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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: DAYBAQ podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Tuesday, the fourteenth of May in London.

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Speaker 1: I'm Caroline Hipki.

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Speaker 2: And I'm Stephen Carroll. Coming up today, French President Emmanuel

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Speaker 2: Macron tells us he's open to a major French bank

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Speaker 2: being taken over by an EU rival to spur deeper integration.

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Speaker 1: The CEOs of Gold and Sachs and Bank of America

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Speaker 1: sit down for exclusive conversations with Bloomberg.

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Speaker 2: And Anglo digs in. The minor rejects a second approach

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Speaker 2: from BHP as questions grow over its alternative plan.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: France's President Emmanuel Macron says he'd be opened the takeover

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Speaker 2: of a major French bank by arrival in the European

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Speaker 2: Union to deepen financial integration in the region. The comments

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Speaker 2: come as Macron tries to persuade his EU partners to

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Speaker 2: embrace what he sees as a transformative program of reforms.

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Speaker 2: Speaking exclusively to Bloomberg at the annual Choose France summit,

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Speaker 2: the French president said the European Union needs a fresh

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Speaker 2: approach to business.

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Speaker 3: Dealing as Europeans means that you need consolidation as Europeans.

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Speaker 4: Not so it could be cross the border mergers for directions.

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Speaker 5: This is a.

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Speaker 3: Totally new world and we do need this new business

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Speaker 3: model for the Europeans. More innovation, more investment, single market

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Speaker 3: and capital market union and a relevant trade policy.

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Speaker 2: French President of Vaniel Macron there speaking to Boomberg's editor

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Speaker 2: in chief John Mickelthwaite on the sidelines of the Choose

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Speaker 2: France Investment Summit in Versailles. Fifteen billion euros of new

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Speaker 2: foreign investment was announced on the first day of the

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Speaker 2: event on Monday. One hundred and eighty business leaders, including

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Speaker 2: Goldman Sachs CEO David Solomon, is attending, who told Bloomberg

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Speaker 2: that France is a very important hub for the company.

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Speaker 1: Britain is also hoping to attract more investment. The UK

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Speaker 1: is sending a four hundred and fifty person business and

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Speaker 1: ministerial delegation to a joint summit in Saudi Arabia. It's

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Speaker 1: the largest group the country is sent in more than

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Speaker 1: a decade. Bloomberg's James Wilcock has more.

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Speaker 6: Saudi Arabia wants to diversify away from oil UK once

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Speaker 6: foreign investment. The result is a British trade success story,

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Speaker 6: but there are questions about the relationship, with fresh allegations

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Speaker 6: about Sadi's poor human rights record in the domestic press.

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Speaker 6: Government figures say total trade has increased forty percent since

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Speaker 6: twenty eighteen to seventeen billion pounds last year, but that

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Speaker 6: same year has also shown there are limits to Britain's

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Speaker 6: willingness to accept Middle Eastern money, with the state stepping

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Speaker 6: in to block a UE funded bid to take over

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Speaker 6: the Telegraph in London. James Wilcock Bloomberg.

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Speaker 2: Radio Anglo American has turned down BHP's second acquisition offer.

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Speaker 2: The deal would have valued the copper giant had forty

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Speaker 2: three billion dollars. Bloomberg's paul A land Hunt says the

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Speaker 2: corporate action has led to some surprising revelations about Anglo's

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Speaker 2: year old turnaround plan.

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Speaker 7: Anglo shareholders have been actually left in the dark ever

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Speaker 7: since that strategic review was launched. Overnight, the company said

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Speaker 7: it would suddenly release the results of that strategic review,

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Speaker 7: so they've really been scrambling to present shareholders with an

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Speaker 7: option of growth.

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Speaker 2: Hunt ads that to fight our BHP, the miner will

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Speaker 2: need to show its shareholders it can be more valuable

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Speaker 2: on its own. Anglo is set to give a detailed

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Speaker 2: update to investors later today.

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Speaker 1: The US Treasury Secretary Janet Yellen says that she hopes

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Speaker 1: China won't retaliate to any coming trade restrictions. She declined though,

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Speaker 1: to confirm reports the White House will announce new tariffs

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Speaker 1: on critical industries like evs this week. Speaking exclusively to Bloomberg,

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Speaker 1: Yellen says the Biden administration hopes to avoid wide range

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Speaker 1: IT restrictions.

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Speaker 8: President Biden believes that anything we do should be targeted

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Speaker 8: to our concerns and not broad based, and hopefully we

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Speaker 8: will not see a significant Chinese response, but that's always

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Speaker 8: a possibility.

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Speaker 1: Janet Yellen added that the US would protect its own

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Speaker 1: emerging industry, saying China is really not playing by the rules.

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Speaker 1: Any Lodge tariff announcement is expected to become a talking

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Speaker 1: point in November's US election.

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Speaker 2: Donald Trump's former lawyer Michael Cohen says the former president

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Speaker 2: agreed to pay adult film actress Stormy Daniels hush money

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Speaker 2: taking the witness stands during the trial's fourth week, Cohen

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Speaker 2: recalled Trump asking him to pay Daniels one hundred and

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Speaker 2: thirty thousand dollars to buy her silence disguised as legal fees.

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Speaker 2: Bloomberg Law anchored June Grasso says Cohen's testimony will form

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Speaker 2: a crucial part of the case.

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Speaker 9: This is the part I mean, this is about not

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Speaker 9: the hush money payments, as we've said many times, it's

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Speaker 9: about the way they were recorded and why they were

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Speaker 9: made because it's not illegal. It's not illegal to pay

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Speaker 9: hush money. So we're at that part in his testimony,

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Speaker 9: and this is important because he's the one who's going

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Speaker 9: to have to be the link to why these payments

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Speaker 9: were recorded as legal expenses and did Trump know about them?

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Speaker 2: Jim Grasso, speaking of their Bloomberg's Joe Matthew. The prosecution could

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Speaker 2: conclude its case this week, after telling the judge on

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Speaker 2: Friday that they expected to call just two more witnesses.

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Speaker 1: Apple is preparing to sell its Vision pro headset outside

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Speaker 1: of the US for the first time. Overseas expansion for

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Speaker 1: the mixed reality device is likely to include China, France,

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Speaker 1: and Germany to start with, although Apple hasn't yet disclosed

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Speaker 1: exactly where the technology will be available. Bloomberg's chief technology

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Speaker 1: correspondent Mark German says the expansion will be an important.

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Speaker 6: Test the headset.

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Speaker 10: It got off to a running start in the US initially,

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Speaker 10: the early adopters chiming in, the early adoptors jumping into

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Speaker 10: buy it, but it really tapered out where you really

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Speaker 10: want to sell. The Vision Pro is in China, Japan,

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Speaker 10: in Korea. Those markets love virtual reality, and so if

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Speaker 10: the Vision Pro, this first model is going to be

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Speaker 10: a success, it has to be a hit with consumers

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Speaker 10: in Asia.

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Speaker 1: Mark German, speaking there, the Vision Pro is Apple's biggest

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Speaker 1: new product in years and kicked off what the CEO

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Speaker 1: Tim Cook has called the era of spatial computing.

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Speaker 2: Melinda French Gates is stepping down as co chair of

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Speaker 2: the seventy five billion dollar foundation she helped create with

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Speaker 2: her former husband. The philanthropist will receive a twelve point

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Speaker 2: five billion dollar payment to use for her own charitable purposes.

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Speaker 2: French Gates said she leaves knowing the foundation is in

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Speaker 2: strong shape. In a statement issued on Monday, Bill Gates

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Speaker 2: will become sole chair, according to the organization, in a

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Speaker 2: moment we'll bring you more of our exclusive interview with

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Speaker 2: the French President and some of the business leaders attending

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Speaker 2: his Choose France Summits. But another story that caught her

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Speaker 2: eye this morning, the return of the meme stock frenzy

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Speaker 2: shares in GameStop Remember Them, surged on speculation that one

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Speaker 2: of the key architects of the mania back in twenty

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Speaker 2: twenty one was returning to social media. Keith Gill, also

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Speaker 2: known as Roaring Kitty, posted firstly on x a picture

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Speaker 2: of a man leaning forward that looked like a gaming controller,

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Speaker 2: which some traders interpreted to mean that he's coming back

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Speaker 2: into action. There was a second post then with a

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Speaker 2: short video clip saying fine, I'll do it myself. This

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Speaker 2: sparked a frenzy online and in the markets GameStop shares

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Speaker 2: more than one hundred and seventy five million of them

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Speaker 2: changed hands yesterday. The chairs closed seventy five percent higher

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Speaker 2: they were at one stage, up as much as one

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Speaker 2: hundred and twenty percent. John Arthurs and Bnbrok Comenian has

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Speaker 2: been writing about this this morning as well, saying that

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Speaker 2: the GameStop mania won't pack a punch like it did

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Speaker 2: in twenty twenty one.

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Speaker 1: No Why, oh why is the big question, and it remains,

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Speaker 1: doesn't it, even though it is twenty twenty one. Why

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Speaker 1: this particular stock, you know, created such a sort of

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Speaker 1: florry of interest. I think the other thing that you've

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Speaker 1: got to say, though, is that anybody who was trading

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Speaker 1: late in that game stop mania moment really didn't make

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Speaker 1: any anything. They were sort of left holding the can,

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Speaker 1: as it were, So I think that's difficult. On the

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Speaker 1: other hand, those who are more kind of favorable to

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Speaker 1: rowing Kitty saying, look, it's not like he went and

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Speaker 1: made a social media name for himself after he just

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Speaker 1: went silent for years.

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Speaker 2: I'm just really happy that we got to say roring

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Speaker 2: Kitty so many times in the radio. Than happy that's

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Speaker 2: Tuesday morning. Let's bring you more of our exclusive entity

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Speaker 2: now though. With French President Emanuel Macron, he's discussing the

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Speaker 2: foundations of Europe how they're changing, including issues like competitiveness, banking, mergers,

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Speaker 2: and investment. With Bloomberg's editor in chief John mcltwaite.

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Speaker 3: If you take the last three decades, we created half

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Speaker 3: of the value capital created by the US. Why lack

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Speaker 3: of innovation, lack of investment? This is the main reason.

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Speaker 3: This is why now my top priority is to have

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Speaker 3: a European policy saying we have to be much more innovative,

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Speaker 3: we have to create a much more efficient capital market,

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Speaker 3: we have to invest much more from a common budget

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Speaker 3: as Europeans and from the private sector, and we have

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Speaker 3: to deliver in our decabination because I do believe that climates,

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Speaker 3: digital growth and job creation are the stipilars of what

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Speaker 3: we have to deliver.

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Speaker 4: And those we will come go through all of those.

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Speaker 4: But just on that point about the European economy, you

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Speaker 4: had a full scale attack on it at the Sorbonne

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Speaker 4: where you said it is sclerotic, it is being left behind.

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Speaker 4: Do you think that from the EU's point of view,

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Speaker 4: the that sclerotic economy is a bigger long term challenge

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Speaker 4: and say, I think this is one Vladimir Puchin.

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Speaker 3: I think this is clearly linked to what's happening as well.

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Speaker 3: But we have to completely reset our model. I think

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Speaker 3: now France clearly is one of the leading economy. We

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Speaker 3: are number one in attractiveness, we've been number one during

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Speaker 3: the past five years, and if you take job creation growth,

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Speaker 3: we are one or second in the in zero zone.

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Speaker 4: Do you think you're being so you mightn't.

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Speaker 3: So we are here now when I take your and

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Speaker 3: especially the EU as a whole. But it's as well

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Speaker 3: for UK. We have this issue in terms of business model.

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Speaker 3: Why because we had low cost energy thanks to Russia,

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Speaker 3: production thanks to Central and Eastern European countries with quite

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Speaker 3: low costs, a market for exports China, and a geopolitical

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Speaker 3: umbrella US. These pillars are being completely revised totally, yes,

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Speaker 3: and it's no more valid. So we have to reinvent

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Speaker 3: one and how by creating much more value on our

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Speaker 3: own by being much more innovative, by creating much more

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Speaker 3: jobs and jobs with value, good jobs, I would say,

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Speaker 3: on our continents. The key point is deliver much more

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Speaker 3: innovation and productivity policy public and private. The second key

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Speaker 3: reforms is to accelerate the caabination and especially our electricity policy,

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Speaker 3: because through renewables and nuclear energy we can deliver low carbon,

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Speaker 3: sovereign and locust energy, which is much more than important

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Speaker 3: gas and fossil fuels.

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Speaker 4: Sir.

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Speaker 3: We need much more investment based on common budget and

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Speaker 3: my view, I mean based on public reports and figures,

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Speaker 3: we need one trillion more in terms of budget in

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Speaker 3: terms of spending. And in parallel, we have to make

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Speaker 3: the Capitan market Union a reality, which is can.

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Speaker 4: I come on to the Capitle market union because you

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Speaker 4: have here an example. You have BNP. Yeah, now probably

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Speaker 4: Europe's definitely the Eurozone's most successful bank, worth eighty billion dollars.

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Speaker 4: But you know you are entertaining these people like JP

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Speaker 4: Morgan and so on. JP Morgan is worth five hundred

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Speaker 4: and fifty billion. It's it's nine times this speak Bank

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Speaker 4: of America four times as speak. And the reason why

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Speaker 4: is BMP Parry Bar cannot expand throughout the European Union

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Speaker 4: and take over other banks.

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Speaker 3: This is very cool we have.

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Speaker 4: You would like to see BMP take over one of these,

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Speaker 4: take over German buying Corone Italian one.

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Speaker 11: I want.

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Speaker 3: I mean, we do need a consolidation, but we do

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Speaker 3: need as well an actual domestic market as Europeans, which

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Speaker 3: is not the case. We have to deal with twenty

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Speaker 3: seven regulations. You know, an energy, finance and telco are

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Speaker 3: the key sectors where single market doesn't exist. It was

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Speaker 3: a choice at the very beginning. I do agree that

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Speaker 3: we have now to open this box and to deliver

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Speaker 3: a single market approach. But with much more efficient. So

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Speaker 3: our view is that now we want to elaborate Franco

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Speaker 3: German consensus on capital marketingion to have a single system

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Speaker 3: of resolution, a single supervision and a much more integrated

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Speaker 3: capital market union.

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Speaker 4: Would you be happy with, say Spain Santandre coming and

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Speaker 4: buying society general, I mean part of.

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Speaker 3: That, it's part of the market, but as Europeans means

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Speaker 3: that you need consolidation as Europeans your notes.

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Speaker 4: So it could be cross bord emergers for directions, but.

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Speaker 3: This one is for banking union. It's already on tack.

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Speaker 3: Now we have to do it for capital MARKETINGNION, which

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Speaker 3: is broader, yes, and even more difficult. But we started

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Speaker 3: to do so at a political level during the last console,

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Speaker 3: and I do believe that we can find a Frouncle

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Speaker 3: German agreement.

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Speaker 2: So that was Francis President Manuel Macron speaking there to

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Speaker 2: Bloomberg's editor in chief John macathwise.

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Speaker 1: Well, let's get more on this and bring in the

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Speaker 1: Bloomberg's Paris bureau chief Alan Katz. Good morning, Alan, thanks

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Speaker 1: for paying with us, Immanu and Macaws such an interesting,

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Speaker 1: in depth conversation. He was clear about what France wants

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Speaker 1: and needs from the EU. How much support though elsewhere

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Speaker 1: in Europe does he have the sorts of ideas that

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Speaker 1: he was talking about, for example, expanding the EU budget

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Speaker 1: by a trillion euros.

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Speaker 12: Well, that's a good question. I mean, one of the

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Speaker 12: things that people are accused France of and this is

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Speaker 12: not actually even particular to many on McCain's that they

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Speaker 12: sort of put French interests in a broader view and

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Speaker 12: they claim this is what Europe needs, what Europe wants,

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Speaker 12: when really it's what France needs and what France wants.

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Speaker 12: In the case of this one trillion dollar budget in

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Speaker 12: Greece that he mentioned, it's just coincidentally or not coincidentally,

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Speaker 12: the same figure that again named Christian Noye is the

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Speaker 12: former head of the Bank of France, came out with

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Speaker 12: it or report recently about how much money Europe needed

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Speaker 12: to spend in order to meet environmental the green transition

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Speaker 12: and environmental challenges, and so in some ways this still

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Speaker 12: seems like a French perspective on things, and it's not

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Speaker 12: really clear at all how much support he has for

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Speaker 12: that at the EU level. Even when he started mentioning

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Speaker 12: German support for things that he was talking about German

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Speaker 12: support in terms of banking union, capital market union, not

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Speaker 12: necessarily the for the one trillion dollars budget increase that

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Speaker 12: he discussed.

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Speaker 2: We heard part of the conversation there about the banking sector.

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Speaker 2: But the French president was also asked about the prospect

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Speaker 2: of the oil giant total and now are you moving

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Speaker 2: its listing to the United States? What was the president's

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Speaker 2: for you on that?

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Speaker 12: So when John micklethwyd our editor chief asked him about that,

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Speaker 12: you know, whether Maxcom would be happy about that, his

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Speaker 12: response was not at all. Now. Then he went on

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Speaker 12: to claim that, oh, this is just a rumor though,

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Speaker 12: and we'll see what really happens. It's not actually a rumor.

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Speaker 12: What happened was that the CEO of Totel told Bloomberg

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Speaker 12: calumnists Heavier Blast that he was considering this, and he

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Speaker 12: since then has told analysts that he hopes to have

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Speaker 12: a decision on it, will be able to present a

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Speaker 12: decision one or the other to the board by September.

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Speaker 12: So this is far from just a rumor. But Macomb

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Speaker 12: did say, you know, his response was not at all

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Speaker 12: when asked about whether he'd be happy with the idea,

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Speaker 12: which makes sense of course, because Totel is your's second

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Speaker 12: biggest oil company.

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Speaker 11: It's a major source of.

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Speaker 12: Tax revenue in France. It provides a guarantees both oil exploration,

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Speaker 12: refining and distribution via retail filling stations in France, so

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Speaker 12: it would be it would be a major hit for France. Wordly. Now,

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Speaker 12: one thing to mention is that Hotel is not talking

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Speaker 12: about moving its headquarters to New York. It stalk abou moving.

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Speaker 4: It's listing.

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Speaker 3: It's not the same thing.

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Speaker 12: But nevertheless said you'd be unhappy with.

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Speaker 1: The idea, okay, so it's just around listings. Well, macaun

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Speaker 1: was speaking at the Choose France investments summage Bloomberg's Future

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Speaker 1: of Finance sum It takes place in Paris today. So

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Speaker 1: how do major businesses, business leaders view manue in Macaw's

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Speaker 1: France right now? In general?

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Speaker 4: Very well?

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Speaker 12: Now, the future of finances is really aimed at at financiers,

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Speaker 12: and that the Choose France conference that he had yesterday

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Speaker 12: was maintained at non French investors. And so I'm going

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Speaker 12: to take those two separately for just a second. But

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Speaker 12: in terms of the non French investors, Choose France really

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Speaker 12: actually has made a big difference. I was talking to

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Speaker 12: the head of the American Chamber of Conference Commerce not

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Speaker 12: too long ago, and she mentioned that it really had

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Speaker 12: helped to convince particularly American CEOs that France was a

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Speaker 12: legitimate and real place to do business because they'd come

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Speaker 12: here for this conference, they'd hear the kinds of words

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Speaker 12: that they want to hear from government in terms about

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Speaker 12: trying to restrain regulation, trying to reduce taxes, trying to

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Speaker 12: create a good environment for businesses to thrive, and it

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Speaker 12: really changed their view on France in terms of finance.

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Speaker 12: France has also really benefited less in part from that,

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Speaker 12: but in large part also from Brexit. And one of

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Speaker 12: the issues that we're going to explore later today though,

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Speaker 12: is that there was an initial surge of jobs coming

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Speaker 12: over from the UK from London to Paris as a

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Speaker 12: result of Brexit, and particularly as a result of the

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Speaker 12: ECB requiring that banks but more and more risk takers

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Speaker 12: and decision makers in continentral Europe. And when the choice

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Speaker 12: came between say Paris, Frankford, Amsterdam and Dublin, Paris really

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Speaker 12: came out ahead. But that increase in jobs has really

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Speaker 12: plateaued at this point. Now, frances has a second law

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Speaker 12: that's going through parliament right now and trying to serve

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Speaker 12: what they call that attractivity law. It doesn't really work

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Speaker 12: in English, but it's a law to try to improve

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Speaker 12: the attractiveness of Paris as a financial center. They're trying

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Speaker 12: to reduce again reduce some restrictions and part of that law,

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Speaker 12: or that draft law, has some ways it might ease

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Speaker 12: the ways in which banks can fire bankers or traders,

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Speaker 12: which is a big issue for them here because they

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Speaker 12: have these quite high paid employees and when banking, as

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Speaker 12: we all know, is a very.

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Speaker 11: Cyclical business, and when things were down, that want to

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Speaker 11: be able to get rid of some of these people

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Speaker 11: on this thing. It's quite difficult to quite time consuming

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Speaker 11: in France, and they're trying to make that easier. So

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Speaker 11: one of the things we're going to explore actually on

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Speaker 11: a panel just to have later this morning is whether

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Speaker 11: or not that's enough to convince particularly foreign banks, whether

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Speaker 11: they're American or other European or Asian, to put more

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Speaker 11: people here in Paris or not, or whether we've sort

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Speaker 11: of hit a CAP's sort of how big Paris can

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Speaker 11: become as sort of a regional financial center.

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Speaker 2: Okay, Alan Kount's our powerspirity, thank you very much for

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Speaker 2: joining us.

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Speaker 1: Well, should we hear from some of those businessiness leaders

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Speaker 1: then who are out the Choose France summit. Bloomberg has

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Speaker 1: been speaking exclusively to some of the biggest names in

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Speaker 1: finance who were there. We'll bring your thoughts from Brian

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Speaker 1: moynihan of Bank of America in just a moment, But

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Speaker 1: first David Solomon of Goldman Sachs now He told Bloomberg

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Speaker 1: Jonathan Farrow that the UK's decision to leave the EU

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Speaker 1: has helped to strengthen France's position.

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Speaker 5: Well, it's evolved a little bit, and Brexit had a

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Speaker 5: big impact on that evolution. You know, we have between

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Speaker 5: three hundred and fifteen four hundred people in Paris now

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Speaker 5: that's triple what we would have had, you know, five

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Speaker 5: six years ago, So there's been an evolution. I do

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Speaker 5: think it's still a complex place for a professional services

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Speaker 5: person to put an employee in our dialogues, you know

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Speaker 5: here we've talked about that. It's one of the things,

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Speaker 5: you know, I'm encouraged by. I think the administration is

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Speaker 5: looking to do things here that actually improve. You know,

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Speaker 5: this is a business environment. I think one of the

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Speaker 5: things that is interesting is we've chosen France. It's a

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Speaker 5: very very important hub for us here on the continent.

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Speaker 5: But I'd also say, are people like living here? And

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Speaker 5: one of the things in a competitive world for talent

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Speaker 5: is we give our people much more latitude to work

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Speaker 5: and operate out of places that they want to live.

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Speaker 5: And it's certainly a very attractive place.

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Speaker 13: So I wanted to ask you directly, have you chosen

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Speaker 13: France because somewhere else is getting worse or because France

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Speaker 13: and the continent is getting better.

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Speaker 5: Well, I think it's a combination. France on the continent

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Speaker 5: has gotten better, the regulatory structure requires that we have

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Speaker 5: more people here for certain functions that are important to

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Speaker 5: our business. Our clients are here, and we want to

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Speaker 5: be near our clients, and so, you know, it's a

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Speaker 5: combination of things that make this an appropriate place for

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Speaker 5: Gold and Secks to continue to grow.

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Speaker 13: I think a lot of us going forward through twenty

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Speaker 13: twenty four into twenty twenty five feel like we're flying

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Speaker 13: blind a little bit. So you have more clarity, more

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Speaker 13: visibility on the future of Europe or the future of

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Speaker 13: the United States.

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Speaker 5: I don't have a lot of visibility on the future

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Speaker 5: of the world, let alone Europe and the United States.

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Speaker 5: I know there are a lot of people that you

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Speaker 5: talk to that are very sure as to how things

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Speaker 5: will play out as we go forward. I tend to

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Speaker 5: look at things and think about risks. How do we

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Speaker 5: manage risks? What are the tails that are out there

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Speaker 5: that we need to be concerned about. When I think

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Speaker 5: about economic outcomes, I think about distribution of those outcomes,

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Speaker 5: and so you know, there's a perception of the direction

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Speaker 5: of travel. We can certainly talk about that, but I

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Speaker 5: certainly I certainly don't. I certainly don't you know, know

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Speaker 5: what the direction of travel is. I will say, going

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Speaker 5: back to what we were talking about here in France

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Speaker 5: and just listening to you know, a number of officials

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Speaker 5: that spoke at lunch today. They're talking about ways that

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Speaker 5: they can accelerate more entrepreneurship, more investment, more flexibility, and

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Speaker 5: also more strengthening and interdependency in Europe. Those things are

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Speaker 5: hard to execute on, but I think they are very important.

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Speaker 13: The White House is doing something similar, but it comes

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Speaker 13: at a cost. I think the budget deficit was six

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Speaker 13: percent of GDP not to six percent last year at

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Speaker 13: a time when unemployment is sounth to full. Speaking of risks,

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Speaker 13: is that want?

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Speaker 5: It's certainly one that I'm very focused on. I think

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Speaker 5: the level of debt in the United States, the level

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Speaker 5: of spending is something that we need a sharper focus

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Speaker 5: on and more dialogue around than what we've seen. We

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Speaker 5: obviously had a pandemic. We made a bunch of decisions,

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Speaker 5: you know, in that pandemic, but we're long out of

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Speaker 5: that pandemic, and the spending levels, you know, are continuing

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Speaker 5: at a pace that I think is raising our debt

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Speaker 5: level and creating issues for us down the rown.

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Speaker 1: So that was David Solomon, the CEO of Goldman Sachs,

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Speaker 1: speaking to Brimberg's Jonathan Farrow.

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Speaker 2: Now, the global economic picture was a key part of

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Speaker 2: the conversation at that event in Versailles as well, and

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Speaker 2: that's something the Bank of America CEO and Chairman Brian

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Speaker 2: moyne and has been discussing again with Jonathan Farrow. Brian

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Speaker 2: moynhan saying that despite the higher rates environment, the evidence

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Speaker 2: suggests that US consumers are in good shape.

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Speaker 14: People getting used to it, but the reality is at

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Speaker 14: some point if it has to bring the front and

440
00:22:52,040 --> 00:22:54,880
Speaker 14: read to get the a normalized curve, because an inverted

441
00:22:54,920 --> 00:22:58,440
Speaker 14: curve forever doesn't sort of economically compute. But I think

442
00:22:58,720 --> 00:23:00,840
Speaker 14: our team thinks that the real rate, the end rate

443
00:23:00,880 --> 00:23:02,159
Speaker 14: that they'll get to it will be more than a

444
00:23:02,200 --> 00:23:04,399
Speaker 14: three and a half percent range as opposed to fifty

445
00:23:04,400 --> 00:23:07,440
Speaker 14: bases point range or one percent range. And we haven't

446
00:23:07,480 --> 00:23:10,119
Speaker 14: really had that since before the financial crisis. So there

447
00:23:10,200 --> 00:23:12,040
Speaker 14: was a moment in sixteen seventy to eighteen where they

448
00:23:12,080 --> 00:23:14,320
Speaker 14: raised rates and they already started bringing them down nineteen.

449
00:23:14,760 --> 00:23:17,480
Speaker 14: So frankly, in our team, I say, if you're under forty,

450
00:23:17,480 --> 00:23:19,399
Speaker 14: you've never seen this kind of rate environment, and this

451
00:23:19,520 --> 00:23:21,760
Speaker 14: is normal. And so three percent front end, three and

452
00:23:21,760 --> 00:23:23,960
Speaker 14: a half, four and a half percent tenure, and people

453
00:23:23,960 --> 00:23:26,160
Speaker 14: will get used to it because America did a lot

454
00:23:26,160 --> 00:23:28,720
Speaker 14: of economic activity prior to two thousand and seven for

455
00:23:28,920 --> 00:23:31,240
Speaker 14: the two hundred plus years of existed, so what people

456
00:23:31,280 --> 00:23:32,840
Speaker 14: have been used to it. It's just we're in a

457
00:23:32,920 --> 00:23:36,040
Speaker 14: very unusual time and so the adjustments are taking place

458
00:23:36,119 --> 00:23:37,440
Speaker 14: and it's running through the economy.

459
00:23:37,480 --> 00:23:39,320
Speaker 13: We're hearing from some companies that maybe the ross and

460
00:23:39,359 --> 00:23:42,160
Speaker 13: cracks we had from Stopbucks McDonald's offering a similar view

461
00:23:42,440 --> 00:23:45,600
Speaker 13: on the US consumer. You've got some sixty nine million customers.

462
00:23:45,880 --> 00:23:47,320
Speaker 13: What do you see? Do you see those cracks? And

463
00:23:47,400 --> 00:23:48,760
Speaker 13: so we're starting to emerge this year.

464
00:23:48,960 --> 00:23:51,000
Speaker 14: So if you think about it, where would the cracks emerge?

465
00:23:51,000 --> 00:23:53,240
Speaker 14: You talked about the average account bouance is there's still

466
00:23:53,440 --> 00:23:56,800
Speaker 14: especially for household seventy five one hundred thousand and below,

467
00:23:57,320 --> 00:23:59,720
Speaker 14: the account bounces a higher than the pandemic by a lot.

468
00:24:00,119 --> 00:24:03,240
Speaker 14: If you think about the spending, the spending settled into

469
00:24:03,280 --> 00:24:05,280
Speaker 14: a more normal where it was in sixteen seventeen eighteen.

470
00:24:05,320 --> 00:24:09,320
Speaker 14: The fabs raising rates, inflation, they're pushing if inflation was higher,

471
00:24:09,320 --> 00:24:11,720
Speaker 14: they're pushing it down or holding it steady, you know.

472
00:24:11,800 --> 00:24:14,320
Speaker 14: So that's that's normal. And then on the credit side,

473
00:24:14,600 --> 00:24:16,679
Speaker 14: we're just normalizing to where we were nineteen. So in

474
00:24:16,680 --> 00:24:19,280
Speaker 14: twenty nineteen is a fifty year low on credit costser

475
00:24:19,440 --> 00:24:21,639
Speaker 14: company and basically last quarter we were a little bit

476
00:24:21,680 --> 00:24:24,800
Speaker 14: higher than that. And so we're normalizing. So it's increasing

477
00:24:24,840 --> 00:24:27,280
Speaker 14: off a base and people say, oh, your charge offs

478
00:24:27,320 --> 00:24:28,679
Speaker 14: are going up, but they're getting back to where they

479
00:24:28,720 --> 00:24:31,040
Speaker 14: were in nineteen, and frankly, people thought that was a

480
00:24:31,080 --> 00:24:33,720
Speaker 14: very good credit and it actually was, and so the

481
00:24:33,800 --> 00:24:35,440
Speaker 14: question is where they go next. The good news is

482
00:24:35,440 --> 00:24:37,439
Speaker 14: we're starting to see the delinkenies flatten back out. Are

483
00:24:37,440 --> 00:24:40,520
Speaker 14: you either not growing anymore? They normalize and then they're staying.

484
00:24:40,560 --> 00:24:43,280
Speaker 14: That's good news on the consumer side, so it's all okay,

485
00:24:43,359 --> 00:24:45,359
Speaker 14: it's just higher rates are tough on people on a

486
00:24:45,400 --> 00:24:48,040
Speaker 14: mortgage market we you know, mortgage originations or way down.

487
00:24:48,119 --> 00:24:51,800
Speaker 14: Higher rates are tough on the corporations using their lines

488
00:24:51,800 --> 00:24:54,200
Speaker 14: a little bit less because you know, small medium sized

489
00:24:54,240 --> 00:24:56,560
Speaker 14: companies because it costs more, and if it costs more,

490
00:24:56,600 --> 00:24:58,840
Speaker 14: you're going to be more jedicious about it. So that

491
00:24:58,920 --> 00:25:01,440
Speaker 14: kind of adjustment, what the FED is doing with great

492
00:25:01,480 --> 00:25:04,120
Speaker 14: structure is having the impact they want. On the other hand,

493
00:25:04,160 --> 00:25:05,720
Speaker 14: the economy's kind of there, and now we've got to

494
00:25:05,720 --> 00:25:06,680
Speaker 14: be careful we don't overshoot.

495
00:25:06,680 --> 00:25:07,120
Speaker 1: The other way.

496
00:25:07,240 --> 00:25:10,119
Speaker 14: It's right now we have a no landing, honestly a

497
00:25:10,160 --> 00:25:11,919
Speaker 14: two percent growth right because you can't say it's a

498
00:25:11,920 --> 00:25:15,040
Speaker 14: soft landing, but that's been pushed out and pushed out

499
00:25:15,080 --> 00:25:17,159
Speaker 14: to when it occurs, and we've got to be careful

500
00:25:17,160 --> 00:25:19,520
Speaker 14: that we don't overshoot because you see the consumer confidence

501
00:25:19,600 --> 00:25:21,639
Speaker 14: numbers tipping download it. That's what you got to be careful.

502
00:25:21,880 --> 00:25:24,160
Speaker 14: The consumer leaves a game, it's hard to get them restarted.

503
00:25:25,280 --> 00:25:27,119
Speaker 2: So how was the Bank of America Chairman and CEO

504
00:25:27,160 --> 00:25:30,879
Speaker 2: Brian Moynhan, speaking exclusively to Bloomberg Surveillance host Jonathan Farrow,

505
00:25:30,960 --> 00:25:34,320
Speaker 2: warning that there are risks out there if rates stay

506
00:25:34,440 --> 00:25:36,639
Speaker 2: too high for too long, speaking of course, not to

507
00:25:36,680 --> 00:25:39,560
Speaker 2: choose Franz Summitton. Interesting to take a moment, perhaps to

508
00:25:39,560 --> 00:25:42,520
Speaker 2: reflect on the thread of the conversation that goes through

509
00:25:42,560 --> 00:25:45,639
Speaker 2: some of those interviews we've brought you this morning, and

510
00:25:45,720 --> 00:25:49,560
Speaker 2: a really big pitch from Emmanuel Macron, yet again echoing

511
00:25:49,600 --> 00:25:52,280
Speaker 2: what we heard in the Sorbonne speech last week too

512
00:25:52,760 --> 00:25:56,399
Speaker 2: around I suppose what his vision of the future of

513
00:25:56,480 --> 00:25:59,399
Speaker 2: Europe is, remembering that he's, you know, halfway through his

514
00:25:59,440 --> 00:26:02,840
Speaker 2: second term as president, he's facing a very difficult European

515
00:26:02,840 --> 00:26:06,639
Speaker 2: election campaign in France, the National Rally party from the

516
00:26:06,640 --> 00:26:09,680
Speaker 2: far right expected to do to come out on top

517
00:26:09,760 --> 00:26:12,600
Speaker 2: in fact, and his list certainly under pressure for his

518
00:26:12,720 --> 00:26:15,240
Speaker 2: party as well. You know, a trillion euros extra in

519
00:26:15,280 --> 00:26:17,520
Speaker 2: the EU budget is a lot of extra money from

520
00:26:17,560 --> 00:26:20,560
Speaker 2: every European member state that is a big contribution that

521
00:26:20,640 --> 00:26:23,440
Speaker 2: all of those countries would have to make, and it

522
00:26:23,520 --> 00:26:26,240
Speaker 2: is a very French vision, as Alan katz are Bureity

523
00:26:26,280 --> 00:26:28,959
Speaker 2: from Paris was telling us of where the EU goes next.

524
00:26:28,840 --> 00:26:31,800
Speaker 2: So the idea of being able to rally that support

525
00:26:31,920 --> 00:26:34,040
Speaker 2: is a really big challenge, even at a leader's level.

526
00:26:34,240 --> 00:26:39,080
Speaker 1: Yeah, absolutely, it's capitalism alaf hances, but can that message

527
00:26:39,119 --> 00:26:43,040
Speaker 1: be sold, and particularly actually when the Franco German relationship

528
00:26:43,160 --> 00:26:46,280
Speaker 1: is not at its strongest. In fact, the personal relationship

529
00:26:46,359 --> 00:26:49,240
Speaker 1: between those two leaders has often been reported as being

530
00:26:49,280 --> 00:26:55,159
Speaker 1: pretty poor. Germany wary of pooling resources with across Europe

531
00:26:55,200 --> 00:26:58,800
Speaker 1: because that would mean of course pooling liabilities. So it's

532
00:26:58,840 --> 00:27:02,840
Speaker 1: about whether that big vision for more investment, for greater

533
00:27:02,960 --> 00:27:06,840
Speaker 1: defense spending, you know, more dynamism and being able to

534
00:27:06,920 --> 00:27:10,000
Speaker 1: hire and farm more easily, whether all of those issues

535
00:27:10,040 --> 00:27:14,040
Speaker 1: translate across Europe, whether he can bring along European partners. Again,

536
00:27:14,119 --> 00:27:16,960
Speaker 1: I mean that's the central axis. We haven't even sort

537
00:27:16,960 --> 00:27:19,760
Speaker 1: of spoken about the periphery countries in Europe and whether

538
00:27:19,800 --> 00:27:22,399
Speaker 1: they buy into the to the French vision. But certainly

539
00:27:22,520 --> 00:27:25,679
Speaker 1: Macon has had a number of opportunities to sort of

540
00:27:26,080 --> 00:27:28,359
Speaker 1: make the big case for what the future of Europe

541
00:27:28,359 --> 00:27:29,000
Speaker 1: should look like.

542
00:27:29,160 --> 00:27:30,600
Speaker 2: Yeah, and at the moment he is one of the

543
00:27:30,600 --> 00:27:33,120
Speaker 2: few people who is doing that. And it's worth remembering

544
00:27:33,119 --> 00:27:35,520
Speaker 2: that he has made big changes to how the French

545
00:27:35,560 --> 00:27:38,520
Speaker 2: economy is run, going right back to the time when

546
00:27:38,520 --> 00:27:40,520
Speaker 2: he was an advisor to the former president of francois

547
00:27:40,600 --> 00:27:42,359
Speaker 2: Land as well, who put in train a set of

548
00:27:42,400 --> 00:27:45,520
Speaker 2: economical forums that bore fruit only when he had become

549
00:27:45,600 --> 00:27:50,199
Speaker 2: president several years later. So this is somebody who knows

550
00:27:50,400 --> 00:27:53,920
Speaker 2: how to make changes at a national level, whether or

551
00:27:53,960 --> 00:27:56,440
Speaker 2: not he can convince his counterparts at a European level

552
00:27:56,480 --> 00:27:59,439
Speaker 2: to do the same thing. You know, Europe tends to

553
00:27:59,480 --> 00:28:02,520
Speaker 2: only make big changes in a crisis. Is the economic

554
00:28:02,520 --> 00:28:05,879
Speaker 2: crisis facing Europe now big enough to warrant the size

555
00:28:05,880 --> 00:28:08,560
Speaker 2: of change that Emmanuel Macron is looking for. We won't

556
00:28:08,560 --> 00:28:10,440
Speaker 2: know on to l after the European elections next month.

557
00:28:11,920 --> 00:28:14,639
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

558
00:28:14,680 --> 00:28:17,760
Speaker 2: stories making news from London to Wall Street and beyond.

559
00:28:18,040 --> 00:28:21,200
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560
00:28:21,359 --> 00:28:24,040
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561
00:28:24,080 --> 00:28:27,119
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562
00:28:27,160 --> 00:28:29,840
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563
00:28:29,880 --> 00:28:32,680
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564
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565
00:28:37,640 --> 00:28:39,040
Speaker 1: I'm Caroline Hepka.

566
00:28:38,800 --> 00:28:41,240
Speaker 2: And I'm Stephen Carroll. Join us again tomorrow morning for

567
00:28:41,360 --> 00:28:43,760
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568
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