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Speaker 1: This is Bloomberg Daybreak. He up for this Monday, the

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Speaker 1: twenty sixth of June in London.

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Speaker 2: Coming up today, Putin under pressure. Questions grow over the

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Speaker 2: Russian leader's grip on power as an almost coup is averted.

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Speaker 1: They have my full support. Sunakbacks the Bank of England's

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Speaker 1: decision to raise rates as Labour's poll lead.

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Speaker 2: Grows less than stimulating. Beijing's modest economic support leaves investors disheartened.

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Speaker 1: Plus dialing a new area code. Reports suggest HSBC will

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Speaker 1: move its London headquarters fum Canary Wharf to BET's former

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Speaker 1: office in the city.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 3: and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Stephen Carroll.

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Speaker 1: And I'm Caroline Hepger. Here all the stories that we're

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Speaker 1: following today.

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Speaker 2: After a weekend that threatened to destabilize Russia. The location

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Speaker 2: of the mercenary leader who ordered a mutiny against Vladimir

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Speaker 2: Putin is unclear. The Russian president diffused the biggest threat

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Speaker 2: to his grip on power in almost a quarter of

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Speaker 2: a century after an eleventh hour deal with the Wagner

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Speaker 2: Group chief Yevgeny Progosion. Under the deal, it was agreed

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Speaker 2: that Progosian would leave the country for Belarus, but he

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Speaker 2: hasn't commented since. Britain's former National security advisor, Lord Ricketts

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Speaker 2: says the Mercenary commander presents a complex challenge for the Kremlin.

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Speaker 4: That's I think why they've been careful in a way

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Speaker 4: they've handled Pergursion, rather than just trying to attack him

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Speaker 4: and eliminate him where he was in Russian territory. They

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Speaker 4: must be concerned about creating a martyr who has been

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Speaker 4: able to appeal to the rank and trial.

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Speaker 2: Those comments from Lord Ricketts come as US and European

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Speaker 2: officials have told Bloomberg that the Murky deal to allow

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Speaker 2: Progosion and his men to leave without consequences is unlikely

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Speaker 2: to mark the end of tensions.

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Speaker 1: Both Putin and Russia will likely come out of the

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Speaker 1: crisis weaker, according to one confidential European intelligence assessment, and

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Speaker 1: that's the view backed by the US Secretary of State

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Speaker 1: Anthony Blinken, who says that the events are deeply embarrassing

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Speaker 1: for Moscow.

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Speaker 5: We've also seen rise to the surface profound questions about

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Speaker 5: the very premises for this Rusian aggression against Ukraine. The

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Speaker 5: Progosi surface very publicly, as well as a direct challenge

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Speaker 5: to Putin's authority. So I think we've seen more cracks

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Speaker 5: emerge in the Russian facade.

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Speaker 1: Blincoln's assessment is also supported by Bloomberg's own reporting. According

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Speaker 1: to people familiar with the situation, tensions within the Russian

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Speaker 1: elite over the Ukraine invasion have been on the rise

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Speaker 1: for months. Over the weekend, Kiev said that its troops

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Speaker 1: pressed forward around Bahmud, where Wagner's forces had fought for months,

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Speaker 1: as well as further south.

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Speaker 2: You know the news this morning, the Prime Minister Rishisnak

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Speaker 2: says he fully supports the Bank of England and the

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Speaker 2: action that it's taking to fire inflation. Sinak's comments come

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Speaker 2: after some of his own ministers criticized the Governor of

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Speaker 2: the Bank, Andrew Bailey, saying he was slow to recognize

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Speaker 2: that inflation wasn't transitory. Here's what he told the BBC's

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Speaker 2: Laura Coomsberg.

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Speaker 6: I think the Bank of England's track record, including the

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Speaker 6: Governor's track record over a long period of time has

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Speaker 6: been that inflation has been managed appropriately and people should

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Speaker 6: have the confidence that inflation will fall back to target.

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Speaker 6: As it is not.

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Speaker 7: All of your colleagues think he's done a good job.

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Speaker 6: I can tell you as Prime Minister, the Bank of

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Speaker 6: England is doing the right thing. The Bank of England

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Speaker 6: has my total support.

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Speaker 2: Sunak also signals that he may take the unusual step

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Speaker 2: of rejecting public sector pay rise recommendations made by independent

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Speaker 2: pay review bodies. The potential measure suggests that a new

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Speaker 2: twin pronged assault on the UK's stubborn inflation problem, with

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Speaker 2: the government prepared to take action alongside the Bank of England.

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Speaker 1: Losses in Chinese assets are mounting again as the government's

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Speaker 1: modest stimulus has disheartened investors. The Hanksying fell six percent

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Speaker 1: last week, the worst drop since March. That is despite

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Speaker 1: Beijing implementing a series of interest rate cuts and extended

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Speaker 1: tax breaks to boost the economy. Data out over the

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Speaker 1: weekend showed China's consumer driven recovery continues to lose momentum,

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Speaker 1: with spending slowing on everything from holiday travel to cars

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Speaker 1: and homes.

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Speaker 2: Central bank chiefs small over the world are gathering in Portugal.

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Speaker 2: This week, markets and economists to debating how far interest

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Speaker 2: rates need to rise to tame inflation and if economies

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Speaker 2: can avoid recession. Bloomberg's Economics and nec BE reporter Anna

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Speaker 2: Rando says the annual gathering comes at an unprecedented time

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Speaker 2: for monetary policy.

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Speaker 7: They're all looking at inflation rates that are too high.

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Speaker 7: They're all looking at a labor market that is surprisingly strong.

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Speaker 7: We are at a really at a turning point in

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Speaker 7: monetary policy. So it's going to be very, very interesting

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Speaker 7: to have all these you know, central bankers on one podium.

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Speaker 2: Bloomberg Xana Rando there, who is covering the gathering in

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Speaker 2: CenTra and Portugal. She will be in the audience when

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Speaker 2: Christine Legarde, Andrew Bailey, J. Powell and Kazuouada. I'll speak

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Speaker 2: on a panel tomorrow.

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Speaker 1: HSBC is leaving Canary Wharf after two decades. Bloomberg's Unpots

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Speaker 1: has more.

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Speaker 8: It's an iconic part of London's Skyline, but in an

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Speaker 8: era of hybrid working and rising costs, HSBC is reportedly

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Speaker 8: planning to leave its Canary Wharf tower when the lease

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Speaker 8: comes up in twenty twenty seven. The time says the

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Speaker 8: bank's employees will be told later today that they're downsizing

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Speaker 8: to an office in Saint Paul's formerly the HQ of

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Speaker 8: BT group. The move comes as AHSBC looks to cut

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Speaker 8: office space around the world by forty percent in London.

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Speaker 8: I'm une pots Blomberg day.

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Speaker 1: Break Europe and those are a few of today's top stories. Right,

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Speaker 1: It's been an absolutely extraordinary couple of days over the weekend.

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Speaker 1: Turmoil in Russia, all really reported via these voice notes

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Speaker 1: on telegram. Global investors though, seem calm, but mainly because

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Speaker 1: it seems absolutely impossible to trade a mutiny, even an

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Speaker 1: aborted one.

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Speaker 2: Yeah, that's right. I mean we're looking at a relatively

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Speaker 2: cam picture from oil to gold, to stocks to currencies

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Speaker 2: this morning almost appears unreflecting of what happened over the

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Speaker 2: weekend in Russia.

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Speaker 1: Yeah, absolutely, I mean it does, of course have the potential,

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Speaker 1: huge potential to spur investors to sell risk your assets.

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Speaker 1: We're talking about the sustainability of the Russian regime, or

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Speaker 1: at least the most significant challenge to Putin's regime in decades.

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Speaker 1: So what does it mean then for Russian gas, for

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Speaker 1: aluminium production, for week exporting of course, there are heavy

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Speaker 1: sanctions against Russia, so perhaps that dampens things down, and

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Speaker 1: yet you know the markets are thinking, if not reacting yet.

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Speaker 2: Yeah, indeed, and there's still some risk sentiment out there

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Speaker 2: in markets this morning that we're watching as well. But

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Speaker 2: let's dig into some of the dramatic events that we've

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Speaker 2: seen in Russia over the weekend, and Interaction aborted a

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Speaker 2: deal broker to apparently absolve its leader of all charges,

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Speaker 2: and Oshan president left weakened. OURMA News director Rosin Mathson

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Speaker 2: is with us this morning for the latest. Good morning

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Speaker 2: to you, Rasland. So since Saturday, there's been very little

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Speaker 2: that we've heard from the protagonists of these events. What

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Speaker 2: is the state of play this Monday morning.

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Speaker 3: Well, that's right.

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Speaker 9: At the moment, it's still radio silence from both Progosian,

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Speaker 9: the Wagner Mercenary Group leader, and Vladimir Putin himself, although

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Speaker 9: some of his officials have been out and about. It

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Speaker 9: seems like his defense minister, who's a key player in

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Speaker 9: all of this, seems to have visited Russian troops inside Ukraine,

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Speaker 9: perhaps a public show of something there. But in terms

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Speaker 9: of the two key men themselves, there's been absolutely nothing

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Speaker 9: for the past twenty four hours after this deal was

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Speaker 9: apparently broken and progotion pulled his forces back. So there's

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Speaker 9: a lot of what ifs, as you were saying that

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Speaker 9: we still don't know. Is he going to move to

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Speaker 9: Byelroots as part of this deal? Will he take all

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Speaker 9: his forces there and take them out of Ukraine? Is

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Speaker 9: Vladimir Putin able to put this behind him? It seems

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Speaker 9: to be the mood in Russia is like, let's to

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Speaker 9: sort of pretend this never happened. To some extent, it's

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Speaker 9: not really been covered in state media. The sense is

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Speaker 9: this was a moment and let's move on. At least

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Speaker 9: that sort of seems to what the Kremlin is trying

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Speaker 9: to project across Russia so far today.

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Speaker 1: It's almost impossible to understand this. But how weakened do

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Speaker 1: we think Vladimir Putin is?

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Speaker 10: Well?

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Speaker 9: Vladimir Putin is a survivor. That man's been in power

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Speaker 9: for several decades, and he's been through bouts of termoil before,

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Speaker 9: of course, also economic unrest, political unrest. He's managed to

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Speaker 9: really denude the political opposition inside Russia over the past

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Speaker 9: few years. But that said, this has to be the

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Speaker 9: most overt challenge to his authority since he came to

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Speaker 9: power some decades ago. To have sort of the visuals

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Speaker 9: of sort of military people, Russian military people marching towards

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Speaker 9: Moscow making demands on him is really something unprecedented, and

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Speaker 9: it has to show that there are cracks in his armor.

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Speaker 9: There's always been a perception that he has absolutely authority

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Speaker 9: and control, and this really is an example that he doesn't.

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Speaker 9: And so the question is what happens with that Fisher

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Speaker 9: Do you get more challenges come up in the run

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Speaker 9: up to the twenty twenty four election, Do elite start

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Speaker 9: to throw their weight behind others in the establishment? They

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Speaker 9: say Putin's time is done. These are really kind of

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Speaker 9: things we just don't know at this point. But what

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Speaker 9: we can say is this a serious moment for Vladimir Putin.

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Speaker 2: What have we been hearing from Putin's international allies and

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Speaker 2: all of this.

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Speaker 9: What's a funny collection of countries that are coming out.

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Speaker 9: You got North Korea saying well, we support Vladimir Putin,

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Speaker 9: around saying we support Vladimir Putin, but also countries like

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Speaker 9: Turkey and China particularly saying, you know, this is an

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Speaker 9: internal affair for Russia and we support efforts, as they say,

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Speaker 9: to restore national security inside Russia. You saw those comments,

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Speaker 9: particularly from China yesterday, and that's a big one because

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Speaker 9: of course China is really on the global stage, probably

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Speaker 9: the biggest friend for on a better word, that Russia has,

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Speaker 9: and certainly a key supporter, and to be making those

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Speaker 9: public statements, China is sending a message there behind the scenes.

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Speaker 9: Who knows. It's hard to imagine that President Cgping is

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Speaker 9: impressed with what's been going on. He really needs a

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Speaker 9: stronger Russia because he's trying to put on an united

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Speaker 9: front against countries like the US. So this can't be

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Speaker 9: good for China either, But at least now publicly statements

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Speaker 9: of support.

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Speaker 1: What do we think it means then? For what's happening

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Speaker 1: in Ukraine the war the Wagner Group has been absolutely

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Speaker 1: central to Russia's offensive There Can the Wagner Group carry

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Speaker 1: on doing that there? What happens to all of these

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Speaker 1: military militias, Effectively, some of them were recruited in Russian prisons,

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Speaker 1: we know.

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Speaker 9: Well, that's right, of course, they've been one of the

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Speaker 9: more organized parts of the Russian machinery inside Ukraine taking

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Speaker 9: on the brunt of some of the key fighting and

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Speaker 9: certainly seeming to be better resourced and organized than the

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Speaker 9: military itself. The big question, as you say, is what

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Speaker 9: happens now. He already had said Prigagen already said that

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Speaker 9: he was no longer going to have his mercenaries fighting

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Speaker 9: places like Bakmut. He was like, we're pulling out. We

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Speaker 9: did our work there and now it's up to the

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Speaker 9: Russian military. But he does command a large force and

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Speaker 9: they have been key in the fighting in Ukraine. The

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Speaker 9: question is does he now take them all out? Do

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Speaker 9: those mercenaries move over to the military under that umbrella

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Speaker 9: and fight on behalf of the Russian military officially, or

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Speaker 9: does he take them with him into Yellow rus or

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Speaker 9: somewhere else. These are really key questions, of course, because

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Speaker 9: Ukraine is in the middle of a counter offensive at

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Speaker 9: the moment, trying to push Russian forces back out. Does

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Speaker 9: this give them the momentum that they were looking for?

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Speaker 2: What is the importance of Balarus and all of this

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Speaker 2: as well? I mean, the idea that they would that

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Speaker 2: that's where pregosion will will go and you know, live

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Speaker 2: in exile is the only detail we have on that

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Speaker 2: for the moment.

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Speaker 9: Well, Bjelar Rus is obviously very interesting because it's an

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Speaker 9: extremely close ally of Russia and its leader. President Lukashenko

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Speaker 9: is a very old friend of Vladimir Putin and certainly

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Speaker 9: seems to have stepped in here to try and broker

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Speaker 9: this on behalf of Putin and Bielarus has been a

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Speaker 9: staging point for Russian troops also into Ukraine during the war.

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Speaker 9: It is now apparently the location of some Russian nuclear weapons,

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Speaker 9: so certainly very very close leadership there. So the question

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Speaker 9: is what does it mean for Progotion to be operating there?

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Speaker 9: Is he going to be taking instructions from the Bielarusians?

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Speaker 9: I highly doubt it. Again, it's just a question. We

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Speaker 9: don't have the answers for right now.

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Speaker 1: Okay, in Mathis and thank you so much for being

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Speaker 1: with us, So Mere's news director Johnny Eslin Studio.

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Speaker 2: Well, of course, all of this has been happening in

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Speaker 2: Russia as the fighting continues in Ukraine. Let's go live

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Speaker 2: to Kiev now and speak to our senior reporter for

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Speaker 2: international affairs, Mark Champion, who joins us from there. Good

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Speaker 2: morning to you, Mark. How have this weekend's events been

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Speaker 2: viewed in.

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Speaker 11: Ukraine, Well, you could say almost with glee.

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Speaker 10: You know, obviously Ukraine's been under pressure from Russia, enormous

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Speaker 10: pressure for the last sixteen months, and more so to

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Speaker 10: see put In challenged, to see him apparently weakened, all

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Speaker 10: of this is just seen as good news. And you know,

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Speaker 10: I was talking to one of President Silski's advisors over

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Speaker 10: the weekend and just he just said, you know, we

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Speaker 10: simply see this as benefiting us.

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Speaker 11: No matter what happens. And that was when we still

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Speaker 11: didn't know how whether pregossion was going to go all

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Speaker 11: the way to Moscow. Whether they're right or not is

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Speaker 11: a different matter.

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Speaker 10: They do say that they're extremely cautious about what is

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Speaker 10: happening on the battlefield, that they are not going to

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Speaker 10: take any big decisions about military advances, attempting to make

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Speaker 10: any kind of you know, take advantage of for all this,

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Speaker 10: and they say that we're going to be cautious. Even

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Speaker 10: if we see an apparent opportunity where troops with drop draw,

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Speaker 10: we're going to be very very careful before we move

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Speaker 10: ahead in case that's simply a trap because the front

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Speaker 10: is somewhat separate from what's going on back in Moscow,

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Speaker 10: and their hope is that over time this will impact

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Speaker 10: the front, that it will create problems for Russian morale,

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Speaker 10: for commander control, etc. But in the immediate term, you know,

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Speaker 10: they don't expect any immediate impact.

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Speaker 1: Okay, that's interesting. The Wagner group has also been extremely

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Speaker 1: important in this war, hasn't it.

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Speaker 11: It was in a very restricted theater. So you have.

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Speaker 10: A front that is more than a thousand kilumbus long,

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Speaker 10: and there's one area around Bachmut in the Donbas region,

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Speaker 10: the eastern part of Ukraine, where Wagner pushed all through

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Speaker 10: the winter, and they were successful in a sense in

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Speaker 10: that they managed to take the city considerable losses on

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Speaker 10: both sides. So they have been the most effective troops

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Speaker 10: that the Russians have, but whether or not they have

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Speaker 10: been able to, you know, to really impact the war

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Speaker 10: as a whole. They don't appear to be playing much

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Speaker 10: of a role in pushing back the counter offense, for example,

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Speaker 10: which is further south, so it's quite complex.

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Speaker 11: They would be a loss. They are some thousands.

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Speaker 10: We don't know exactly how many troops they have, but

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Speaker 10: many estimates are around twenty five to forty thousands at

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Speaker 10: different times and Some of those troops are very professional mercenaries.

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Speaker 10: Others are recruits, even they were convicts, So it's a

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Speaker 10: mixed bag really, But any loss you know, of that

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Speaker 10: capacity would be a loss for Russia.

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Speaker 11: We still don't know that. The Russians have.

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Speaker 10: Said that, you know, they're going to bring some of

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Speaker 10: the Wagner troops into the ranks of the armed forces,

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Speaker 10: so they may reappear, but more spread through different units

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Speaker 10: of the armed forces.

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Speaker 2: Mark, is this a turning point in the war in Ukraine?

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Speaker 11: You know, we really don't know. It could be.

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Speaker 10: So it could be in the sense that the Ukrainians hope,

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Speaker 10: which is that Plutin becomes weaker and he has to

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Speaker 10: focus at home and he simply doesn't have the resources

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Speaker 10: to continue and he looks for ways out. The other possibility, though,

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Speaker 10: is that, you know, as a weakened authoritarian leader, he

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Speaker 10: feels the need to double down and you know, pregussion,

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Speaker 10: after all, represented a hawkish vein of opinion in Russia.

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Speaker 11: He became quite popular amongst alternationalists.

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Speaker 10: People who wanted to pursue the war in a more

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Speaker 10: committed way.

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Speaker 1: Yeah, Mark, thank you so much for being with us.

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Speaker 1: That is Bloomberg's senior reporter for International Affairs, Mark Champion.

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