WEBVTT - David Cameron's 2nd Act, Fentanyl Diplomacy & JP Morgan's Big Commodities Call

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

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<v Speaker 1>in London. This is the Blueberg Daybreak you at podcast.

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<v Speaker 1>I'm Caroline Hipkick and.

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

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<v Speaker 2>former Prime Minister returns to government, but will you be

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<v Speaker 2>weighed down by his political baggage.

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<v Speaker 1>Biden and g do some fentanyl diplomacy and agree a

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<v Speaker 1>deal to crack down on opioid production.

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<v Speaker 2>And JP Morgan's top strategist, Marko Kolanovitch calls on traders

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<v Speaker 2>to fate stocks and bonds for commodities.

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<v Speaker 1>Let's start with a roundup of our top stories.

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<v Speaker 2>Brittie Sunach is appointed the former Prime Minister David Cameron

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<v Speaker 2>as Foreign Secretary in an extraordinary cabinet reshuffle after a

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<v Speaker 2>day of high drama and downing Street. Cameron takes over

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<v Speaker 2>from James Cleverly, who's now Home Secretary after Suella Braverman

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<v Speaker 2>was sacked. Speaking at the Lord Mayor's Banquet in the

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<v Speaker 2>City of London, Sounach so to put a positive spin

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<v Speaker 2>on the changes.

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<v Speaker 3>We've delivered one of the most significant years for British

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<v Speaker 3>foreign policy in recent times. That's due in no small

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<v Speaker 3>part to James cleverly and I'm pleased to have appointed

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<v Speaker 3>a new Foreign Secretary who will build on everything that

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<v Speaker 3>we have achieved in the last year.

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<v Speaker 2>Surprise return of David Cameron is a gamble for SUNAC

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<v Speaker 2>as he tries to overturn a twenty point deficit in

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<v Speaker 2>the Polls. Labour says Cameron's been brought back as a

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<v Speaker 2>life draft for the Prime minister. However, Conservative Peter Michael

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<v Speaker 2>Haseltein says the decision will quote put to bed the

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<v Speaker 2>right wing lurch of the Tory Party.

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<v Speaker 1>Well, the shock decision to bring back David Cameron has

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<v Speaker 1>conservatives from across the party telling Bloomberg that they're now

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<v Speaker 1>on shore of sunac's political direction. Cameron was subject of

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<v Speaker 1>a controversy in twenty twenty one when it emerged that

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<v Speaker 1>he had aggressively lobbied the government on behalf of the

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<v Speaker 1>now defunct Green Silk Capital. However, Cameron notably swerved the

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<v Speaker 1>subject when asked about it after his appointment.

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<v Speaker 4>Well, I think all those things were dealt with by

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<v Speaker 4>the Treasury Select Committee and as far as I'm concerned,

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<v Speaker 4>that is all dealt with and in the past, and

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<v Speaker 4>I now have one job as Britain's Foreign Secretary as

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<v Speaker 4>part of Richie's Senac's team to try and make sure

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<v Speaker 4>this country can be as secure and as prosperous in

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<v Speaker 4>a difficult and dangerous world.

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<v Speaker 1>Cameron's previous views on foreign policy may also prove problematic.

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<v Speaker 1>He was notably warm towards China during his premiership, whilst

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<v Speaker 1>his support for remaining in the EU led to his

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<v Speaker 1>resignation after the twenty sixteen Brexit referendum.

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<v Speaker 2>Joe Biden is stepping up the pressure on Israel to

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<v Speaker 2>reduce civilian casualties in Gaza. The US President says the

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<v Speaker 2>Al Shifa hospital quote must be protected, calling for Israel

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<v Speaker 2>to take less intrusive action. Speaking to Bloomberg, Israel's economy

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<v Speaker 2>minister Near Barkat insisted his country is also determined to

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<v Speaker 2>minimize collateral damage.

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<v Speaker 5>And so entering Gaza focusing on the militants that are

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<v Speaker 5>by the way using the hostages as human shields. It's

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

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<v Speaker 5>make sure that we only hit the militants and enable

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<v Speaker 5>the people to leave the northern part of Gaza.

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<v Speaker 2>Near Barcas was speaking to Bloomberg after AID agencies, and

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<v Speaker 2>GAZA warns that their work will effectively cease in the

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<v Speaker 2>next two days due to a lack of fuel.

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<v Speaker 1>China and the United States are set to jointly crack

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<v Speaker 1>down on fentanyl in a diplomatic coup for Joe Biden.

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<v Speaker 1>Bloomberg has learnt the President and jijingpin will announce a

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<v Speaker 1>deal when they meet at the Asia Pacific Economic Cooperation

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<v Speaker 1>Summit tomorrow. The San Francisco mayor London Breed is hosting

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<v Speaker 1>the summit. She told Bloomberg what the deal could mean.

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<v Speaker 6>The resources that are being sent out of China that

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<v Speaker 6>come into either the US or Mexico are cut off

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<v Speaker 6>to the fullest extent possible. That we work together in

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<v Speaker 6>order to ensure that this deadly poison that is killing

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<v Speaker 6>people in San Francisco in significant numbers and all over

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

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<v Speaker 1>Breeze City is one of many devastated by the drug.

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<v Speaker 1>Republicans have made the Biden administration's failure to crack down

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<v Speaker 1>on fentanyl a campaign issue.

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<v Speaker 2>US Treasury Secretary Janet Yellen is taking aim at Moody's

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<v Speaker 2>pessimism on the American economy. The ratings agency shifted its

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<v Speaker 2>outlook on the US Triple A credit rating to negative,

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<v Speaker 2>citing budget deficits and political instability. The response from the

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<v Speaker 2>American government's top financial official didn't hold back.

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<v Speaker 7>This is a decision that I disagree with. The American

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<v Speaker 7>economy is fundamentally strong, and treasury securities remain the world's

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<v Speaker 7>pre eminent safe and liquid ACCID Johnett.

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<v Speaker 2>Yellen's comments come despite Moody's being the only major ratings

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<v Speaker 2>agency to still give the US a top score fit

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<v Speaker 2>down Grater the government earlier this year and the SMP

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<v Speaker 2>in twenty eleven.

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<v Speaker 1>One of Wall Street's most respected strategists has warned clients

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

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<v Speaker 8>JP Morgan's chief market strategist, Marko Kolanovich says investors should

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<v Speaker 8>ditch stocks in favor of commodities. A client note reveals

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<v Speaker 8>that the bank is staying underweight in equities in favor

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<v Speaker 8>of cash and commodities. The JP Morgan strategist is using

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<v Speaker 8>a cut in bond allocation to fund an increase in commodities,

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<v Speaker 8>where he's most optimistic on energy. Klanovitch believes that equities

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<v Speaker 8>will soon become unattractive as the Fed's higher for longer

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<v Speaker 8>strategy continues. The note comes as Bloomberg Economics says it

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<v Speaker 8>expects today's US inflation report to show slower progress towards

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<v Speaker 8>the Fed's two percent target, keeping the central bank bias

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

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<v Speaker 1>Now to the politics in the UK, which she soon

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<v Speaker 1>act brought back former Premier David Cameron as the Foreign Secretary.

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<v Speaker 1>The shock move bringing a baut the leader who called

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<v Speaker 1>the Brexit referendum but campaigned against leaving the EU, has

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<v Speaker 1>led conservatives from across the party to question at Sunak's

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<v Speaker 1>political direction. Joining us now for more is Bloomberg's EMEA

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<v Speaker 1>News Desk Managing Editor Adam Blenford. Good morning, Adam, Thank

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<v Speaker 1>you so much for your time. There is a long

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<v Speaker 1>list of questions that many journalist, perhaps some MPs also

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<v Speaker 1>have for David Cameron on Brexit, China, Libya and lobbying.

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<v Speaker 1>Is Cameron going to be bogged down justifying his own legacy?

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<v Speaker 9>Good morning, Caroline. Well, journalists will of course ask the questions.

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<v Speaker 1>As you said, there are.

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<v Speaker 9>Several topics, but that the past is that Sinak and

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<v Speaker 9>Cameron will very much want to look to the current situation.

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<v Speaker 9>The media will no doubt focus on those perhaps unfinished

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<v Speaker 9>bits of business from David Cameron's past, but there is

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<v Speaker 9>plenty going on in the world today, as we all

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<v Speaker 9>know every day, and so the intro for the UK

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<v Speaker 9>Foreign Secretary is exceedingly long, ranging of course, from the

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<v Speaker 9>ongoing wars in the Middle East and Russia's war against

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<v Speaker 9>Ukraine to relations with China, which will be complicated by

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<v Speaker 9>perhaps Cameron's ongoing and previous links with the country that

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<v Speaker 9>perhaps could be the most interesting and most thorny of

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<v Speaker 9>the issues that he's facing. Brexit is and remains a

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<v Speaker 9>bit of a lightning rod for division, but it is

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<v Speaker 9>something that has now faded slightly into the past. Certainly

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<v Speaker 9>the rights and wrongs of whether we call calling the

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<v Speaker 9>referendum on how it went is now does feel not?

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<v Speaker 8>Does it not? Quite?

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<v Speaker 9>Quite a long time ago? So it would be very

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<v Speaker 9>interesting to see. Of course, not long ago Richie Seen

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<v Speaker 9>posted himself as the change candidate, and then of course

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<v Speaker 9>he's brought back David Cameron to how much can David

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<v Speaker 9>Cameron bring the change the Foreign Office.

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<v Speaker 2>Well, it was, as you say, Adam, quite the surprise

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<v Speaker 2>when we first learned about this yesterday. Let's take a

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<v Speaker 2>listen to some of the coverage as David Cameron emerged

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<v Speaker 2>outside Downing Street.

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<v Speaker 3>I was not expecting.

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<v Speaker 2>Okay, what we've just seen would mean a place in

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<v Speaker 2>the House.

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<v Speaker 3>The Foreign Secretary could.

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<v Speaker 9>Be David Cameron, Lord Cameron Foreign Sector Camp, can it?

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<v Speaker 2>Well, that was coverage from Sky News as David Cameron

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<v Speaker 2>emerged as the Foreign Secretary. Adam, what does this show

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<v Speaker 2>about Rishie Sunak's leadership that he's made this decision to

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<v Speaker 2>bring back David Cameron. Former Cabinet Minister Reese Mark raises

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<v Speaker 2>the issue of the Conservatives being in danger of losing

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<v Speaker 2>votes to the refeign Party.

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<v Speaker 9>Sunak will of course portray this as him being strong.

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<v Speaker 9>He will of course show this as his attempt to

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<v Speaker 9>make it clean break with what was becoming a distraction

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<v Speaker 9>the the the policies and public statements of Suella Bradman

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<v Speaker 9>and her her pushing back against the Number ten's authority.

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<v Speaker 9>But you're absolutely right bringing back somebody who's who's had

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<v Speaker 9>his time in the public eye, was a divisive figure

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<v Speaker 9>in his own way and certainly doesn't look directly completely

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<v Speaker 9>to the future. It's it's already dividing the Conservatives, or

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<v Speaker 9>at least some of the right more right wing media

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<v Speaker 9>are pretend attempting to say that it's dividing the Conservatives.

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<v Speaker 9>The Daily Telegraph this morning says that the Camera's appointment

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<v Speaker 9>is opening up a backlash and threatens of backlash with

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<v Speaker 9>Entry Breggs, a teer MPs and a backlash from the right.

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<v Speaker 9>And so there's debates around that you're right to highlight

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<v Speaker 9>Jacob Briece Mobb, but the proof, as they always say,

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<v Speaker 9>will be in the pudding. You know, the Reform Party

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<v Speaker 9>might be prompted to stand more candidates in a general

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<v Speaker 9>election which is coming up in the coming year, and

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<v Speaker 9>it perhaps changes a little bit of the electoral calculus.

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<v Speaker 9>How does Cameron, the old Etonian former Prime Minister who

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<v Speaker 9>opposed Brexit, how does he speak to the red wall,

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<v Speaker 9>although as protector it's not particularly his job, but in

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<v Speaker 9>terms of the Conservative Party as a whole, perhaps he

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<v Speaker 9>could hold He could shore up support within the southern

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<v Speaker 9>Conservative constituencies in the south of England where they've been

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<v Speaker 9>under pressure from the Liberal Democrats and they've lost quite

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<v Speaker 9>a significant number of by elections in recent times, so

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<v Speaker 9>it's a really interesting, really interesting prospect.

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<v Speaker 1>Yeah, it certainly is Cameron back after being away from

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<v Speaker 1>frontline politics for seven years. Of course, it means no

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<v Speaker 1>women in leadership roles in government right now, not the

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<v Speaker 1>big four most senior positions in cabinet. Totally fascinating. Adam,

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<v Speaker 1>thank you so much for your time this morning. Bloomberg's

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<v Speaker 1>EMEA Newsdesk Managing Editor Adam Blendford.

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<v Speaker 2>Well, let's turn to the markets next and JP Morgan

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<v Speaker 2>Chase Stratus. Marco Kalanovitz continues to see risks in the

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

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<v Speaker 2>seeing equities reverting back to a quote unattractive risk reward

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<v Speaker 2>as the FED set to marine higher for longer. Joining

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<v Speaker 2>US stats Scott Spinberg, Television niker Anna Edwards. Morning to you, Anna,

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<v Speaker 2>Why is Marco Klalovitch turning outative stocks?

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

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<v Speaker 10>this rally, And just to paint a picture for radio

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<v Speaker 10>listeners during October that was a terrible month for US

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<v Speaker 10>stocks and the November's been pretty good. So we've been

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<v Speaker 10>seeing this bounce taking place in stocks, and he's saying,

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<v Speaker 10>you fade this rally. He gives a whole host of reasons,

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<v Speaker 10>and I'll briefly mention some of them. The FED staying

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<v Speaker 10>higher for longer is one of them. So higher interest

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<v Speaker 10>rates from the Fed. There are divided opinions out there

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<v Speaker 10>about that, but he sees higher for longer and that

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<v Speaker 10>puts pressure on any business model that relies on low

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<v Speaker 10>interest rates. He talks about profit expectations being too optimistic,

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

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<v Speaker 10>inflation coming down. We've seen inflation coming down in lots

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<v Speaker 10>of geographies, and the other side of that is that

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

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<v Speaker 10>And then there's a couple of arguments he makes that

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<v Speaker 10>are to do with market dynamics, if you like. One

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<v Speaker 10>of them is momentum strategies, which basically means computers that

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<v Speaker 10>spot what was happening and say, well, that was happening,

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<v Speaker 10>maybe that will carry on happening, and just buy that stuff.

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<v Speaker 10>So he says that a lot of the rally that

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<v Speaker 10>we've seen in November has been driven by these momentum

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<v Speaker 10>strategies and shortcovering another market dynamic. And so as a

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<v Speaker 10>result of all of that, he says, fade this stock rally.

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<v Speaker 1>Really interesting. He's got a number of points of why

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<v Speaker 1>that should be. But Klonovitch himself is well known for

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<v Speaker 1>sort of making these significant Cause what's he been saying

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<v Speaker 1>about markets.

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<v Speaker 8>Up to now?

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<v Speaker 10>Yeah, so JP Morgan Chase strategist. This is Marko Kolanovitch,

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<v Speaker 10>much quoted in Bloomberg News copy and by other investors

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<v Speaker 10>watch closely by their investors. He was one of Wall

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<v Speaker 10>Street's biggest optimists during twenty twenty two, and that didn't

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<v Speaker 10>always work out so well for him. He reversed his

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<v Speaker 10>view on many of those calls last year when they

0:13:04.440 --> 0:13:06.920
<v Speaker 10>weren't working out. And he's cut his equity allocation actually

0:13:07.160 --> 0:13:09.800
<v Speaker 10>in mid December, in January, in March.

0:13:09.679 --> 0:13:10.240
<v Speaker 1>And in May.

0:13:10.600 --> 0:13:13.200
<v Speaker 10>It's all of that due to the deteriorating economic outlook

0:13:13.240 --> 0:13:15.719
<v Speaker 10>this year. So he's already been sort of taking a

0:13:15.800 --> 0:13:18.200
<v Speaker 10>knife to his equity allocation, and here he is doing

0:13:18.240 --> 0:13:20.240
<v Speaker 10>it a little more by suggesting we fade this at

0:13:20.280 --> 0:13:21.560
<v Speaker 10>this current rally, so.

0:13:21.679 --> 0:13:24.880
<v Speaker 2>Reducing exposure to stucks, but more optimistic on oil.

0:13:24.880 --> 0:13:28.000
<v Speaker 10>Why is that, Yeah, absolutely, so overweight then on commodities

0:13:28.040 --> 0:13:30.240
<v Speaker 10>and oil is a big part of that. Also overweight

0:13:30.320 --> 0:13:32.520
<v Speaker 10>on cash, So the oil side of things. He says,

0:13:32.679 --> 0:13:34.760
<v Speaker 10>we've seen a recent pullback in oil prices. Of course

0:13:34.800 --> 0:13:37.600
<v Speaker 10>they spiked up around the tensions in the Middle East,

0:13:37.600 --> 0:13:39.400
<v Speaker 10>but they've actually pulled back a little bit, so he

0:13:39.440 --> 0:13:42.040
<v Speaker 10>sees potential for them to rise. He sees oil, as

0:13:42.080 --> 0:13:45.320
<v Speaker 10>many people do, as a geopolitical hedge. So it's come

0:13:45.400 --> 0:13:47.120
<v Speaker 10>off a period where it was used as an inflation

0:13:47.240 --> 0:13:49.000
<v Speaker 10>hedge for many people. So if you're going to be

0:13:49.120 --> 0:13:51.000
<v Speaker 10>hurt by inflation, on the one hand, you might benefit

0:13:51.040 --> 0:13:53.000
<v Speaker 10>from the higher oil price. Well, here he is talking

0:13:53.040 --> 0:13:55.960
<v Speaker 10>about it as a geopolitical hedge, So geopolitics might play

0:13:56.000 --> 0:13:57.880
<v Speaker 10>bad for you for many of your assets, but it

0:13:58.000 --> 0:14:00.760
<v Speaker 10>might be that oil prices benefit and'suggesting that that could

0:14:00.760 --> 0:14:03.040
<v Speaker 10>be an area of strength. He also says overweight cash.

0:14:03.320 --> 0:14:05.280
<v Speaker 10>But there in mind, cash isn't what we think of cash.

0:14:05.320 --> 0:14:07.520
<v Speaker 10>When they don't mean boxes under the bed, they mean

0:14:07.760 --> 0:14:10.319
<v Speaker 10>they mean in bank accounts, in money market funds, in

0:14:10.360 --> 0:14:13.319
<v Speaker 10>short duration treasuries, So cash and cash equivalents things that

0:14:13.320 --> 0:14:14.520
<v Speaker 10>are easy to access.

0:14:14.520 --> 0:14:17.040
<v Speaker 2>Okay, Anna Edwards and your boxes of cash, thank you

0:14:17.200 --> 0:14:19.840
<v Speaker 2>very much for joining us. Thank you Ray this morning

0:14:21.120 --> 0:14:22.680
<v Speaker 2>into of course, that we're having that conversation on a

0:14:22.800 --> 0:14:25.200
<v Speaker 2>day when market's very much focused on the USCPI report

0:14:25.320 --> 0:14:28.160
<v Speaker 2>due out later on, again expected to show progress towards

0:14:28.200 --> 0:14:31.680
<v Speaker 2>the federal reserves two percent targets Bimberck Economics. They'll sees

0:14:31.760 --> 0:14:35.640
<v Speaker 2>the Fed keeping its bias towards more tightening. So we're

0:14:35.640 --> 0:14:37.960
<v Speaker 2>looking at the year on year rate being unchanged at

0:14:38.000 --> 0:14:42.160
<v Speaker 2>four point one percent according to our economists, but the

0:14:43.080 --> 0:14:46.840
<v Speaker 2>end of the food excluding food and energy core number

0:14:47.080 --> 0:14:49.600
<v Speaker 2>being zero point three percent games for the second straight

0:14:49.680 --> 0:14:55.160
<v Speaker 2>month in October, So the downward trajectory being maintained. But

0:14:55.440 --> 0:14:57.800
<v Speaker 2>this this issue of what it actually means and whether

0:14:58.000 --> 0:14:59.920
<v Speaker 2>it kind of changes the game for the FED doesn't

0:15:00.160 --> 0:15:01.680
<v Speaker 2>like this print is expected to do so.

0:15:02.000 --> 0:15:04.280
<v Speaker 1>No, but the year on years of slow grind lower

0:15:04.440 --> 0:15:06.960
<v Speaker 1>is perhaps a good thing. Look after all of that

0:15:07.040 --> 0:15:09.520
<v Speaker 1>sort of serious politics and markets chatter, I do think

0:15:09.560 --> 0:15:12.120
<v Speaker 1>that we've got a point to your attention to possibly

0:15:12.160 --> 0:15:15.200
<v Speaker 1>the best read on the Bloomberg terminal. How much do

0:15:15.200 --> 0:15:17.560
<v Speaker 1>you think you'd pay for a vintage Ferrari race car?

0:15:17.920 --> 0:15:19.480
<v Speaker 2>Oh well, I think if I was in New York yesterday,

0:15:19.480 --> 0:15:22.120
<v Speaker 2>I'd be much poorer this morning anyway. By the sounds

0:15:22.160 --> 0:15:22.720
<v Speaker 2>of things.

0:15:22.720 --> 0:15:26.760
<v Speaker 1>Nine on fifty two million dollars at auction for nineteen

0:15:26.840 --> 0:15:29.800
<v Speaker 1>sixty two Ferrari. It's certainly a very special one.

0:15:29.760 --> 0:15:32.440
<v Speaker 2>Special because it actually raced in the twenty four hours

0:15:32.440 --> 0:15:34.400
<v Speaker 2>of Aman race in nineteen sixty two, which is part

0:15:34.480 --> 0:15:36.880
<v Speaker 2>of kind of Ferrari's legacy when it came to their

0:15:37.000 --> 0:15:39.080
<v Speaker 2>racing team as well. So that's it's one of these

0:15:39.280 --> 0:15:42.000
<v Speaker 2>very particular gto examples that was used in one of

0:15:42.080 --> 0:15:46.800
<v Speaker 2>their and one of their races too. This is Bloomberg

0:15:46.880 --> 0:15:49.840
<v Speaker 2>Daybreak Europe. You're morning brief on the stories making news

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