Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg daybec podcast. Good morning, It's Wednesday,
Speaker 2: the twenty fourth of December. I'm Caroline Hepga in London.
Speaker 2: Coming up today. France passes a stopgap bill to keep
Speaker 2: the state running. Debate on the budget resumes in January.
Speaker 2: The US sanction's former EU officials in an escalating clash
Speaker 2: over free speech and big tech, and the co founder
Speaker 2: of Brevan Howard, billionaire Alan Howard has left the UK
Speaker 2: to live in Switzerland. Let's start with a roundup of
Speaker 2: our top stories. France has adopted a stopgap budget bill
Speaker 2: for twenty twenty six to avoid a government shutdown. The
Speaker 2: so called spiciale or special law, allows the state to
Speaker 2: continue collecting taxes and borrowing money despite the lack of
Speaker 2: a full budget. Effectively, it rolls over fiscal plans into
Speaker 2: the new year. Addressing the Nation or French television, Prime
Speaker 2: Minister Sebastia Locornu explained the situation.
Speaker 1: Taking the time to discuss a budget in a democracy
Speaker 1: like France is not a weakness. In the meantime, a
Speaker 1: special law is being discussed in parliament. It will allow
Speaker 1: us to continue to collect taxes and keep public services
Speaker 1: going from January first. That doesn't mean it's a budget
Speaker 1: and there will be a number of negative consequences if
Speaker 1: the situation continues.
Speaker 2: That was the French Prime Minister Sebastia Lecornu speaking Vira
Speaker 2: translator ahead of the National Assembly's decision. The temporary legislation
Speaker 2: comes after the government warned that the parts of the
Speaker 2: finance bill that had been agreed so far would only
Speaker 2: bring down France's deficit to five point three percent of
Speaker 2: economic output in twenty twenty six, so lowering it a
Speaker 2: tenth of one percent versus this year. The National Assembly
Speaker 2: is set to assume debate on the full French budget
Speaker 2: in early January. Now, the Trump administration has imposed visa
Speaker 2: sanctions on former EU Commissioner Tierre Breton as a punishment
Speaker 2: for his work regulating big tech. The US Sector of
Speaker 2: State Marco Rubio announced the move on social media, accusing
Speaker 2: Briton of extra territorial censorship.
Speaker 3: The US State.
Speaker 2: Department is also targeted for other people leading organizations that
Speaker 2: are focused on digital hate speech encountering extremism. The Global
Speaker 2: Disinformation Index, in a statement, called the US sanctions an
Speaker 2: authoritarian attack on free speech and an egregious act of
Speaker 2: government censorship. In a social media post, Breha, who was
Speaker 2: also the former CEO of Orange and Atos, responded by
Speaker 2: asking whether the US is returning to McCarthyism of the
Speaker 2: nineteen fifties. Now gold has risen above four thousand, five
Speaker 2: hundred dollars and ounce for the first time, while silver
Speaker 2: and platinum also advances to two records. Precious metals are
Speaker 2: ending this year with gains not seen in decades. Blueberg's
Speaker 2: Metals reporter Martin Richie says global uncertainty has helped to
Speaker 2: drive the rally.
Speaker 4: You know, you can never imagine prices at this level
Speaker 4: even two years ago, but here we are. And I
Speaker 4: think this December rally that you've seen in gold and
Speaker 4: in the precious metals is really king a continuation of
Speaker 4: the same themes we've seen throughout this year. It's about
Speaker 4: the debasement trade, growing sort of mistrust in traditional assets
Speaker 4: a sovereign bonds and currencies. It's a bit the weaker dollar.
Speaker 4: It's about central banks buying gold because of those things.
Speaker 2: Richie adds that traders are now betting the US Federal
Speaker 2: Reserve will lower the cost of borrowing again next year,
Speaker 2: which would be a tailwind for non yielding precious metals.
Speaker 2: Gold spot price this morning four four hundred and eighty
Speaker 2: four dollars flat. Currently, the US economy expanded at the
Speaker 2: fastest pace in two years. According to data release on Tuesday,
Speaker 2: a real GDP increased at a four point three percent
Speaker 2: annualized pace in the third quarter. Economists had expected growth
Speaker 2: of just three point three percent. The surprise has pushed
Speaker 2: up treasury yields as traders factor in the resilient consumer spending.
Speaker 2: The data had been delayed due to the US government shutdown. Now,
Speaker 2: BP has agreed to sell a majority stake in its
Speaker 2: Castro unit to the investment firm Stone Peak Partners. Under
Speaker 2: the deal, BP will get about six billion dollars for
Speaker 2: a sixty five percent stake in the lubricants business. The
Speaker 2: all major had planned to divest twenty billion dollars of
Speaker 2: assets by the end of twenty twenty seven to improve
Speaker 2: its balance sheet. It comes as Meg O'Neal prepares to
Speaker 2: take the helm of BP in April after running Australia's
Speaker 2: Woodside Energy. One of the co founders of Brevan Howard
Speaker 2: Asset Management has left the UK, adding to concern about
Speaker 2: the exodus of Britain's wealthy. Alan Howard has a net
Speaker 2: worth of roughly four point three billion dollars and, according
Speaker 2: to a Bloomberg analysis of regulatory filings, now lives in Switzerland.
Speaker 2: Bloomberg's James Walcock has more.
Speaker 5: This year, Switzerland voted to reject a fifty percent inheritance tax,
Speaker 5: while Britain expanded its version of the levy. Alan Howard
Speaker 5: may have followed the incentives. The Brevan Howard co founder
Speaker 5: declined to comment to Bloomberg for the story, but the
Speaker 5: billionaire now joins the ranks of many of the financial elite.
Speaker 5: We have reported on Leaving the UK that exodus is
Speaker 5: a worrying trend for the government as it is banking
Speaker 5: on higher tax revenue and growth from the wealthy for
Speaker 5: its economic agenda in London.
Speaker 6: James Walcock, Bloomberg Radio.
Speaker 2: The release of the so called EBSTCEN files has so
Speaker 2: far failed to satisfy the US public. The US Department
Speaker 2: of Justice has released thousands of pages of heavily redacted
Speaker 2: records and photos related to the convicted sex offender in
Speaker 2: the past week, but the document dump has drawn criticism
Speaker 2: for missing a December nineteenth deadline and for the heavy redactions.
Speaker 2: President Trump says the saga is unfairly tarnishing individuals.
Speaker 7: A lot of people are very angry that pictures are
Speaker 7: being released of other people that really had nothing to
Speaker 7: do with Epstein, but they're a picture with him because
Speaker 7: he was at a party, and you ruin a reputation
Speaker 7: of somebody.
Speaker 6: But I never went there, but a lot of people did.
Speaker 2: Go there, President Trump speaking, They're doing a news conference
Speaker 2: last night. Included in the late dispatch of release fars
Speaker 2: As an email sent from an individual named AA saying
Speaker 2: they are at the British War Family's Balmoral residents and
Speaker 2: asking Epstein associate Gilaine Maxwell for quote inappropriate friends. In October,
Speaker 2: Andrew Mountbatten Windsor, formerly a Prince and the Duke of York,
Speaker 2: lost his titles following scrutiny over his links with Epstein.
Speaker 2: Those are some of our top news stories today. Let's
Speaker 2: look at the markets. So it's a shorter trading day.
Speaker 2: Fewer markets are open across at Europe, but London is
Speaker 2: trading forty one hundred is down two tenths of one percent.
Speaker 2: The US socks at six hundred overall just about in
Speaker 2: positive territory. US DOOP futures, though fading down a tenth
Speaker 2: of one percent, very light trading volumes at the end
Speaker 2: of what has been a really stelly year for US
Speaker 2: and European stocks. Third year of US SOOX six hundred
Speaker 2: gains up sixteen percent over all, so global stocks climbing
Speaker 2: to a record high at the end of this year.
Speaker 2: Ten year treasury yields have been consolidating around four sixteen,
Speaker 2: so UK yields at four point fifty two. As for
Speaker 2: those precious metal prices, gold four thousand, four hundred and
Speaker 2: eighty six dollars, Bitcoin is down a percent and breakthrough
Speaker 2: at sixty two dollars forty five. So that's a look
Speaker 2: at the markets. In a moment, we'll get into the
Speaker 2: story about France's budget and what to expect from central
Speaker 2: banks next year and other stories caught my eye. Though
Speaker 2: today I wonder whether you'll read this five top tables.
Speaker 2: It's a column from Bloomberg Pursuits. And we may not
Speaker 2: have even eaten pigs in blankets yet for Christmas in
Speaker 2: the UK, but already there are lots of ideas about
Speaker 2: how you can eat well in the city that prides
Speaker 2: itself on doing hogmanat that is New Ye's Eve to you,
Speaker 2: and I really like nowhere else is Edinburgh, of course,
Speaker 2: and among the lists that the team have compiled, I'll
Speaker 2: mention a few Cafe Carlton Dults in Leith and makers
Speaker 2: Mash in the Old Town.
Speaker 3: In Edinburgh.
Speaker 2: The food scene, especially in the Port of Leath near Edinburgh,
Speaker 2: is really growing because of quality seafood availability, our own
Speaker 2: spoil the rest of what is revealed about the best
Speaker 2: places to eat in Edinburgh. But perhaps if you're headed
Speaker 2: to the raw Marles sometime soon, maybe you'll take a look,
Speaker 2: maybe perhaps for a New Year's Eve.
Speaker 3: Care who knows. But let's think about what's happening in France.
Speaker 2: First, the National Assembly voted on this special law on Tuesday,
Speaker 2: so this is to roll over the twenty twenty five budgets.
Speaker 2: President Macro's putting pressure on Prome Minister Saci Corney to
Speaker 2: have a budget by the end of January. Joining us now,
Speaker 2: it's Blimberg's economist Jehan dalbar Jean. Thank you so much
Speaker 2: for speaking to us today in terms of this emergency law.
Speaker 2: So you know, the last bit of decision making by
Speaker 2: lawmakers what does it actually do.
Speaker 8: So, yes, a special is basically a temporary, narrow version
Speaker 8: of the budget, not to have a kind of U
Speaker 8: style government shutdown in France. Basically, a special let allows
Speaker 8: the public administration to run basic operational expenditures and to
Speaker 8: borrow in the market, which is quite important.
Speaker 6: Altho, it's quite complicated to be.
Speaker 8: Very precise on its cop but just because it's the
Speaker 8: third time in a French history such a specialot is
Speaker 8: actually implemented, so it's.
Speaker 6: Quite a rare event.
Speaker 8: What we understand for sure is that the government cannot
Speaker 8: launch like new investments or for example, increase musy spending.
Speaker 2: Yes, it's unusual, but then again it was used last
Speaker 2: year because of the difficulties of getting a budget passed,
Speaker 2: and so that remains the main question for the divided
Speaker 2: government in France.
Speaker 3: How are they going to do it?
Speaker 8: Absolutely well, the Specialty series is another good illustration of
Speaker 8: how fragmented is parliament in France and how little the
Speaker 8: culture of compromise is in the countries in the country.
Speaker 8: But in practice, if you look at the budget, we
Speaker 8: understand that a compromise is within rich we are missing
Speaker 8: some ten billion euros of spending cuts or tax heights
Speaker 8: which are something feasible to get in the early weeks
Speaker 8: of January. The objective remains to have a deficeit close
Speaker 8: to five percent of the twenty twenty six GIDP, and
Speaker 8: we would ark that that the king Maker Socialist Party
Speaker 8: will be willing to find a compromise in order not
Speaker 8: to run the risk of slap elections.
Speaker 2: Yes, absolutely, which is the thing that has caused so
Speaker 2: much difficulty for Manuel Marco, isn't it when he did
Speaker 2: that in twenty four But look, France has still got
Speaker 2: the eurzon it's highest budget deficit, and they've been trying
Speaker 2: to fund that with using shorter maturities in terms of
Speaker 2: the brow of borrowing. That in and of itself poses
Speaker 2: some difficulties, doesn't it further down the line.
Speaker 6: Yes absolutely.
Speaker 8: I mean, if we take a step back the big
Speaker 8: picture that France is indeed like lagging its supen piers
Speaker 8: and substantial fiscal consolidation is required over four years to
Speaker 8: just meet its commitments.
Speaker 6: So in order to do.
Speaker 8: That, France needs to increase taxes obviously, but also to
Speaker 8: cut expenditures, and that will be through a pension reform
Speaker 8: in the in the coming years, that's something that the
Speaker 8: presidential election will will look at obviously in the future,
Speaker 8: but it's also through some technical adjustment to the issuance policy,
Speaker 8: you could shorten you can shorten the maturity at issuance
Speaker 8: to decrease the interest payments over time.
Speaker 6: But that's something which is risky as.
Speaker 8: Well because you basically increase the worl over risk, and
Speaker 8: so it's a basic trade off between lowering the cost
Speaker 8: of funding but also increasing the refinancing risk over time.
Speaker 2: When you think about the last year in France of
Speaker 2: this kind of political uncertainty, the economic pressures, how would
Speaker 2: you describe the year in economics and politics in France?
Speaker 6: So that the.
Speaker 8: Political situation has been obviously pretty messy, but the economy
Speaker 8: has been pretty resilient, and quite surprisingly, the economy has
Speaker 8: been growing pretty fast in the third quarter with open
Speaker 8: five GP growth, which was ahead of most of its
Speaker 8: European peers.
Speaker 6: So residence of.
Speaker 8: The economy political mess, and we would wait for twenty
Speaker 8: six to get a sense of how consumers we'll respond
Speaker 8: to that political mess at the end of the year,
Speaker 8: and how films will keep on or not investing and benefit.
Speaker 6: Or not from the lowering of the of.
Speaker 8: The financing conditions thanks to the ECB easing policy over
Speaker 8: the past quarters.
Speaker 3: Okay, so that is interesting.
Speaker 2: And there are also local elections due in March twenty
Speaker 2: twenty six, so as well as the budget, there's also
Speaker 2: that vote to consider too in the coming few months.
Speaker 2: Jan thank you so much for your reflections on what's
Speaker 2: happening in France, including that special law past just this week,
Speaker 2: Bloomberg economist Jean Dalbar stay with us.
Speaker 3: More from Bloomberg Daybakeube coming up after this.
Speaker 2: Now for a word on the interest rate picture, then
Speaker 2: for the year ahead, our m live currency rate stretches.
Speaker 2: Ven Ram joins me this morning. Then, good to speak
Speaker 2: to you. I think it's really important to understand the
Speaker 2: shifting sands when it comes to interest rate policy. Reflect
Speaker 2: on twenty twenty five first and how things have changed
Speaker 2: this year morning, Caitlin.
Speaker 9: So I think that you know, we have gone from
Speaker 9: a position where major where the major global central banks
Speaker 9: were saying, you know what, we need to cut through
Speaker 9: interstates and then inflation is going to converge to two
Speaker 9: percent this year. That of course hasn't happened with most
Speaker 9: of the major central banks. We've got inflation that is
Speaker 9: pretty sticky, holding either around two and a half or three,
Speaker 9: and so you know, the suddenly the central banks are
Speaker 9: having to turn around and ask themselves the question, a
Speaker 9: hang on our our assumptions? Right, we don't see inflation
Speaker 9: converging to two percent anytime soon, not definitely, not next
Speaker 9: year according to even their own projections.
Speaker 10: So there's been a bit of rethink.
Speaker 9: And if you think back, you know the one currency episode,
Speaker 9: in fact, interlinked to interestates of course, is the one
Speaker 9: that sticks out to me most is the what happened
Speaker 9: to the.
Speaker 10: Euro at this point last year?
Speaker 9: I remember calls were for the euro dollar to reach parity,
Speaker 9: and look at where we are now going at one
Speaker 9: eighteen against the dollars. So you know, if there's anything
Speaker 9: that the markets have taught central banks and investors this year,
Speaker 9: it's about humility.
Speaker 2: I think, yeah, okay, a huge change. Briefly, then, what
Speaker 2: do you think is the most important thing to watch
Speaker 2: out for for twenty twenty six?
Speaker 9: Well, I think that you know, one factor that I'll
Speaker 9: be watching deffinitely is for our fast central banks are
Speaker 9: going to turn around and raise rates if needed, for instance,
Speaker 9: but the Bank of Japan or they already, of course
Speaker 9: in a rate hiking cycle. But you know, the tailor
Speaker 9: rule rate shows that they need to be at one
Speaker 9: point five given their own inflation projections and growth projections.
Speaker 9: But you know, the Bank of Japan is kind of
Speaker 9: going at a gay She'll bease thirty five basis.
Speaker 10: Points a year. I don't think that's going to cut it.
Speaker 11: This is Bloomberg Daybreak Europe, your morning brief on the
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