1
00:00:02,520 --> 00:00:07,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,680 --> 00:00:12,600
Speaker 2: This is the Bloomberg Day BAC podcast. Good morning, It's Thursday,

3
00:00:12,640 --> 00:00:15,840
Speaker 2: the twenty third of July. I'm Caroline Hepka in London.

4
00:00:15,760 --> 00:00:19,360
Speaker 1: And I'm Stephen Caroline Brussels. Coming up today, Houthi militants

5
00:00:19,360 --> 00:00:22,640
Speaker 1: announce attacks on tankers in the Red Sea, meaning oil

6
00:00:22,680 --> 00:00:25,600
Speaker 1: creeps closer to one hundred dollars a barrel.

7
00:00:25,800 --> 00:00:29,120
Speaker 2: Alphabets, shares fall as it's two hundred and five billion

8
00:00:29,160 --> 00:00:33,640
Speaker 2: dollar AI splurge, raises fresh questions about return on investment.

9
00:00:34,080 --> 00:00:38,280
Speaker 1: Plus aurevoir Paris banker's way, another move as French politics

10
00:00:38,280 --> 00:00:41,640
Speaker 1: and expiring tax breaks onsettle exiles from London.

11
00:00:42,159 --> 00:00:44,199
Speaker 2: Let's start with a roundup of our top stories.

12
00:00:44,920 --> 00:00:48,320
Speaker 1: Ran back Toothy militants say they've targeted two oil tankers

13
00:00:48,320 --> 00:00:50,760
Speaker 1: in the Red Sea. Their claim appears to have been

14
00:00:50,800 --> 00:00:54,560
Speaker 1: confirmed by the UK's Maritime Trade Operations Center, which says

15
00:00:54,640 --> 00:00:58,240
Speaker 1: a tanker reported being struck in the area. Brancrude oil

16
00:00:58,280 --> 00:01:01,160
Speaker 1: jumped above ninety six dollars a barrel as traders reacted

17
00:01:01,200 --> 00:01:03,640
Speaker 1: to the latest threat to shipping in the region. Honor

18
00:01:03,640 --> 00:01:06,280
Speaker 1: Aunt as our managing editor for the Middle Eastern North Africa.

19
00:01:06,840 --> 00:01:10,480
Speaker 3: The overnight attack on shipping by Hufi's marks the first

20
00:01:10,520 --> 00:01:14,000
Speaker 3: time they struck an oil tanker after they announced that

21
00:01:14,040 --> 00:01:17,240
Speaker 3: they would be imposing a blockade on any ship calling

22
00:01:17,319 --> 00:01:21,119
Speaker 3: for Saudi ports in the Red Sea. That's critical information

23
00:01:21,360 --> 00:01:24,680
Speaker 3: because after the war on Iran began and after the

24
00:01:24,720 --> 00:01:28,600
Speaker 3: effective closure of Hormuz, the Red Sea coast is where

25
00:01:28,760 --> 00:01:32,200
Speaker 3: the Saudis redirected a bulk of their exports, and they

26
00:01:32,200 --> 00:01:35,360
Speaker 3: became so reliant on the area that loadings at Yanbu

27
00:01:35,480 --> 00:01:38,440
Speaker 3: alone exceeded four million barrels a day.

28
00:01:38,800 --> 00:01:41,520
Speaker 1: At Spinberg's honor, and shortly after reports of the Red

29
00:01:41,520 --> 00:01:44,560
Speaker 1: Sea attacks, the United States and non state twelfth consecutive

30
00:01:44,640 --> 00:01:47,720
Speaker 1: night of strikes against Iran, saying it was targeting the

31
00:01:47,720 --> 00:01:51,400
Speaker 1: country's ability to attack commercial shipping. And with the conflict

32
00:01:51,440 --> 00:01:53,720
Speaker 1: seeming to widen, there's a little sign that the US

33
00:01:53,800 --> 00:01:56,520
Speaker 1: or Iran are ready to return to the negotiating table.

34
00:01:56,840 --> 00:01:59,680
Speaker 2: The European Central Bank is expected to leave interest rates

35
00:01:59,720 --> 00:02:03,840
Speaker 2: on change today as policymakers assess the impact of renewed

36
00:02:03,880 --> 00:02:06,880
Speaker 2: fighting in the Middle East. Economists and traders expect the

37
00:02:06,920 --> 00:02:09,880
Speaker 2: ECB to keep its rates at two and a quarter

38
00:02:09,919 --> 00:02:13,760
Speaker 2: percent after raising borrowing costs at their last meeting. The

39
00:02:13,800 --> 00:02:17,680
Speaker 2: recent jumping oil prices has revived the expectations the Central

40
00:02:17,680 --> 00:02:21,280
Speaker 2: Bank may need to tighten policy again later this year,

41
00:02:21,720 --> 00:02:25,760
Speaker 2: despite signs that inflation is more than expected in June.

42
00:02:26,240 --> 00:02:29,560
Speaker 2: Here is the view of Hosegacia Canterra, who is the

43
00:02:29,560 --> 00:02:31,120
Speaker 2: CFO of Santander.

44
00:02:32,040 --> 00:02:36,480
Speaker 4: This all depends on the outcome or the developments in

45
00:02:36,520 --> 00:02:41,880
Speaker 4: the Middle East and how translates into inflationary pressures or not.

46
00:02:42,639 --> 00:02:46,519
Speaker 4: So far this translation is not is happening, but it's

47
00:02:46,720 --> 00:02:49,360
Speaker 4: very moderate, and I think we need to wait and

48
00:02:49,400 --> 00:02:52,840
Speaker 4: see how this developed. Having said that, we expect one

49
00:02:53,040 --> 00:02:56,600
Speaker 4: more rate increase in September and from then I think

50
00:02:56,600 --> 00:02:58,959
Speaker 4: the ECB will react to data.

51
00:03:00,080 --> 00:03:03,960
Speaker 2: Tante's CFO speaking there to Bloomberg. Attention will now turn

52
00:03:04,040 --> 00:03:07,639
Speaker 2: to ECB President Christine Legards news conference, where investors will

53
00:03:07,639 --> 00:03:10,800
Speaker 2: be listening for any indication that another rate rise in

54
00:03:10,840 --> 00:03:12,800
Speaker 2: September remains on the table.

55
00:03:13,120 --> 00:03:15,600
Speaker 1: The United States and Saudi Arabia have finalized a deal

56
00:03:15,680 --> 00:03:19,800
Speaker 1: to share nuclear technology, which is alarmed experts in non proliferation.

57
00:03:20,240 --> 00:03:22,919
Speaker 1: The agreement allows the US to build reactors in the

58
00:03:22,919 --> 00:03:26,520
Speaker 1: Middle Eastern Kingdom, paving the way for uranium enrichment on

59
00:03:26,639 --> 00:03:30,040
Speaker 1: Saudi soil. US Secretary of State Marco Rubio was asked

60
00:03:30,080 --> 00:03:34,440
Speaker 1: by reporters at that risk spreading the technology around nuclear weapons.

61
00:03:34,760 --> 00:03:36,640
Speaker 5: Well, I'm not going to pine directly on that agreement.

62
00:03:36,680 --> 00:03:37,440
Speaker 1: We're going to put out.

63
00:03:39,240 --> 00:03:42,320
Speaker 5: Even when the moment is appropriate, we'll put out that writing.

64
00:03:42,400 --> 00:03:44,520
Speaker 5: We all have to do it with Congress anyways, so

65
00:03:44,600 --> 00:03:46,720
Speaker 5: I we'll so only do it publicly, but suffice it

66
00:03:46,800 --> 00:03:48,800
Speaker 5: to say, the US is not going to reach any

67
00:03:48,800 --> 00:03:51,480
Speaker 5: agreement with any country in the world that leads to

68
00:03:51,520 --> 00:03:52,560
Speaker 5: the risk of prooriforation.

69
00:03:53,440 --> 00:03:57,560
Speaker 1: Despite Rubio's words, nuclear watchdogs say the deal would set

70
00:03:57,600 --> 00:04:01,360
Speaker 1: a precedent for other Middle Eastern countries to insist that

71
00:04:01,440 --> 00:04:03,760
Speaker 1: they have the right to make nuclear fuel as well.

72
00:04:03,920 --> 00:04:06,360
Speaker 1: That could bring that would bring some of them within

73
00:04:06,400 --> 00:04:10,840
Speaker 1: weeks of acquiring atomic weapons. The surprise agreement comes as

74
00:04:10,840 --> 00:04:13,360
Speaker 1: President Donald Trump justifies as WARWI a run on the

75
00:04:13,360 --> 00:04:16,919
Speaker 1: grounds of destroying Around's nuclear program and preventing the spread

76
00:04:17,000 --> 00:04:18,240
Speaker 1: of nuclear weapons.

77
00:04:18,520 --> 00:04:20,960
Speaker 2: To some of this morning's earnings reports, now the French

78
00:04:21,000 --> 00:04:24,320
Speaker 2: lend of BNP Paraba has reported profits that beat expectations.

79
00:04:24,320 --> 00:04:27,120
Speaker 2: In the second quarter. The bank saw net income of

80
00:04:27,200 --> 00:04:30,200
Speaker 2: four point three five billion euros over that period. That's

81
00:04:30,279 --> 00:04:33,480
Speaker 2: up thirty three percent compared to the same period last year.

82
00:04:34,080 --> 00:04:37,520
Speaker 2: Equity's revenue rose to one point four billion euros, well

83
00:04:37,560 --> 00:04:40,400
Speaker 2: ahead of the one point one billion forecast by analysts

84
00:04:40,440 --> 00:04:43,240
Speaker 2: and only a little shy of the gains reported by

85
00:04:43,240 --> 00:04:45,280
Speaker 2: the largest Wall Street banks.

86
00:04:45,560 --> 00:04:49,200
Speaker 1: And staying with the financial industry, Italy's a New Credit

87
00:04:49,279 --> 00:04:52,760
Speaker 1: reported higher than expected profit and raised its fullier guidance.

88
00:04:52,800 --> 00:04:55,640
Speaker 1: The bank saw profits of two point nine billion euros

89
00:04:55,640 --> 00:04:58,560
Speaker 1: in the second quarter and upgraded its fullier forecast to

90
00:04:58,720 --> 00:05:02,040
Speaker 1: well above eleven bi euros. The strong results come as

91
00:05:02,080 --> 00:05:05,279
Speaker 1: UniCredit CEO Andrea or Chell moves closer to a takeover

92
00:05:05,400 --> 00:05:06,960
Speaker 1: of Germany's commerce bank.

93
00:05:07,160 --> 00:05:11,359
Speaker 2: Now let's get to the US earnings picture. Alphabet boosted

94
00:05:11,400 --> 00:05:14,400
Speaker 2: its projected capital expenditures for the year to two hundred

95
00:05:14,440 --> 00:05:19,080
Speaker 2: and five billion dollars. The highest spending outlook stokes concerns

96
00:05:19,120 --> 00:05:23,000
Speaker 2: that Google's parent company will ditch fiscal discipline in the

97
00:05:23,080 --> 00:05:27,120
Speaker 2: race to dominate AI. Here's our executive editor for Technology,

98
00:05:27,200 --> 00:05:27,960
Speaker 2: Tom Giles.

99
00:05:28,680 --> 00:05:32,080
Speaker 6: We thought they were spending a lot before. In this

100
00:05:32,200 --> 00:05:34,839
Speaker 6: quarter they came out and said, hold my beer, we're

101
00:05:34,880 --> 00:05:39,200
Speaker 6: spending even more than we said these are unprecedented numbers, hundreds.

102
00:05:38,920 --> 00:05:39,880
Speaker 1: Of billions of dollars.

103
00:05:40,000 --> 00:05:42,040
Speaker 6: They raised the two as much as two hundred and

104
00:05:42,040 --> 00:05:46,279
Speaker 6: five billion. It really speaks to the urgency of obtaining

105
00:05:46,320 --> 00:05:49,000
Speaker 6: the chips and the infrastructure, the data centers that are

106
00:05:49,040 --> 00:05:52,480
Speaker 6: needed to fulfill their AI ambitions.

107
00:05:52,720 --> 00:05:56,719
Speaker 2: Giles added that the company had seen some advances for

108
00:05:56,920 --> 00:06:00,120
Speaker 2: Google Cloud in the second quarter. Cloud revenue top twenty

109
00:06:00,120 --> 00:06:03,720
Speaker 2: four billion dollars in three months to June, up eighty

110
00:06:03,760 --> 00:06:07,120
Speaker 2: two percent from a year earlier. Shares in Alphabet fell

111
00:06:07,240 --> 00:06:10,039
Speaker 2: as much as five percent in late trading.

112
00:06:10,160 --> 00:06:13,320
Speaker 1: In our Tesla cell profits tumbole despite a strong quarter

113
00:06:13,400 --> 00:06:16,240
Speaker 1: for its automotive business. COO Elon Mosk said it would

114
00:06:16,240 --> 00:06:19,640
Speaker 1: be a massive capex year and pointed to planned investments

115
00:06:19,640 --> 00:06:23,040
Speaker 1: in robotics and AI. The company expects capital expenditures in

116
00:06:23,080 --> 00:06:26,920
Speaker 1: excess of twenty five billion dollars. Here's Bimberg techs Ed Ludlow.

117
00:06:27,560 --> 00:06:30,479
Speaker 7: In the world of AI, the future business lines robotaxi,

118
00:06:30,560 --> 00:06:33,479
Speaker 7: humanoid robotics. They don't have much to show for it yet,

119
00:06:33,640 --> 00:06:36,800
Speaker 7: and so the appeal really was for patients that these

120
00:06:36,920 --> 00:06:39,560
Speaker 7: are still long shots with a big build out ahead.

121
00:06:39,960 --> 00:06:42,800
Speaker 1: That said Ludlow. Shares in Tesla fell just over four

122
00:06:42,839 --> 00:06:45,120
Speaker 1: percent and after hours trading in New York.

123
00:06:45,680 --> 00:06:51,120
Speaker 2: And in terms of Open Ai, its unintended hack of

124
00:06:51,480 --> 00:06:55,800
Speaker 2: rifle hugging face was accomplished in hours what would have

125
00:06:55,880 --> 00:06:59,800
Speaker 2: taken experienced hackers weeks. Bloomberg under sounds that the company's

126
00:06:59,839 --> 00:07:04,599
Speaker 2: right Ogue AI models were far faster than their human counterparts.

127
00:07:05,040 --> 00:07:08,839
Speaker 2: Hakka One CEO Carus Brague says that the incident is

128
00:07:08,880 --> 00:07:11,400
Speaker 2: a wake up call for cybersecurity professionals.

129
00:07:11,920 --> 00:07:16,080
Speaker 8: There's also some lessons in here for security leaders and defenders,

130
00:07:16,200 --> 00:07:20,360
Speaker 8: which is the time is now to really retool environments

131
00:07:20,400 --> 00:07:23,000
Speaker 8: to make sure that their discovery to remediation gap is

132
00:07:23,040 --> 00:07:23,720
Speaker 8: really closed.

133
00:07:24,520 --> 00:07:26,000
Speaker 1: Because many of the exploits, in.

134
00:07:25,880 --> 00:07:28,440
Speaker 8: Fact, all of the exploits that were used in this

135
00:07:28,600 --> 00:07:32,920
Speaker 8: model's behavior, those were issues that are sitting in someone's

136
00:07:32,960 --> 00:07:34,320
Speaker 8: backlog that need to be addressed.

137
00:07:34,360 --> 00:07:35,560
Speaker 1: They need to be found and fixed.

138
00:07:36,560 --> 00:07:41,240
Speaker 2: Sparg Whovonse cybersecurity firm, also praised both companies for publicly

139
00:07:41,320 --> 00:07:45,200
Speaker 2: disclosing the hack. An Open Ai spokesperson says the company

140
00:07:45,280 --> 00:07:48,679
Speaker 2: has communicated with law enforcement and other government authorities about

141
00:07:48,680 --> 00:07:53,760
Speaker 2: the incident and has been transparent with them about its findings.

142
00:07:53,400 --> 00:07:56,040
Speaker 1: And just a one more story this morning from the UK.

143
00:07:56,480 --> 00:07:59,880
Speaker 1: The government has just announced that pubs, clubs and live

144
00:08:00,120 --> 00:08:02,800
Speaker 1: music venues will receive a twenty percent cut to their

145
00:08:02,880 --> 00:08:06,360
Speaker 1: business rates bills, saving what the government says a typical

146
00:08:06,400 --> 00:08:09,480
Speaker 1: pub will be one thousand, one hundred pounds worth of

147
00:08:09,520 --> 00:08:13,160
Speaker 1: savings next year. The statement says that the changes will

148
00:08:13,200 --> 00:08:17,160
Speaker 1: be funded, including for measures including reviewing release for businesses

149
00:08:17,160 --> 00:08:20,880
Speaker 1: that do not make a positive contribution quote to local communities,

150
00:08:20,920 --> 00:08:25,520
Speaker 1: such as vape shops. This latest announcement for Andy Burnham's

151
00:08:25,560 --> 00:08:28,240
Speaker 1: new government comes as a group of prominent millionaires in

152
00:08:28,280 --> 00:08:30,280
Speaker 1: the UK have called on the Prime Minister to tax

153
00:08:30,320 --> 00:08:33,360
Speaker 1: them more. Football pond At Gary Lineker is among those

154
00:08:33,480 --> 00:08:35,680
Speaker 1: behind a letters the Prime Minister which claims a two

155
00:08:35,679 --> 00:08:39,040
Speaker 1: percent levy on wealth over ten million pounds would raise

156
00:08:39,160 --> 00:08:42,000
Speaker 1: about twenty four billion pounds in a year.

157
00:08:42,640 --> 00:08:44,640
Speaker 2: So those are our top stories for you this morning.

158
00:08:44,800 --> 00:08:48,800
Speaker 2: Let's get to the markets now. Oil prices have jumped

159
00:08:49,160 --> 00:08:51,559
Speaker 2: so brank crude futures are up two point one percent

160
00:08:51,640 --> 00:08:55,240
Speaker 2: ninety six dollars zero sixth. The boll Dovisi also at

161
00:08:55,280 --> 00:08:57,880
Speaker 2: eighty eight dollars twenty five With this possible new front

162
00:08:57,880 --> 00:09:01,679
Speaker 2: in the Middle East, more Asia equities, our MSCI Asia

163
00:09:01,720 --> 00:09:04,400
Speaker 2: Pacific Index gaining almost one percent. That costs me up

164
00:09:04,440 --> 00:09:06,240
Speaker 2: by three point six percent. But there was quite a

165
00:09:06,320 --> 00:09:10,560
Speaker 2: route in terms of US SKX. Yesterday all in indexes closed.

166
00:09:10,240 --> 00:09:11,240
Speaker 1: In the red.

167
00:09:11,360 --> 00:09:14,560
Speaker 2: You had Microsoft down almost two percent, Meta down more

168
00:09:14,559 --> 00:09:17,520
Speaker 2: than two percent. Futures for the US are still in

169
00:09:17,559 --> 00:09:19,320
Speaker 2: the red. Now is that futures dropping a quarter of

170
00:09:19,320 --> 00:09:21,920
Speaker 2: one percent? Your SOX fifty futures down three tenths ten

171
00:09:21,960 --> 00:09:24,360
Speaker 2: ure US treasure yields at four sixty six ahead of

172
00:09:24,360 --> 00:09:27,000
Speaker 2: that ECB rate decision. Those are the markets.

173
00:09:27,800 --> 00:09:30,040
Speaker 1: Well, in a moment, we will bring you more on

174
00:09:30,080 --> 00:09:32,360
Speaker 1: the attacks on tankers and the red c plus why

175
00:09:32,400 --> 00:09:34,320
Speaker 1: ten years after the bregsit vote some of the bankers

176
00:09:34,360 --> 00:09:38,080
Speaker 1: have moved to Paris are thinking of leaving. But another

177
00:09:38,120 --> 00:09:41,360
Speaker 1: story that caught our eye this morning. If you're going

178
00:09:41,440 --> 00:09:45,520
Speaker 1: on one holiday, why not go on Toobrooks. Hannah Harra

179
00:09:45,600 --> 00:09:47,640
Speaker 1: has been writing about a growing trend for travelers to

180
00:09:47,679 --> 00:09:51,160
Speaker 1: combine two trips and one something high energy, perhaps some exploration,

181
00:09:51,240 --> 00:09:53,560
Speaker 1: with something quieter and relaxing. No many of us do

182
00:09:53,640 --> 00:09:56,280
Speaker 1: this already, combining our desires to see new things with

183
00:09:56,320 --> 00:09:58,280
Speaker 1: the need to have downtime, but there are no luxury

184
00:09:58,360 --> 00:10:00,880
Speaker 1: versions of this. You could do Safari East Africa with

185
00:10:00,920 --> 00:10:04,720
Speaker 1: the beaches of Zanzibar, or Singapore with the rainforests of Borneo.

186
00:10:05,040 --> 00:10:07,600
Speaker 1: In the US, popular choices include going to Nashville and

187
00:10:07,600 --> 00:10:10,920
Speaker 1: as well as Orange Beach, Alabama. And hotel groups are

188
00:10:10,920 --> 00:10:13,080
Speaker 1: now providing for this, so you can stay in two

189
00:10:13,080 --> 00:10:15,320
Speaker 1: hotels in the same group, one in a city and

190
00:10:15,360 --> 00:10:18,480
Speaker 1: one that's a more resort style as well. This is

191
00:10:18,480 --> 00:10:20,640
Speaker 1: something that I feel like I've been doing unconsciously for

192
00:10:20,679 --> 00:10:22,480
Speaker 1: many years as well. But I think the big debate

193
00:10:22,559 --> 00:10:24,200
Speaker 1: is which one do you do first? Do you relax

194
00:10:24,240 --> 00:10:25,800
Speaker 1: first or do you do the excitement first.

195
00:10:26,120 --> 00:10:28,480
Speaker 2: Oh, I definitely go to the city breakfirst and then

196
00:10:28,600 --> 00:10:29,840
Speaker 2: do the beach afterwards.

197
00:10:30,200 --> 00:10:30,440
Speaker 1: Yeah.

198
00:10:30,720 --> 00:10:34,760
Speaker 2: I feel very on top of the trend as I

199
00:10:34,800 --> 00:10:37,000
Speaker 2: was looking at a holiday in Greece which haven't booked,

200
00:10:37,240 --> 00:10:39,960
Speaker 2: but it was definitely within the same hotel group and

201
00:10:40,000 --> 00:10:42,920
Speaker 2: they had one hotel in a city and one out

202
00:10:42,960 --> 00:10:43,559
Speaker 2: on the beaches.

203
00:10:43,720 --> 00:10:46,520
Speaker 1: Sounds amazing. Hannah Howard does a great job, doesn't she

204
00:10:46,720 --> 00:10:50,200
Speaker 1: exactly head of trend? We didn't even know it. Put

205
00:10:50,240 --> 00:10:53,840
Speaker 1: link to Hannah's story in our podcast show notes. Well,

206
00:10:53,920 --> 00:10:55,880
Speaker 1: let's bring you up today with the latest developments in

207
00:10:55,920 --> 00:10:57,920
Speaker 1: the Middle East now where the the militant Group and

208
00:10:58,000 --> 00:11:00,600
Speaker 1: Yemen says it's targeted two oil tank is in the

209
00:11:00,640 --> 00:11:03,120
Speaker 1: Red Sea. Stuart Livington Wallers, who had our coverage of

210
00:11:03,120 --> 00:11:06,120
Speaker 1: the Middle East and Africa, joins us now from More. Stuart.

211
00:11:06,160 --> 00:11:08,240
Speaker 1: First of all, what do we know about these attacks?

212
00:11:08,760 --> 00:11:11,520
Speaker 9: Yeah, good morning? So, yeah, who does have claimed two attacks?

213
00:11:11,520 --> 00:11:15,320
Speaker 9: We've only had one confirmed from the UK Navy, which

214
00:11:15,360 --> 00:11:17,800
Speaker 9: is sort of the benchmark for US in terms of

215
00:11:18,720 --> 00:11:22,559
Speaker 9: confirmed attacks. However, let's even assume it's one. One is

216
00:11:22,720 --> 00:11:25,520
Speaker 9: very bad news. So the HOHO, She's had been repeatedly

217
00:11:25,559 --> 00:11:29,000
Speaker 9: making this threat for some time and basically hadn't delivered.

218
00:11:29,040 --> 00:11:30,760
Speaker 9: And I think there was a sense within the shipping

219
00:11:30,760 --> 00:11:34,400
Speaker 9: community that that was still a viable route. But it's

220
00:11:34,520 --> 00:11:38,360
Speaker 9: notable now that we're starting to see ships do U turns,

221
00:11:38,840 --> 00:11:40,880
Speaker 9: particularly in the south not going into the Red Sea.

222
00:11:40,960 --> 00:11:43,560
Speaker 9: We've got ones in the north the Red Sea the

223
00:11:43,600 --> 00:11:46,320
Speaker 9: worst spots to go southwards and now going northwards through sewers,

224
00:11:46,360 --> 00:11:48,600
Speaker 9: and obviously the implication that has for the shipping market

225
00:11:48,679 --> 00:11:52,920
Speaker 9: is it adds a huge amount of time to sailing distances,

226
00:11:53,040 --> 00:11:54,800
Speaker 9: which in turn has this knock on effect on the

227
00:11:54,800 --> 00:11:58,120
Speaker 9: global fleet. So you should anticipate high freight rates that

228
00:11:58,240 --> 00:12:00,920
Speaker 9: again sort of feed through into the global economy. So

229
00:12:00,960 --> 00:12:03,679
Speaker 9: it's potentially quite important in terms of the shipping market,

230
00:12:03,720 --> 00:12:06,520
Speaker 9: and then for the energy market. Obviously that was something

231
00:12:06,559 --> 00:12:09,360
Speaker 9: of a lifeline for Saudi oil exports in particularly, and

232
00:12:09,400 --> 00:12:12,040
Speaker 9: I think they got up to almost been not quite

233
00:12:12,080 --> 00:12:14,560
Speaker 9: six million barrels a day at the peak, you know,

234
00:12:14,600 --> 00:12:17,960
Speaker 9: which helped offset to a large degree what was happening

235
00:12:17,960 --> 00:12:20,720
Speaker 9: in horror move is not completely clearly, but again a

236
00:12:20,800 --> 00:12:23,360
Speaker 9: really important damper in terms of the oil price. And

237
00:12:23,400 --> 00:12:25,920
Speaker 9: again they're the dominan effect on the global economy.

238
00:12:27,559 --> 00:12:31,400
Speaker 2: Yeah, indeed, so that red Sea route being you know,

239
00:12:31,520 --> 00:12:36,880
Speaker 2: really quite important. Then in terms of what has also

240
00:12:36,920 --> 00:12:39,200
Speaker 2: happened in the wider war, I mean, shortly after this

241
00:12:39,280 --> 00:12:42,400
Speaker 2: incident there was also a twelfth night of US strikes

242
00:12:42,480 --> 00:12:47,960
Speaker 2: on Iran. Is there any prospect of a return to negotiations.

243
00:12:48,280 --> 00:12:50,360
Speaker 1: I mean, I think hard to answer.

244
00:12:50,520 --> 00:12:53,319
Speaker 9: I will say that in terms of the characterization, they

245
00:12:53,320 --> 00:12:55,840
Speaker 9: are saying that there have been exchanges of messages, but

246
00:12:55,840 --> 00:12:59,160
Speaker 9: that it's not negotiations. Reading to that, what you will

247
00:13:00,200 --> 00:13:02,439
Speaker 9: there is an interest for both sides to de escalate here,

248
00:13:02,440 --> 00:13:04,360
Speaker 9: but it's hard to see a path out, so particularly

249
00:13:04,400 --> 00:13:06,520
Speaker 9: from the U s side, I think there are deep

250
00:13:06,559 --> 00:13:09,920
Speaker 9: concerns about again the price of retail gasoline in the

251
00:13:10,000 --> 00:13:14,239
Speaker 9: US rising above four dollars a gallon. Again, more importantly,

252
00:13:14,520 --> 00:13:17,240
Speaker 9: it's deeply unpopular war in terms of the electorates and

253
00:13:17,280 --> 00:13:21,480
Speaker 9: the midterms coming up. And there is the rather worrying

254
00:13:21,600 --> 00:13:24,520
Speaker 9: point about, you know, the US's supply of munitions, because

255
00:13:24,520 --> 00:13:27,360
Speaker 9: it's been pretty relentless attacks and a lot of these

256
00:13:27,480 --> 00:13:32,040
Speaker 9: munitions were sort of earmarked really for potential operations elsewhere

257
00:13:32,040 --> 00:13:34,760
Speaker 9: in the world, so it diminishes the US ability to

258
00:13:34,800 --> 00:13:38,240
Speaker 9: operate elsewhere, and the stuff can't be replaced particularly fast,

259
00:13:38,720 --> 00:13:40,360
Speaker 9: as well as the economic costs. And then from the

260
00:13:40,400 --> 00:13:42,920
Speaker 9: Iranian side, you know, horr moves has been a really

261
00:13:42,960 --> 00:13:45,120
Speaker 9: important leverage point for them, but I think they must

262
00:13:45,200 --> 00:13:47,520
Speaker 9: be acutely aware that the longer this goes on, the

263
00:13:47,559 --> 00:13:50,760
Speaker 9: more likely it is that all the countries that depend

264
00:13:50,840 --> 00:13:53,560
Speaker 9: on hormones are going to be working fast and furiously

265
00:13:54,120 --> 00:13:57,439
Speaker 9: to build alternative routes, be that by road, by rail,

266
00:13:57,720 --> 00:14:01,280
Speaker 9: building new ports outside of horror moves, and if that happens,

267
00:14:01,280 --> 00:14:03,360
Speaker 9: and if that happens at speed, which seems very likely

268
00:14:03,480 --> 00:14:07,800
Speaker 9: right now, then the power of that leverage diminishes rather fast.

269
00:14:08,760 --> 00:14:11,480
Speaker 1: Amid all of the frustration from Golf allies at the

270
00:14:11,480 --> 00:14:13,880
Speaker 1: widening war of the US has also signed this nuclear

271
00:14:13,920 --> 00:14:17,560
Speaker 1: technology sharing deal with Saudi Arabia. Why has it so

272
00:14:17,679 --> 00:14:20,280
Speaker 1: alarmed that I was concerned about non proliferation?

273
00:14:21,240 --> 00:14:23,600
Speaker 9: I mean, I think mostly because it's so different to

274
00:14:23,640 --> 00:14:26,280
Speaker 9: the existing agreements it has with other countries. I mean,

275
00:14:26,360 --> 00:14:28,440
Speaker 9: most would be the UAE. So these are under the

276
00:14:28,760 --> 00:14:31,320
Speaker 9: so called one two three agreements, where basically you have

277
00:14:31,560 --> 00:14:34,840
Speaker 9: a nuclear technology sharing agreement. You know, you can build

278
00:14:34,880 --> 00:14:38,240
Speaker 9: nuclear power plants, but you can't enrich or reprocess uranium

279
00:14:38,320 --> 00:14:41,000
Speaker 9: on your own soil. In otherwise, that is a you know,

280
00:14:41,040 --> 00:14:43,440
Speaker 9: as you said, are sort of a non proliferation aspect

281
00:14:43,480 --> 00:14:46,280
Speaker 9: to it. Now, it must be said, we haven't seen

282
00:14:46,320 --> 00:14:48,520
Speaker 9: the details of this deal. There have been, you know,

283
00:14:48,560 --> 00:14:52,720
Speaker 9: several reports about it, and the consensus in those reports

284
00:14:52,720 --> 00:14:54,960
Speaker 9: seems to be that it would exclude that and in

285
00:14:55,000 --> 00:14:57,680
Speaker 9: particular would exclude sort of an additional protocol, so called

286
00:14:57,720 --> 00:15:00,680
Speaker 9: additional protocol that would basically allow for a much more

287
00:15:00,680 --> 00:15:04,600
Speaker 9: intrusive verification regime in Saudi Arabia that doesn't seem to

288
00:15:04,600 --> 00:15:06,400
Speaker 9: be the case. But again, look we'll see the details

289
00:15:06,440 --> 00:15:09,040
Speaker 9: when they come. But in in some that is I

290
00:15:09,080 --> 00:15:12,200
Speaker 9: think the big concern in the non proliferation camp is

291
00:15:12,240 --> 00:15:16,440
Speaker 9: that this potentially would allow Saudi Arabia to enrich uranium

292
00:15:16,440 --> 00:15:17,240
Speaker 9: on its own soil.

293
00:15:18,520 --> 00:15:21,640
Speaker 2: Yeah, okay, so that's a very important point, Stuart, Thank

294
00:15:21,640 --> 00:15:24,440
Speaker 2: you so much for being with Stuart Livingston Wallace, who

295
00:15:24,440 --> 00:15:27,240
Speaker 2: heads our coverage of the Middle East and Africa. Were

296
00:15:27,280 --> 00:15:29,360
Speaker 2: the latest on the US Iron Wall.

297
00:15:30,880 --> 00:15:31,600
Speaker 1: Stay with us.

298
00:15:31,840 --> 00:15:34,320
Speaker 2: More from Bloomberg Daybakeupe coming up after this.

299
00:15:36,200 --> 00:15:38,640
Speaker 1: Now, after the Breagsit referendum a decade ago, hundreds of

300
00:15:38,680 --> 00:15:41,680
Speaker 1: bankers made the move from London to Paris as financial

301
00:15:41,720 --> 00:15:45,040
Speaker 1: firms beefed up operations in the EU. Now with their

302
00:15:45,200 --> 00:15:48,760
Speaker 1: tax incentives in France due to expire summer, eyeing next

303
00:15:48,840 --> 00:15:52,280
Speaker 1: year's at French presidential elections and wondering whether it's time

304
00:15:52,320 --> 00:15:55,480
Speaker 1: to move again. Our Paris finance supporter Claudia Cohen joins

305
00:15:55,560 --> 00:15:58,320
Speaker 1: us now for more. Claudia, good morning. You've been speaking

306
00:15:58,360 --> 00:16:00,680
Speaker 1: to some of those who moved after right, so why

307
00:16:00,720 --> 00:16:02,280
Speaker 1: are they thinking about leaving France.

308
00:16:02,360 --> 00:16:06,600
Speaker 10: Now, so this was from the beginning of hate year deadline,

309
00:16:06,680 --> 00:16:09,720
Speaker 10: so when the bankers, so it will be either foreign

310
00:16:09,800 --> 00:16:14,360
Speaker 10: bankers or either French bankers moving to Paris to work

311
00:16:14,480 --> 00:16:17,800
Speaker 10: at US banks or at the French banks. Also, they

312
00:16:17,800 --> 00:16:21,760
Speaker 10: had this tax deal. It's basically like they will pay

313
00:16:21,880 --> 00:16:27,440
Speaker 10: whalex taxes and obviously it's important for those IIE owners workers.

314
00:16:27,920 --> 00:16:30,600
Speaker 10: And basically the deal from the beginning was that it

315
00:16:30,640 --> 00:16:33,520
Speaker 10: would last eight years. And so if we look at

316
00:16:33,640 --> 00:16:38,120
Speaker 10: the Brexit vote, some of the first bankers who came

317
00:16:38,160 --> 00:16:41,880
Speaker 10: to Paris post Brexit vote, they came in twenty eighteen.

318
00:16:42,360 --> 00:16:45,360
Speaker 10: So now this year, next year and the year after

319
00:16:45,800 --> 00:16:48,480
Speaker 10: will be crucial years for them to ask you know,

320
00:16:48,720 --> 00:16:51,120
Speaker 10: well you stay in Paris, do you want to stay

321
00:16:51,120 --> 00:16:54,400
Speaker 10: in the same city? Is you going to pay around

322
00:16:54,520 --> 00:16:59,360
Speaker 10: fifteen to twenty five percent more taxes? So obviously, you

323
00:16:59,360 --> 00:17:03,360
Speaker 10: know there are so personal choices to make. If you're

324
00:17:03,360 --> 00:17:06,040
Speaker 10: a British banker who came to Paris, you enjoy it.

325
00:17:06,080 --> 00:17:09,080
Speaker 10: Paris is a lovely city, the business is great, but

326
00:17:09,359 --> 00:17:13,040
Speaker 10: easy time to go on maybe And obviously we highlighted

327
00:17:13,119 --> 00:17:16,120
Speaker 10: in the story the fact that you know, politics has

328
00:17:16,200 --> 00:17:22,560
Speaker 10: been messy in friends since twenty twenty four and next

329
00:17:22,600 --> 00:17:26,639
Speaker 10: year there is a very very crucial election, presidential election

330
00:17:26,840 --> 00:17:29,760
Speaker 10: happening in the country, and as you probably saw in

331
00:17:29,840 --> 00:17:32,280
Speaker 10: the pool, you can see that the far right end

332
00:17:32,440 --> 00:17:35,720
Speaker 10: the far left are leading the pool, and those two

333
00:17:35,760 --> 00:17:38,639
Speaker 10: parties are not very well known to be business friendly.

334
00:17:39,040 --> 00:17:42,639
Speaker 10: So basically some of the bankers think that the taxis

335
00:17:42,680 --> 00:17:46,280
Speaker 10: could go even higher with one of those parties going

336
00:17:46,320 --> 00:17:49,720
Speaker 10: into power. But also, you know, the atmosphere might not

337
00:17:49,840 --> 00:17:52,400
Speaker 10: be as nice as it was those past two years

338
00:17:52,480 --> 00:17:53,440
Speaker 10: in Paris.

339
00:17:53,880 --> 00:17:59,320
Speaker 2: Yeah. Interesting, how wide spread though is that sentiment and

340
00:17:59,560 --> 00:18:02,960
Speaker 2: where are these people where they considering moving to.

341
00:18:03,560 --> 00:18:06,960
Speaker 10: So to be fair, I talked to traders, bankers that

342
00:18:07,080 --> 00:18:10,960
Speaker 10: I also had a long chat with management at those

343
00:18:11,080 --> 00:18:14,520
Speaker 10: US banks, at those French banks. Basically, no one is

344
00:18:14,560 --> 00:18:18,080
Speaker 10: expecting a mass exoduce because you know, I mean, your

345
00:18:18,119 --> 00:18:19,320
Speaker 10: question is the right one.

346
00:18:19,359 --> 00:18:20,720
Speaker 1: If you leave Paris, where are.

347
00:18:20,680 --> 00:18:23,159
Speaker 10: You going to go? After? We said politics is a

348
00:18:23,200 --> 00:18:25,879
Speaker 10: mess in France, but it's a mess everywhere else in

349
00:18:25,920 --> 00:18:28,320
Speaker 10: the UK, in Italy, we don't know what is going

350
00:18:28,359 --> 00:18:32,159
Speaker 10: to happen. So the first bankers who are living and

351
00:18:32,200 --> 00:18:35,040
Speaker 10: who think about living, what they tell you is that

352
00:18:35,119 --> 00:18:37,159
Speaker 10: you know they look at going back to London, they

353
00:18:37,160 --> 00:18:41,399
Speaker 10: look at miland they look at at Dubai, but I

354
00:18:41,440 --> 00:18:44,200
Speaker 10: don't think it would be a max exodis at all.

355
00:18:44,480 --> 00:18:46,800
Speaker 10: And also what we highlight in the story, and what

356
00:18:46,920 --> 00:18:51,080
Speaker 10: is interesting is that how much the parish headquarters of

357
00:18:51,119 --> 00:18:55,480
Speaker 10: those American banks wants to retain those bankers and the

358
00:18:55,560 --> 00:18:59,520
Speaker 10: question is very much so there will be negotiation with

359
00:18:59,800 --> 00:19:03,439
Speaker 10: the the management and those bankers were thinking about leaving

360
00:19:03,800 --> 00:19:08,240
Speaker 10: to try to compensate, you know, the lack of income

361
00:19:08,359 --> 00:19:10,439
Speaker 10: they're going to lose after the tax increase.

362
00:19:10,680 --> 00:19:12,840
Speaker 1: But what's the risk care for the French economy if

363
00:19:12,880 --> 00:19:15,480
Speaker 1: there were to be a movement of these key financial

364
00:19:15,480 --> 00:19:17,200
Speaker 1: players out of the city.

365
00:19:17,400 --> 00:19:20,199
Speaker 10: I mean, you know, Paris has been clearly the winner

366
00:19:20,720 --> 00:19:23,919
Speaker 10: for the banks have to brexit, So I mean the

367
00:19:24,000 --> 00:19:27,880
Speaker 10: major will risk will be that, you know, after Paris

368
00:19:28,000 --> 00:19:31,560
Speaker 10: was considered as the most attractive place, bankers will look

369
00:19:31,560 --> 00:19:36,840
Speaker 10: at other places. And also, you know Macron obviously was

370
00:19:36,960 --> 00:19:40,479
Speaker 10: himself the former or child investment bankers. He was very

371
00:19:40,560 --> 00:19:43,199
Speaker 10: much pro business. So the main risk that is the

372
00:19:43,280 --> 00:19:46,080
Speaker 10: government who is going to be elected next year is

373
00:19:46,119 --> 00:19:50,000
Speaker 10: not considered as pro business. You know, maybe the US

374
00:19:50,040 --> 00:19:53,480
Speaker 10: management in New York will say the Paris at portal like, look,

375
00:19:53,560 --> 00:19:56,520
Speaker 10: maybe it's time to reduce a bit the workforce. But

376
00:19:56,760 --> 00:20:00,200
Speaker 10: that said, as I was saying before, no one he

377
00:20:00,240 --> 00:20:02,800
Speaker 10: wants to do that because the business has been extremely

378
00:20:03,240 --> 00:20:06,800
Speaker 10: flourishing in front in terms of the M and A scene,

379
00:20:07,200 --> 00:20:11,920
Speaker 10: the trading scene also, so I'm hopeful that Paris, whatever

380
00:20:11,960 --> 00:20:14,880
Speaker 10: happened will stay, you know the place TV after lends

381
00:20:15,480 --> 00:20:17,040
Speaker 10: for finance workers.

382
00:20:19,359 --> 00:20:21,720
Speaker 1: Thanks for listening to Bloomberg Daybreak Europe.

383
00:20:21,880 --> 00:20:24,440
Speaker 2: If you're enjoying the podcast, give us a follow, leave

384
00:20:24,480 --> 00:20:26,720
Speaker 2: a rating or review, and maybe send it to that

385
00:20:26,800 --> 00:20:29,600
Speaker 2: one friend or colleague who's always trying to keep up

386
00:20:29,640 --> 00:20:30,280
Speaker 2: with the news.

387
00:20:30,640 --> 00:20:33,000
Speaker 1: And if one podcast today isn't jenof for you, you can

388
00:20:33,000 --> 00:20:36,000
Speaker 1: also listen to us live every weekday from six am

389
00:20:36,040 --> 00:20:39,040
Speaker 1: in London on DAB Radio, on tune in and on

390
00:20:39,119 --> 00:20:40,560
Speaker 1: the Bloomberg Business App.

391
00:20:40,840 --> 00:20:43,280
Speaker 2: Oh if you've got a smart speaker nearby, just say

392
00:20:43,440 --> 00:20:44,720
Speaker 2: play Bloomberg Radio