1
00:00:02,560 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:10,039 --> 00:00:13,240
Speaker 2: This is the Bloomberg Daybreak Youro podcast. Good morning, It's Monday,

3
00:00:13,280 --> 00:00:16,680
Speaker 2: the sixth of October. I'm Stephen Carolin Brussels and I'm.

4
00:00:16,560 --> 00:00:17,680
Speaker 3: Lissie Verden in London.

5
00:00:17,760 --> 00:00:21,840
Speaker 4: Coming up today, French Prime Minister Sebastian Lekochnu resigns after

6
00:00:21,880 --> 00:00:26,040
Speaker 4: President Macon's decision to appoint a largely unchanged cabinet sparks

7
00:00:26,040 --> 00:00:27,360
Speaker 4: and opposition backlash.

8
00:00:28,240 --> 00:00:32,640
Speaker 2: French government bond yells spike and stocks tumble as investors

9
00:00:32,680 --> 00:00:37,199
Speaker 2: brace for more political uncertainty in the EU's second largest economy.

10
00:00:37,640 --> 00:00:40,519
Speaker 4: Plus, the gold rush continues. The price of the precious

11
00:00:40,560 --> 00:00:44,400
Speaker 4: metal closes in on four thousand dollars. Announcers government borrowing

12
00:00:44,479 --> 00:00:46,080
Speaker 4: drives a flight to Haven's.

13
00:00:47,040 --> 00:00:49,640
Speaker 5: Let's start with a round up of our top stories.

14
00:00:49,360 --> 00:00:50,200
Speaker 3: Within the past hour.

15
00:00:50,240 --> 00:00:53,080
Speaker 4: The French Prime Minister is Sebastian Lekochnu has resigned, the

16
00:00:53,080 --> 00:00:56,080
Speaker 4: move coming just a day after President Emmanuel Macon named

17
00:00:56,080 --> 00:00:59,680
Speaker 4: a new cabinet that was broadly criticized. This is Bloomberg's

18
00:00:59,720 --> 00:01:02,760
Speaker 4: Paris reporter Caroline Conna reacting to the news.

19
00:01:03,120 --> 00:01:05,360
Speaker 6: We had lots of emails this morning from the French

20
00:01:05,400 --> 00:01:08,320
Speaker 6: government saying this there would be a handover this time

21
00:01:08,360 --> 00:01:11,840
Speaker 6: for Lucanu for hold on his coul there would be

22
00:01:11,880 --> 00:01:16,440
Speaker 6: another handover for b And now everything is collapsing already

23
00:01:17,160 --> 00:01:20,960
Speaker 6: three and a half weeks with this Prime Minister Sebastian Cornu,

24
00:01:21,080 --> 00:01:24,520
Speaker 6: and as many analysts have been saying all morning, we

25
00:01:24,600 --> 00:01:29,120
Speaker 6: are now getting very very close to perhaps new fresh legislative.

26
00:01:28,560 --> 00:01:33,440
Speaker 4: Elections, Caroline Conna speaking there from our Paris bureau. French

27
00:01:33,480 --> 00:01:37,480
Speaker 4: bonds fell as investors braced for more political uncertainty. French

28
00:01:37,480 --> 00:01:40,160
Speaker 4: tenure yields have risen sharply after those headlines, and that

29
00:01:40,240 --> 00:01:43,200
Speaker 4: widened the nation's borrowing premium over German debt, a key

30
00:01:43,240 --> 00:01:46,480
Speaker 4: gauge of fiscal risk, to over eighty nine basis points,

31
00:01:46,480 --> 00:01:48,800
Speaker 4: at the highest level since late twenty twenty four.

32
00:01:49,640 --> 00:01:53,920
Speaker 2: In Japan, Sanai Takeichi, a pro stimulus conservative, as poised

33
00:01:53,920 --> 00:01:57,320
Speaker 2: to become the country's first female prime minister. Japanese equities

34
00:01:57,360 --> 00:01:59,720
Speaker 2: led Asian stocks to an all time high following hers

35
00:02:00,360 --> 00:02:01,440
Speaker 2: win and the ruling.

36
00:02:01,280 --> 00:02:02,800
Speaker 5: LDP's leadership race.

37
00:02:03,120 --> 00:02:06,320
Speaker 2: While equity investors embraced the news, bond markets did not

38
00:02:06,960 --> 00:02:10,080
Speaker 2: longer dated Japanese bond slid with the forty year yield

39
00:02:10,160 --> 00:02:14,400
Speaker 2: surging as investors balance the potential upside of stimulus against

40
00:02:14,400 --> 00:02:17,360
Speaker 2: debt market risk with more. Here's our editor at large

41
00:02:17,360 --> 00:02:18,640
Speaker 2: in Tokyo, Sherry Anne.

42
00:02:19,280 --> 00:02:22,280
Speaker 1: We know that Sanatatakaichi is a nationalist. We know that

43
00:02:22,320 --> 00:02:24,760
Speaker 1: she's a fan of Margaret Thatcher, a fan of heavy

44
00:02:24,840 --> 00:02:28,600
Speaker 1: metal music as well. But it's really the pro growth

45
00:02:28,639 --> 00:02:32,280
Speaker 1: policies that Sanattakaichi has talked about that is really the

46
00:02:32,320 --> 00:02:36,760
Speaker 1: focus for investors. She's talked about the bogspeezy monetary policy,

47
00:02:36,880 --> 00:02:39,880
Speaker 1: toned down her rhetoric during this election campaign, but we

48
00:02:39,960 --> 00:02:43,440
Speaker 1: know that she wants to continue expanding fiscal policy. She's

49
00:02:43,480 --> 00:02:47,359
Speaker 1: promised cash Handel's tax rebate, hinting at raising the tax

50
00:02:47,440 --> 00:02:49,280
Speaker 1: free income allowance as well.

51
00:02:49,680 --> 00:02:52,360
Speaker 2: Chary Anne was speaking as analysts that Goldman Sachs warned

52
00:02:52,400 --> 00:02:55,600
Speaker 2: that volatility in Japan's longer dated bonds may now spill

53
00:02:55,680 --> 00:02:58,880
Speaker 2: over into markets as far away as the US and UK.

54
00:02:59,400 --> 00:03:02,240
Speaker 2: Scrutiny of longer day to debt in many developed economies

55
00:03:02,240 --> 00:03:04,680
Speaker 2: has increased, does government's ramp up borrowing.

56
00:03:05,040 --> 00:03:07,320
Speaker 4: The growing fiscal concerns in some of the world's biggest

57
00:03:07,320 --> 00:03:10,560
Speaker 4: economies has seen some investors flocking to the perceived safety

58
00:03:10,800 --> 00:03:11,359
Speaker 4: of pressures.

59
00:03:11,400 --> 00:03:12,560
Speaker 3: Metals and bitcoin.

60
00:03:12,840 --> 00:03:15,120
Speaker 4: Gold hit another record today and is now closing in

61
00:03:15,160 --> 00:03:18,200
Speaker 4: on four thousand dollars an ounce, following a glittering run

62
00:03:18,200 --> 00:03:21,400
Speaker 4: that's seen it surge almost fifty percent this year. Bitcoin

63
00:03:21,440 --> 00:03:23,880
Speaker 4: meanwhile set another all time high over the weekend. Does

64
00:03:23,919 --> 00:03:26,799
Speaker 4: a broader risk rally around the US government shut down. BOYD,

65
00:03:26,880 --> 00:03:29,880
Speaker 4: the world's largest cryptocurrency OPEC.

66
00:03:29,560 --> 00:03:31,800
Speaker 2: Plus, has agreed to return one hundred and thirty seven

67
00:03:31,919 --> 00:03:35,680
Speaker 2: thousand barrels a day of halted supply, a slower pace

68
00:03:35,800 --> 00:03:39,200
Speaker 2: than earlier this year. That's despite signs of a global

69
00:03:39,240 --> 00:03:42,720
Speaker 2: oil surplus starting to emerge after an earlier difference in

70
00:03:42,800 --> 00:03:46,680
Speaker 2: position between co leaders Saudi Arabia and Russia. Our reporter

71
00:03:46,800 --> 00:03:51,040
Speaker 2: Wayloon Soon says OPEC producers are each facing different circumstances.

72
00:03:51,760 --> 00:03:55,640
Speaker 7: Some like Russia is actually trying to contend with like

73
00:03:55,720 --> 00:03:59,800
Speaker 7: increased attacks on its oil production capacity, so that's all

74
00:04:01,040 --> 00:04:04,040
Speaker 7: pulling back some of their potential production. We do see

75
00:04:04,080 --> 00:04:07,040
Speaker 7: some estimates for the one hundred and thirty seven thousand

76
00:04:07,040 --> 00:04:10,200
Speaker 7: barrels per day that or PET promise over the weekend.

77
00:04:10,360 --> 00:04:12,200
Speaker 5: Actually Russia taks up about.

78
00:04:11,960 --> 00:04:14,480
Speaker 7: A third of debt and a third of debt might

79
00:04:14,560 --> 00:04:17,400
Speaker 7: come under stress because of you, Princess hex on our

80
00:04:17,680 --> 00:04:19,600
Speaker 7: expot facilities.

81
00:04:19,279 --> 00:04:22,600
Speaker 2: Bloomberg Whalen soon speaking there. The decision to drip feed

82
00:04:22,720 --> 00:04:26,479
Speaker 2: more barrels shows OPEC's commitment to keep battling for a

83
00:04:26,560 --> 00:04:29,599
Speaker 2: share of the oil market, but the market's forward curve

84
00:04:29,680 --> 00:04:33,719
Speaker 2: closely watched by opeka's faltering. Wall Street forecasters like JP

85
00:04:33,880 --> 00:04:38,520
Speaker 2: Morgan and Goldman Sachs expect the oiled price slide will

86
00:04:38,560 --> 00:04:40,799
Speaker 2: extend below sixty dollars a barrel.

87
00:04:41,680 --> 00:04:44,440
Speaker 4: Representatives from Hamas and Israel are due to begin talks

88
00:04:44,440 --> 00:04:46,920
Speaker 4: in Egypt today and aimed at ending their two year

89
00:04:46,960 --> 00:04:49,840
Speaker 4: war in Gaza. The first sign of whether the negotiations

90
00:04:49,839 --> 00:04:53,000
Speaker 4: are serious will be whether Hamas releases the remaining hostages

91
00:04:53,120 --> 00:04:56,640
Speaker 4: in return for Israel releasing Palestinian prisoners. The US President

92
00:04:56,720 --> 00:04:59,560
Speaker 4: has laid out a twenty point plan to end the hostilities.

93
00:05:00,000 --> 00:05:01,800
Speaker 3: He's talking up the prospects of a deal.

94
00:05:02,480 --> 00:05:04,600
Speaker 5: They've been fighting for a plan for years.

95
00:05:05,000 --> 00:05:09,480
Speaker 6: We get the usages back almost immediately. Negotiations are going

96
00:05:09,520 --> 00:05:11,359
Speaker 6: on right now, will probably take.

97
00:05:11,200 --> 00:05:14,040
Speaker 5: A couple of days, and people are very happy.

98
00:05:13,800 --> 00:05:14,960
Speaker 8: About it now.

99
00:05:15,040 --> 00:05:17,359
Speaker 4: Despite his upbeat home Donald Trump has also made it

100
00:05:17,400 --> 00:05:20,320
Speaker 4: clear that he's losing patience with both Hamas and Israel.

101
00:05:20,600 --> 00:05:23,960
Speaker 4: Axios is reporting that the US president called Israel's Benjamin

102
00:05:23,960 --> 00:05:27,560
Speaker 4: Netanyahu over the weekend to discuss Hamas's apparent willingness to

103
00:05:27,600 --> 00:05:30,560
Speaker 4: release the hostages, but the Israeli Prime minister complained that

104
00:05:30,600 --> 00:05:33,720
Speaker 4: the offer was meaningless. Trump, according to the report, snapped

105
00:05:33,720 --> 00:05:37,320
Speaker 4: at Netanyahoo for being negative and added, this is a win.

106
00:05:37,720 --> 00:05:39,920
Speaker 3: Take it, and.

107
00:05:39,880 --> 00:05:42,440
Speaker 2: Those are your top stories on the markets. The kakarant

108
00:05:42,520 --> 00:05:45,400
Speaker 2: down two percent this morning, the ten year French government

109
00:05:45,520 --> 00:05:48,839
Speaker 2: yield up six basis points to three point five seven percent,

110
00:05:48,880 --> 00:05:51,440
Speaker 2: at an eighty seven basis point spread over the ten

111
00:05:51,520 --> 00:05:54,880
Speaker 2: year German yield. The Euro seven tenths weaker against the

112
00:05:54,920 --> 00:05:57,880
Speaker 2: dollar at one sixteen sixty two, the Bloomberg Dollar Spot

113
00:05:57,920 --> 00:06:00,800
Speaker 2: Index half a percent stronger, and we're continuing to see

114
00:06:00,839 --> 00:06:03,520
Speaker 2: weakness in the yen after the leadership election for the

115
00:06:03,560 --> 00:06:06,160
Speaker 2: LDP over the weekend. There So the Japanese yen one

116
00:06:06,240 --> 00:06:09,920
Speaker 2: point nine percent weeker against the dollar, hovering around one

117
00:06:10,240 --> 00:06:11,160
Speaker 2: fifty there.

118
00:06:12,560 --> 00:06:16,200
Speaker 5: Well, Lizzie, what a moment for French politics.

119
00:06:16,240 --> 00:06:18,520
Speaker 2: It feels like I money back from Paris from the

120
00:06:18,600 --> 00:06:22,200
Speaker 2: last time the government collapsed in France, and now we're

121
00:06:22,200 --> 00:06:25,680
Speaker 2: looking at Sebastian Laconnu, only around three weeks in the job,

122
00:06:25,760 --> 00:06:30,760
Speaker 2: resigning from the position after only unveiling his cabinet last night,

123
00:06:30,800 --> 00:06:33,320
Speaker 2: a cabinet that had a lot of familiar faces in it,

124
00:06:33,360 --> 00:06:35,799
Speaker 2: people in the same positions that they were the last

125
00:06:35,800 --> 00:06:38,719
Speaker 2: time around. But it wasn't enough for one of the

126
00:06:38,760 --> 00:06:42,120
Speaker 2: key parties that was supporting the government the last time

127
00:06:42,160 --> 00:06:44,719
Speaker 2: around to hang on, it seems, and that was part

128
00:06:44,760 --> 00:06:47,279
Speaker 2: of what it appears at this moment may have driven

129
00:06:47,320 --> 00:06:51,960
Speaker 2: Sebastian Lecornu to resign. And you know, yet another huge

130
00:06:51,960 --> 00:06:53,440
Speaker 2: moment that we're seeing on markets too.

131
00:06:53,880 --> 00:06:54,120
Speaker 8: Yeah.

132
00:06:54,160 --> 00:06:56,760
Speaker 4: A colleague has told me that Lacochnu has lasted less

133
00:06:56,760 --> 00:06:58,960
Speaker 4: than half of a Liz Truss and slightly more than

134
00:06:59,000 --> 00:07:02,320
Speaker 4: two scaramoot is just to put into context how brief

135
00:07:02,760 --> 00:07:05,240
Speaker 4: his tenure has been as Prime minister. But as you say,

136
00:07:05,240 --> 00:07:08,080
Speaker 4: it seems to be because of the backlash sparked among

137
00:07:08,080 --> 00:07:11,240
Speaker 4: the opposition parties that there was really a copy and

138
00:07:11,280 --> 00:07:13,800
Speaker 4: paste done when it came to picking that cabinet. Just

139
00:07:13,880 --> 00:07:18,000
Speaker 4: not enough compromise here for the opposition parties. We hadn't

140
00:07:18,040 --> 00:07:21,040
Speaker 4: even got to the budget yet and already Prime Minister

141
00:07:21,120 --> 00:07:23,080
Speaker 4: Lacochnu resigning this morning.

142
00:07:23,080 --> 00:07:26,120
Speaker 2: Stephen, Well, let's bring some analysis of both the politics

143
00:07:26,160 --> 00:07:27,240
Speaker 2: and the market reaction.

144
00:07:27,360 --> 00:07:27,480
Speaker 9: Now.

145
00:07:27,560 --> 00:07:29,600
Speaker 2: We have Ben Silles with at our managing editor for

146
00:07:29,920 --> 00:07:33,000
Speaker 2: economics and government coverage in Europe, and our market supporter

147
00:07:33,120 --> 00:07:34,800
Speaker 2: Valerie Titala is with us as well.

148
00:07:34,840 --> 00:07:35,000
Speaker 5: Ben.

149
00:07:35,040 --> 00:07:36,920
Speaker 2: I'd like to start with you just give us a

150
00:07:36,960 --> 00:07:39,920
Speaker 2: sense of how dramatic this moment is. The bastard Leacannho

151
00:07:40,320 --> 00:07:44,200
Speaker 2: already gone before facing the threatened no confidence vote.

152
00:07:45,200 --> 00:07:47,280
Speaker 10: Yeah, it's pretty dramatic, isn't it. I mean, we were

153
00:07:47,320 --> 00:07:49,720
Speaker 10: just done on morning news call this morning discussing how

154
00:07:49,880 --> 00:07:52,400
Speaker 10: likely and how quickly he was gonna this moment was

155
00:07:52,440 --> 00:07:57,000
Speaker 10: going to fall when my colleague in Paris piped up

156
00:07:57,000 --> 00:08:00,800
Speaker 10: to say, yeah, lacon Is just quit. So, I mean

157
00:08:00,840 --> 00:08:03,000
Speaker 10: it caught all of us what we've been expecting this

158
00:08:03,040 --> 00:08:07,640
Speaker 10: to happen, you know, certainly the next month or so,

159
00:08:07,760 --> 00:08:11,720
Speaker 10: perhaps this week, but most people have been surprised by

160
00:08:12,320 --> 00:08:14,480
Speaker 10: the pace of which it's moving. And yet it's pretty dramatic,

161
00:08:14,800 --> 00:08:17,600
Speaker 10: and it just speaks to the kind of deep, deep

162
00:08:17,840 --> 00:08:20,880
Speaker 10: underlying problems facing France as they try to try to

163
00:08:20,920 --> 00:08:23,280
Speaker 10: find out find a way to move forward.

164
00:08:23,880 --> 00:08:26,040
Speaker 4: Ben, we're hearing that Lacock new is expected to speak

165
00:08:26,040 --> 00:08:29,240
Speaker 4: from his office around ten forty five am Paris time.

166
00:08:29,560 --> 00:08:32,120
Speaker 4: What are the typical next steps in a moment like this.

167
00:08:34,559 --> 00:08:38,000
Speaker 10: So you've been through a question than Ben, The big yeah,

168
00:08:38,040 --> 00:08:39,839
Speaker 10: I mean, the big question is going to be will

169
00:08:39,880 --> 00:08:43,960
Speaker 10: this actually force Machran to dissolve parliament and call a

170
00:08:44,000 --> 00:08:48,200
Speaker 10: fresh election. That's what Marine Leapenn's national rally are calling

171
00:08:48,240 --> 00:08:54,760
Speaker 10: for this morning. That would seem to be the logical step.

172
00:08:54,880 --> 00:08:58,880
Speaker 10: But at the same time, a lot of people point out,

173
00:08:58,960 --> 00:09:03,280
Speaker 10: and particularly people in the Macron camp, that a fresh

174
00:09:03,280 --> 00:09:09,400
Speaker 10: election is not likely to resolve the fundamental problems that

175
00:09:09,480 --> 00:09:13,719
Speaker 10: the Parliament is divided between three main blocks which are

176
00:09:13,800 --> 00:09:17,920
Speaker 10: pretty kind of antagonistic to each other. So it's all

177
00:09:18,040 --> 00:09:21,319
Speaker 10: the line impossible to forge a consensus, certainly a majority

178
00:09:21,360 --> 00:09:23,920
Speaker 10: behind any sort of budget strategy.

179
00:09:25,200 --> 00:09:27,360
Speaker 2: Let's bring in our market support of Valerie title has

180
00:09:27,400 --> 00:09:29,520
Speaker 2: been across the moves that we've seen on markets on

181
00:09:29,559 --> 00:09:31,560
Speaker 2: the back of this, I mean Valerie. Even in the

182
00:09:31,600 --> 00:09:34,480
Speaker 2: early trades before we had this latest headline, we were

183
00:09:34,480 --> 00:09:38,280
Speaker 2: seeing pressure on French government borrowing costs. Just put in context,

184
00:09:38,360 --> 00:09:40,720
Speaker 2: the moves that we've seen this morning on bond markets.

185
00:09:40,920 --> 00:09:44,040
Speaker 8: Well, when it comes to the French Germans spread, which

186
00:09:44,120 --> 00:09:48,839
Speaker 8: is a real measure of worries over government's deficit sustainability,

187
00:09:48,840 --> 00:09:50,960
Speaker 8: should I say, for the French government, we are seeing

188
00:09:51,000 --> 00:09:54,240
Speaker 8: that spread widen six basis points in today's a trade.

189
00:09:54,559 --> 00:09:57,640
Speaker 8: It's very interesting though we are seeing yields rise in France,

190
00:09:57,720 --> 00:09:59,679
Speaker 8: but it does look like there is a safety bid

191
00:09:59,679 --> 00:10:02,839
Speaker 8: into German buns and there is a safety bid into treasuries.

192
00:10:02,880 --> 00:10:05,880
Speaker 8: Now I think this is key because what the market

193
00:10:05,920 --> 00:10:09,480
Speaker 8: is really worried about is these fiscal dominance moments happening

194
00:10:09,559 --> 00:10:12,880
Speaker 8: not one by one, but all at once. Remember we

195
00:10:12,960 --> 00:10:16,840
Speaker 8: had one overnight in Japan, the surprise election there with

196
00:10:16,960 --> 00:10:20,240
Speaker 8: the big spender likely to become the new prime minister.

197
00:10:20,320 --> 00:10:22,960
Speaker 8: So we already had fixed income trading week before this

198
00:10:23,000 --> 00:10:26,360
Speaker 8: announcement that the PM was going to resign in France.

199
00:10:26,480 --> 00:10:29,880
Speaker 8: And at least for now, it does feel like bond

200
00:10:29,920 --> 00:10:33,000
Speaker 8: markets have reached some sort of stability because we're seeing

201
00:10:33,000 --> 00:10:35,560
Speaker 8: that bid into treasuries, so that's nice to see at

202
00:10:35,640 --> 00:10:37,839
Speaker 8: least when it comes to the market calming down, though,

203
00:10:37,880 --> 00:10:40,480
Speaker 8: we are seeing sustained weakness in the euro it is

204
00:10:40,520 --> 00:10:43,640
Speaker 8: still sliding down over seven tens of one percent, and

205
00:10:43,800 --> 00:10:46,079
Speaker 8: the equity market at least when it comes to France

206
00:10:46,160 --> 00:10:48,280
Speaker 8: also on a back foot. The CAC forty down near

207
00:10:48,320 --> 00:10:51,320
Speaker 8: two percent. Weakness in French banks which is not a

208
00:10:51,360 --> 00:10:53,240
Speaker 8: decent thing to see, but that could all be tied

209
00:10:53,679 --> 00:10:54,920
Speaker 8: to the weakness.

210
00:10:54,480 --> 00:10:55,319
Speaker 5: In French bonds.

211
00:10:55,360 --> 00:10:57,280
Speaker 8: Remember, a lot of these French banks will be sitting

212
00:10:57,600 --> 00:11:01,559
Speaker 8: heavily on French debt, so the ability of French oaits

213
00:11:01,600 --> 00:11:04,240
Speaker 8: and matters a lot for these banks profitability.

214
00:11:04,320 --> 00:11:05,959
Speaker 4: Yeah, we're looking at the likes of Bay and pay

215
00:11:06,000 --> 00:11:08,440
Speaker 4: Power about down more than five percent, CLDIACA call four

216
00:11:08,440 --> 00:11:11,199
Speaker 4: point eight percent, SoC GEN six point two percent lower.

217
00:11:11,480 --> 00:11:13,560
Speaker 4: Off the back of this news and just in terms

218
00:11:13,559 --> 00:11:16,000
Speaker 4: of the politics, we've had Jordan Bardella of the National

219
00:11:16,080 --> 00:11:20,319
Speaker 4: Rally calling for President Imaginel Macon to dissolve the National Assembly.

220
00:11:20,400 --> 00:11:22,120
Speaker 4: But look, this is very much in line with their

221
00:11:22,200 --> 00:11:26,080
Speaker 4: position for months now. Not much change there. Well, I

222
00:11:26,120 --> 00:11:28,480
Speaker 4: wonder how you would be thinking about the markets over

223
00:11:28,480 --> 00:11:31,679
Speaker 4: the next few weeks when we are discussing whether Macon's

224
00:11:31,679 --> 00:11:32,800
Speaker 4: position is intenable.

225
00:11:33,040 --> 00:11:35,920
Speaker 8: Look, I think for the markets you need a stable government.

226
00:11:36,000 --> 00:11:38,160
Speaker 8: That's step one, and then you need a government that

227
00:11:38,280 --> 00:11:39,520
Speaker 8: is going to stop spending.

228
00:11:39,559 --> 00:11:40,199
Speaker 5: That's step two.

229
00:11:40,400 --> 00:11:44,520
Speaker 8: Both of those steps have been very hard for France

230
00:11:44,720 --> 00:11:47,719
Speaker 8: in last few weeks, if not the last year, year

231
00:11:47,720 --> 00:11:50,560
Speaker 8: and a half. Now, when it comes to perhaps the

232
00:11:50,600 --> 00:11:53,640
Speaker 8: new general elections, I think that would be maybe seen

233
00:11:53,920 --> 00:11:56,160
Speaker 8: as a positive for the market because you have to

234
00:11:56,200 --> 00:11:58,280
Speaker 8: think that there needs to be something shaken up in

235
00:11:58,320 --> 00:12:01,560
Speaker 8: French politics in order to get a strong government. The

236
00:12:01,559 --> 00:12:04,000
Speaker 8: market wants to see a strong government. The bond market

237
00:12:04,120 --> 00:12:06,600
Speaker 8: wants to see a strong government. We haven't had one

238
00:12:06,720 --> 00:12:08,720
Speaker 8: under Macron, but I think the market will start to

239
00:12:08,720 --> 00:12:11,360
Speaker 8: think could we have one under a different leader that

240
00:12:11,360 --> 00:12:12,640
Speaker 8: could turn the tide around.

241
00:12:12,679 --> 00:12:13,760
Speaker 3: Now that is a big.

242
00:12:13,679 --> 00:12:17,160
Speaker 8: Question, Lizzie, because we also know that even a government

243
00:12:17,320 --> 00:12:19,679
Speaker 8: has a massive majority like here in the UK, has

244
00:12:19,720 --> 00:12:22,840
Speaker 8: had issues raining and spending. So it really starts to

245
00:12:22,840 --> 00:12:26,240
Speaker 8: beg the question whether the market does really need to

246
00:12:26,280 --> 00:12:29,400
Speaker 8: blow up in order to get these politicians on the

247
00:12:29,480 --> 00:12:31,760
Speaker 8: right side of the trade here to calm the bomb

248
00:12:31,760 --> 00:12:34,559
Speaker 8: market down. Now, it's not just the people in power,

249
00:12:34,600 --> 00:12:37,960
Speaker 8: but it's also the French people. There's a lot to

250
00:12:38,040 --> 00:12:41,839
Speaker 8: be absorbed, at least in terms of changing their direction. Remember,

251
00:12:41,840 --> 00:12:44,719
Speaker 8: there's a lot of pushback on these kind of pension reforms.

252
00:12:44,800 --> 00:12:47,000
Speaker 8: Those are the things the bond market wants, but it's

253
00:12:47,120 --> 00:12:49,840
Speaker 8: going to be very difficult to get that on the table.

254
00:12:51,720 --> 00:12:52,360
Speaker 5: Stay with us.

255
00:12:52,480 --> 00:12:56,800
Speaker 2: More from Bloomberg Daybreak Europe coming up after this Ben

256
00:12:56,880 --> 00:12:59,720
Speaker 2: How likely does that election to the National Assembly?

257
00:12:59,760 --> 00:13:00,280
Speaker 5: See?

258
00:13:00,320 --> 00:13:02,719
Speaker 2: Now, this is an option that Emmanuel Macron didn't have

259
00:13:02,840 --> 00:13:05,560
Speaker 2: last December when Michelle Barney felt he could have done

260
00:13:05,559 --> 00:13:09,840
Speaker 2: it three weeks ago when Sebastian Leacaranu was accepted as

261
00:13:09,880 --> 00:13:13,480
Speaker 2: the new Prime minister. Is that the logical path now

262
00:13:13,520 --> 00:13:14,480
Speaker 2: for the French president?

263
00:13:16,960 --> 00:13:20,640
Speaker 10: I think probably not, to be honest, I think that

264
00:13:20,840 --> 00:13:23,320
Speaker 10: you know, it's more likely to make things worse for

265
00:13:23,360 --> 00:13:25,840
Speaker 10: Macron than to make things better, And so if you

266
00:13:25,960 --> 00:13:29,439
Speaker 10: kind of like analyze the merits of that option on

267
00:13:29,920 --> 00:13:35,000
Speaker 10: its own terms, it seems unlikely. That said, all of

268
00:13:35,000 --> 00:13:38,200
Speaker 10: the other options look pretty grim as well. And I

269
00:13:38,240 --> 00:13:42,200
Speaker 10: think that the fundamental issue here is that it's Macron

270
00:13:42,440 --> 00:13:47,680
Speaker 10: who is the problem. And until twenty twenty seven when

271
00:13:47,720 --> 00:13:51,040
Speaker 10: his term his term ends and will have a new

272
00:13:51,040 --> 00:13:55,239
Speaker 10: presidential election which will which will afford a real fundamental

273
00:13:55,240 --> 00:13:57,320
Speaker 10: reset for French politics, I think we're going to be

274
00:13:57,360 --> 00:14:01,040
Speaker 10: going round and round in this impact. I mean, obviously,

275
00:14:01,360 --> 00:14:04,679
Speaker 10: another question there is whether Macron himself might quit and

276
00:14:04,720 --> 00:14:12,760
Speaker 10: trigger a an early presidential election. That is something that

277
00:14:12,840 --> 00:14:16,120
Speaker 10: he has insisted he will not do, but it does

278
00:14:16,160 --> 00:14:19,320
Speaker 10: seem to be the only thing that could really get

279
00:14:19,360 --> 00:14:22,320
Speaker 10: France unblocked in the next eighteen months.

280
00:14:22,520 --> 00:14:24,680
Speaker 4: I suppose a question to both of you is, wouldn't

281
00:14:24,680 --> 00:14:26,880
Speaker 4: Marine Lapenn be worse for the market?

282
00:14:27,040 --> 00:14:27,280
Speaker 10: Ben?

283
00:14:27,320 --> 00:14:29,840
Speaker 3: Are we closer to seeing the far right in the Alise.

284
00:14:30,080 --> 00:14:35,160
Speaker 10: Well getting closer? I think that for the twenty twenty

285
00:14:35,200 --> 00:14:39,200
Speaker 10: seven election, if that's when it comes, the scenario is

286
00:14:39,280 --> 00:14:43,160
Speaker 10: going to be La Penn or if she's allowed to run,

287
00:14:43,240 --> 00:14:46,200
Speaker 10: Lapenn if not, Bardella will be in the final two

288
00:14:46,200 --> 00:14:49,680
Speaker 10: for the runoff. The question of who will be facing

289
00:14:49,720 --> 00:14:56,520
Speaker 10: her is wide open. And then the issue will be

290
00:14:56,680 --> 00:15:01,240
Speaker 10: whether this Republican Front, which has conser distantly prevented La

291
00:15:01,280 --> 00:15:05,600
Speaker 10: Penn getting into power in the last two elections against Macron,

292
00:15:06,040 --> 00:15:09,080
Speaker 10: whether that holds. We saw it weaker in twenty twenty

293
00:15:09,160 --> 00:15:13,240
Speaker 10: two versus twenty seventeen. She is stronger now than she

294
00:15:13,440 --> 00:15:17,560
Speaker 10: was then, the establishment forces are weaker, She's getting closer,

295
00:15:19,000 --> 00:15:22,960
Speaker 10: and twenty twenty seven would for sure be her best chance.

296
00:15:22,800 --> 00:15:25,720
Speaker 2: Yet, Valerie, Just back to you on the market's perspective.

297
00:15:25,720 --> 00:15:28,400
Speaker 2: From here, we're in the position of uncertainty now as

298
00:15:28,400 --> 00:15:32,720
Speaker 2: to what happens next. But how long will markets give

299
00:15:33,640 --> 00:15:35,880
Speaker 2: French President of Vanuel Macron to try to come up

300
00:15:35,880 --> 00:15:37,960
Speaker 2: with some sort of solution of this before we see

301
00:15:38,160 --> 00:15:40,880
Speaker 2: things get even worse in terms of borrowing costs.

302
00:15:41,000 --> 00:15:43,000
Speaker 8: Look, Stephen, that's a good question. I mean, it could

303
00:15:43,000 --> 00:15:46,760
Speaker 8: really all be down to the global markets, frankly, and

304
00:15:46,840 --> 00:15:49,560
Speaker 8: we've seen quite a decent rally in the treasury market

305
00:15:49,680 --> 00:15:52,040
Speaker 8: in the last six weeks, last month and a half,

306
00:15:52,040 --> 00:15:55,160
Speaker 8: and that has taken some pressure off of global bonds.

307
00:15:55,160 --> 00:15:58,560
Speaker 8: But that could be something that could easily be turned around.

308
00:15:58,640 --> 00:16:01,600
Speaker 8: If you have perhaps sell off in the treasury market,

309
00:16:01,640 --> 00:16:04,400
Speaker 8: to sell off in the JGB market all happening at

310
00:16:04,440 --> 00:16:07,160
Speaker 8: the same time this instability is happening in France, it

311
00:16:07,200 --> 00:16:10,560
Speaker 8: could really start to pressure the government sooner rather than later.

312
00:16:10,640 --> 00:16:13,200
Speaker 8: But on the flip side, Stephen, let's say you have

313
00:16:13,440 --> 00:16:16,760
Speaker 8: the US economy slowing down, you see a decent treasury rally,

314
00:16:16,840 --> 00:16:19,120
Speaker 8: especially when it comes to those long end yields, that

315
00:16:19,200 --> 00:16:22,600
Speaker 8: could really be something that could help the French government

316
00:16:22,640 --> 00:16:24,240
Speaker 8: have a bit more time on their hands when it

317
00:16:24,280 --> 00:16:25,600
Speaker 8: comes to reforming the government.

318
00:16:27,640 --> 00:16:30,360
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

319
00:16:30,440 --> 00:16:33,480
Speaker 2: stories making news from London to Wall Street and beyond.

320
00:16:33,800 --> 00:16:37,800
Speaker 9: Look for us on your podcast feed every morning, on Apple, Spotify,

321
00:16:37,880 --> 00:16:39,920
Speaker 9: and anywhere else you get your podcasts.

322
00:16:40,000 --> 00:16:43,040
Speaker 2: You can also listen live each morning on London Dab Radio,

323
00:16:43,080 --> 00:16:45,560
Speaker 2: the Bloomberg Business app, and Bloomberg dot Com.

324
00:16:45,800 --> 00:16:48,600
Speaker 9: Our flagship New York station, is also available on your

325
00:16:48,600 --> 00:16:53,320
Speaker 9: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

326
00:16:53,560 --> 00:16:54,960
Speaker 9: I'm Caroline Hepka.

327
00:16:54,720 --> 00:16:57,160
Speaker 2: And I'm Stephen Carroll. Join us again tomorrow morning for

328
00:16:57,280 --> 00:16:59,680
Speaker 2: all the news you need to start your day, right

329
00:16:59,680 --> 00:17:01,320
Speaker 2: here on Bloomberg day Break Europe.

330
00:17:03,040 --> 00:17:09,080
Speaker 1: M mm hmm