the shadow fleet of ships carrying

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Speaker 3: Russian oil. This investigation looked at the way Russia's exporting

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Speaker 3: LNG from its Arctic terminal that only opened last December.

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Speaker 3: How are they doing it?

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Speaker 11: Yeah, I mean the LNG dark fleet is much smaller

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Speaker 11: than Russian the Russian one which is so far when

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Speaker 11: you some calculations show that they've a met hundreds of

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Speaker 11: billions of dollars with that trade for liquefied natural gas,

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Speaker 11: it's a little bit more challenging. Unlike the oil industry,

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Speaker 11: where there are thousands over seven thousand vessels available, so

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Speaker 11: it's easier to hide your movement and buy old and

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Speaker 11: smaller ships. The LNG industry liquified natural gas is much smaller.

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Speaker 11: It has only seven over a little bit over seven

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Speaker 11: hundred ships, and it's a very specialized trade, so you

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Speaker 11: can't just bring it to any old port. You have

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Speaker 11: to bring it to a specialized LNG export terminal or

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Speaker 11: import terminal. So through our reporting we discovered that a

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Speaker 11: company in Dubai we're not exactly shared the relation with Russia.

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Speaker 11: But this company started amassing vessels in March twenty twenty

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Speaker 11: four to help Russia essentially export the fuel. The fuel

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Speaker 11: was finally exported with one of these ships in August.

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Speaker 11: A picture satellite pictures confirmed it was the first of August.

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Speaker 11: The vessel called Pie was faking its AIS location, so

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Speaker 11: that ship tracking data showed that it was in the barns.

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Speaker 8: See.

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Speaker 1: Okay, so who's buying this leng what are the known

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Speaker 1: risks about this?

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Speaker 11: So through our investigation we found that the Russian government

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Speaker 11: has been putting pressure on Arctic Energy two to get

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Speaker 11: exports out of the facility. Because of the sanctions from

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Speaker 11: the United States last year, they weren't able to get

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Speaker 11: their icebreaker ships and they were also struggling to find

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Speaker 11: buyers and to this day they still do struggle to

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Speaker 11: find buyers. So because of that, they were looking at

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Speaker 11: waves to get the fuel out. That's why the dark

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Speaker 11: Fleet was developed. And I think it's important for Putin

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Speaker 11: as well. He's looked at this project, which has been

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Speaker 11: hit by sanctions, as a sort of prestige project. If

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Speaker 11: they're able to get these exports out of the facility,

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Speaker 11: then it shows that Western sanction aren't effective against Moscow's

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Speaker 11: trade of fossil fuels. So this has gotten Putin's personal

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Speaker 11: stamp of approval to get it through and through our

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Speaker 11: According to people with knowledge of the strategy, there is

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Speaker 11: pressure from Russian officials to get the shipments out.

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Speaker 3: What about the counter efforts to is this? Surely the

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Speaker 3: US must be looking at the circumvention and thinking about

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Speaker 3: how to combats.

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Speaker 11: Precisely so, the shadow fleet of vessels were accumulated over

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Speaker 11: the last few months, and the first shipment was in

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Speaker 11: early August. In quick succession, there were three more shipments.

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Speaker 11: All three of the vessels were faking their location when

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Speaker 11: they picked up the energy from the Arctic Energy to facility,

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Speaker 11: but later in August the US slap sanctions on all

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Speaker 11: three of the ships. There was another instance where one

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Speaker 11: of the sanctioned vessel transferred the energy through a ship

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Speaker 11: to ship transfer onto a vessel that hadn't been sanctioned yet. Basically,

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Speaker 11: less than two weeks later, do you sanction that ship

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Speaker 11: as well? So US is taking unprecedently fast steps to

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Speaker 11: make sure that any way they can put pressure on

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Speaker 11: the development or further development of the Dark fleet, and

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Speaker 11: so they're throwing sanctions on very quickly. By doing so,

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Speaker 11: you're also deterring potential buyers, because if you're a company

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Speaker 11: somewhere looking to potentially purchase the fuel, would you risk

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Speaker 11: counter sanctions from the United States if they see that

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Speaker 11: you're involved in this trade.

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Speaker 6: Mm hmm