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Speaker 1: This is the Bluemberg DAYBAK podcast, available every morning on Apple,

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Speaker 1: Spotify or wherever you listen. It's Monday, the eighth of

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Speaker 1: July in London. I'm Caroline Hepki.

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Speaker 2: And I'm Stephen Carroll. Coming up today, France faces political

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Speaker 2: gridlock as voters back left wing candidates and reject marieing

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Speaker 2: Lupin's far right National Rally.

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Speaker 1: Britain's new Chancellor, Rachel Reeves, will set out plans to

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Speaker 1: spur private investment in the economy.

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Speaker 2: Today, plus a House divided, more congressional democrats come forward

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Speaker 2: to say they want Biden out of the US presidential race.

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

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Speaker 2: France could see political gridlock after a surprise win by

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Speaker 2: a left wing coalition in the country's parliamentary elections. The

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Speaker 2: New Popular Front won the most seats in Sunday's vote,

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Speaker 2: but was around one hundred short of a majority. President

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Speaker 2: Macran's group came in second, with the far right National

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Speaker 2: Rally in third place. Jean mugnachan leader of the far

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Speaker 2: left France Unbowed party, says negotiations with Macron's centrist alliance

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Speaker 2: are out of the question.

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Speaker 3: We said it already last and we really read this

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Speaker 3: to the President of the Republic. We refuse to enter

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Speaker 3: into negotiations with its party to make wheelnked and dealings,

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Speaker 3: especially having fought relentlessly for seven years against its policies

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Speaker 3: of social abuse and ecogical inaction. The boats of the

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Speaker 3: French people have just confirmed this.

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Speaker 2: John mcmanachean from France on bad speaking there through a translator.

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Speaker 2: He also told supporters that the new Popular Front intends

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Speaker 2: to implement its full planned program of policies, including a

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Speaker 2: major increase in public spending and boosting the minimum wage.

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Speaker 1: Tactical voting to block far right candidates led the National

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Speaker 1: rally to win far fewer seats than polls had predicted.

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Speaker 1: The party's Marine La Penz says the outcome will hurt France.

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Speaker 4: France is going to be totally deadlocked with three groups

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Speaker 4: of roughly equal size in the National Assembly, so that's

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Speaker 4: the way to go. It's unfortunate. We will lose another year,

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Speaker 4: another year of illegal immigration, another year of purchasing power loss,

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Speaker 4: another year of insecurity exploding in our country.

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Speaker 1: Donald for Be the national rallies Marine Le Penn, speaking

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Speaker 1: there through a translator, her party won one hundred and

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Speaker 1: forty three seats, while Maquin's Allies secured one hundred and

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Speaker 1: fifty six and the New Popular Front got one hundred

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Speaker 1: and seventy eight. The euro weekened slightly in Asian trading

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Speaker 1: after the results, and French bond futures also slipped. While

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Speaker 1: markets are concerned at some of the left spending pledges,

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Speaker 1: some strategists say that investors could come to like a

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Speaker 1: hung parliament scenario after a period of initial weakness.

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Speaker 2: Here in the UK, newly appointed Chancellor Rachel Reeves will

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Speaker 2: set out the Labor government's growth plan later today. Following

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Speaker 2: Friday's landslide election victory, Blomberg's learned she intends to create

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Speaker 2: new financial instruments to stimulate private investment in major infrastructure projects.

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Speaker 2: Jonathan Reynolds, now the Business and Trade Secretary, says another

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Speaker 2: big issue is improving trade with the EU.

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Speaker 5: Really about standards on food. We've got the same standards

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Speaker 5: as the European Union. If we can sell more whiskey,

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Speaker 5: more salmon to a market which is so significant to us,

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Speaker 5: of course we should explore an opportunity like that. And

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Speaker 5: I think moving forward to be Frank a relationship to

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Speaker 5: Europe that is not determined by the internal politics of

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Speaker 5: the Conservative Party is very much in the national interest.

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Speaker 2: Business and Trade Secretary Jonathan Reynolds there boosting the size

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Speaker 2: of Britain's economy is a critical aim for the new

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Speaker 2: Prime Minister, care Starmer. He says that'll help his government

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Speaker 2: avoid having to cut spending or raise taxes.

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Speaker 1: British companies are boosting salaries on offer for new hires

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Speaker 1: even as they recruit fewer people. Pay data from the

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Speaker 1: Recruitment and Employment Confederation shows starting wages increase at the

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Speaker 1: fastest rate in eight months in June. The figures add

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Speaker 1: to the evidence that labor shortages and the minimum wage

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Speaker 1: increase are keeping pay inflation elevated, which made trouble policymakers

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Speaker 1: at the Bank of England. However, a British Chambers of

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Speaker 1: Commerce survey shows less than half of companies are now

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Speaker 1: worried about inflation.

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Speaker 2: In the United States, more senior Democrats have said they

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Speaker 2: want Joe Biden to step aside as the party's presidential nominee.

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Speaker 2: The latest defections include several House Committee leaders who express

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Speaker 2: their views and a private call organized by House Minority

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Speaker 2: leader Hikim Jeffries, but the US President has vowed to

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Speaker 2: stay in the race, and in an exclusive interview with

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Speaker 2: ABC's George Stephanopolis, Biden insisted that he is sharp enough

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Speaker 2: to do the job for another term.

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Speaker 6: I have a Cogniti test every single day.

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Speaker 1: Every day.

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Speaker 6: I have that test everything.

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Speaker 2: I do general, not only am I campaign and I'm

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Speaker 2: running the world.

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Speaker 7: Would you be willing to have the independent medical evaluation.

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Speaker 6: Watch may between. There's a lot of time that's in

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Speaker 6: this campaign.

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Speaker 2: It's over one hundred and twenty five days.

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Speaker 6: So the answer, decision, the right answer right now is no,

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Speaker 6: you don't want to do that?

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Speaker 2: Who I've already done it. Despite that interview, tensions the

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Speaker 2: Democratic Party arising. This week, the president will host NATO

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Speaker 2: members in Washington. Many will be watching to see how

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Speaker 2: Biden performs at the summit after some officials have expressed

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Speaker 2: their worries about the president's age during last month's G

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Speaker 2: seven gathering.

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Speaker 1: Now to Corporate News, Boeing has agreed to plead guilty

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Speaker 1: to criminal conspiracy and faces a fine of as much

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Speaker 1: as four hundred and eighty seven million dollars in a

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Speaker 1: new low for the plane makeup. The US Justice Department

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Speaker 1: found that the company failed to comply with a deferred

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Speaker 1: prosecution deal Struck in twenty twenty one related to two

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Speaker 1: fatal seven three seven Max crashes in twenty eighteen and

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Speaker 1: twenty nineteen that killed three hundred and forty six people.

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Speaker 1: As part of that deal, the planemaker had pledged to

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Speaker 1: improve internal safety controls. It was followed by the Alaska

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Speaker 1: Airlines non fatal accident. Boeing had no immediate comment on

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Speaker 1: the agreement with prosecutors.

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Speaker 2: Iran has elected a reformist press sident keen on restarting

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Speaker 2: talks with the US over the landmark twenty fifteen nuclear deal.

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Speaker 2: Masud Pizeshkian, a heart surgeon and former health minister, beat

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Speaker 2: his hardline rival and a run off vote on Friday.

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Speaker 2: Turnout was close to a record low in an election

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Speaker 2: the US State Department called not free or fair. Pizeskiin

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Speaker 2: is widely expected to seek improved relations with the West

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Speaker 2: with a view to removing damaging economic sanctions, as well

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Speaker 2: as handling Iran's conflict with Israel well. A moment will

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Speaker 2: bring you more in the French election results and take

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Speaker 2: a look at Keir Starmer's first days as Prime minister.

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Speaker 2: In the UK. But the story that caught Aarrye this

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Speaker 2: morning the rise of algorithms on currency trading desks. So

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Speaker 2: we know that of course algorithms have used for a

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Speaker 2: long time inequities, but now the likes of BMP parry

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Speaker 2: Bar expanding into the technology. They've got nicknames like Viper,

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Speaker 2: Iguana and chameleon for some of the algos that are

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Speaker 2: out there, BNP using them to try and gain an

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Speaker 2: edge in this massive market seven point five trillion dollars

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Speaker 2: a day in foreign exchanges. They actually the argos of

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Speaker 2: different characteristics. The Viper is more aggressive, Chameleon is for

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Speaker 2: large transactions, and iguanas for trades that are to be

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Speaker 2: completed over a certain window of time, whether it's a

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Speaker 2: question of what point in that window you want to

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Speaker 2: execute the trade or not. Look, this is a big

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Speaker 2: trend towards automation that we've seen across the industry. There

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Speaker 2: are concerns that there are some risks that come with

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Speaker 2: this as well, a grown number of asset managers warning

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Speaker 2: about a spate of macro events. The programs haven't been

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Speaker 2: able to cope with the Bank of International Settlements talking

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Speaker 2: about making the market more vulnerable to Pursta volotivity. There's

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Speaker 2: an impact on jobs too, and nat West the number

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Speaker 2: of traders focused on G TENFX currencies dropping about seventy

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Speaker 2: percent in the last two decades, but more work for

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Speaker 2: quantitative analysts and developers on the flip side of that

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Speaker 2: as well. It's a fascinating read abous development in the industry.

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Speaker 2: Our colleagues Will Shaw and Asatkin has been writing about it.

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Speaker 2: You'll find it on Bloomberg dot com and on the terminal.

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Speaker 1: Okay, so let's get more than on the results of

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Speaker 1: the French parliamentary elections, including well that were there. The

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Speaker 1: Alliance or of left wing parties won the largest number

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Speaker 1: of seats, with Macron's Allies in second and the far

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Speaker 1: right National Rally in third, but no group secured an

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Speaker 1: overall majority, and building a coalition to govern will be difficult.

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Speaker 1: Our executive editor for Europe, Chad Thomas, joins us. Now,

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Speaker 1: good morning, Chad. Should we start with one of the surprises?

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Speaker 1: Then the National Rally ended up in third place. I

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Speaker 1: mean you could hear the frustration of Marine le Pen

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Speaker 1: in the clip that we just played earlier. What happened?

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Speaker 7: Yeah, good morning Caroline. She certainly was one of many

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Speaker 7: people who were caught by a surprise with the results

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Speaker 7: last night. There was an audible gasp here in the

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Speaker 7: newsroom when we started seeing some of those numbers coming in.

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Speaker 7: Basically what happened was tactical voting the both Macron's group

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Speaker 7: and the Left Alliance. They pulled the number of candidates

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Speaker 7: out of races where there were three or four people

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Speaker 7: competing for this Sunday so that they had a better

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Speaker 7: chance of beating Marine Le Penn's party. This is something

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Speaker 7: that they have done traditionally in previous elections as well,

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Speaker 7: and you know, ultimately, ultimately it worked, and although the

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Speaker 7: National Rally had been polling in first place coming into

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Speaker 7: the vote on Sunday, that tactically removing candidates helped the

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Speaker 7: other two groups to secure larger numbers of seats in

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Speaker 7: the National Assembly.

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Speaker 2: Of course, one of those surprises as well, a much

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Speaker 2: better performance that had been expected for President Macron's ally

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Speaker 2: is coming in second, down around one hundred seats on

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Speaker 2: when the election was called. But is this a victory

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Speaker 2: for them.

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Speaker 7: Yes, Stephen, It's really comes down the question of how

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Speaker 7: you want to slice it right, and certainly Macron is

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Speaker 7: likely to do that. It's interesting because Macron, someone who

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Speaker 7: normally is speaking nearly every day, whether giving a speech

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Speaker 7: or go on television, he has not said a single

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Speaker 7: word in public since the first round of the voting.

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Speaker 7: So we're all waiting to see what does Macron say,

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Speaker 7: how does he slice these results, and ultimately then how

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Speaker 7: does he move forward in naming a prime minister.

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Speaker 2: Yeah, there's some great front pages of the newspapers in

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Speaker 2: France this morning. I see in the front page.

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Speaker 6: Of Le Palais.

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Speaker 2: Now what do we do?

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Speaker 6: It's the question.

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Speaker 2: What are the options for the government now?

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Speaker 7: I think the one thing that you can probably rule

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Speaker 7: out is the far right taking over government. They came

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Speaker 7: in third. Now you have these two groups left who

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Speaker 7: managed to in some way align by pulling out candidates

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Speaker 7: in order to thwart the far right winning the election.

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Speaker 7: But beyond that, the far left and Macron's group have

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Speaker 7: very little in common as well, and there is not

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Speaker 7: a tradition of coalition governments in France. I live in

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Speaker 7: Germany normally I'm in Paris this morning, where where you

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Speaker 7: do have that, and so it will be really interesting

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Speaker 7: to see Melenchom, the head of the far Left party

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Speaker 7: here in France last night basically said you know, Macron

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Speaker 7: has lost we want to implement our full program, but

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Speaker 7: they don't have a majority either. So somehow these two

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Speaker 7: groups are going to have to find a way to

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Speaker 7: form a government or you end up with a minority

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Speaker 7: government and then that minority government struggles to pass any

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Speaker 7: legislation because they don't have the majority in parliament.

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Speaker 1: Yeah. Absolutely, so the markets will be trying to assess

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Speaker 1: what policy making then emerges from this. It does seem

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Speaker 1: to have studied the euro at least this morning, and

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Speaker 1: we've seen a kind of narrowing of the space between

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Speaker 1: French and Germany's Chad, thank you so much for being

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Speaker 1: with us. Our executive editor for Europe, Chad Thomas.

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Speaker 2: There Well Becka in the Labor Party is in government

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Speaker 2: for the first time since twenty ten, hitting the ground running.

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Speaker 2: Kirstarmer on a tour of Scotland, Northern Ireland and Wales,

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Speaker 2: having held his first cabinet meeting on Saturday. Today, the

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Speaker 2: Chancellor Rachel Reeves will speak to business leaders at the

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Speaker 2: Treasury after the party's landslide election victory. Are UK Parltic

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Speaker 2: support of James Wilcock is with us for more this

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Speaker 2: morning took us through James. The flurry of activity we've

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Speaker 2: seen since the Labor win on Friday. Is this a

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Speaker 2: sign of how prepared they were for this moment?

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Speaker 6: This pace of it, certainly, Stephen is absolutely blinding. I

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Speaker 6: mean broadly. It breaks down into three sections, like all

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Speaker 6: the various ministerial appointments. So like you said, most of

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Speaker 6: the shadow ministers we've seen, including Chancellor Rachel Reeves, have

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Speaker 6: now become the Chancellor and also the ministers. A few

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Speaker 6: interesting ones though, you have the Timson CEO, James Timpson

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Speaker 6: becoming the Prisons Minister. Now that is curious because both

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Speaker 6: big business figure but also someone who I think a

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Speaker 6: third of his no he said in the past that

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Speaker 6: the third of prisoners shouldn't be in prison. And when

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Speaker 6: you see that, the government is likely to face crises

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Speaker 6: quite quickly on both the prisons front, where there is

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Speaker 6: massive overcrowding and the NHS. It's fascinating they've taken that

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Speaker 6: route simply. You've had Jackie Smith, who was a former

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Speaker 6: Labour parltician who's become a peer and now become an

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Speaker 6: Education minister. And Patrick Valance, who people will remember from

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Speaker 6: the COVID Heer as an independent civil servant now becoming

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Speaker 6: the Science Minister. So there's this real kind of government

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Speaker 6: of all talents impression coming in. And like you say

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Speaker 6: that those kind of appointments couldn't be lined up on

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Speaker 6: the hoof, they would have to have been long planned,

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Speaker 6: long prepared. So that's the appointment side. On the sort

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Speaker 6: of diplomacy front, it is astonishing the speed that is

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Speaker 6: going on. Starmer has already been in Scotland, he will

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Speaker 6: be in Wales, Northern Anenti, the four nations of the UK.

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Speaker 6: And then the Foreign Secretary David Lammy has already been

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Speaker 6: to Germany, Poland down Sweden just over the weekend while

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Speaker 6: you all were recovering from the election dates. They'll be

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Speaker 6: going to NATO tomorrow. Defense Secretary John Healey is on

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Speaker 6: a tripley odessa in Ukraine, has announced more military aid.

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Speaker 6: And so then you've got the policy front to the

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Speaker 6: rounded policy. The flagship of tax policy gone dead in

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Speaker 6: the water. We shall hear no more of it. That

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Speaker 6: has been ended in day one, and most of the

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Speaker 6: press report that July seventeenth will be date the date

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Speaker 6: for the King's speech. So next Wednesday we will get

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Speaker 6: a whole new legislative agenda. Honestly, the pace is astonishing.

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Speaker 1: Yeah, and the King's speech really is the kind of

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Speaker 1: begin marks the beginning of that legislative process and the agenda.

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Speaker 1: In terms of what we expect then today from Rachel

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Speaker 1: Reeves's speech, I mean, surely we're not going to get

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Speaker 1: any spending and taxation details that will be left to

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Speaker 1: the budget. But what might she say, not only.

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Speaker 6: Because it will be left the budget, Caroline, but also

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Speaker 6: because Rachel Reaves has made a feature of the election

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Speaker 6: campaign saying no, absolutely not will labor be sort of

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Speaker 6: in any way profitigate with the public finances, and it's

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Speaker 6: ruled out multiple tax rises. What she will say, though,

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Speaker 6: with from multiple sources clubed Bloomberg's reporting, is house planning reform.

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Speaker 6: She may reintroduced compulsory housebuilding targets as soon as today,

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Speaker 6: because often that will involve secondary statute legislation is supposed

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Speaker 6: to a new bill. Expect some immediate loosening of planning

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Speaker 6: red tape that holds back infrastructure spending. And all this

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Speaker 6: is around the theme of bringing in private investments to

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Speaker 6: drive growth, something that the Labor Party knows is absolutely crucial.

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Speaker 2: James what about the NATO summers. Of course it's something

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Speaker 2: important for Keir Starmer coming up as well. What should

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Speaker 2: be watching out for there?

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Speaker 6: I mean, it'll be fascinating to see how other leaders

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Speaker 6: treat him. You know the law of a politician with

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Speaker 6: a big win. There will be some questions over Kirs

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Speaker 6: Starmer's push back of Britain's target to spend two point

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Speaker 6: five percent of GDP on defense, but he'll quite likely

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Speaker 6: be able to get away with that because he has

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Speaker 6: the big win. But in all these things, so Stephen,

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Speaker 6: it's just this mad roller coaster. You look at what

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Speaker 6: is coming for this UK political calend that you have, NATO,

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Speaker 6: European political community. In a few weeks King speech that

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Speaker 6: we mentioned a US election and the coming budget. But

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Speaker 6: don't lose sight of what sort of the real goals

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Speaker 6: are for labor. As this pace comes out, and it

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Speaker 6: comes back to Rachel Reta's speech today, Labour AIDS are

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Speaker 6: very aware of two facts. If growth doesn't pick up

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Speaker 6: and they don't create policy now to bring growth back,

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Speaker 6: they face some damning physical decisions. In say eighteen months

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Speaker 6: or twenty four months ago, in about our own Bloomberg

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Speaker 6: Economics estimates and the other is their majority is quite volatile,

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Speaker 6: as Boris Johnson found out just five years ago.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 1: I'm Caroline Hipka and.

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