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

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Speaker 1: dayba Acurate podcast, available every morning on Apples, Spotify or

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Speaker 1: wherever you listen. It's Wednesday, the ninth of October. Hit

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Speaker 1: in London. I'm Caroline Hepka and.

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Speaker 2: I'm Stephen Carroll. Coming up today. The US government considers

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Speaker 2: breaking up Google over its dominance of the online search market.

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Speaker 1: Jamie Diamond, JP Morgan CEO, says that London risks falling

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Speaker 1: further behind New York's IPO market if labor doesn't follow

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Speaker 1: through on its promised reforms.

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Speaker 2: Plus Franz's budget crunch, we have a special report on

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Speaker 2: investors falling out of love with French debt over what

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Speaker 2: one economist has described as fiscal murder.

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

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Speaker 2: The US Department of Justice is considering a historic breakup

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Speaker 2: of Google as a possible remedy in the monopoly case

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Speaker 2: at won against the company in August. The regulator is

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Speaker 2: contemplace forcing the firm to sell off parts of its

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Speaker 2: operations as it seeks to prevent the tech giant from

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Speaker 2: using its products, including Chrome and Android, to dominate the

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Speaker 2: search industry. Speaking to Bloomberg's The David Rubinstein Show peer

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Speaker 2: to Peer Conversations for an episode set to air this week.

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Speaker 2: Alphabet and Google CEO Sundar pitch I played down the

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Speaker 2: idea that the company's competition battles pose an immediate threat.

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Speaker 3: We definitely disagree with the ruling, but it been still

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Speaker 3: in the middle of the the remedy sphase, and you know,

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Speaker 3: we will appeal and this process will likely take many years.

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Speaker 3: And you know, I'm confident given that you know, we

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Speaker 3: are focused on innovating using technology, will do well in

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Speaker 3: the long run.

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Speaker 2: That's off about CEOs and or pitch I speaking there

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Speaker 2: to Bloomberg last month, responding to Tuesday's Justice Department filing,

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Speaker 2: Google said its proposals would have significant unintended consequences for consumers, businesses,

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Speaker 2: and American competitiveness.

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Speaker 1: Chinese equities have led losses in Asia. Thats Trader's way,

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Speaker 1: weak economic data and Beijing's reluctance to commit to more stimulus.

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Speaker 1: The Benchmarks is I three hundred index tumbled as much

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Speaker 1: as seven point four percent in its biggest fall since

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Speaker 1: twenty twenty. The drop more than wiped out the previous

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Speaker 1: day's gains when stocks searched following the end of the

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Speaker 1: Golden Week holiday. The latest moves come as a growing

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Speaker 1: number of strshists and fund managers say that Beijing needs

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Speaker 1: to back up it's spending pledges with fiscal measures. Here

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Speaker 1: is Nicholas Yeo, who's head of Chinese equities at Aberdeen.

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Speaker 4: The base case is still to follow true, right. I

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Speaker 4: mean you look very bad if there was no follow true.

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Speaker 4: So everything just like you know, the expectation has been

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Speaker 4: built in and if there's no follow true is not

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Speaker 4: just affecting global investors. I think the key here is

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Speaker 4: that the domestic investors are also in the market right now,

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Speaker 4: right people are opening account and not deliver. The credibility

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Speaker 4: issue might be back again, right because we have many

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Speaker 4: false dawned. Can the government of fort another one?

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Speaker 5: Right?

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Speaker 1: Nicholas Yeo's comments show a mismatch between actually investors and

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Speaker 1: officials in Beijing, who expressed confidence on Tuesday that they

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Speaker 1: would hit an economic growth target of about five percent

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Speaker 1: in China this year.

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Speaker 2: Jamie diamond says the UK government will have to make

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Speaker 2: changes to capital markets if they want to stem the

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Speaker 2: flow of companies that are opting to list in new

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Speaker 2: York over London. In July, British regulators overhaul their rules

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Speaker 2: for companies looking to make their public debut in the

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Speaker 2: UK as part of a concerted effort to draw more

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Speaker 2: initial public offerings to the city. Speaking exclusively to Bloomberg,

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Speaker 2: the JP Morgan chairman and CEO said the mood music

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Speaker 2: from the new labor administration is positive but needs to

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Speaker 2: be backed up by further action.

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Speaker 5: Pretty I love the fact that if you're listening to

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Speaker 5: the current labor government or the talking about growth, investment markets,

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Speaker 5: capital markets, they do need to do those things to

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Speaker 5: help her recover. If they didn't do those things, no,

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Speaker 5: I think it will become more permanent than a lot

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Speaker 5: of people. They go in the United stations is more liquidity,

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Speaker 5: it's easy to do, I mean, and so or they

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Speaker 5: have a lot of business theres which also making this

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Speaker 5: in a great business environment will also help coming going

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Speaker 5: public here. But right now the NASDEK or yorkstaga change,

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Speaker 5: they're just more attractive places to go and we'll see

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Speaker 5: how that bends out.

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Speaker 2: Jamie Diamond's warning comes as London stock market continues to

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Speaker 2: battle a lack of IPOs, with firms including chip designer

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Speaker 2: arm instead opting to list in the US, with its

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Speaker 2: deeper capital markets and prospects for higher valuations.

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Speaker 1: Britain's shift into faster settlement of trading is running into

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Speaker 1: a problem. It's currency. The UK wants to join the

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Speaker 1: US in settling equity trades one day after the deal

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Speaker 1: is made, which is known as T plus one, but

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Speaker 1: BlueBag has learned that the chair of the group spearheading

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Speaker 1: the transition, Andrew Douglas, is warning that unlike the US,

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Speaker 1: the pound is not a reserve currency and is less

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Speaker 1: liquid than the dollar, so the UK has to take

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Speaker 1: a different approach. Currency trades typically take two days to settle,

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Speaker 1: so the plans shift in the UK on equity trading

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Speaker 1: in twenty twenty seven has the potential to dislocate the market.

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Speaker 2: Hurricane Milton retained Category five strength as Florida residents fled

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Speaker 2: the coastline ahead of its arrival. The storm has the

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Speaker 2: potential to be one of the most destructive hurricanes ever

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Speaker 2: to hit Florida and is expected to cause devastation across

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Speaker 2: the state. Florida Democrat Kathy Caster says anyone in an

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Speaker 2: evacuation zone needs to leave now.

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Speaker 6: This is an epic catastrophe. I mean, Hurricane Helleen was

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Speaker 6: less than two weeks ago, but there are still some

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Speaker 6: people I've heard from them even this morning who think, Okay, well,

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Speaker 6: I'm going to go to the second floor and ride

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Speaker 6: this out, even though I'm in an evacuation zone, and

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Speaker 6: they need to take stock of their lives.

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Speaker 2: Representasive Castor called for long term disaster relief in an

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Speaker 2: interview on Bloomberg's Balance of Power program. The hurricane is

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Speaker 2: expected to make landfall on Wednesday nights.

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Speaker 1: The storm is likely to cause at least seventy five

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Speaker 1: billion dollars worth of damage. Investors in catastrophe bonds are

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Speaker 1: girding themselves for substantial losses, as the combined destructive force

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Speaker 1: of Hurricanes Helene and Milton are expected to trigger payment

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Speaker 1: clauses on a scale not seen in years. The full

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Speaker 1: story now from Blomberg's Charlie Pellett.

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Speaker 7: Catastrophe bonds, or cat bonds, as they're known in the industry,

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Speaker 7: are issued by insurers and reinsurers to provide financial protection

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Speaker 7: against the most severe natural disasters. Investors who buy the

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Speaker 7: bonds stand to make large gains if a pre defined

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Speaker 7: event does not occur, but can lose a big chunk

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Speaker 7: of their capital if it does. Two weeks after Halleen

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Speaker 7: unleashed severe floods in more than two two dozen states,

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Speaker 7: Florida is bracing for the impact of Milton, which is

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Speaker 7: expected to make landfall early Thursday morning in New York.

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Speaker 7: Charlie Palette, Bloomberg Radio.

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Speaker 1: So watching closely what's happening in China, and in fact

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Speaker 1: we've had some more detail. The Chinese Ministry of Finance

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Speaker 1: is going to brief people on fiscal policy on Saturday.

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Speaker 1: So the Finance Ministry talking about holding that briefing on

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Speaker 1: the twelfth of October at ten am. So this actually

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Speaker 1: has already started to affect equities being traded on shore

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Speaker 1: in China. So the CSI three hundred pulling back on

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Speaker 1: some of the losses. Currently we're down by three point

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Speaker 1: eight percent. So that's I think an interesting point to

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Speaker 1: bear in mind as we've been waiting for those details,

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Speaker 1: further details from Beijing.

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Speaker 2: Yeah, and indeed that's been something it has been a

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Speaker 2: dominant theme on those markets since they reopened from the holidays.

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Speaker 2: We're going to get into our story around the French

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Speaker 2: budget and how investors have been perceiving French death in

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Speaker 2: a moment, but we're going to bring you first to

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Speaker 2: the news out of the US Justice departments consider whether

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Speaker 2: to force Google to sell part of its operations as

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Speaker 2: one way to resolve a monopoly case over the dominance

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Speaker 2: of its search engine. Could be the biggest move torain

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Speaker 2: in a major tech company since the failed attempt to

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Speaker 2: break up Microsoft two decades ago. Our tech editor of

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Speaker 2: Lad Savavas with us for more on this story. What

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Speaker 2: exactly is then the Department of Justice proposal and is

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Speaker 2: it a threat to get Google to change its ways?

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Speaker 8: Yes, I would think that what we're looking at the

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Speaker 8: moment is still very much a form of negotiation by lawsuit,

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Speaker 8: so to speak. The starting point for this is there

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Speaker 8: already has been a ruling to say that Google has

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Speaker 8: been in breach of anti trust laws in the US.

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Speaker 8: What we're doing at the moment is the dog is

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Speaker 8: putting forward proposals to look at the remedies that should

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Speaker 8: be considered by the judge in making the final judgment.

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Speaker 8: Those remedies will guaranteed be appealed by Google because Google

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Speaker 8: doesn't feel like it's operating any illegal monopolies, and there's

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Speaker 8: a back and forth into two. The main thing to

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Speaker 8: say here is that it's a highly complex situation, and

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Speaker 8: the DOJ points out that whatever remedies need to be implemented,

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Speaker 8: they can't just rewind the clock. The situation is it is,

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Speaker 8: and they need to look forward, and they need to

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Speaker 8: make sure that Google doesn't have anti trust powers in

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Speaker 8: the future. And part of that, let's say, the most

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Speaker 8: extreme part of that, may be the consideration of breaking

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Speaker 8: off some of the businesses.

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Speaker 1: So what's Google's counter argument then.

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Speaker 8: Oh, Google's counter argument is that if you break off

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Speaker 8: those businesses, you break them, So things like the Chrome

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Speaker 8: browser and the Android operating system, which is the most

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Speaker 8: dominant one in the world, would effectively break without Google

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Speaker 8: being able to have the control and the network effects

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Speaker 8: that it currently enjoys. Google's argument is to say that

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Speaker 8: these things are being provided for free at the moment,

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Speaker 8: some elements of them, and it's worth highlighting it's just elements,

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Speaker 8: not the entire software stack, are open source, and without

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Speaker 8: Google having and enjoying the current that he enjoys, people

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Speaker 8: lose out, especially users will lose out. And some of

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Speaker 8: the other remedy measures such as sharing Google data, such

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Speaker 8: as sharing a person's search results with potential competitors in

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Speaker 8: the search market, Google argues endangers the users in endagers

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Speaker 8: their prevacy and security.

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Speaker 2: How does this particular case compared to this scrutiny that

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Speaker 2: Google is faced from other regulators, notably in the European Union.

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Speaker 8: Well, it is very much along the same track, I

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Speaker 8: mean worth bearing in mind, this is one of several

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Speaker 8: lawsuits in the US. It isn't just searched that there

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Speaker 8: are other Google businesses that or the regulators looking at.

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Speaker 8: In the EU, the Digital Regulation Chief Vestiture she has

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Speaker 8: pointed out that as far as the ads market, the

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Speaker 8: online ads market goes, Google is in a position where

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Speaker 8: it both owns the marketplace and owns supply and demand companies.

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Speaker 8: So that's something that both Europe and the US are

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Speaker 8: looking at closely.

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Speaker 1: What does all of this mean for other big tech

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Speaker 1: firms flat It's.

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Speaker 8: Difficult to say, because there isn't another Google. To be honest,

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Speaker 8: The closest thing to it is meta because it enjoys

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Speaker 8: such a large audience with Facebook and Instagram and the like.

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Speaker 8: But there really isn't another Google with the breadth of

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Speaker 8: services that it has, I mean bear in mind, services

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Speaker 8: like YouTube could very easily operate as an individual business.

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Speaker 8: There are several CEOs under the Google CEO. It's a

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Speaker 8: huge company.

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Speaker 1: So what sort of president it says for others?

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Speaker 8: I'm not really sure because Google doesn't have matching company

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Speaker 8: out there.

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Speaker 2: Okay, a story of what could do to watch then

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Speaker 2: test flatsaav Thanks so much for joining us with the

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Speaker 2: analysis of that news on Google.

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Speaker 1: When France's presidence called a snap parliamentary election back in June,

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Speaker 1: investors took fright, the country's borrowing cost jumped, and the

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Speaker 1: months of political deadlock have seen the fiscal and economic

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Speaker 1: situation deteriorate. Bloemberg Economics reporter based in Paris, William Horribin

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Speaker 1: has been writing about this ahead of tomorrow's budget announcement

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Speaker 1: from the new Prime Minister, Michelle Barnier, and will joins

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Speaker 1: us this morning. Hi, what's happened then to France's standing

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Speaker 1: with investors? What's happening in the bond markets has been

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Speaker 1: something we've tracked closely.

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Speaker 9: Yeah, good morning's taking care well. France used to be

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Speaker 9: sort of a semi semi core country, a sort of

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Speaker 9: proxy for the safest German bonds that offered an attractive

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Speaker 9: and small premium to investors, but now deficits of widened

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Speaker 9: suddenly and the economy is misfiring at the same time

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Speaker 9: as the political outlook has become very unstable after snap

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Speaker 9: elections delivered to hung Parliament this summer. And that's quite

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Speaker 9: a contrast to said maybe a decade of stability that

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Speaker 9: included a large part of the manual Macron's presidency of France,

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Speaker 9: and he sort of turned the country into to some

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Speaker 9: extent a sort of post a child for economic growth

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Speaker 9: and gradual repair of finances after the year's own debt crisis,

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Speaker 9: but it's now sort of become a poster child for

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Speaker 9: fiscal difficulties that are hard to fix, and his investors

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Speaker 9: dump French bonds. As you mentioned earlier, the spread between

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Speaker 9: the country's ten yure borrowing costs and that of Germany

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Speaker 9: says widened to nearly eighty basis points from between fourteen

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Speaker 9: fifty before the elections. That's the spread that in the

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Speaker 9: years to come is going to cost as over time

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Speaker 9: if it continues, will cost billions of years a year

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Speaker 9: to France.

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Speaker 2: So what's gone wrong then, with the country's finances and economy.

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Speaker 9: Well before the elections, Macron had a workable majority, although

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Speaker 9: not an absolute majority in Parliament, and then in June

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Speaker 9: he's sort of surprised observers certainly and even his allies

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Speaker 9: by dissolve parliament and betting that you get more stability

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Speaker 9: and stem the rise of the far right with elections

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Speaker 9: that sort of backfired spectacularly, and the Assembly, the National

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Speaker 9: Assembly is now made up of three deeply divided blocks

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Speaker 9: that are unable to govern alone and allergic to working together.

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Speaker 9: After several months of talks, Macro finally managed to appoint

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Speaker 9: Michelle Barney as Prime Minister. But Barnier's party has fewer

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Speaker 9: than fifty seats in the five hundred and seventy seven

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Speaker 9: seat Assembly. So the mass of all this means that

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Speaker 9: the Barnier's government could easily be toppled in a no

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Speaker 9: confidence vote, with the Left is already pushing for that,

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Speaker 9: and so that sort of hands the keys, not all

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Speaker 9: of the keys to power, but it hands a lot

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Speaker 9: of power to the National Ranni's Marine La penn because

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Speaker 9: if she joins the no confidence vote, then then this

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Speaker 9: government falls.

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Speaker 1: Yeah. In terms of the next steps that we're watching

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Speaker 1: out for, then what about the budget, which is obviously

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Speaker 1: clearly the top job for Michelle Barney to try to deliver.

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Speaker 9: Yeah, this is what we're certainly watching this week, and

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Speaker 9: there's been quite a lot of build up to it,

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Speaker 9: and then in recent days he's due to present the

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Speaker 9: budget on Thursday evening. He's already warned that we're looking

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Speaker 9: at sixty billion euros of savings that will be required

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Speaker 9: to get the deficit of five percent of economic output

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Speaker 9: from six percent this year. That's a crucial first step

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Speaker 9: in getting towards the EU limit of three percent in

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Speaker 9: twenty to twenty nine. However, these serving, these savings are

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Speaker 9: really going to get to hurt, with forty billion coming

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Speaker 9: from spending cuts, which is a large amount for France

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Speaker 9: in one year, and it could hit anything from pensions

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Speaker 9: to social security, to apprenticeships and training. And on top

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Speaker 9: of that, there's twenty billion years of tax increases that

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Speaker 9: are going to hit big businesses and the wealthy. And

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Speaker 9: that's a very risky strategy for Macron, who has built

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Speaker 9: his reputation on the sort of pro business approach and

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Speaker 9: a lot of his allies say that this is key

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Speaker 9: to jobs and investment.

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