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Speaker 1: Good morning. It's Tuesday, the full teenth of November here

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Speaker 1: in London. This is the Blueberg Daybreak you at podcast.

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Speaker 1: I'm Caroline Hipkick and.

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Speaker 2: I'm Stephen Carroll. Coming up today Cameron's second act. The

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Speaker 2: former Prime Minister returns to government, but will you be

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Speaker 2: weighed down by his political baggage.

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Speaker 1: Biden and g do some fentanyl diplomacy and agree a

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Speaker 1: deal to crack down on opioid production.

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Speaker 2: And JP Morgan's top strategist, Marko Kolanovitch calls on traders

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Speaker 2: to fate stocks and bonds for commodities.

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

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Speaker 2: Brittie Sunach is appointed the former Prime Minister David Cameron

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Speaker 2: as Foreign Secretary in an extraordinary cabinet reshuffle after a

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Speaker 2: day of high drama and downing Street. Cameron takes over

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Speaker 2: from James Cleverly, who's now Home Secretary after Suella Braverman

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Speaker 2: was sacked. Speaking at the Lord Mayor's Banquet in the

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Speaker 2: City of London, Sounach so to put a positive spin

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Speaker 2: on the changes.

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Speaker 3: We've delivered one of the most significant years for British

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Speaker 3: foreign policy in recent times. That's due in no small

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Speaker 3: part to James cleverly and I'm pleased to have appointed

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Speaker 3: a new Foreign Secretary who will build on everything that

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Speaker 3: we have achieved in the last year.

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Speaker 2: Surprise return of David Cameron is a gamble for SUNAC

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Speaker 2: as he tries to overturn a twenty point deficit in

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Speaker 2: the Polls. Labour says Cameron's been brought back as a

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Speaker 2: life draft for the Prime minister. However, Conservative Peter Michael

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Speaker 2: Haseltein says the decision will quote put to bed the

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Speaker 2: right wing lurch of the Tory Party.

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Speaker 1: Well, the shock decision to bring back David Cameron has

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Speaker 1: conservatives from across the party telling Bloomberg that they're now

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Speaker 1: on shore of sunac's political direction. Cameron was subject of

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Speaker 1: a controversy in twenty twenty one when it emerged that

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Speaker 1: he had aggressively lobbied the government on behalf of the

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Speaker 1: now defunct Green Silk Capital. However, Cameron notably swerved the

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Speaker 1: subject when asked about it after his appointment.

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Speaker 4: Well, I think all those things were dealt with by

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Speaker 4: the Treasury Select Committee and as far as I'm concerned,

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Speaker 4: that is all dealt with and in the past, and

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Speaker 4: I now have one job as Britain's Foreign Secretary as

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Speaker 4: part of Richie's Senac's team to try and make sure

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Speaker 4: this country can be as secure and as prosperous in

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Speaker 4: a difficult and dangerous world.

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Speaker 1: Cameron's previous views on foreign policy may also prove problematic.

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Speaker 1: He was notably warm towards China during his premiership, whilst

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Speaker 1: his support for remaining in the EU led to his

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Speaker 1: resignation after the twenty sixteen Brexit referendum.

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Speaker 2: Joe Biden is stepping up the pressure on Israel to

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Speaker 2: reduce civilian casualties in Gaza. The US President says the

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Speaker 2: Al Shifa hospital quote must be protected, calling for Israel

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Speaker 2: to take less intrusive action. Speaking to Bloomberg, Israel's economy

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Speaker 2: minister Near Barkat insisted his country is also determined to

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Speaker 2: minimize collateral damage.

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Speaker 5: And so entering Gaza focusing on the militants that are

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Speaker 5: by the way using the hostages as human shields. It's

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Speaker 5: a challenge, so we're taking our time. You want to

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Speaker 5: make sure that we only hit the militants and enable

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Speaker 5: the people to leave the northern part of Gaza.

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Speaker 2: Near Barcas was speaking to Bloomberg after AID agencies, and

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Speaker 2: GAZA warns that their work will effectively cease in the

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Speaker 2: next two days due to a lack of fuel.

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Speaker 1: China and the United States are set to jointly crack

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Speaker 1: down on fentanyl in a diplomatic coup for Joe Biden.

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Speaker 1: Bloomberg has learnt the President and jijingpin will announce a

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Speaker 1: deal when they meet at the Asia Pacific Economic Cooperation

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Speaker 1: Summit tomorrow. The San Francisco mayor London Breed is hosting

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Speaker 1: the summit. She told Bloomberg what the deal could mean.

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Speaker 6: The resources that are being sent out of China that

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Speaker 6: come into either the US or Mexico are cut off

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Speaker 6: to the fullest extent possible. That we work together in

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Speaker 6: order to ensure that this deadly poison that is killing

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Speaker 6: people in San Francisco in significant numbers and all over

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Speaker 6: the country, that we're able to combat this to stop it.

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Speaker 1: Breeze City is one of many devastated by the drug.

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Speaker 1: Republicans have made the Biden administration's failure to crack down

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Speaker 1: on fentanyl a campaign issue.

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Speaker 2: US Treasury Secretary Janet Yellen is taking aim at Moody's

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Speaker 2: pessimism on the American economy. The ratings agency shifted its

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Speaker 2: outlook on the US Triple A credit rating to negative,

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Speaker 2: citing budget deficits and political instability. The response from the

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Speaker 2: American government's top financial official didn't hold back.

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Speaker 7: This is a decision that I disagree with. The American

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Speaker 7: economy is fundamentally strong, and treasury securities remain the world's

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Speaker 7: pre eminent safe and liquid ACCID Johnett.

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Speaker 2: Yellen's comments come despite Moody's being the only major ratings

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Speaker 2: agency to still give the US a top score fit

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Speaker 2: down Grater the government earlier this year and the SMP

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Speaker 2: in twenty eleven.

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Speaker 1: One of Wall Street's most respected strategists has warned clients

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Speaker 1: against investing in the stock market. Bloomberg's tiwa Adebayo has more.

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Speaker 8: JP Morgan's chief market strategist, Marko Kolanovich says investors should

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Speaker 8: ditch stocks in favor of commodities. A client note reveals

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Speaker 8: that the bank is staying underweight in equities in favor

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Speaker 8: of cash and commodities. The JP Morgan strategist is using

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Speaker 8: a cut in bond allocation to fund an increase in commodities,

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Speaker 8: where he's most optimistic on energy. Klanovitch believes that equities

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Speaker 8: will soon become unattractive as the Fed's higher for longer

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Speaker 8: strategy continues. The note comes as Bloomberg Economics says it

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Speaker 8: expects today's US inflation report to show slower progress towards

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Speaker 8: the Fed's two percent target, keeping the central bank bias

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Speaker 8: towards more tightening. In London, I'm tiwa Adebio Bloomberg Radio.

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Speaker 1: Now to the politics in the UK, which she soon

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Speaker 1: act brought back former Premier David Cameron as the Foreign Secretary.

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Speaker 1: The shock move bringing a baut the leader who called

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Speaker 1: the Brexit referendum but campaigned against leaving the EU, has

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Speaker 1: led conservatives from across the party to question at Sunak's

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Speaker 1: political direction. Joining us now for more is Bloomberg's EMEA

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Speaker 1: News Desk Managing Editor Adam Blenford. Good morning, Adam, Thank

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Speaker 1: you so much for your time. There is a long

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Speaker 1: list of questions that many journalist, perhaps some MPs also

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Speaker 1: have for David Cameron on Brexit, China, Libya and lobbying.

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Speaker 1: Is Cameron going to be bogged down justifying his own legacy?

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Speaker 9: Good morning, Caroline. Well, journalists will of course ask the questions.

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Speaker 1: As you said, there are.

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Speaker 9: Several topics, but that the past is that Sinak and

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Speaker 9: Cameron will very much want to look to the current situation.

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Speaker 9: The media will no doubt focus on those perhaps unfinished

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Speaker 9: bits of business from David Cameron's past, but there is

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Speaker 9: plenty going on in the world today, as we all

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Speaker 9: know every day, and so the intro for the UK

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Speaker 9: Foreign Secretary is exceedingly long, ranging of course, from the

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Speaker 9: ongoing wars in the Middle East and Russia's war against

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Speaker 9: Ukraine to relations with China, which will be complicated by

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Speaker 9: perhaps Cameron's ongoing and previous links with the country that

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Speaker 9: perhaps could be the most interesting and most thorny of

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Speaker 9: the issues that he's facing. Brexit is and remains a

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Speaker 9: bit of a lightning rod for division, but it is

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Speaker 9: something that has now faded slightly into the past. Certainly

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Speaker 9: the rights and wrongs of whether we call calling the

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Speaker 9: referendum on how it went is now does feel not?

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Speaker 8: Does it not? Quite?

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Speaker 9: Quite a long time ago? So it would be very

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Speaker 9: interesting to see. Of course, not long ago Richie Seen

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Speaker 9: posted himself as the change candidate, and then of course

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Speaker 9: he's brought back David Cameron to how much can David

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Speaker 9: Cameron bring the change the Foreign Office.

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Speaker 2: Well, it was, as you say, Adam, quite the surprise

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Speaker 2: when we first learned about this yesterday. Let's take a

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Speaker 2: listen to some of the coverage as David Cameron emerged

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Speaker 2: outside Downing Street.

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Speaker 3: I was not expecting.

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Speaker 2: Okay, what we've just seen would mean a place in

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Speaker 2: the House.

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Speaker 3: The Foreign Secretary could.

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Speaker 9: Be David Cameron, Lord Cameron Foreign Sector Camp, can it?

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Speaker 2: Well, that was coverage from Sky News as David Cameron

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Speaker 2: emerged as the Foreign Secretary. Adam, what does this show

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Speaker 2: about Rishie Sunak's leadership that he's made this decision to

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Speaker 2: bring back David Cameron. Former Cabinet Minister Reese Mark raises

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Speaker 2: the issue of the Conservatives being in danger of losing

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Speaker 2: votes to the refeign Party.

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Speaker 9: Sunak will of course portray this as him being strong.

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Speaker 9: He will of course show this as his attempt to

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Speaker 9: make it clean break with what was becoming a distraction

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Speaker 9: the the the policies and public statements of Suella Bradman

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Speaker 9: and her her pushing back against the Number ten's authority.

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Speaker 9: But you're absolutely right bringing back somebody who's who's had

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Speaker 9: his time in the public eye, was a divisive figure

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Speaker 9: in his own way and certainly doesn't look directly completely

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Speaker 9: to the future. It's it's already dividing the Conservatives, or

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Speaker 9: at least some of the right more right wing media

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Speaker 9: are pretend attempting to say that it's dividing the Conservatives.

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Speaker 9: The Daily Telegraph this morning says that the Camera's appointment

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Speaker 9: is opening up a backlash and threatens of backlash with

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Speaker 9: Entry Breggs, a teer MPs and a backlash from the right.

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Speaker 9: And so there's debates around that you're right to highlight

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Speaker 9: Jacob Briece Mobb, but the proof, as they always say,

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Speaker 9: will be in the pudding. You know, the Reform Party

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Speaker 9: might be prompted to stand more candidates in a general

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Speaker 9: election which is coming up in the coming year, and

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Speaker 9: it perhaps changes a little bit of the electoral calculus.

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Speaker 9: How does Cameron, the old Etonian former Prime Minister who

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Speaker 9: opposed Brexit, how does he speak to the red wall,

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Speaker 9: although as protector it's not particularly his job, but in

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Speaker 9: terms of the Conservative Party as a whole, perhaps he

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Speaker 9: could hold He could shore up support within the southern

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Speaker 9: Conservative constituencies in the south of England where they've been

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Speaker 9: under pressure from the Liberal Democrats and they've lost quite

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Speaker 9: a significant number of by elections in recent times, so

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Speaker 9: it's a really interesting, really interesting prospect.

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Speaker 1: Yeah, it certainly is Cameron back after being away from

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Speaker 1: frontline politics for seven years. Of course, it means no

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Speaker 1: women in leadership roles in government right now, not the

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Speaker 1: big four most senior positions in cabinet. Totally fascinating. Adam,

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Speaker 1: thank you so much for your time this morning. Bloomberg's

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Speaker 1: EMEA Newsdesk Managing Editor Adam Blendford.

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Speaker 2: Well, let's turn to the markets next and JP Morgan

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Speaker 2: Chase Stratus. Marco Kalanovitz continues to see risks in the

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Speaker 2: stock market. He's in recommending investors fade this year's rally,

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Speaker 2: seeing equities reverting back to a quote unattractive risk reward

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Speaker 2: as the FED set to marine higher for longer. Joining

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Speaker 2: US stats Scott Spinberg, Television niker Anna Edwards. Morning to you, Anna,

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Speaker 2: Why is Marco Klalovitch turning outative stocks?

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Speaker 10: Good morning, Stephen and Caroline. Yes, he's talking about fading

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Speaker 10: this rally, And just to paint a picture for radio

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Speaker 10: listeners during October that was a terrible month for US

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Speaker 10: stocks and the November's been pretty good. So we've been

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Speaker 10: seeing this bounce taking place in stocks, and he's saying,

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Speaker 10: you fade this rally. He gives a whole host of reasons,

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Speaker 10: and I'll briefly mention some of them. The FED staying

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Speaker 10: higher for longer is one of them. So higher interest

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Speaker 10: rates from the Fed. There are divided opinions out there

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Speaker 10: about that, but he sees higher for longer and that

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Speaker 10: puts pressure on any business model that relies on low

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Speaker 10: interest rates. He talks about profit expectations being too optimistic,

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Speaker 10: businesses losing their pricing power. That's the other side of course,

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Speaker 10: inflation coming down. We've seen inflation coming down in lots

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Speaker 10: of geographies, and the other side of that is that

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Speaker 10: companies aren't able to achieve the margins they've previously made.

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Speaker 10: And then there's a couple of arguments he makes that

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Speaker 10: are to do with market dynamics, if you like. One

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Speaker 10: of them is momentum strategies, which basically means computers that

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Speaker 10: spot what was happening and say, well, that was happening,

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Speaker 10: maybe that will carry on happening, and just buy that stuff.

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Speaker 10: So he says that a lot of the rally that

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Speaker 10: we've seen in November has been driven by these momentum

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Speaker 10: strategies and shortcovering another market dynamic. And so as a

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Speaker 10: result of all of that, he says, fade this stock rally.

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Speaker 1: Really interesting. He's got a number of points of why

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Speaker 1: that should be. But Klonovitch himself is well known for

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Speaker 1: sort of making these significant Cause what's he been saying

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Speaker 1: about markets.

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Speaker 8: Up to now?

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Speaker 10: Yeah, so JP Morgan Chase strategist. This is Marko Kolanovitch,

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Speaker 10: much quoted in Bloomberg News copy and by other investors

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Speaker 10: watch closely by their investors. He was one of Wall

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Speaker 10: Street's biggest optimists during twenty twenty two, and that didn't

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Speaker 10: always work out so well for him. He reversed his

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Speaker 10: view on many of those calls last year when they

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Speaker 10: weren't working out. And he's cut his equity allocation actually

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Speaker 10: in mid December, in January, in March.

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Speaker 1: And in May.

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Speaker 10: It's all of that due to the deteriorating economic outlook

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Speaker 10: this year. So he's already been sort of taking a

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Speaker 10: knife to his equity allocation, and here he is doing

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Speaker 10: it a little more by suggesting we fade this at

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Speaker 10: this current rally, so.

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Speaker 2: Reducing exposure to stucks, but more optimistic on oil.

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Speaker 10: Why is that, Yeah, absolutely, so overweight then on commodities

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Speaker 10: and oil is a big part of that. Also overweight

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Speaker 10: on cash, So the oil side of things. He says,

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Speaker 10: we've seen a recent pullback in oil prices. Of course

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Speaker 10: they spiked up around the tensions in the Middle East,

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Speaker 10: but they've actually pulled back a little bit, so he

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Speaker 10: sees potential for them to rise. He sees oil, as

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Speaker 10: many people do, as a geopolitical hedge. So it's come

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Speaker 10: off a period where it was used as an inflation

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Speaker 10: hedge for many people. So if you're going to be

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Speaker 10: hurt by inflation, on the one hand, you might benefit

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Speaker 10: from the higher oil price. Well, here he is talking

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Speaker 10: about it as a geopolitical hedge, So geopolitics might play

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Speaker 10: bad for you for many of your assets, but it

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Speaker 10: might be that oil prices benefit and'suggesting that that could

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Speaker 10: be an area of strength. He also says overweight cash.

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Speaker 10: But there in mind, cash isn't what we think of cash.

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Speaker 10: When they don't mean boxes under the bed, they mean

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Speaker 10: they mean in bank accounts, in money market funds, in

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Speaker 10: short duration treasuries, So cash and cash equivalents things that

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Speaker 10: are easy to access.

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Speaker 2: Okay, Anna Edwards and your boxes of cash, thank you

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Speaker 2: very much for joining us. Thank you Ray this morning

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Speaker 2: into of course, that we're having that conversation on a

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Speaker 2: day when market's very much focused on the USCPI report

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Speaker 2: due out later on, again expected to show progress towards

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Speaker 2: the federal reserves two percent targets Bimberck Economics. They'll sees

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Speaker 2: the Fed keeping its bias towards more tightening. So we're

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Speaker 2: looking at the year on year rate being unchanged at

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Speaker 2: four point one percent according to our economists, but the

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Speaker 2: end of the food excluding food and energy core number

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Speaker 2: being zero point three percent games for the second straight

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Speaker 2: month in October, So the downward trajectory being maintained. But

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Speaker 2: this this issue of what it actually means and whether

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Speaker 2: it kind of changes the game for the FED doesn't

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Speaker 2: like this print is expected to do so.

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Speaker 1: No, but the year on years of slow grind lower

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Speaker 1: is perhaps a good thing. Look after all of that

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Speaker 1: sort of serious politics and markets chatter, I do think

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Speaker 1: that we've got a point to your attention to possibly

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Speaker 1: the best read on the Bloomberg terminal. How much do

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Speaker 1: you think you'd pay for a vintage Ferrari race car?

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Speaker 2: Oh well, I think if I was in New York yesterday,

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Speaker 2: I'd be much poorer this morning anyway. By the sounds

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Speaker 2: of things.

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Speaker 1: Nine on fifty two million dollars at auction for nineteen

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Speaker 1: sixty two Ferrari. It's certainly a very special one.

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Speaker 2: Special because it actually raced in the twenty four hours

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Speaker 2: of Aman race in nineteen sixty two, which is part

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Speaker 2: of kind of Ferrari's legacy when it came to their

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Speaker 2: racing team as well. So that's it's one of these

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Speaker 2: very particular gto examples that was used in one of

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Speaker 2: their and one of their races too. This is Bloomberg

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