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

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Speaker 1: DAYBAC podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Thursday, the eighth of August here in London.

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Speaker 1: I'm Caroline Hepkin.

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Speaker 2: And I'm Stephen Carroll. As market volatility continues, JP Morgan

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Speaker 2: increases its US recession risk to thirty five percent by

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Speaker 2: the end of the year.

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Speaker 1: Anti racism counterprotesters turn out in their thousands across the

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Speaker 1: UK as a threatened night of far right demonstrations fails

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Speaker 1: to materialize.

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Speaker 2: Plus our exclusive interview with the Eurogroup chief Pascal Donna,

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Speaker 2: who who tells us the European Union must be ready

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Speaker 2: to take action for a potential second Donald Trump presidency.

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

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Speaker 2: Three quarters of the global carry trade has now been unwound.

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Speaker 2: That's according to JP Morgan's quant strategists, who say the

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Speaker 2: weeks volatility is wiped out year to date returns and

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Speaker 2: cut it into the past two years of profits. Bloomberg's

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Speaker 2: Market's Lives Mark Cranfield says Japan, one of the homes

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Speaker 2: of the carry trade, is still not stable.

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Speaker 3: It's a bit dysfunctional market you're seeing in Japan, and

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Speaker 3: that's not too surprising when you consider the extreme volatility

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Speaker 3: you've seen in the past week. It's really a market

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Speaker 3: currently of headless chickens. People are just chasing everything, every headline,

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Speaker 3: every nu once. So in terms of expecting volatility to

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Speaker 3: die down, unlikely. We're going to have plenty of it.

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Speaker 3: And we've got US elections coming as well. People are

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Speaker 3: just going to get used to it.

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Speaker 2: It's Mark Cranfield from our M Live team there. His

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Speaker 2: comments on the US come as JP Morgan has ramped

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Speaker 2: up its recession forecast, America's largest bankness he's a thirty

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Speaker 2: five percent chance of a downturn before the end of

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Speaker 2: the year. The lender also paired back its interest rate forecast,

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Speaker 2: taking the chance of center banks keeping interest rates high

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Speaker 2: for higher for longer back to thirty percent.

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Speaker 1: Well that's the market story. Thousands of people took to

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Speaker 1: the streets across the UK yesterday to stand against planned

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Speaker 1: far right riots. Here are some counteractivists speaking to crowds

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Speaker 1: in Birmingham last night.

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Speaker 3: We are the twenty at High Area.

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Speaker 4: And we liked it.

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Speaker 2: I love that.

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Speaker 1: In addition to the largely peaceful anti racist protesters. Six

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Speaker 1: thousand police officers were deployed to guard immigration centers. The

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Speaker 1: precautions came after nine days of violent anti immigrant unrest

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Speaker 1: and reported plans to target lawyers for asylum seekers. More

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Speaker 1: than four hundred rioters have been arrested so far, and

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Speaker 1: some of the UK's biggest banks and consultancies had told

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Speaker 1: staff to go home early due to the unrest.

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Speaker 2: Ukraine has mounted its biggest assault on Russian territory since

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Speaker 2: the war began. In February twenty twenty two, Vladimir Putin

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Speaker 2: was told one thousand Ukrainian troops had crossed the order

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Speaker 2: and a televised briefing the Russian leader orchestrated with his

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Speaker 2: defense chiefs. Ukraine has moved to target Russian infrastructure and

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Speaker 2: industrial capacity, alongside military facilities, to try to undermine the

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Speaker 2: Kremlin's war. As the conflict enters its third year, European

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Speaker 2: gas prices search to the highest level this year on

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Speaker 2: unconfirmed reports that Ukrainian troops had seized a key LNG

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Speaker 2: transit point near the border with Russia.

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Speaker 1: The Eurogroup president has told Bloomberg Radio that the prospect

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Speaker 1: of another Donald Trump presidency should push Europe to make

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Speaker 1: its economy more autonomous. Pascal Donaho, who chairs the Forum

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Speaker 1: of Euro Area Finance Ministers, says that it's a serious

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Speaker 1: issue for the EU.

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Speaker 4: Donald Trump has outlined a very different agenda with regard

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Speaker 4: to taraf level, some with regard to trade, but as

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Speaker 4: America is deciding what they want to do with regard

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Speaker 4: to that, it's why it's so important that we here

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Speaker 4: in Europe take our steps to look at how we

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Speaker 4: can deepen our own economic foundations to deal with that

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Speaker 4: kind of change where are to happen in the US.

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Speaker 1: The UER Group president's comments to Bloomberg Radio echo those

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Speaker 1: of ECB President Christine Lagarde, who said earlier this year

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Speaker 1: that Europe should brace for harsh decisions if Trump wins

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Speaker 1: November's election. Meanwhile, President Joe Biden has said that he's

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Speaker 1: not confident of a peaceful transition of power if the

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Speaker 1: Republican candidate loses the vote. He was speaking to CBS

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Speaker 1: News in his first interview since he ended his own

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Speaker 1: re election bid.

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Speaker 2: To some breaking news this hour, the German engineering giant

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Speaker 2: Zieman's has upgraded its earnings and revenue outlook for the

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Speaker 2: full year. It's now seeking revenue growth of between four

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Speaker 2: and eight percent above estimates. This as the company reported

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Speaker 2: higher than expected orders and profits from its industrial business

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Speaker 2: in the third quarter.

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Speaker 1: Now, three Taylor Swift concerts have been canceled in Europe

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Speaker 1: over a suspected terror plot. The singer was scheduled to

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Speaker 1: play at the Ernst Happel Stadium Vienna this evening, but

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Speaker 1: the event organizer says that they had quote no choice

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Speaker 1: but to cancel the shows for everyone's safety. Two suspects

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Speaker 1: have been arrested over the alleged plan, which looked to

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Speaker 1: target major events in the country's capital.

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Speaker 2: And Britain's employers have stepped up hiring for white collar

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Speaker 2: jobs and the latest sign of a tight labor market

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Speaker 2: job postings in July or fourteen percent higher than last

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Speaker 2: year on recruiter Robert Walters site, a record not seen

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Speaker 2: since the post pandemic rebound. The positive economic news may

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Speaker 2: spell trouble for the Bank of England, which is concerned

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Speaker 2: about higher wages. Separate data from the Recruitment and Employment

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Speaker 2: Confederation shows a rise in starting salaries. In a moment,

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Speaker 2: we'll bring you more analysis on the market moves and

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Speaker 2: update you on those demonstrations in the UK last night.

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Speaker 2: But another story that caught our I this morning, what

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Speaker 2: it's like when ozempic takes over an entire town. Our

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Speaker 2: bloomberg big take today is looking at the city of

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Speaker 2: Bowling Green in Kentucky, which has one of the highest

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Speaker 2: rates of prescriptions for GLP weight glass drugs in the US.

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Speaker 2: According to data from Purple Alp, at least four percent

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Speaker 2: of residents of Bowling Green, Kentucky have received prescriptions to

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Speaker 2: take one of those medications like ozambic with govi, etc.

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Speaker 2: Over the past years, where colleagues have been speaking to

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Speaker 2: people there about the prevalence of the drugs in the city,

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Speaker 2: how they know so many people that are taking them,

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Speaker 2: and how businesses are adapting to it, to those who

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Speaker 2: are providing the shots to also how it's affecting the

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Speaker 2: city's dining culture. Bowling Green, Kentucky claims to have the

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Speaker 2: most restaurants per capita in the United States, so how

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Speaker 2: the restaurants are adapting.

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Speaker 1: That I was the one of the biggest takeaways from

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Speaker 1: that whole story. Actually, is the issue with the town

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Speaker 1: one of the problems as according to one of the

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Speaker 1: people that Bloomberg spoke to is that actually one of

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Speaker 1: the main things to do there is to go out

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Speaker 1: and eat, and so really difficult. But there's also a

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Speaker 1: really interesting map actually now kind of hot spots of

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Speaker 1: where these drugs are being used most in the US

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Speaker 1: and it is fascinating. It's not just Hollywood, this is

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Speaker 1: everybody taking it.

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Speaker 2: Yeah, well worth your time. You'll find the whole please

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Speaker 2: on Bloomberg dot com and on the terminal now stop.

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Speaker 1: Markets are seeing gains in Asia this morning, although pretty

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Speaker 1: volatile day. So seeing perhaps some further recovery after this

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Speaker 1: tail split spin that we saw earlier in the week.

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Speaker 1: But JP Morgan has increased the expected chance of a

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Speaker 1: US recession up to thirty five percent by the end

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Speaker 1: of this year. So joining us this morning discuss the

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Speaker 1: markets our markets lifesty is Mary Nicola. Good morning, Mary,

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Speaker 1: Good to have you on the program. So you're have

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Speaker 1: closed with its best day since November. Yes, there, the

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Speaker 1: stup features are down this morning. We still just have

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Speaker 1: a lot of volatility, although stocks are rebounding somewhat. How

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Speaker 1: big is the recovery then in the equity markets? How

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Speaker 1: can we describe it now?

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Speaker 5: I think it's still too early to tell that we're

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Speaker 5: in for a solid rebound that we're going to consistently,

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Speaker 5: consistently see gains from here because you still have heightened volatility.

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Speaker 5: You still have a lot of nerves in the market

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Speaker 5: about the US recession. Calls of increased risks of a

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Speaker 5: US recession is one thing, So there's still a lot

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Speaker 5: of nerves. And of course you've got Middle East tensions

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Speaker 5: and the fear of a strike from Iran. All these

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Speaker 5: are culminating and keeping investors on edge, and that's unlikely

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Speaker 5: to go away. So I think you don't see a

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Speaker 5: solid recovery yet in the equity markets.

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Speaker 2: When thinking about the US market, we had a week

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Speaker 2: forty two billion dollar sale of treasuries yesterday. We're looking

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Speaker 2: at yields moving a little bit lower today after higher yesterday.

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Speaker 2: We've got the jobless claims out later today. I mean,

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Speaker 2: how much is their volatility to on that side of

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Speaker 2: the market.

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Speaker 5: Yeah, I think in general we'll just see increase volatility,

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Speaker 5: but I don't think that we're going to see a

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Speaker 5: continued correction higher in yields. Especially with the increased volatility.

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Speaker 5: You have a number of headwinds still undermining market confidence,

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Speaker 5: and of course you need somewhere to go. You need

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Speaker 5: a haven, and the US treasuries has been benefiting from

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Speaker 5: that haven bid, whether you're talking about US treasuries, whether

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Speaker 5: you're talking about Swiss frank So there has been some

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Speaker 5: things to counter the precipitous decline that we've seen in

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Speaker 5: US stocks. So as a result, I think the correction

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Speaker 5: is just a short term one, especially if the bets

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Speaker 5: are going to increase and are still on the table

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Speaker 5: that the FED is likely to cut.

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Speaker 1: Yeah. Absolutely, I mean so in terms of that FED

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Speaker 1: rate path, how big are the recession concerns? I mean

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Speaker 1: JP Morgan increasing the chances or the expectation that they

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Speaker 1: have of recession by the end of the year from

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Speaker 1: twenty five to thirty five percent. How do we think

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Speaker 1: about the rate path now?

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Speaker 5: Yeah, at the end of the day, every single data

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Speaker 5: that is coming out between now and the FED is

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Speaker 5: going to be highly scrutinized. So, for example, you mentioned

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Speaker 5: the initial jobless claims. It's amazing that this weakly noisy

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Speaker 5: data has become such a big market movers. But investors

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Speaker 5: need assurances that the economy is not headed for hard landing.

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Speaker 5: But it might seem to be a little bit overblown.

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Speaker 5: So if you take, for example, the Atlanta fit now cast,

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Speaker 5: it's still pretty strong and showing that the US economy

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Speaker 5: is at two point nine percent, growing at two point

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Speaker 5: nine percent, but still be up to retail sales data

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Speaker 5: next week to play caate market concerns, especially on the

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Speaker 5: US consumer, which continues to be obviously the main driver

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Speaker 5: of the US economy.

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Speaker 2: Mary, what about the carry trader? Are this as well?

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Speaker 6: Jp?

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Speaker 2: Morgan saying further and winding of that as well. Is

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Speaker 2: this a temporary shift? Is this something that this market

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Speaker 2: trade is going to fall out of favor.

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Speaker 5: Yeah, it's going to take a while for confidence to

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Speaker 5: be restored in the carry trade. It's been quite a rollercoaster,

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Speaker 5: and it's one of those things where the momentum is

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Speaker 5: too strong that you just need to take a step

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Speaker 5: back and wait for it to unwind. At the end

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Speaker 5: of the day, there are a few comments from the

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Speaker 5: BOJ that they don't know where the terminal rate is,

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Speaker 5: which might spook investors because obviously investors need clarity and

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Speaker 5: forward guidance of where it's headed. But at the end

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Speaker 5: of the day, if we look at the way the

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Speaker 5: boj's responded from some of the comments from the Deputy

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Speaker 5: Governor yesterday, they're unlikely to be too aggressive, especially if

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Speaker 5: they see the market reaction in the way it has been.

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Speaker 5: So it will be very very slow increase in rates

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Speaker 5: from the BOJ but it's going to still take some

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Speaker 5: time for that carry trade to come back in for

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Speaker 5: investors to feel confident, because still you're going to have

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Speaker 5: a new trading range for dollar yen for example, maybe

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Speaker 5: around the one forties. And then once that settles through

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Speaker 5: and you see a steadier pace, you're likely to see

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Speaker 5: carrie trade coming back, largely because en rates are still

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Speaker 5: very low in comparison.

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Speaker 6: Two G.

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Speaker 1: Yeah, Mary, thank you so much for your explanations. That

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Speaker 1: is our market's live strashes, Mary Nikola, there on all

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Speaker 1: the latest market moves.

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Speaker 5: In the UK.

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Speaker 2: The planned far right demonstrations last night didn't materialize. After

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Speaker 2: a week of anti immigrant protests and rioting in the UK,

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Speaker 2: police had been bracing for a significant night last night. Instead,

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Speaker 2: anti racism protesters turned out in their thousands in towns

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Speaker 2: and cities across the country. Joining us now at more

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Speaker 2: details Bloomberg's teaa at a biota, Well, what happened last night?

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Speaker 6: Well, there was some relief. Actually, after the past nine

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Speaker 6: or so days of unrest, the BBC had been reporting

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Speaker 6: that there were more than one hundred events and protests

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Speaker 6: anticipated on Wednesday night, and in response to that, police

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Speaker 6: had actually deployed six thousand specialist officers who were ready

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Speaker 6: to guard areas, especially around immigration related facilities. And those

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Speaker 6: fears were stoked by a lot of reporting during the

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Speaker 6: day about a message campaign. There were messages that surfaced online,

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Speaker 6: reportedly from far right agitators, and they were urging supporters

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Speaker 6: to converge around a list of different addresses of immigration

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Speaker 6: related facilities in cities around the country. It's something that

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Speaker 6: we reported on Bloomberg too, But actually what happened instead

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Speaker 6: is that thousands of peaceful protesters actually gathered at those

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Speaker 6: locations around the country. They were in places like Newcastle

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Speaker 6: where chants were heard saying Jordy's are of all colors,

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Speaker 6: and in Birmingham where they were saying bigots out of brum. So,

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Speaker 6: you know, the UK has been reeling from what has

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Speaker 6: been the worst outbreak of writing in more than a decade,

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Speaker 6: but actually last night it seems like there was some respite,

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Speaker 6: at least from the very worst fears about what might

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Speaker 6: have happened.

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Speaker 1: Yeah, so it didn't materialize. There's also there have been

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Speaker 1: a lot of concern about social media and how that

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Speaker 1: has played into these days of unrest in the UK.

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Speaker 6: Yeah, there is a lot of worry about that side

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Speaker 6: of things, especially because the messages that we saw last

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Speaker 6: night were being sent over those communication methods listing the

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Speaker 6: addresses of immigration facilities. The police have actually acknowledged that,

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Speaker 6: you know, they were taking slightly by surprise at the

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Speaker 6: speed with which the violence was able to spread. After

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Speaker 6: that killing of those three girls in Southport in northwest

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Speaker 6: England last week, the false rumors about the perpetrator of

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Speaker 6: that crime were amplified online. They were suggesting that the

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Speaker 6: perpetrator was at a Muslim migrant. We know now that they

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Speaker 6: are British. And there's also the question of foreign interference.

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Speaker 6: Bloomberg's got some exclusive reporting out suggesting that UK authorities

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Speaker 6: actually suspect that foreign state back actors and UK domestic

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Speaker 6: extremists worked together online to sort of incite violence. They

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Speaker 6: were using platforms including TikTok, Telegram and of course x

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Speaker 6: including accounts which had stolen British identities, and on the

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Speaker 6: next stage, of these inquiries into what happened online. We

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Speaker 6: spoke to our Emre Equalities editors Serraja too yesterday on

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Speaker 6: the Bloomberg UK Politics podcast, and he was telling us

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Speaker 6: that now the complicated part will be bringing those responsible

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Speaker 6: for whipping up online hatred to justice. At the moment,

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Speaker 6: people are being arrested and prosecuted under something called the

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Speaker 6: Communications Act, but of course the Online Safety Act is

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Speaker 6: due to come into law soon. That's what will actually

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Speaker 6: prevent misinformation and force tech companies to take it down.

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Speaker 6: That hasn't yet come into players, expected in early twenty

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Speaker 6: twenty five, so it's yet to be seen just how

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Speaker 6: and if the perpetrators of those crimes will come to justice.

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Speaker 2: And just briefly, TI, where you've been reporting as well

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Speaker 2: in some of the economic cost of this people being

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Speaker 2: sent on Early yesterday.

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Speaker 6: Yeah, I spoke to a number of employees at different

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Speaker 6: firms across the city of London. Some were offered more

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Speaker 6: flexibility in terms of working from home, some are allowed

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Speaker 6: to commute later and actually a number of firms acknowledged

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Speaker 6: what was going on in emails to all their employees.

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Speaker 6: So it's definitely cutting through in terms of businesses in

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Speaker 6: the city of London.

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Speaker 2: The Your Group president Pascal donah who has told us

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Speaker 2: the prospect of a second Donald Trump presidency in the

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Speaker 2: US as an impetus for the European Union to make

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Speaker 2: its economy more autonomous. He's been discussing the outlook for

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Speaker 2: the European economy with us here in Bloomberg Radio, including

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Speaker 2: the shift in market bets for the ECB. I started

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Speaker 2: by asking him about the reason market turmoil and whether

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Speaker 2: he was concerned about risks from a slowing US economy.

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Speaker 4: Well, there's always risks when we see really important trading

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Speaker 4: partners have a change in their economic outlook. So whether

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Speaker 4: it be America, whether at the other parts of the

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Speaker 4: global economy, if their economic outlook begins to change, of

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Speaker 4: course that can have an effect, particularly on such an

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Speaker 4: important trading partner as Europe as in America. But again

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Speaker 4: I would just go back to the medium term outlook

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Speaker 4: for the American economy. It continue used to look really positive.

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Speaker 4: Their performance in the aftermath of the pandemic has been

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Speaker 4: so strong in terms of employment growth and economic growth itself,

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Speaker 4: and despite the volatility in markets in recent days, my

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Speaker 4: own sense is that performance and that outlook continues to

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Speaker 4: be there.

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Speaker 2: Part of the effect of the market termol though, has

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Speaker 2: been markets pricing in more rate cuts from the European

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Speaker 2: Central Bank. Would further rate cuts be welcome in your viewer?

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Speaker 2: Are they a signal of weakness in the euro Area economy.

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Speaker 4: Well, that's the decision very much for the European Central

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Speaker 4: Bank to make, and we always respect as Finance Minister

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Speaker 4: as their independence in decisions they make. But I think

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Speaker 4: their indication is that they believe we are going in

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Speaker 4: broadly in the right direction with regard to inflation, that

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Speaker 4: continue to monitor us and if that journey with inflation continues,

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Speaker 4: that will have positive consequences. Then for decisions they make,

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Speaker 4: I think that can only help where we are in

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Speaker 4: our ability to increase growth within Europe. And if I

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Speaker 4: look at the project that we need to deliver here

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Speaker 4: in Europe, it's about how we can improve our growth

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Speaker 4: performance as we have been successful in getting inflation down

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Speaker 4: and regardless of what happens in other parts of the world, Steven,

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Speaker 4: that's the journey that we need to continue on.

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Speaker 2: One of the issues that you raised after the last

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Speaker 2: Year Group meeting in July was the issue of sustainable

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Speaker 2: fiscal consolidation, gradual and sustained was the language that you used.

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Speaker 2: What was needed in the Euro Area? What does that

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Speaker 2: look like in practical terms?

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Speaker 4: What it looks like practically is the very big energy

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Speaker 4: support measures that were in place in different national economies

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Speaker 4: when inflation was so high that they need to be

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Speaker 4: phased out and entirely removed in twenty twenty five. We

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Speaker 4: have across so many economies at the moment physcal measures

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Speaker 4: that were but in place true taxation and true expenditure

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Speaker 4: with the aim of offsetting the impact of high energy pricing.

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Speaker 4: As we have seen inflation come down and as we

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Speaker 4: have seen the cost of energy come down. Practically with

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Speaker 4: that now means it's those support measures that were in

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Speaker 4: place that were meant to be temporary come to an

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Speaker 4: end next year. And if they come to an end,

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Speaker 4: that in turn will create the opportunity for deficits across

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Speaker 4: the Euro Area in twenty twenty five to come down again.

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Speaker 4: So that's the big practical next step that we need

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Speaker 4: to deliver.

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Speaker 2: There's the political realities of that as well, though, And

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Speaker 2: in countries like France, for example, where we're in sort

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Speaker 2: of political stasis, is it going to be possible for

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Speaker 2: countries like France to achieve that aim. Are you worried

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Speaker 2: about the French public finances?

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Speaker 4: My view is, if you look at the euro Area

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Speaker 4: budget outlook, and even if you look at the outlot

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Speaker 4: of economies such as the French economy, I'm very confident

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Speaker 4: in the stability of their public finances and the stability

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Speaker 4: of the euro Area overall. Of course, in order for

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Speaker 4: a budgets to be passed within the French Parliament, there

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Speaker 4: needs to be a government in place, and there needs

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Speaker 4: to be the political consensus to implement that budget. And

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Speaker 4: look that work is underway, and I'm sure we'll only

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Speaker 4: intensify in the aftermath of the Olympics. But overall, I

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Speaker 4: am very confident in the outlook of the euro Area

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Speaker 4: deficits and our ability to manage that. And I also

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Speaker 4: believe that in our bigger economy, such as the French economy,

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Speaker 4: over time we will have the ability to see those

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Speaker 4: levels of borrowing go back to a more normal place.

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Speaker 2: Just another international issue that's facing the Euro Area economy,

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Speaker 2: or could potentially if there's another Donald Trump presidency, if

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Speaker 2: that were to materialize after November's election, Do you see

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Speaker 2: that as a being risk to the euro Area economy.

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Speaker 2: In terms of that risk is there.

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Speaker 4: It's up to obviously to the American people to decide

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Speaker 4: who they want as their next president. But Donald Trump

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Speaker 4: has outlined a very different agenda with regard to tariff

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Speaker 4: levels and with regard to trade. But as America is

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Speaker 4: deciding what they want to do with regard to that,

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Speaker 4: it's why it's so important that we here in Europe

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Speaker 4: take our steps to look at how we can deepen

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Speaker 4: our own economic foundations to deal with that kind of

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Speaker 4: change where it to happen in the US. I believe

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Speaker 4: the relationship between Europe and the US is one that

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Speaker 4: is important on so many different levels for both sides

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Speaker 4: of the Atlantic. But I also believe that here in

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Speaker 4: Europe we need to continue to deepen our own economic autonomy,

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Speaker 4: to deepen the performance of our economy and the strength

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Speaker 4: of our economy here in Europe, so that we're in

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Speaker 4: a stronger position to deal with the kind of changes

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Speaker 4: that make them out of America. So, of course it's

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Speaker 4: a really serious issue that could develop across next year,

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Speaker 4: but we here in Europe, I'm confident, will be well

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Speaker 4: positioned to be able to continue to develop the relationship

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Speaker 4: with the US, but to do with in a way that,

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Speaker 4: from a European perspective, is stronger.

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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 2: You can also listen live each morning on London Dab Radio,

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Speaker 1: I'm Caroline Hepka and.

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Speaker 2: on Bloomberg Daybreak Europe.