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

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Speaker 1: Day BAQ podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Friday, the eighteenth of July and London.

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Speaker 1: I'm Caroline Hepca. Coming up today. FED Governor Chris Waller

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Speaker 1: breaks with fellow policymakers as he backs a rate cut

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Speaker 1: at the next meeting to support the US jobs market.

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Speaker 1: Traders place wages on more Bank of England reductions this

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Speaker 1: year that could net them a one thousand percent return plus.

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Speaker 1: Diplomatic speed dating nations use the G twenty gathering in

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Speaker 1: South Africa to forge new alliances as they face a

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

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Speaker 1: FED Governor Christopher Waller is backing a rate cut this

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Speaker 1: month to support a labor market that he says is

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Speaker 1: showing signs of weakness. His remarks set him apart from

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Speaker 1: most of his fellow policymakers who have characterized the employment

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Speaker 1: landscape in the US as still being solid. But Waller

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Speaker 1: argues that inflation expectations remain anchored and wage growth isn't accelerating.

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Speaker 2: I believe it makes sense to cut the formc's policy

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Speaker 2: rate by twenty five basis points two weeks from now

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Speaker 2: and looking to later this year. If, as I expect,

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Speaker 2: underlying inflation remains in check with headline inflation data reporting

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Speaker 2: modest but temporary increases from inflate tariffs that are not

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Speaker 2: unanchoring inflation expectations, and the economy continues to grow slowly,

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Speaker 2: I would support even further twenty five basis point cuts

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Speaker 2: to move policy towards neutral.

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Speaker 1: In a question and answer session after his speech at

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Speaker 1: an event hosted by The Money Marketers, Walla said that

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Speaker 1: the timing of additional FED rate cuts beyond the one

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Speaker 1: that he's pushing for would depend on incoming data. Speaking

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Speaker 1: separately to Bloombergs for Cisco, FED President Mary Daily says

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Speaker 1: that she thinks it's reasonable to plan on two interest

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Speaker 1: rate cuts this year.

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Speaker 3: I can't wait forever because if we wait too inflation

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Speaker 3: gets to two percent, well, then we've lost We've likely

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Speaker 3: injured the economy in some way that was completely unnecessary.

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Speaker 3: And so I'm of the mind that you know that

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Speaker 3: the summary of economic projections we put out, which had

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Speaker 3: two rate cuts for this year, I think that's a

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Speaker 3: reasonable outlook.

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Speaker 1: To have Mary Daily, however, did not commit to an

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Speaker 1: immediate cut. The latest commentary from policymakers comes as the

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Speaker 1: S and P five hundred clothes at an all time

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Speaker 1: high on Thursday, briefly topping six three hundred now. The

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Speaker 1: latest news on rate cuts comes as FED Chair Jerome

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Speaker 1: Powell responded to concerns over the two point five billion

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Speaker 1: dollar renovation to Federal Reserve buildings in Washington. The criticism

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Speaker 1: over the construction has coincided with President Trump's increasing hostility

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Speaker 1: towards the FED, as the President lobbies for lower interest

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Speaker 1: rates in a letter to the White House's Office of

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Speaker 1: Management and Budget, Powell now says that the FED has

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Speaker 1: added a web page for transparency about the renovations. With

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Speaker 1: more hiss Our, International Economics and Policy correspondent Mike McKee

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Speaker 1: Pale says.

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Speaker 4: That they're misunderstood that the FED has been regularly monitoring

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Speaker 4: the costs they've gone up by circumstances outside of their control,

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Speaker 4: plus the fact that they're renovating two buildings from the

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Speaker 4: nineteen thirties that have never been renovated. They have to

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Speaker 4: do things like asbestos removal and shore up the building

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Speaker 4: on the inside, so they don't collapse.

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Speaker 1: Bloomberg's Mike McKee speaking there. Joan Powell also says that

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Speaker 1: he has now asked the US Inspector General to conduct

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Speaker 1: a fresh review of the project.

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Speaker 5: Now.

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Speaker 1: Some traders have placed contrarian bets that the Bank of

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Speaker 1: England will cut interest rates in the UK by seventy

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Speaker 1: five basis points this year, with a possible return for

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Speaker 1: them of a thousand percent on the line. The wages

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Speaker 1: were made yesterday despite the market moving in the opposite

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Speaker 1: direction after a hotter than expected inflation print. Bloombergs James

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Speaker 1: Walcock has the story.

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Speaker 5: This gamble rests on the labor market. Although this week

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Speaker 5: saw UK inflation rising to three point six percent, yesterday's

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Speaker 5: jobs data saw the number of employees on payroll drop

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Speaker 5: and vacancies fall for the thirty sixth consecutive month. So

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Speaker 5: although options trading is anonymous, the thinking behind the one

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Speaker 5: point five million pounds in debts is likely. The Bank

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Speaker 5: of England will have to address Britain's cooling labor market.

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Speaker 5: It's made even riskier by the ons jobs dated being

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Speaker 5: subject to frequent, sometimes quite drastic revisions in London. James Wilcock,

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Speaker 5: Bloomberg Radio.

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Speaker 1: Staying with the UK. It has emerged that details of

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Speaker 1: more than one hundred Britons, including spies and special forces,

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Speaker 1: were in a data league of Afghan collaborators. Almost nineteen

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Speaker 1: thousand people had their information compromised. In twenty twenty two,

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Speaker 1: courts had blocked journalists from reporting the news as the

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Speaker 1: UK government spent eight hundred and fifty million pounds on

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Speaker 1: a secret relocation program for thousands of Afghans at risk

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Speaker 1: of retaliation from the Taliban Labour. MP and Leader of

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Speaker 1: the House of Commons Lucy Powell says that the whole

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Speaker 1: situation has been uncomfortable.

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Speaker 6: There are many many questions here about how this data

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Speaker 6: leak happened, what were the consequences of it, what actions

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Speaker 6: were taken as a result, and what procedures and policies

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Speaker 6: have been put in place to make sure that that

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Speaker 6: would never happen again.

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Speaker 1: Lucy Powell and other members of the government are facing

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Speaker 1: calls for a public inquiry. The Shadow Defense Secretary James

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Speaker 1: Cartilage apologized on behalf of the former Conservative government which

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Speaker 1: was in power when that leak was discovered. The US

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Speaker 1: Commerce Department will impose anti dumping tariffs of ninety three

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Speaker 1: point five percent on imports of Chinese graphites, which is

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Speaker 1: a key battery component. The new duties will be a

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Speaker 1: blow to battery manufacturers as they add to existing rates,

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Speaker 1: making the effective tariff one hundred and sixty percent. Tesla

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Speaker 1: and its key battery supplier, Japan's Panasonic, were among companies

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Speaker 1: pushing to block the new tariffs. The new charges are

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Speaker 1: set to make the global electric vehicles apply chain even

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Speaker 1: trickier and in earnings, Netflix has reported second quarter results

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Speaker 1: that exceeded expectations in every major metric. Revenue at the

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Speaker 1: firm grew to eleven point one billion dollars over the period,

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Speaker 1: with earnings jumping to seven dollars nineteen per share. CEO

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Speaker 1: Ted Sarandols says his outlook is positive.

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Speaker 7: We're feeling really good about the business. We had a

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Speaker 7: plan to reaccelerate growth and we've delivered on that plan.

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Speaker 7: And engagement, which we view as our best proxy for

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Speaker 7: member happiness because when people watch more, they stick around longer,

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Speaker 7: so that's retention.

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Speaker 1: Netflix is Ted Sarandelsh speaking there now. The final season

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Speaker 1: of Squid Game was one of a steady slate of

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Speaker 1: popular shows that Netflix released. The company has also raised

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Speaker 1: its forecast for full year sales and profit margins. It

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Speaker 1: expects to generate up to forty five point two billion

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Speaker 1: dollars in sales this year. And lastly, in sports news,

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Speaker 1: England are through to the semi finals of the Women's

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Speaker 1: European Football Championship after beating Sweden on penalties. The defending

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Speaker 1: champions overturned a two nerl deficit with an equalizer from

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Speaker 1: nineteen year old Michelle Ajimang in the eighty first minute,

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Speaker 1: taking the match to extra time. Manager Serena Viiegman said

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Speaker 1: that the sides three to two spot kick victory was eventful.

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Speaker 7: Still very emotional.

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Speaker 8: I think a lot of Dan still in my life,

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Speaker 8: in my body, I mean, but.

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Speaker 1: Yeah, crazy game, England coach Serena Wiegman speaking there. The

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Speaker 1: lion Ss will now face Italy in the semi finals

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Speaker 1: and next Tuesday. And if you're hanging in there for

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Speaker 1: the golf, Matt Fitzpatrick is hoping to build on his

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Speaker 1: promising start at the Open Championship. He goes into the

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Speaker 1: second round at Royal Port Rush with a share of

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Speaker 1: the lead on four underpart And those are our top

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Speaker 1: stories for you this morning. Let's have a look at

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Speaker 1: the markets then, So in Asia you got the MSCI

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Speaker 1: AH Specific Index up by three tenths of one percent,

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Speaker 1: the taie x that jump to higher almost one percent,

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Speaker 1: the hands send Tech Index also gaining, thanks in part

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Speaker 1: to TSMC's upbeat guidance lifting semiconductors in Asia, US and

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Speaker 1: Europeans stop futures firmly in the green, the S and

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Speaker 1: P five hundred closing at an all time high yesterday.

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Speaker 1: We had solid US retail sales yesterday. The dollar is lower,

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Speaker 1: Treasury is catching a bid after those comments from Waller

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Speaker 1: about an interest rate cut the upcoming meeting, and we

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Speaker 1: have a sales update that we're watching out full from Berbery.

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Speaker 1: So those are the markets. In a moment, will bring

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Speaker 1: you the latest on the shifting sands around the outlook

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Speaker 1: now for US interest rates, plus why the G twenty

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Speaker 1: in South Africa has become a chance for a bit

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Speaker 1: of diplomatic speed dating. Before that, though, another story is

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Speaker 1: caught my attention today. AI agents are about to go mainstream. Now.

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Speaker 1: This is the artificial intelligence software that can complete multi

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Speaker 1: step tasks for users with quite minimal supervision. OpenAI is

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Speaker 1: going to roll out these new chat GPT options that

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Speaker 1: basically do more than just research. They browse, type, and

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Speaker 1: click on the Internet for you, so they can streamline

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Speaker 1: your sort of personal and professional life. It does mean

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Speaker 1: you have to pay for them if you use chat,

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Speaker 1: GPT pro Plus and team this. According to Blueberg's Rachel Metz,

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Speaker 1: who's been writing about this, Microsoft and rival Anthropic are

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Speaker 1: also focusing on this AI agents. It's the next step

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Speaker 1: in AI. Salm Altman has in the past call it

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Speaker 1: the next giant breakthrough. I was pretty dubious about getting

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Speaker 1: sucked into another kind of time consuming Internet world, maybe

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Speaker 1: akin to social media. But actually I've started to see

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Speaker 1: some productivity gains from AI, so I wonder exactly what

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Speaker 1: the capabilities of AI agents are really going to be.

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Speaker 1: We're going to find out pretty soon. There are also

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Speaker 1: some warnings though about safety and security risks that could

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Speaker 1: increase with them. You do still have to give them

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Speaker 1: apparently permission to make any purchases if they do get

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Speaker 1: to that point for you. But it's a really interesting

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Speaker 1: piece that Rachel's written about exactly when you'll get your

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Speaker 1: hands on these AI agents. I'm going to put a

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Speaker 1: note and a link to that story in our show

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Speaker 1: notes for you now let's think about the Federal Reserve.

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Speaker 1: Christopher Waller saying that policymakers should cut interest rates by

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Speaker 1: twenty five basis points this month to support the US

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Speaker 1: labor market. Joining me now as our market's live stash.

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Speaker 1: It's Mark Cranfield on this story. Good morning, Mark. So

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Speaker 1: the next FED meeting is the twenty ninth to the

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Speaker 1: thirtieth of July, and Washington what data is. While appointing

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Speaker 1: to to support a cuts.

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Speaker 8: He favors the labor market, saying that it is not

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Speaker 8: quite as strong as it seems to be on the surface,

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Speaker 8: that there's underlying issues there, and that wages growth is

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Speaker 8: helping to keep inflation down as well. So he sees

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Speaker 8: that as being a bigger risk than some of his

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Speaker 8: colleagues do. So he's very focused on that part of it.

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Speaker 8: It's yet another signal to investors that there's quite a

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Speaker 8: split within the FED thinking at the moment there are

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Speaker 8: He's not the only one who thinks there should be

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Speaker 8: early interest rate cuts. Mary Daily also says the Fed

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Speaker 8: shouldn't wait too long. But then, of course, we've also

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Speaker 8: heard some people this week saying that patients is the

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Speaker 8: best way to go and they're not ready, so should

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Speaker 8: be a pretty lively meeting behind closed doors later in

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Speaker 8: the month.

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Speaker 1: Although are we getting to the point where we have

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Speaker 1: to ask about where the policymakers' comments are entirely focused

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Speaker 1: on the economics? Remember only yesterday present charm speculating about

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Speaker 1: firing jerown pals had to defend the FEDS bending on renovations,

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Speaker 1: and he's still under pressure. How do market see that?

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Speaker 8: I think the traders have been thinking that way for

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Speaker 8: a few weeks already. I think if they weren't concerned

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Speaker 8: that there was some politic in going on and that

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Speaker 8: Jerome Power was under extreme pressure from outside sources, you

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Speaker 8: wouldn't have the betting markets giving any odds at all

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Speaker 8: on Jerome Power leaving before the end of his term.

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Speaker 8: As it is, I think at one stage this week

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Speaker 8: we had forty odds that Jerome Power would not finish

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Speaker 8: his term, which seems quite incredible when you think that

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Speaker 8: he is the chairman of the Federal Reserve. So the

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Speaker 8: fact that traders are even willing to make bets on

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Speaker 8: the fact that we may have a different Fed chairman,

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Speaker 8: that really just shows how seriously they're having to take that.

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Speaker 8: It's also being reflected in the value of the US

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Speaker 8: dollar and the shape of the usual curve. Those are

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Speaker 8: also things which move in relation to that. I get

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Speaker 8: the sense that traders don't want to go all out

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Speaker 8: on it. Yet it still feels like a slightly a

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Speaker 8: remote risk. But he is no longer something which they

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Speaker 8: can't pay any attention to, a tool. They are giving

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Speaker 8: it some credence.

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

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Speaker 1: this morning. Our market's life strush is Mark Cranfield. So

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Speaker 1: some food for thought. They're on the fared. Now let's

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Speaker 1: think about South Africa. The finance minister in godong Wana

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Speaker 1: has told Bloomberg that the group of twenty finance ministers

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Speaker 1: and central governors who are meeting near Durban in South

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Speaker 1: Africa are close to a deal on a communicate. Of course,

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Speaker 1: the US Treasury sectually, Scott Bessett, has not been at

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Speaker 1: that gathering and the US tariff war has overshadowed it.

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Speaker 1: Joining US now from the G twenty event in South

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Speaker 1: Africa is our europe correspondent to Oliver krook Ollie. Good morning.

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Speaker 1: President Trump's trade and tariff policies have been sending shockwaves

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Speaker 1: through the global economy. So just firsty, what's the mood

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Speaker 1: in South Africa.

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Speaker 9: Not just the trade policy, because you know, there's been

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Speaker 9: the whole debate about the FED share potentially being removed

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Speaker 9: early and there was this press conference that was given

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Speaker 9: by Donald Trump just about two nights ago, actually just

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Speaker 9: minutes before I was going to sit down with the

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Speaker 9: Norwegian finance minister, and I was just the sort of

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Speaker 9: the Norwegian croner up and that moved by a full

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Speaker 9: percentage point right in the wake of all of these

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Speaker 9: sort of conversations. So it really sort of highlights this

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Speaker 9: idea that the Trump administration with its trade war but

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Speaker 9: also at sort of domestic policy and politics within the

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Speaker 9: United States on the FED chair, but really having really

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Speaker 9: large impacts across the world. You know, the old adage

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Speaker 9: about the dollars our currency or problem very much holding

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Speaker 9: the case, and it does cause some concerns about global

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Speaker 9: financial stability, which is exactly what I've been hearing with

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Speaker 9: a number of the finance ministers that I've been speaking

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Speaker 9: to over the last couple of days. We should also

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Speaker 9: say there's been sort of some interesting developments here on

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Speaker 9: the side of the EU. A lot of the sort

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Speaker 9: of big EU countries have also had a meeting yesterday

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Speaker 9: with Canada, South Korea, and Japan all talking about tariff policy.

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Speaker 9: And this is sort of going into some of the

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Speaker 9: reporting that we have been doing, the concept that maybe

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Speaker 9: if the United States continues to cause massive problems on

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Speaker 9: trade around the world, that the negotiations that there could

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Speaker 9: be a more formal alignment between not just the European

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Speaker 9: Union and European countries, but potentially broader to something closer

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Speaker 9: to the sort of G six and that sort of coalition.

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Speaker 9: And I spoke to one European finance minister who really

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Speaker 9: does not believe that whatever we get in the next

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Speaker 9: two weeks, whether it's you know, thirty percent terrafts on

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Speaker 9: the EU or continued negotiations or a deal, that that

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Speaker 9: will be the end of the conversation.

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Speaker 5: That those sort of.

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Speaker 9: Larger coalitions need to be formalized in a certain way

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Speaker 9: potentially to deal with the United States well into the future.

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Speaker 10: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 10: stories making news from London to Wall Street and beyond.

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Speaker 1: Caroline Hepka and.

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