WEBVTT - Blanket Tariff Hike Plan, Dimon: EU Is Losing, Santander’s Rising Star

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>This is the Blueberg Day BAQ podcast. Good morning, It's Friday,

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<v Speaker 2>the eleventh of July. I'm Caroline Hebket in London.

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<v Speaker 1>And I'm Stephen Carolin Brussels. Coming up today. US President

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<v Speaker 1>Donald Trump raises the prospect of higher global tariffs after

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<v Speaker 1>threatening Canada with a thirty five percent rate on some goods.

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<v Speaker 2>JP Morgan's Jamie Darman tells European leaders they're losing to

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<v Speaker 2>the US and China as he warns of market complacency

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<v Speaker 2>over tariffs.

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<v Speaker 1>Plus the inside story of the former Morgan Stanley banker

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<v Speaker 1>shaking up Santander's wealth business and why not Everyone is Happy.

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<v Speaker 3>Let's start with a roundup of our top stories.

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<v Speaker 1>US President Donald Trump now says he's eyeing blanket tariffs

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<v Speaker 1>of fifteen to twenty percent on most trading partners. The

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<v Speaker 1>comments in a phone interview with NBC News would mark

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<v Speaker 1>a significant increase in the current US global baseline of

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<v Speaker 1>ten percent. The President also reportedly dismissed concerns that further

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<v Speaker 1>tariffs could negatively affect stocks or inflation, pointing to recent

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<v Speaker 1>rises in the US equity market. Stefan Hoffer, Asia, chief

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<v Speaker 1>investment stratist at LGT Bank says in the long term,

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<v Speaker 1>the impact of tariffs is far harder to assess.

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<v Speaker 4>Frankly, we are in uncharted territory. We've never seen anything

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<v Speaker 4>like this. There is no playbook for this. We've gone

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<v Speaker 4>from an effective import tariff pre President Trump's second second

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<v Speaker 4>presidency of just below two percent to the Liberation Day

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<v Speaker 4>twenty seven percent down to you know, it's a moving

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<v Speaker 4>target and these kind of distortions are very, very difficult

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<v Speaker 4>to map out onto a model where we land finally.

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<v Speaker 1>Stefan Hoffer speaking there as US stock futures have turned

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<v Speaker 1>weaker and the greenback has climbed against major piers on

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<v Speaker 1>the Latest News Well.

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<v Speaker 2>Separately, in a post on truth Social Trump said that

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<v Speaker 2>the US will impose a tariff of thirty five percent

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<v Speaker 2>on Canadian products starting on the first of August. Now

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<v Speaker 2>that will be ten percent higher than the current rate

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<v Speaker 2>applied to all goods not covered under the existing US

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<v Speaker 2>Mexico Canada free Trade Agreement. Bloomberg's Jill Desis says the

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<v Speaker 2>White House is so far signaling that the free trade

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<v Speaker 2>agreement holds this.

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<v Speaker 5>US and CA that the trade agreement between the US

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<v Speaker 5>and Canada and Mexico that those goods aren't included in

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<v Speaker 5>this thirty five percent tariff threat. I think that's really

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<v Speaker 5>really important because what that ultimately tells us then is

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<v Speaker 5>that what Trump's ultimately doing. It appears, and again I

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<v Speaker 5>have to caution this is a very quickly evolving story,

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<v Speaker 5>but what that does mean potentially is that this is

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<v Speaker 5>essentially a ten percent tariff increase over a group of

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<v Speaker 5>goods that were covered already with a twenty five percent tariffs.

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<v Speaker 2>Bloombergs, Gilds is there in response to the US person's threat,

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<v Speaker 2>Canada's Prime Minister, Martin Karney so that he would continue

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<v Speaker 2>to defend workers and businesses. A large proportion of Canada's

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<v Speaker 2>exports to the US do fall under the rules of

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<v Speaker 2>the USMCA, so would be unaffected by the new rate.

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<v Speaker 1>I mean, while Jamie Diamond is sounding a warning about

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<v Speaker 1>the muted market reaction to tariffs. Speaking at an event

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<v Speaker 1>in Dublin hosted by Ireland's Foreign Ministry, the JP Morgan

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<v Speaker 1>CEO said, unfortunately, I think there is complacency. The Wall

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<v Speaker 1>Street stalwart also weighed in and what he believes is

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<v Speaker 1>a major European competitiveness problem, as Bimbrooks Crispets reports.

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<v Speaker 6>You're losing. That's the stark assessment of Jamie Diamond, who

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<v Speaker 6>says the EU has a huge problem at the moment

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<v Speaker 6>when it comes to competitiveness, citing the region's sluggish growth.

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<v Speaker 6>The JP Morgan boss pointed out that Europe's economic weight

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<v Speaker 6>has declined significantly, falling from ninety percent of USGDP to

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<v Speaker 6>just over sixty five percent in the past ten to

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<v Speaker 6>fifteen years. He says the best way to reverse that

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<v Speaker 6>decline is to build an internal market that functions more

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<v Speaker 6>effectively across all industries. Diamonds comments come as the EU

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<v Speaker 6>seeks to conclude an intram trade deal with the US

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<v Speaker 6>that could allow the block to lock in a ten

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<v Speaker 6>percent tariff rate beyond the August first deadline as they

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<v Speaker 6>negotiate a permanent agreement in London Crispit Bloomberg Radio.

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<v Speaker 2>French Prime Minister Francois Beroux has called on the European

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<v Speaker 2>Central Bank to do more to support the economy as

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<v Speaker 2>his government struggles to contain a budget deficit and slowing

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<v Speaker 2>growth in France. In an interview with LC Television, Beayrou

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<v Speaker 2>said he dreams of the ECB, quote feeling it has

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<v Speaker 2>a role to play for growth in the EU, in

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<v Speaker 2>other words, to support activity rather than putting brakes on it.

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<v Speaker 2>He added that rate cuts were a possible option. His

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<v Speaker 2>comments represent a rare critique of the Central Bank, which

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<v Speaker 2>has already delivered eight cuts in a year to bring

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<v Speaker 2>boring costs to two percent. During a contrast between the

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<v Speaker 2>ECB and the Federal Reserve, Beairu said that France faces

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<v Speaker 2>similar challenges to the US, but without the strong dollar

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<v Speaker 2>that gives the FED the option to create money and

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<v Speaker 2>fuel optimism in the economy.

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<v Speaker 1>UK's Prime Minister Kiir Starmer says he's agreed to what

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<v Speaker 1>he calls a groundbreaking deal to return small boat migrants

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<v Speaker 1>to France. The British leaders agreed to a pilot's scheme

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<v Speaker 1>with the French President Emmanuel Macrart Downing Street. He says

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<v Speaker 1>the agreement will mean for every person sent back, the

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<v Speaker 1>UK will accept an asylum seeker who hasn't attempted an

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<v Speaker 1>illegal crossing.

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<v Speaker 7>This will show others trying to make the same journey

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<v Speaker 7>that it will be in vain, and the jobs they've

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<v Speaker 7>been promised in the UK will no longer exist because

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<v Speaker 7>of the nationwide crackdown we're delivering on illegal working.

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<v Speaker 1>Starmer has been politically damaged by record numbers of people

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<v Speaker 1>crossing the English Channel in small boats. Roughly twenty one

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<v Speaker 1>thousand illegal migrants have made the journey so far this year.

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<v Speaker 2>President Donald Trump says that he plans to make a

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<v Speaker 2>major state went on Russia on Monday, as the US

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<v Speaker 2>prepares to send more American weapons to Ukraine paid for

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<v Speaker 2>by NATO allies. In a telephone interview with NBC News,

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<v Speaker 2>Trump said that he also expects the Senate to pass

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<v Speaker 2>a quote biting sanctions bill on Russia after he criticized

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<v Speaker 2>Vladimir Putin for his continued attacks on Ukraine. Russia has

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<v Speaker 2>been pounding Kiev and other Ukrainian cities with record numbers

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<v Speaker 2>of drones and missiles. Ukrainian President Vladimir Zelinski was optimistic

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<v Speaker 2>though about more aid, at a meeting of US and

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<v Speaker 2>European allies in Rome.

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<v Speaker 8>We must stop Russian droms and missiles, and these means

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<v Speaker 8>more air defense supplies and more investments in interceptor drowns,

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<v Speaker 8>air defense systems, and of course fissans and I urged

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<v Speaker 8>all our partners, increase your investments when Russia increases its attacks.

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<v Speaker 8>We cannot have a shortage of funding for drum production.

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<v Speaker 2>And Zelinsky speaking there at the Ukraine Recovery Conference in Rome,

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<v Speaker 2>where allies announced more than ten billion euros in additional funding,

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<v Speaker 2>the Ukrainian leader said that he since had a positive

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<v Speaker 2>dialogue with President Trump over the delivery of Patriot air

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<v Speaker 2>defense batteries with.

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<v Speaker 1>Those are your top stories on the markets. The Bloomberg

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<v Speaker 1>Dollar Spot Index two tenths stronger this morning, so the

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<v Speaker 1>Euro is weaker at one sixteen seventy seven, the pound

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<v Speaker 1>at one thirty five fifty seven. The Canadian dollar is

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<v Speaker 1>three tenths weaker this morning at one thirty six ninety seven.

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<v Speaker 1>On equity markets, after the record finished the S and

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<v Speaker 1>P five hundred yesterday, features are two tenths lower for

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<v Speaker 1>SMP Emini's European stop futures down two tenths of one

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<v Speaker 1>percent this morning as well.

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<v Speaker 2>In a moment, more on how markets are reading the

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<v Speaker 2>latest moves by Donald Trump on trade, plus the rising

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<v Speaker 2>style banker who is shaking things up at a traditionally

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<v Speaker 2>stayed unit of Spain's Santander. But before we get to

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<v Speaker 2>that a word on our story that we've been reading

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<v Speaker 2>about this morning. The UK is set to end issuing

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<v Speaker 2>of paper share certificates.

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<v Speaker 1>Yeah, this is a story for our colleagues Joe Mays

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<v Speaker 1>and Tom Reese saying the Chancellor is going to announce

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<v Speaker 1>this in the her Mansion House speech next week. It's

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<v Speaker 1>something that the industry has long sought. It's been an

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<v Speaker 1>end of an era though. I mean, this has been

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<v Speaker 1>a tradition that's been around for four hundred years. You

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<v Speaker 1>get a paper certificate when you have a share, and

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<v Speaker 1>there's a paper registry to log all of these as well.

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<v Speaker 1>And essentially this is part of a digital shift happens

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<v Speaker 1>in other parts of the world. It's enforced in the

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<v Speaker 1>European Union since the start of this year for existing

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<v Speaker 1>securities and going back to try to tage three for

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<v Speaker 1>new shares being issued as well. It's been recommended for

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<v Speaker 1>a long time. It's going to, according to the Chancellor,

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<v Speaker 1>going to reduce the costs for business and sports. We're

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<v Speaker 1>going to have to hold these paper certificates.

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<v Speaker 3>No, I mean, look, I get the argument right.

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<v Speaker 2>It would be much but much better to digitize if

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<v Speaker 2>it's quicker and cheaper. Although having a share certificate, you know,

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<v Speaker 2>if you want to get into the weeds of it,

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<v Speaker 2>it does give you a direct relationship with the company,

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<v Speaker 2>right they have to write to you, and then you

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<v Speaker 2>get to go to the AGM, you get to vote

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<v Speaker 2>and so on. So you know, there is obviously that

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<v Speaker 2>bizire of people that if you go, if you digitize it,

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<v Speaker 2>that you keep the same rights if you're a shareholder.

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<v Speaker 1>It also makes less exciting if you move into a

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<v Speaker 1>new house and you're clearing out an attic and you

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<v Speaker 1>can find a box with things in it that doesn't

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<v Speaker 1>you know that's not going to happen anymore.

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<v Speaker 2>Yeah, exactly listen that you know, maybe that Sharon Apple,

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<v Speaker 2>that's somebody buried.

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<v Speaker 3>Yeah, it would be quite useful, now, wouldn't it.

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<v Speaker 1>Thought exactly. Well, let's get back to the market's conversation

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<v Speaker 1>around how investors are thinking about the latest set of

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<v Speaker 1>trade headlines. So Donald Trump ramping up his rhetoric when

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<v Speaker 1>it comes to Canada, threatening those higher tariffs and saying

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<v Speaker 1>the EU may get a tariff letter as soon as today.

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<v Speaker 1>On Markets Life Strash as Mark Cranfield is with us

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<v Speaker 1>for more. Mark, great to talk to you. Can you

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<v Speaker 1>just explain to us how markets reacted to those Canada headlines.

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<v Speaker 1>So we had the threat of a higher tariff, but

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<v Speaker 1>then some mitigation in maintaining the exceptions under the existing

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<v Speaker 1>trade deal.

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<v Speaker 9>Yeah, yet another whipplush day, especially the foreign exchange market.

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<v Speaker 9>You look at the Canadian do that's probably a good

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<v Speaker 9>example of how people have been reacting to it. We

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<v Speaker 9>saw the cadiing dollar weeken dramatically at first, and then

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<v Speaker 9>gradually clawback some of its strength as the bit more

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<v Speaker 9>information came through. It's still weaker on the day, but

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<v Speaker 9>nowhere near as bad as it was first thing. This morning,

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<v Speaker 9>the dollar is slightly firmer overall. But there is one

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<v Speaker 9>very clear interesting theme emerging in the foreign exchange market,

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<v Speaker 9>and that's the divergence between the Chinese yuan and the

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<v Speaker 9>Japanese yen. They're going in opposite directions, and that just

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<v Speaker 9>shows that traders are looking beyond tariffs. There's also local

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<v Speaker 9>themes that play as well. You've got the Chinese central

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<v Speaker 9>bank supporting its currency, wants to have a strong, stable currency,

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<v Speaker 9>and then you've got local issues in Japan. They're coming

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<v Speaker 9>up towards upper house elections, which look as though it's

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<v Speaker 9>going to be a very close call. No one's too

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<v Speaker 9>sure how it's going to go. And then Japan struggle

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<v Speaker 9>to try and get a trade deal with the United States,

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<v Speaker 9>which doesn't seem to be moving forward very well, and

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<v Speaker 9>the yen is suffering because of that. So even within

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<v Speaker 9>all the choppy movements that we've seen today, we are

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<v Speaker 9>getting a bit of a theme appearing in the foreign

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<v Speaker 9>exchange market where the winners are graining a bit more traction,

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<v Speaker 9>the losers are just losing even more ground.

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<v Speaker 2>What do you think it tells us about how markets

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<v Speaker 2>are treating all of these trade headlines.

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<v Speaker 3>Is it fatigue frustration?

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<v Speaker 9>There's certainly a bit of headline fatigue on that the

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<v Speaker 9>fact that we often traders are used to hearing that

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<v Speaker 9>trade letters are going out or they're about to trawis

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<v Speaker 9>about to be imposed, but then there's a negotiation period,

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<v Speaker 9>so it doesn't actually hit straight away. So people are

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<v Speaker 9>getting used to the fact that they shouldn't read too

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<v Speaker 9>much into it, they shouldn't price it fully into the market,

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<v Speaker 9>and yet they need to some extent to be aware

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<v Speaker 9>of what's happening in there, and yet it's happening so frequently.

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<v Speaker 9>Of course, people are wondering whether or not they should

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<v Speaker 9>even trade it at all, particularly when you see things

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<v Speaker 9>like the US stock market continuing to grind higher, making

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<v Speaker 9>new records, Bitcoin making new records, and some parts of

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<v Speaker 9>the markets seemingly unaffected by what charists are doing at all.

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<v Speaker 9>So there's no uniformity anymore. If they go back to

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<v Speaker 9>say Liberation Day, when the whole Swaver things were first announced,

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<v Speaker 9>it was just negative across financial markets. The conditions have

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<v Speaker 9>changed quite a bit now. People are being more discerning

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<v Speaker 9>between different aspects of that, and that's something that's beginning

0:12:23.240 --> 0:12:24.400
<v Speaker 9>to play out a bit more.

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<v Speaker 1>Okay, Mark Crinfield, our market's life strastis thank you very

0:12:27.800 --> 0:12:28.840
<v Speaker 1>much for joining us.

0:12:30.160 --> 0:12:33.400
<v Speaker 2>To Spain now, where a former Morgan Stanley banker is

0:12:33.440 --> 0:12:38.040
<v Speaker 2>shaking up Santander's unique catering for the bank's richest customers

0:12:38.080 --> 0:12:40.920
<v Speaker 2>and not everyone is happy about it. Our Spanish equities

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<v Speaker 2>reporter Macarena Munuos Monjano joins us now for more on

0:12:45.679 --> 0:12:48.440
<v Speaker 2>this and welcome to the program. Macarena tell us about

0:12:48.760 --> 0:12:53.199
<v Speaker 2>Haavier Garcia Carranza, who he is and how he's changing

0:12:53.280 --> 0:12:56.800
<v Speaker 2>things to this part of Santander that were seen as

0:12:56.840 --> 0:12:58.960
<v Speaker 2>really quite stayed before.

0:13:00.120 --> 0:13:00.280
<v Speaker 10>Hi.

0:13:00.320 --> 0:13:00.800
<v Speaker 8>Good morning.

0:13:00.880 --> 0:13:03.360
<v Speaker 10>Yes. So the bank last year point at Ergatia Carranza

0:13:03.400 --> 0:13:06.280
<v Speaker 10>as the global head of its wealth unit, which includes

0:13:06.360 --> 0:13:10.080
<v Speaker 10>private banking, asset management and the insurance business. And he

0:13:10.120 --> 0:13:13.600
<v Speaker 10>has made some big changes at the unit. He used

0:13:13.640 --> 0:13:16.640
<v Speaker 10>to be an investment banker at Morgan Stanley and joined

0:13:17.240 --> 0:13:20.560
<v Speaker 10>the Spanish bank in twenty sixteen. So in his new

0:13:20.640 --> 0:13:23.920
<v Speaker 10>role he has changed a number of managers. He's cutting costs,

0:13:24.200 --> 0:13:28.720
<v Speaker 10>he's boosting some new businesses such as independent advisement in

0:13:28.800 --> 0:13:32.200
<v Speaker 10>private banking or the life and pension business in insurance.

0:13:32.600 --> 0:13:35.600
<v Speaker 10>So this unit is a relatively small one. It represents

0:13:35.640 --> 0:13:38.240
<v Speaker 10>like thirteen percent of the bank's profit, but it's a

0:13:38.320 --> 0:13:41.560
<v Speaker 10>very profitable one with a seventy percent return on tange

0:13:41.640 --> 0:13:44.760
<v Speaker 10>global equity. And the aim is that it keeps growing.

0:13:45.160 --> 0:13:47.920
<v Speaker 10>We hear these years should grow at a double digit.

0:13:49.040 --> 0:13:51.520
<v Speaker 1>Okay, now you've put apportioned that some bankers are nervous

0:13:51.520 --> 0:13:53.800
<v Speaker 1>about the changes that he's making in that unit.

0:13:53.920 --> 0:13:58.240
<v Speaker 10>Why well, So as part of the changes there are

0:13:58.280 --> 0:14:01.880
<v Speaker 10>some job cuts. We year, it's about ten percent of

0:14:01.920 --> 0:14:05.200
<v Speaker 10>the stuff in the unit. But also the bank is

0:14:05.280 --> 0:14:08.520
<v Speaker 10>hiring some top talent from other lenders, so they brought

0:14:09.280 --> 0:14:12.400
<v Speaker 10>a private banker from Julius bar They are also hiring

0:14:12.400 --> 0:14:15.520
<v Speaker 10>people from Caisher Bank, so it's kind of a mix.

0:14:15.559 --> 0:14:19.640
<v Speaker 10>But the net number is a ten percent reduction. So

0:14:19.680 --> 0:14:23.760
<v Speaker 10>that's why what it's causing the nervousness.

0:14:23.440 --> 0:14:24.240
<v Speaker 3>Okay, nervousness.

0:14:24.560 --> 0:14:28.200
<v Speaker 2>How do the changes then fit into the broader future

0:14:28.240 --> 0:14:30.280
<v Speaker 2>strategy in the picture for Santander.

0:14:31.520 --> 0:14:33.840
<v Speaker 10>Well, so this is a key area for the bank

0:14:34.000 --> 0:14:37.800
<v Speaker 10>as it looks to boost fees now that interest rates

0:14:37.800 --> 0:14:41.160
<v Speaker 10>are lower so and that is hurting the lending revenue.

0:14:41.200 --> 0:14:44.040
<v Speaker 10>So this is how so growing in fees is key

0:14:44.400 --> 0:14:48.240
<v Speaker 10>and this business of private banking, asset management and insurance

0:14:48.400 --> 0:14:51.080
<v Speaker 10>is a great fee generator. So this is a key

0:14:51.080 --> 0:14:51.920
<v Speaker 10>area for the bank.

0:14:52.800 --> 0:14:56.120
<v Speaker 1>Okay, Makarana, thank you very much for joining us. Makarnemnos Montano.

0:14:56.240 --> 0:14:59.400
<v Speaker 1>They're joining us from Madrid with the latest on that story,

0:14:59.400 --> 0:15:02.080
<v Speaker 1>and you can read the full story on Bloomberg dot

0:15:02.160 --> 0:15:05.120
<v Speaker 1>com and on the terminal as well of Macarenas reporting

0:15:05.320 --> 0:15:09.960
<v Speaker 1>rising star at Santander shakes up the bank's stayed wealth business.

0:15:10.000 --> 0:15:11.920
<v Speaker 1>A really interesting moment to be looking, of course at

0:15:11.920 --> 0:15:15.080
<v Speaker 1>how Santander is moving things around given the upheaval that

0:15:15.080 --> 0:15:17.840
<v Speaker 1>we've seen in so many parts of the European banking

0:15:17.880 --> 0:15:21.520
<v Speaker 1>sector of various talk about mergers and acquisitions as well.

0:15:21.560 --> 0:15:24.400
<v Speaker 1>In fact, even the commerce bank build for uniw Credit.

0:15:24.480 --> 0:15:27.360
<v Speaker 1>I note this morning that there's some commentary out of

0:15:27.440 --> 0:15:29.960
<v Speaker 1>one of the German ministers as well talking about that deal,

0:15:30.000 --> 0:15:33.840
<v Speaker 1>which we know has been quite controversial about. You know

0:15:33.920 --> 0:15:35.960
<v Speaker 1>that the German government has been kind of watching very

0:15:35.960 --> 0:15:38.440
<v Speaker 1>closely as as UNI Credit has been ramping up at

0:15:38.440 --> 0:15:40.000
<v Speaker 1>stake in commerce.

0:15:39.560 --> 0:15:45.560
<v Speaker 2>Bank, cross border deals in finance and banking. Controversial, yes,

0:15:45.800 --> 0:15:47.720
<v Speaker 2>still in Europe, that is the case.

0:15:48.560 --> 0:15:48.720
<v Speaker 10>You know.

0:15:48.760 --> 0:15:52.000
<v Speaker 2>It was a really interesting piece also because Girlcia Kranz

0:15:52.040 --> 0:15:54.520
<v Speaker 2>of course was here in London, based in London for

0:15:54.640 --> 0:15:57.320
<v Speaker 2>Morgus Stanley before going to Santander and shaking things up.

0:15:59.240 --> 0:16:01.840
<v Speaker 1>This is Bloomberg day Break Europe, your morning brief on

0:16:01.880 --> 0:16:05.080
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0:16:30.280 --> 0:16:36.880
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