1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,600 --> 00:00:12,760 Speaker 2: This is the Bloomberg daybacre At podcast. Good morning, It's Thursday, 3 00:00:12,800 --> 00:00:15,880 Speaker 2: the thirtieth of July. I'm Caroline Hepcat in London. 4 00:00:15,840 --> 00:00:18,960 Speaker 1: And I'm Stephen Caroline Brussels. Coming up today, the United 5 00:00:19,000 --> 00:00:22,439 Speaker 1: States delivers a heavy wave of strikes against Iran and 6 00:00:22,520 --> 00:00:25,520 Speaker 1: what it calls a powerful response to attempted attacks on 7 00:00:25,560 --> 00:00:26,600 Speaker 1: American forces. 8 00:00:27,320 --> 00:00:30,840 Speaker 2: Bond markets deliver a warning to Kevin Walsh as long 9 00:00:30,920 --> 00:00:34,720 Speaker 2: term US boring costs hit a nineteen year high after 10 00:00:34,760 --> 00:00:37,680 Speaker 2: the Federal Reserve opts not to hike rates. 11 00:00:38,400 --> 00:00:41,800 Speaker 1: Plus throwing shade how a family feud is clouding the 12 00:00:41,840 --> 00:00:44,879 Speaker 1: forty billion euro Italian RayBan Empire. 13 00:00:45,440 --> 00:00:47,680 Speaker 3: Let's start with the roundup of our top stories. 14 00:00:48,080 --> 00:00:50,360 Speaker 1: The US military says it has launched what it calls 15 00:00:50,360 --> 00:00:54,279 Speaker 1: a powerful response to Iran's attempted missile attack on American 16 00:00:54,360 --> 00:00:57,600 Speaker 1: forces in the Middle East. US Central Command says American 17 00:00:57,640 --> 00:01:02,320 Speaker 1: forces struck dozens of Revolutionary Guards targets, including command centers, 18 00:01:02,480 --> 00:01:06,600 Speaker 1: miss island, drone facilities, and coastal defense sites. The strikes 19 00:01:06,640 --> 00:01:08,839 Speaker 1: came less than twenty four hours after I Ran fired 20 00:01:08,840 --> 00:01:12,000 Speaker 1: ballistic missiles at a US base in Jordan, ending a 21 00:01:12,080 --> 00:01:15,720 Speaker 1: brief pause and hostilities. Meanwhile, US Energy Secretary Chris Wright 22 00:01:15,800 --> 00:01:18,480 Speaker 1: says oil continues to flow through the Strait of Hormuz 23 00:01:18,800 --> 00:01:21,040 Speaker 1: under the protection of US military escorts. 24 00:01:21,640 --> 00:01:24,760 Speaker 4: A seven day trailing average right now out of the 25 00:01:24,800 --> 00:01:28,880 Speaker 4: Arabian Golf region is thirteen million barrels a day, about 26 00:01:28,959 --> 00:01:31,800 Speaker 4: half of that flowing through the strait and half of 27 00:01:31,840 --> 00:01:35,720 Speaker 4: that through bypass pipelines. So we're about two thirds of 28 00:01:35,760 --> 00:01:38,679 Speaker 4: the delivery of oil out of the Arabian Golf Region 29 00:01:38,920 --> 00:01:40,960 Speaker 4: as we were before the conflict started. 30 00:01:42,040 --> 00:01:44,240 Speaker 1: Good to hear our full interview with Energy Secretary Chris 31 00:01:44,360 --> 00:01:47,400 Speaker 1: Right on the Bloomberg Talks podcast. His comments came as 32 00:01:47,440 --> 00:01:50,600 Speaker 1: Katar resumed LNG exports for the first time in more 33 00:01:50,640 --> 00:01:53,920 Speaker 1: than three weeks through the Strait, offering tentative signs that 34 00:01:54,040 --> 00:01:57,720 Speaker 1: energy supplies are beginning to recover despite the renewed fighting. 35 00:01:58,800 --> 00:02:01,600 Speaker 2: Long term US treasure yields have surged to their highest 36 00:02:01,640 --> 00:02:05,600 Speaker 2: level in nineteen years, as investors question whether the Federal 37 00:02:05,680 --> 00:02:09,160 Speaker 2: Reserve is serious about tackling inflation. The cell or followed 38 00:02:09,160 --> 00:02:12,080 Speaker 2: the Fed's decision to leave interest rates unchanged for a 39 00:02:12,120 --> 00:02:16,440 Speaker 2: seventh straight month, despite che Kevin Walsh's hawkish rhetoric. 40 00:02:17,120 --> 00:02:21,440 Speaker 5: For some households, businesses, and market professionals, five years of 41 00:02:21,520 --> 00:02:25,000 Speaker 5: high inflation have left a mistaken impression that's hard to 42 00:02:25,040 --> 00:02:29,200 Speaker 5: shake that the Fed's implicit inflation target was somehow. 43 00:02:28,800 --> 00:02:29,800 Speaker 6: Above two percent. 44 00:02:30,160 --> 00:02:34,040 Speaker 5: Let me reiterate, there is no soft inflation target. 45 00:02:35,360 --> 00:02:40,000 Speaker 2: However, investors appeared unconvinced by Walsh's words, sending thirty eight 46 00:02:40,080 --> 00:02:43,560 Speaker 2: yields sharply higher as markets wager of the Fed was 47 00:02:43,720 --> 00:02:47,680 Speaker 2: only delaying an inevitable interest rate hike. Within hours of 48 00:02:47,680 --> 00:02:51,480 Speaker 2: his press conference, JP Morgan brought forward its forecast for 49 00:02:51,600 --> 00:02:54,720 Speaker 2: the next US rate hike to December. Market is an 50 00:02:54,760 --> 00:02:57,560 Speaker 2: uprising a sixty five percent chance for a rate rise 51 00:02:57,680 --> 00:02:59,919 Speaker 2: at the next FED meeting in September. 52 00:03:01,240 --> 00:03:03,239 Speaker 1: The Bank of England is expected to follow the Fair's 53 00:03:03,360 --> 00:03:05,639 Speaker 1: lead and leave interest rates unchanged. 54 00:03:05,680 --> 00:03:06,000 Speaker 7: Today. 55 00:03:06,040 --> 00:03:08,840 Speaker 1: That's in line with market pricing. Traders see just a 56 00:03:08,840 --> 00:03:11,880 Speaker 1: one percent chance of a rate hike, with the Monetary 57 00:03:11,880 --> 00:03:15,320 Speaker 1: Policy Committee expected to leave borrowing casts unchanged for a 58 00:03:15,360 --> 00:03:19,320 Speaker 1: fifth straight meeting. It's Boomberg Economics chf UK economist Dan Hansen. 59 00:03:19,760 --> 00:03:23,079 Speaker 8: You've got inflation and the data not throwing up any 60 00:03:23,080 --> 00:03:23,720 Speaker 8: red flags. 61 00:03:24,000 --> 00:03:24,600 Speaker 7: Good news. 62 00:03:24,960 --> 00:03:27,360 Speaker 8: On the other hand, re escalation in the Middle East, 63 00:03:27,520 --> 00:03:30,519 Speaker 8: and that is obviously a significant issue for the Bank 64 00:03:30,520 --> 00:03:33,120 Speaker 8: of England and all central banks because all prices have risen, 65 00:03:33,480 --> 00:03:37,800 Speaker 8: importantly for European central banks, gas prices have risen, and 66 00:03:37,840 --> 00:03:39,760 Speaker 8: you sort of had those two things up and you've 67 00:03:39,800 --> 00:03:42,240 Speaker 8: got this picture where in the near term there's no 68 00:03:42,320 --> 00:03:44,600 Speaker 8: rush to do anything, but you've got to keep your 69 00:03:44,640 --> 00:03:47,200 Speaker 8: options open because we just do not know where this 70 00:03:47,280 --> 00:03:50,520 Speaker 8: is heading into the second latter half of this year. 71 00:03:50,840 --> 00:03:52,880 Speaker 1: Dan Hanson, I'm speaking as markets put the yards of 72 00:03:52,880 --> 00:03:55,440 Speaker 1: a rate hike in September at around sixty percent. 73 00:03:55,880 --> 00:03:56,040 Speaker 6: Well. 74 00:03:56,040 --> 00:03:58,040 Speaker 1: Have live coverage of the Bank of England's decision here 75 00:03:58,080 --> 00:04:01,000 Speaker 1: on Bloomberg from twelve pm London. I'm followed by Governor 76 00:04:01,040 --> 00:04:03,360 Speaker 1: Andrew Bailey's press conference an hour later. 77 00:04:04,400 --> 00:04:08,040 Speaker 2: Twos earnings news now the French bank s Listage General 78 00:04:08,240 --> 00:04:11,200 Speaker 2: has raised its profitability outlook and announce a one and 79 00:04:11,240 --> 00:04:14,600 Speaker 2: a half billion euro share buyback. The lender's second quarter 80 00:04:14,640 --> 00:04:18,479 Speaker 2: profit came in two hundred million euros higher than estimates 81 00:04:18,560 --> 00:04:21,040 Speaker 2: at almost one point eight billion euros. 82 00:04:21,560 --> 00:04:22,240 Speaker 3: Revenue form. 83 00:04:22,279 --> 00:04:26,279 Speaker 2: SoC Gen's French retail operations rose almost thirteen percent off 84 00:04:26,279 --> 00:04:30,400 Speaker 2: setting a mixed performance at the trading unit. Equities trading 85 00:04:30,440 --> 00:04:34,120 Speaker 2: revenue failed to match Wall Street's performance, while fixed income 86 00:04:34,160 --> 00:04:35,720 Speaker 2: declined more than expected. 87 00:04:36,520 --> 00:04:39,359 Speaker 1: And staying with bank earnings, bbva IS reported second quarter 88 00:04:39,440 --> 00:04:42,919 Speaker 1: profits that beat estimates of three point zero six billion euros. 89 00:04:43,040 --> 00:04:45,960 Speaker 1: The Spanish bank also announcing plans to start a share 90 00:04:45,960 --> 00:04:48,320 Speaker 1: buy back for as much as two billion euros. 91 00:04:49,160 --> 00:04:53,840 Speaker 2: Samsung's ship business has reported a nearly twenty five thousand 92 00:04:53,960 --> 00:04:57,880 Speaker 2: percent jump in second quarter profits as it gains ground 93 00:04:57,960 --> 00:04:59,520 Speaker 2: in the AI memory race. 94 00:04:59,800 --> 00:05:00,599 Speaker 3: The we move. 95 00:05:00,920 --> 00:05:04,880 Speaker 2: The more than children fiftyfold increase lifted operating profit at 96 00:05:04,920 --> 00:05:09,240 Speaker 2: the division to an a list beating sixty two billion dollars. 97 00:05:09,480 --> 00:05:12,600 Speaker 2: Bloomberg's sole bureau chief Cap Barton here, it was. 98 00:05:12,560 --> 00:05:15,599 Speaker 9: An absolutely historic quarter for them, record profits for their 99 00:05:15,640 --> 00:05:20,240 Speaker 9: semiconductor division. Obviously, their mobile phones and their other electronics 100 00:05:20,240 --> 00:05:22,719 Speaker 9: didn't do quite so well. They actually tipped into a loss. 101 00:05:22,720 --> 00:05:25,920 Speaker 9: But the semiconductors are doing so outlandishly well that it's 102 00:05:25,920 --> 00:05:27,839 Speaker 9: carrying the whole company at this stage. 103 00:05:27,760 --> 00:05:32,200 Speaker 2: Cat Barton speaking there as Samsung's shares rose before slipping 104 00:05:32,200 --> 00:05:35,600 Speaker 2: into a loss as investors questioned whether the AI boom 105 00:05:35,640 --> 00:05:40,039 Speaker 2: can continue to justify the sector's massive spending. The results 106 00:05:40,080 --> 00:05:42,800 Speaker 2: come just a day after rival s k Heinex also 107 00:05:42,839 --> 00:05:47,839 Speaker 2: reported record profits that still fell short of investors' lofty expectations. 108 00:05:48,640 --> 00:05:51,320 Speaker 1: Met As Mark Zuckerberg is defending his AI bet to 109 00:05:51,360 --> 00:05:56,000 Speaker 1: skeptical investors after giving a disappointing quarterly revenue forecast, Pressures 110 00:05:56,040 --> 00:05:59,960 Speaker 1: building on the social media giant CEO to downplay concerning 111 00:06:00,160 --> 00:06:03,320 Speaker 1: the company isn't benefiting quickly enough from its investments in 112 00:06:03,360 --> 00:06:07,600 Speaker 1: the technology. Company also reported the lowest free cash flow 113 00:06:07,640 --> 00:06:10,360 Speaker 1: in years, a sign of high AI costs, which could 114 00:06:10,360 --> 00:06:13,080 Speaker 1: about to one hundred and forty five billion dollars this year. 115 00:06:13,279 --> 00:06:16,680 Speaker 1: According to Mark Zuckerberg, the investments are enhancing Meta. 116 00:06:17,320 --> 00:06:20,560 Speaker 10: Our investments in AI are accelerating every major part of 117 00:06:20,600 --> 00:06:23,920 Speaker 10: our core business. They're improving the experience for people using 118 00:06:23,920 --> 00:06:27,400 Speaker 10: our apps, driving better performance for advertisers, and helping our 119 00:06:27,440 --> 00:06:31,560 Speaker 10: teams build new experiences and ship faster. Second, we are 120 00:06:31,600 --> 00:06:34,440 Speaker 10: developing new personal agents that will be the foundation for 121 00:06:34,520 --> 00:06:36,960 Speaker 10: our next wave of products and revenue lines in the 122 00:06:36,960 --> 00:06:38,120 Speaker 10: months and years ahead. 123 00:06:40,160 --> 00:06:43,440 Speaker 1: Meta chairman and CEO Mark Zuckerberg there speaking on a 124 00:06:43,480 --> 00:06:46,920 Speaker 1: call with investors. The news comes after investors complained earlier 125 00:06:46,920 --> 00:06:51,360 Speaker 1: this year when Zuckerberg increased projected expenditures on AI. Many 126 00:06:51,400 --> 00:06:53,840 Speaker 1: of them don't agree with the platform's heavy spending on 127 00:06:54,040 --> 00:06:56,400 Speaker 1: virtual reality and the metaverse. 128 00:06:57,800 --> 00:07:02,440 Speaker 2: Far fighters in France and Space are making progress containing wildfires, 129 00:07:02,480 --> 00:07:06,880 Speaker 2: with cooler weather expected towards the weekend. Meanwhile, in Greece, 130 00:07:07,240 --> 00:07:11,560 Speaker 2: two FAR fighters have died tackling a blaze as strong 131 00:07:11,640 --> 00:07:16,080 Speaker 2: winds hamper CRUZ efforts. Gary Brooks from the Bordeaux British 132 00:07:16,080 --> 00:07:18,760 Speaker 2: community says people are trying to help each other. 133 00:07:19,600 --> 00:07:22,800 Speaker 11: We got offers from a lot of bridges to when 134 00:07:22,840 --> 00:07:26,960 Speaker 11: we were evacuating to go to them and show their 135 00:07:27,040 --> 00:07:30,600 Speaker 11: birds and so on. In fact, later on they were 136 00:07:30,640 --> 00:07:33,239 Speaker 11: impacted by the tire's approaching border. 137 00:07:35,400 --> 00:07:38,520 Speaker 2: Gary Brooks speaking there from France, where the far to 138 00:07:38,560 --> 00:07:40,640 Speaker 2: the west of Bordeaux has burned about four hundred and 139 00:07:40,680 --> 00:07:45,680 Speaker 2: twenty square kilometers of France's girond region. But this situation 140 00:07:45,840 --> 00:07:48,480 Speaker 2: has stabilized somewhat over the past few days. The spread 141 00:07:48,480 --> 00:07:51,520 Speaker 2: of fires outside of Madrid has also slowed, with mort 142 00:07:51,520 --> 00:07:55,800 Speaker 2: evacuees returning to their homes. So those are our top 143 00:07:55,840 --> 00:07:59,320 Speaker 2: stories for you today. Let's look at the markets now. 144 00:07:59,440 --> 00:08:03,520 Speaker 2: The cost down one point four percent, in massively chopping trading, 145 00:08:03,680 --> 00:08:08,320 Speaker 2: and despite strong Samsung earnings, the China is also slumping, 146 00:08:08,360 --> 00:08:11,600 Speaker 2: almost at six percent overall in age, you've got still 147 00:08:11,640 --> 00:08:14,320 Speaker 2: something of a sell off. THEMSCI Asia Pacific Index down 148 00:08:14,320 --> 00:08:18,760 Speaker 2: by half of one percent. Also, it comes after some 149 00:08:18,800 --> 00:08:21,920 Speaker 2: pretty mixed results out of the big US firms. Microsoft 150 00:08:21,960 --> 00:08:26,520 Speaker 2: strong growth, Meta, though disappointing in terms of its revenue outlook. 151 00:08:26,560 --> 00:08:28,480 Speaker 2: The S and P five hundred yesterday fell one and 152 00:08:28,480 --> 00:08:31,880 Speaker 2: a half percent. Looking at stock futures, though Nazak and 153 00:08:32,040 --> 00:08:33,920 Speaker 2: S and P five hundred emage futures are in the green. 154 00:08:34,000 --> 00:08:37,080 Speaker 2: Usox fwifty futures are down two tenths of one percent, 155 00:08:37,120 --> 00:08:39,680 Speaker 2: and you see this continued sell off in treasuries thirty 156 00:08:39,760 --> 00:08:42,400 Speaker 2: eight US yields up three basis points this morning's five 157 00:08:42,440 --> 00:08:45,400 Speaker 2: point two three percent. Three officials dissented in favor of 158 00:08:45,440 --> 00:08:49,880 Speaker 2: a hike yesterday, and oil prices this morning breakthrough down 159 00:08:49,920 --> 00:08:52,000 Speaker 2: three tenths but still above ninety dollars. 160 00:08:52,040 --> 00:08:54,720 Speaker 3: About those are the markets in a moment. 161 00:08:54,840 --> 00:08:58,000 Speaker 1: More on the market reaction to the FED decision plus 162 00:08:58,040 --> 00:09:01,800 Speaker 1: the family disputes that's threatening one of Europe's biggest business empires. 163 00:09:02,320 --> 00:09:03,959 Speaker 1: But for us, another story that we've been reading this 164 00:09:04,120 --> 00:09:08,600 Speaker 1: morning on the Sound of Luxury. Brandon Presser has been 165 00:09:08,640 --> 00:09:10,920 Speaker 1: writing about this for Bloomberg Pursuits as two parts of 166 00:09:10,960 --> 00:09:12,720 Speaker 1: the story that I love. One is that he tackles 167 00:09:12,760 --> 00:09:16,400 Speaker 1: the issue of ours that are pronounced or aren't pronounced, 168 00:09:16,440 --> 00:09:18,200 Speaker 1: and whether or not that's considered to be a good 169 00:09:18,320 --> 00:09:20,760 Speaker 1: or a bad thing. And anyone, any Irish person that's 170 00:09:20,800 --> 00:09:24,000 Speaker 1: moved to England knows the bane of the fact that 171 00:09:25,160 --> 00:09:27,160 Speaker 1: people in the safeties of English don't pronounce their ours, 172 00:09:27,400 --> 00:09:29,520 Speaker 1: and that leads lots of confusion when people say, are 173 00:09:29,600 --> 00:09:32,760 Speaker 1: you from Ireland and it sounds like Ireland and then 174 00:09:32,800 --> 00:09:34,320 Speaker 1: you have to say, yes, I am from an island. 175 00:09:34,400 --> 00:09:37,320 Speaker 1: What a strange question to ask. That's beside the point 176 00:09:37,559 --> 00:09:40,720 Speaker 1: of what Brandon gets to because this is all related 177 00:09:40,760 --> 00:09:44,600 Speaker 1: to what's considered to be prestige. What are the prestige sounds? 178 00:09:44,679 --> 00:09:47,280 Speaker 1: And apparently now in twenty twenty six, it's not to 179 00:09:47,320 --> 00:09:48,760 Speaker 1: do with whether or not you're pronouncing an our. 180 00:09:48,840 --> 00:09:50,640 Speaker 6: It's to do with what I. 181 00:09:50,640 --> 00:09:54,480 Speaker 1: Suppose, speaking more slowly, having a little bit more pace, 182 00:09:55,200 --> 00:09:59,360 Speaker 1: using languages, or using words that perhaps are a little 183 00:09:59,400 --> 00:10:03,480 Speaker 1: bit more esoteric. I suppose in describing what it is 184 00:10:03,520 --> 00:10:06,559 Speaker 1: that you're describing. You know, a room becomes a sanctuary, 185 00:10:06,679 --> 00:10:09,719 Speaker 1: a stay becomes a journey, and this is something that 186 00:10:09,800 --> 00:10:11,880 Speaker 1: actually hospitality workers are being trained to do. 187 00:10:12,600 --> 00:10:12,800 Speaker 10: Yeah. 188 00:10:13,120 --> 00:10:16,439 Speaker 2: I have dubbed this luxury voice. It's kind of the 189 00:10:16,520 --> 00:10:20,959 Speaker 2: equivalent of the old telephone voice. And yes, it's something 190 00:10:21,040 --> 00:10:24,560 Speaker 2: that is being heard in expensive hotels and restaurants. Now 191 00:10:24,600 --> 00:10:26,120 Speaker 2: that we've told you about it, you're going to notice 192 00:10:26,160 --> 00:10:30,360 Speaker 2: it absolutely everywhere. But this is because there's been a 193 00:10:30,400 --> 00:10:34,800 Speaker 2: bit of research done into this. And yes, apparently in 194 00:10:34,960 --> 00:10:38,600 Speaker 2: luxury hotels people speak like about ten percent more slowly 195 00:10:38,840 --> 00:10:41,480 Speaker 2: than they would in an everyday way. And this is 196 00:10:41,559 --> 00:10:44,320 Speaker 2: all meant to show empathy. It's not about the transaction. 197 00:10:44,840 --> 00:10:47,240 Speaker 2: It's about how you feel, how you're made to feel. 198 00:10:47,320 --> 00:10:50,640 Speaker 3: So it's all of this. It's not therapy speak. It's 199 00:10:50,720 --> 00:10:51,760 Speaker 3: kind of exactly. 200 00:10:53,280 --> 00:10:55,559 Speaker 2: Is that your best impression of the luxury voice? 201 00:10:55,600 --> 00:10:55,959 Speaker 6: I love it. 202 00:10:56,320 --> 00:10:56,920 Speaker 8: Yeah, it might be. 203 00:10:57,040 --> 00:10:57,599 Speaker 7: I quite like that. 204 00:10:57,679 --> 00:11:00,559 Speaker 1: One of the luxury psychologists, yes that's a job, who 205 00:11:00,920 --> 00:11:03,120 Speaker 1: Brandon spoke to for this piece, said that it's not 206 00:11:03,240 --> 00:11:07,240 Speaker 1: about luxury trying to fit consumer preferences. It's about guiding 207 00:11:07,320 --> 00:11:11,880 Speaker 1: people towards more desirable versions of themselves, which I feel 208 00:11:11,880 --> 00:11:14,080 Speaker 1: like is a great aspiration for a Thursday morning. We'll 209 00:11:14,080 --> 00:11:16,240 Speaker 1: put a link to that piece in our podcast show notes. 210 00:11:17,800 --> 00:11:19,439 Speaker 1: Let's bring you more now though, on how markets have 211 00:11:19,559 --> 00:11:23,440 Speaker 1: interpreting the Federal Reserve chairs comments on rates and inflation, 212 00:11:23,600 --> 00:11:26,240 Speaker 1: no luxury voice and evidence there long dated treasury eels 213 00:11:26,280 --> 00:11:28,440 Speaker 1: jumping to their highest since two thousand and seven. Our 214 00:11:28,480 --> 00:11:32,200 Speaker 1: Markets Live Executive editor Mark Hudmore joins us now for more. 215 00:11:32,520 --> 00:11:32,720 Speaker 6: Mark. 216 00:11:32,760 --> 00:11:35,319 Speaker 7: What was it then that investors didn't like from Cavin Warsh? 217 00:11:36,080 --> 00:11:39,160 Speaker 12: It was just a terrible press conference, I have to say, 218 00:11:39,559 --> 00:11:42,199 Speaker 12: so disappointing. Look, there are a lot of people in 219 00:11:42,280 --> 00:11:45,120 Speaker 12: the macro community, including myself, who are delighted by the 220 00:11:45,120 --> 00:11:47,319 Speaker 12: idea they were going to step away from Ford guidance. 221 00:11:47,600 --> 00:11:48,959 Speaker 12: It's kind of been the bane of the world the 222 00:11:49,040 --> 00:11:51,079 Speaker 12: last twenty years, and it stopped people thinking, you know, 223 00:11:51,160 --> 00:11:53,200 Speaker 12: people of stopping able to like just look at data 224 00:11:53,280 --> 00:11:56,200 Speaker 12: themselves and react. They wait till some fed official translates 225 00:11:56,240 --> 00:11:57,719 Speaker 12: the data for them. It's kind of seems to have 226 00:11:57,800 --> 00:12:00,560 Speaker 12: made the market much stupider, I think. So the fact 227 00:12:00,559 --> 00:12:02,040 Speaker 12: that they were stepped away from forward guidance, I thought 228 00:12:02,120 --> 00:12:04,640 Speaker 12: was wonderful. A lot of the macro community were quite optimistic, 229 00:12:04,679 --> 00:12:08,520 Speaker 12: and maybe that's why it's so disappointing that the press conference, 230 00:12:08,960 --> 00:12:11,800 Speaker 12: it was that the fact that he actually rambled a 231 00:12:11,960 --> 00:12:15,079 Speaker 12: lot around, he talked a lot, and it's not just 232 00:12:15,240 --> 00:12:17,280 Speaker 12: that he said very little, it's that he said a 233 00:12:17,280 --> 00:12:20,520 Speaker 12: lot of confusing things. He undermined the inflation target. He 234 00:12:20,679 --> 00:12:22,120 Speaker 12: was adamant that we're going to get down to two 235 00:12:22,160 --> 00:12:24,240 Speaker 12: percent that we've obviously been nowhere near for years. He 236 00:12:24,360 --> 00:12:26,920 Speaker 12: implied that you know, sure, it's absolutely pc is what 237 00:12:26,960 --> 00:12:28,400 Speaker 12: we're looking at. Oh, we might not be looking at 238 00:12:28,400 --> 00:12:30,040 Speaker 12: that in January because we have a whole range of things. 239 00:12:30,280 --> 00:12:32,400 Speaker 12: He basically just said a lot of things that really 240 00:12:32,559 --> 00:12:35,440 Speaker 12: undermined his credibility. He sounded like someone who's like, I've 241 00:12:35,559 --> 00:12:37,439 Speaker 12: just thought about this job for the first time, so 242 00:12:37,520 --> 00:12:39,199 Speaker 12: I'm working it out, even though he's been on the 243 00:12:39,240 --> 00:12:41,199 Speaker 12: committee for a while. So I just think it was 244 00:12:41,240 --> 00:12:43,560 Speaker 12: a massive blow to FED credibility. We see that quite 245 00:12:43,559 --> 00:12:46,520 Speaker 12: obviously because we're seeing long Annealed spike and the dollar down. Obviously, 246 00:12:46,559 --> 00:12:48,959 Speaker 12: higher yields normally supports the currency, but the fact that 247 00:12:49,000 --> 00:12:51,200 Speaker 12: you've got that that tandem of dollar weakness and long 248 00:12:51,240 --> 00:12:53,959 Speaker 12: Annealed hire shows that the market was just like, wow, 249 00:12:54,120 --> 00:12:57,720 Speaker 12: this is this is this is a blow to FED credibility. Obviously, 250 00:12:57,800 --> 00:13:00,319 Speaker 12: it's a first meeting, and you know, maybe it was 251 00:13:00,320 --> 00:13:02,559 Speaker 12: an early mistake and maybe he can reclaim it, but 252 00:13:02,920 --> 00:13:04,720 Speaker 12: it's a very worrying for a sign. 253 00:13:05,280 --> 00:13:06,680 Speaker 3: Okay, so Hankleer. 254 00:13:06,800 --> 00:13:10,600 Speaker 2: Second, what's happened then to the idea that Kevin Walsh 255 00:13:10,679 --> 00:13:13,840 Speaker 2: doesn't want the Central Bank to communicate as much? 256 00:13:13,920 --> 00:13:14,560 Speaker 3: I mean, should we. 257 00:13:14,840 --> 00:13:17,040 Speaker 2: Get used to more moves like this or will w 258 00:13:17,200 --> 00:13:22,760 Speaker 2: Wash maybe maybe learn from this from this event. 259 00:13:23,840 --> 00:13:26,160 Speaker 12: I hope he learns that if he doesn't want to 260 00:13:26,160 --> 00:13:28,320 Speaker 12: communicate as much ford guns, that's fine, but then don't 261 00:13:28,400 --> 00:13:30,679 Speaker 12: say loads of other random things that kind of just 262 00:13:30,760 --> 00:13:33,959 Speaker 12: sound weird. So I don't think it's a problem that 263 00:13:34,000 --> 00:13:35,360 Speaker 12: the step away from Ford guns. I do think that'll 264 00:13:35,360 --> 00:13:36,920 Speaker 12: be a transition for the market, and I think that 265 00:13:36,960 --> 00:13:39,079 Speaker 12: I'm sure some corporates will probably struggle with it, but 266 00:13:39,200 --> 00:13:40,840 Speaker 12: as said, the macro community loves it, and I think 267 00:13:40,960 --> 00:13:44,240 Speaker 12: ultimately longer term it is probably better, even though there's 268 00:13:44,240 --> 00:13:47,680 Speaker 12: an adjustment period. So it's not about the step away 269 00:13:47,679 --> 00:13:49,959 Speaker 12: from Ford guns that's the problem. Is that then just 270 00:13:50,040 --> 00:13:54,000 Speaker 12: don't say things that like undermine the FED undermined. It's 271 00:13:54,080 --> 00:13:57,400 Speaker 12: two percent target that are inconsistent, that sound like you've 272 00:13:57,440 --> 00:13:59,719 Speaker 12: not really thought about the job. That just sound like 273 00:13:59,760 --> 00:14:02,559 Speaker 12: you're your policy is more on hope rather than like 274 00:14:03,240 --> 00:14:05,120 Speaker 12: actually that you've got a plan. It's okay to not 275 00:14:05,200 --> 00:14:08,800 Speaker 12: provide forward guidance if you convey the impression that you're 276 00:14:08,920 --> 00:14:11,720 Speaker 12: you know, you've got authority and you know you're ready 277 00:14:11,720 --> 00:14:12,959 Speaker 12: to do the right thing when needed. You know, I 278 00:14:13,000 --> 00:14:14,400 Speaker 12: need to tell people in advance you are ready to 279 00:14:14,440 --> 00:14:16,680 Speaker 12: do it. But and that was the impression that Warship 280 00:14:16,760 --> 00:14:18,640 Speaker 12: given before the meeting, and I think, you know, he 281 00:14:18,760 --> 00:14:20,560 Speaker 12: built a vex putation. I think people are quite optimistic. 282 00:14:20,640 --> 00:14:23,560 Speaker 12: And you know, it's a real blow yesterday, Mark. 283 00:14:23,640 --> 00:14:25,680 Speaker 1: What does this mean for the rest of the world 284 00:14:25,720 --> 00:14:27,840 Speaker 1: when we see moves like this in treasuries and the 285 00:14:27,880 --> 00:14:32,080 Speaker 1: prospect of more volatility if this I suppose approach continues. 286 00:14:32,680 --> 00:14:36,080 Speaker 12: Yeah, we'll get more crosshouse at volatility because people, I mean, 287 00:14:36,160 --> 00:14:37,600 Speaker 12: we're always going to get that when we step away 288 00:14:37,640 --> 00:14:39,920 Speaker 12: from FED guidance. But and that's okay, But I think 289 00:14:39,920 --> 00:14:42,000 Speaker 12: it's even worse with the underminding the FED credibility in 290 00:14:42,120 --> 00:14:43,560 Speaker 12: terms of that people are going to react to data 291 00:14:43,680 --> 00:14:46,600 Speaker 12: more than like kind of the massaged guidance. But I 292 00:14:46,680 --> 00:14:48,920 Speaker 12: think that the fact that the FED is, you know, 293 00:14:49,120 --> 00:14:51,360 Speaker 12: has taken a blow to credibility. You know, this is 294 00:14:51,360 --> 00:14:53,040 Speaker 12: the most important center bank in the world in a 295 00:14:53,080 --> 00:14:56,840 Speaker 12: world where people are worried about debts everywhere, and kind 296 00:14:56,840 --> 00:15:01,000 Speaker 12: of people being fiscally showing fiscal straint and being mature 297 00:15:01,000 --> 00:15:03,520 Speaker 12: about this. I think this adds to to upward pressure 298 00:15:03,560 --> 00:15:07,160 Speaker 12: and long and yields everywhere. You know, Basically, if if 299 00:15:07,240 --> 00:15:10,040 Speaker 12: the FED yield curve US yield curve is going to 300 00:15:10,080 --> 00:15:12,200 Speaker 12: see steepening pressure is awake of this, that's going to 301 00:15:12,240 --> 00:15:14,560 Speaker 12: feed through to kind of steepening pressure everywhere. 302 00:15:14,880 --> 00:15:15,600 Speaker 7: And that's a that's a. 303 00:15:15,600 --> 00:15:17,840 Speaker 12: Problem in a world that that is already very indebted. 304 00:15:17,880 --> 00:15:19,480 Speaker 12: So I think this is you know, this is quite 305 00:15:19,520 --> 00:15:23,200 Speaker 12: a consequential kind of message. Now, you know, I'm sounding 306 00:15:23,320 --> 00:15:25,840 Speaker 12: very dramatic here. I guess that the one kind of 307 00:15:25,960 --> 00:15:29,640 Speaker 12: qualifying stake intry voice mark, I'm very I'm very far 308 00:15:29,760 --> 00:15:31,680 Speaker 12: from a luxury voice. I knew this didn't work for 309 00:15:31,760 --> 00:15:33,520 Speaker 12: even I did laugh a lot to your segment there, 310 00:15:33,560 --> 00:15:36,840 Speaker 12: But you know, speaking slowly and using you know, sophisticated words, 311 00:15:36,880 --> 00:15:38,640 Speaker 12: that's not me. I'm a simple man who talks too fast. 312 00:15:39,200 --> 00:15:41,560 Speaker 12: But I want to say one kind of qualifying step 313 00:15:41,600 --> 00:15:44,040 Speaker 12: before two dramatic. Look, this was a this I really 314 00:15:44,080 --> 00:15:45,520 Speaker 12: think it was a big mistake, and I don't want 315 00:15:45,520 --> 00:15:47,640 Speaker 12: to downplay how much a mistake this was, But you know, 316 00:15:47,680 --> 00:15:49,680 Speaker 12: this is this is one meeting, and there's a there's. 317 00:15:49,480 --> 00:15:50,960 Speaker 7: A there's a chance to correct that mistake. 318 00:15:51,000 --> 00:15:52,640 Speaker 12: And it is his first meeting, and you know, I 319 00:15:52,680 --> 00:15:54,280 Speaker 12: can't remember off top of my head, but I do 320 00:15:54,480 --> 00:15:56,840 Speaker 12: know that you know, any first meetings being this bad 321 00:15:56,880 --> 00:15:59,600 Speaker 12: at forir FED chairs, But all FED chairs have have 322 00:15:59,720 --> 00:16:01,720 Speaker 12: got as they gone along. So I'm not saying that 323 00:16:02,080 --> 00:16:03,520 Speaker 12: it's going to be the way of the future for 324 00:16:03,520 --> 00:16:06,920 Speaker 12: ever more. Maybe he's very good in future performances. Maybe 325 00:16:06,920 --> 00:16:09,840 Speaker 12: at Jackson holl he sounds super tharted. But I'm just saying, 326 00:16:10,240 --> 00:16:12,200 Speaker 12: if we're talking about the message from this FED meeting 327 00:16:12,280 --> 00:16:14,240 Speaker 12: last night, it was a strong one, and it was 328 00:16:14,280 --> 00:16:16,800 Speaker 12: a strong one that the FED doesn't have as much 329 00:16:16,840 --> 00:16:18,400 Speaker 12: credibility as we thought twenty four hours ago. 330 00:16:19,120 --> 00:16:21,760 Speaker 2: Wow. Okay, that's pretty uncomfortable then, isn't it. For markets? 331 00:16:21,760 --> 00:16:24,320 Speaker 2: Thank you so much Mark for being with us as ever. 332 00:16:24,680 --> 00:16:28,560 Speaker 2: Clear direct and forthright. Mark cut more on Market's life, 333 00:16:28,640 --> 00:16:32,120 Speaker 2: executive editor, stay with us. 334 00:16:32,400 --> 00:16:34,840 Speaker 3: More from Bloomberg Daybacube coming up after this. 335 00:16:38,160 --> 00:16:38,280 Speaker 11: Now. 336 00:16:38,320 --> 00:16:41,000 Speaker 1: The Italian business manly and ardidol Vecchio built one of 337 00:16:41,040 --> 00:16:45,359 Speaker 1: Europe's biggest business empires in the glasses maker essel or Luxotako, 338 00:16:45,760 --> 00:16:48,160 Speaker 1: but since his death four years ago, his family's bickering 339 00:16:48,280 --> 00:16:51,880 Speaker 1: is threatening to unravel his forty billion euro legacy. Our 340 00:16:51,920 --> 00:16:54,520 Speaker 1: senior editor Anthony Pellazzo joins us now from Rome for 341 00:16:54,640 --> 00:16:55,600 Speaker 1: more on this story. 342 00:16:55,680 --> 00:16:59,160 Speaker 7: Ansley, good morning. What is the issue then? At Esla Lexatago. 343 00:16:59,520 --> 00:17:02,280 Speaker 13: Well, as we lay out in our story, Leonardo de 344 00:17:02,400 --> 00:17:07,080 Speaker 13: Vecchio was this amazing entrepreneur and he built the world's 345 00:17:07,280 --> 00:17:11,480 Speaker 13: biggest eyewear company from scratch. He merged that with a 346 00:17:11,560 --> 00:17:15,520 Speaker 13: French competitor a few years before he died, and he 347 00:17:15,600 --> 00:17:18,960 Speaker 13: wanted to keep the family together. But in his will 348 00:17:19,320 --> 00:17:23,480 Speaker 13: he didn't empower anyone with the authority to make major decisions. 349 00:17:24,000 --> 00:17:28,280 Speaker 13: So four years later this has become a big stumbling block. 350 00:17:28,720 --> 00:17:32,960 Speaker 13: All eight heirs have an equal vote, but his will 351 00:17:33,080 --> 00:17:40,040 Speaker 13: requires unanimity or nearity on major decisions. So, for example, 352 00:17:40,200 --> 00:17:43,199 Speaker 13: if one air wants to sell out and go their 353 00:17:43,240 --> 00:17:47,520 Speaker 13: own way. The will also limits the dividend payouts from 354 00:17:47,600 --> 00:17:50,880 Speaker 13: the family holding company, and that means that the excess 355 00:17:51,000 --> 00:17:55,040 Speaker 13: cash has not gone to the children, it's gone to 356 00:17:55,200 --> 00:17:58,639 Speaker 13: the holding company and they don't have access. And so 357 00:17:59,200 --> 00:18:01,800 Speaker 13: at this point they haven't been able to agree on 358 00:18:02,160 --> 00:18:05,760 Speaker 13: any changes that would resolve all this and restructure. 359 00:18:05,160 --> 00:18:06,480 Speaker 6: The family holding company. 360 00:18:07,160 --> 00:18:09,879 Speaker 13: One of his sons tried to do a buyout of 361 00:18:10,200 --> 00:18:13,640 Speaker 13: two of the siblings earlier this year, and that would 362 00:18:13,680 --> 00:18:17,520 Speaker 13: have concentrated some of the powering and kind of given 363 00:18:17,800 --> 00:18:21,560 Speaker 13: the whole enterprise some clarity, but that deal fell apart. 364 00:18:21,920 --> 00:18:24,720 Speaker 2: There are laws evolved, there's a lot going on. But 365 00:18:24,960 --> 00:18:28,720 Speaker 2: what effect then is this dispute then having actually on 366 00:18:28,840 --> 00:18:29,400 Speaker 2: the business. 367 00:18:30,040 --> 00:18:34,760 Speaker 13: Well, luckily for shareholders and incidentally for the heirs, the 368 00:18:34,920 --> 00:18:39,200 Speaker 13: answer is so far not much. Es The Lord Luxottica 369 00:18:39,720 --> 00:18:42,400 Speaker 13: is the company that's at the core of the family fortune. 370 00:18:43,200 --> 00:18:46,680 Speaker 13: It's a dominant player globally in eye care. It has 371 00:18:47,119 --> 00:18:52,240 Speaker 13: this vertical system of research, manufacturing, design and then retail 372 00:18:52,400 --> 00:18:56,160 Speaker 13: like lens Crafters or Sunglass Hut, and in recent years 373 00:18:56,200 --> 00:18:59,480 Speaker 13: it's really leaned into technology. So they have this deal 374 00:18:59,760 --> 00:19:03,160 Speaker 13: with Meta where they're building AI glasses there's a lot 375 00:19:03,200 --> 00:19:04,600 Speaker 13: of enthusiasm about that. 376 00:19:05,320 --> 00:19:07,760 Speaker 6: But then they also have these other initiatives. 377 00:19:07,800 --> 00:19:12,000 Speaker 13: They have glasses that help correct near sightedness in children. 378 00:19:12,200 --> 00:19:15,119 Speaker 6: That's a new thing. And then they're making frames that have. 379 00:19:15,359 --> 00:19:19,520 Speaker 13: Hearing amplification that could create an alternative to wearing a 380 00:19:19,600 --> 00:19:24,040 Speaker 13: hearing aid. So the stock has fallen a lot since 381 00:19:24,359 --> 00:19:27,240 Speaker 13: late last year, but that's mostly tied to the transition 382 00:19:27,960 --> 00:19:30,400 Speaker 13: to the higher tech products that cost more to make 383 00:19:30,600 --> 00:19:34,640 Speaker 13: and the threat to profit margins the families bickering. 384 00:19:35,000 --> 00:19:38,600 Speaker 6: It's putting a cloud on the premium. 385 00:19:38,440 --> 00:19:44,359 Speaker 13: Say that as Luxotica has enjoyed, But overall the company 386 00:19:44,440 --> 00:19:47,360 Speaker 13: is very strong and it's you know, it's navigating through 387 00:19:47,400 --> 00:19:50,280 Speaker 13: a transition that doesn't threaten their market position. 388 00:19:50,560 --> 00:19:53,359 Speaker 1: Are there any thoughts to resolution of the family dispute 389 00:19:53,359 --> 00:19:55,600 Speaker 1: there or is there a risk perhaps that it may 390 00:19:56,240 --> 00:19:58,280 Speaker 1: lead to a point where it does affect the business. 391 00:19:58,680 --> 00:19:59,920 Speaker 6: Well, that's a big question. 392 00:20:00,560 --> 00:20:04,920 Speaker 13: The risk is that if they can't come together and 393 00:20:05,400 --> 00:20:09,080 Speaker 13: come to a solution, then it all winds up in courts. 394 00:20:09,560 --> 00:20:13,760 Speaker 13: The courts make decisions that are unpredictable, and then there's 395 00:20:14,000 --> 00:20:18,200 Speaker 13: some sort of an unraveling that that is uncontrolled. Right, 396 00:20:18,560 --> 00:20:22,080 Speaker 13: So one possibility. One possibility that's come up and there 397 00:20:22,119 --> 00:20:27,000 Speaker 13: seems to be some interest in, is a restructuring at 398 00:20:27,160 --> 00:20:30,960 Speaker 13: the family holding company. It's called Delphine, and what they 399 00:20:31,000 --> 00:20:33,639 Speaker 13: would need to do would be to sell the banking 400 00:20:33,760 --> 00:20:35,960 Speaker 13: stocks that the family owns. 401 00:20:36,400 --> 00:20:39,000 Speaker 6: At this point it's about a third of their fortune. 402 00:20:39,400 --> 00:20:43,160 Speaker 13: That would give some financial flexibility to do a restructuring. 403 00:20:43,720 --> 00:20:45,560 Speaker 6: Say if one sibling wants. 404 00:20:45,440 --> 00:20:47,960 Speaker 13: To sell out the other one wants to buy in, 405 00:20:48,600 --> 00:20:50,520 Speaker 13: there's some flexibility to do that. 406 00:20:51,280 --> 00:20:54,719 Speaker 6: There are so many potholes in the road toward a solution. 407 00:20:55,440 --> 00:20:58,399 Speaker 13: Everybody has to agree, and so what they've done, or 408 00:20:58,480 --> 00:21:00,719 Speaker 13: what they're trying to do now is to hire an 409 00:21:00,840 --> 00:21:05,480 Speaker 13: outside advisor, somebody with some gravitars who can mediate and 410 00:21:05,600 --> 00:21:08,720 Speaker 13: bring them together and come up with a solution that 411 00:21:08,840 --> 00:21:09,640 Speaker 13: they all agree upon. 412 00:21:10,880 --> 00:21:13,040 Speaker 7: Thanks for listening to Bloomberg Daybreak Europe. 413 00:21:13,400 --> 00:21:15,920 Speaker 2: If you're enjoying the podcast, give us a follow, leave 414 00:21:16,000 --> 00:21:18,119 Speaker 2: a rating or review, and maybe send it to that 415 00:21:18,320 --> 00:21:21,119 Speaker 2: one friend or colleague who's always trying to keep up 416 00:21:21,160 --> 00:21:21,399 Speaker 2: with the. 417 00:21:21,440 --> 00:21:24,200 Speaker 1: News And if one podcast today isn't it off for you. 418 00:21:24,200 --> 00:21:26,800 Speaker 1: You can also listen to us live every weekday from 419 00:21:26,960 --> 00:21:29,960 Speaker 1: six am in London on Dab Radio, on tune in 420 00:21:30,200 --> 00:21:32,000 Speaker 1: and on the Bloomberg Business app. 421 00:21:32,359 --> 00:21:34,720 Speaker 2: Oh if you've got a smart speaker nearby, just say 422 00:21:34,960 --> 00:21:36,200 Speaker 2: play Bloomberg Radio.