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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg daybreakurate podcast, available every morning on Apple,

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Speaker 2: Spotify or wherever you listen. It's Thursday, the nineteenth of June,

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Speaker 2: in London. I'm Caroline Hepka. Coming up today, American officials

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Speaker 2: prepare for a potential strike on Iran, as President Trump

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Speaker 2: says he prefers to make a final decision one second

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Speaker 2: before it's due. The Fed keeps interest rates steady as

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Speaker 2: Jerome Powell warns of weak US growth and a pickup

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Speaker 2: in inflation ahead of today's Bank of England decision.

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Speaker 3: Plus buyer's remorse.

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Speaker 2: Non Doms rushed to sell their London homes as one

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Speaker 2: of the architects of the super Rich tax plan calls

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Speaker 2: its role out a mistake. Let's start with a roundup

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Speaker 2: of our top stories. Sources have told Bloomberg that senior

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Speaker 2: US officials are preparing for a possible strike on Iran

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Speaker 2: in the coming days. The reporting indo that the Trump

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Speaker 2: administration is assembling the infrastructure necessary to directly enter a

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Speaker 2: conflict with Tehran, while the situation is said to be

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Speaker 2: evolving and could still change. Some of those who spoke

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Speaker 2: to Bloomberg on condition of anonymity, pointed to potential plans

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Speaker 2: for a weekend strike. President Trump was asked yesterday if

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Speaker 2: he would be approving a strike on Iran.

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Speaker 4: You do I seriously think I'm going to answer that, quay?

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Speaker 3: Will you strike the Iranian nuclear component?

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Speaker 4: And what time exactly?

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Speaker 5: Sir?

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Speaker 4: Sir would you strike it?

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Speaker 6: Would you please.

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Speaker 4: Inform U so we can be there and watch.

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Speaker 3: I mean, you don't know that I'm going to even

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Speaker 3: do it.

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Speaker 7: You don't know.

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Speaker 4: I may do it, I may not do it.

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Speaker 1: I mean, nobody knows what I'm going to do.

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Speaker 2: The comment suggests that the US President's view has changed

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Speaker 2: significantly following Israel's bombardment of Iran's nuclear and ballistic missile facilities.

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Speaker 2: Iran had been in negotiations with the US over its

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Speaker 2: nuclear program for weeks and had a further meeting scheduled

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Speaker 2: when Israel attacked on Friday. Well since Israel's strikes started,

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Speaker 2: Iran has fired four hundred ballistic missiles and hundreds of

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Speaker 2: drones at Israel, killing twenty four people and injuring more

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Speaker 2: than eight hundred. At least two hundred and twenty four

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Speaker 2: Iranians have been killed by Israel's attacks. That's according to

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Speaker 2: the government there. The country's supreme leader, Ayatola Hamone, said

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Speaker 2: that the Islamic Republic will not surrender.

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Speaker 7: In telling the Iranian nation to surrender is not a

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Speaker 7: wise thing to say. America getting involved in this would

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Speaker 7: be one hundred percent to its detriment. The damage to

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Speaker 7: America if it gets militarily involved would be an irreparable damage,

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Speaker 7: no doubt.

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Speaker 2: The words of Iran's Ayatola Ali Haamane, spoken thereby a translator.

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Speaker 2: As Iranian Foreign Minister Abbas Arakchi said in a social

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Speaker 2: media post that his country remained quote committed to diplomacy

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Speaker 2: and had never sought and would never seek nuclear weapons.

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Speaker 2: Bloomberg unders sounds that foreign ministers from the UK, France,

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Speaker 2: and Germany are planning to hold nuclear talks with their

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Speaker 2: Iranian counterparts in Geneva on Friday.

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Speaker 4: Now.

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Speaker 2: Shell CEO says that GPS jamming in the Strait of

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Speaker 2: Hormuz is proving to be a problem for navigation in

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Speaker 2: the area. About a fifth of the world's crude output

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Speaker 2: passes through the narrow waterway at the entrance of the

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Speaker 2: Persian Gulf.

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Speaker 3: Shell co WHYLEL.

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Speaker 2: Swan says that while the route remains open, signal blocking

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Speaker 2: is a major hindrance for vessels passing through the area.

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Speaker 8: What is particularly challenging right now is some of the

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Speaker 8: jamming that's happening on GPS devices and the like, which

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Speaker 8: is a concern. The Strait of Hormus is, at the

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Speaker 8: end of the day, the artery through which the world's

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Speaker 8: energy is flowing.

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Speaker 2: Well el San. They're speaking to Bloomberg at Japan's Energy

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Speaker 2: summit in Tokyo. While there has not yet been any

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Speaker 2: indication that Iran will close the Strait of Hormuz, all

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Speaker 2: analysts hel Bloomberg an attempt to do so could push

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Speaker 2: prices above one hundred and twenty dollars a bowel. Moving

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Speaker 2: on to the Federal Reserve, officials voted again to hold

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Speaker 2: interest rates steady yesterday, but new projections highlight a growing

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Speaker 2: divide among policymakers. The FMC unanimously chose to keep the

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Speaker 2: benchmark federal funds rate in a range of four point

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Speaker 2: two five to four point five percent, This for a

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Speaker 2: fourth meeting in a row. After the decision, the Central

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Speaker 2: Banks chaired your own Powell told reporters the Fed is

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Speaker 2: in a good position.

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Speaker 6: Despite elevated uncertainty, the economy is in a sourd position.

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Speaker 6: That is why we think the appropriate thing to do

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Speaker 6: is to hold where we are. The current stance of

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Speaker 6: monetary policy leaves us well positioned to respond in a

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Speaker 6: timely way to economic developments.

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Speaker 2: That is chaired Jerown Powells speaking. The latest FED projections

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Speaker 2: point though to a split amongst members. Seven members now

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Speaker 2: foresee no rate cuts this year to signal one more cut,

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Speaker 2: whilst ten want at least two cuts before the end

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Speaker 2: of the year. The Federal Reserve did also downgrade it's

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Speaker 2: estimates for growth this year and projected higher inflation well.

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Speaker 2: The Bank of England is also set to hold interest

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Speaker 2: rates steady. During today's Monetary Policy Committee meeting, policymakers are

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Speaker 2: expected to keep borrowing costs at four point two five

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Speaker 2: percent for the UK and signal that they will stick

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Speaker 2: to the central banks one cut every other meeting approach.

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Speaker 2: Our chief UK economist Dan Hansen says that investors will

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Speaker 2: be focused on indicators of the rate path ahead.

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Speaker 9: We watch the votes split, we watch all these things.

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Speaker 9: No one's expecting them to change rate, but I think

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Speaker 9: assigns that effectfully. Which side of the trade off that

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Speaker 9: central banks face. Is it, you know, high inflation or

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Speaker 9: is it the weaklave market. I think it's good that's

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Speaker 9: going to be what effectually gets revealed.

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Speaker 2: That was Bloomberg's Dan Hanson speaking there. Bank of England

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Speaker 2: officials lowered rates by a quarter point in May in

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Speaker 2: a surprisingly close vote due to inflation concerns. Since then, though,

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Speaker 2: inflation has surged to its fastest pace in more than

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Speaker 2: a year, and escalating tensions in the Middle East are

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Speaker 2: now complicating matters by driving up oil prices. With only

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Speaker 2: four pending or trading IPOs so far in twenty twenty five,

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Speaker 2: London stock market is looking to Asia for new business.

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Speaker 2: Bloomberg's Ewan Potts has the details on that story.

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Speaker 4: Now.

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Speaker 5: If US stock markets have sent mixed signals to Chinese

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Speaker 5: companies in recent years, the message from London is clear,

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Speaker 5: your listing is welcome on the LC. Speaking to Bloomberg

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Speaker 5: in Shanghai, the City of London Corporation's chairman told us

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Speaker 5: we need more IPOs happening in London. He says the

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Speaker 5: corporation can provide opportunities for Chinese firms to secure customers

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Speaker 5: and funding in the UK. And drive them to list

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Speaker 5: in city via its connector scheme with Shanghai. China introduced

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Speaker 5: the Stock connect program with the UK in twenty nineteen,

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Speaker 5: allowing companies to issue depository receipts on each other's exchanges,

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Speaker 5: but six years later only a handful of firms have

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Speaker 5: taken advantage of the scheme. With the LSE facing a

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Speaker 5: rash of delistings and takeovers, its promoters are very keen

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Speaker 5: to get some new business through the front door in London.

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Speaker 5: I'm ewing pots Bloomberg.

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Speaker 2: Radio also staying here in London. The number of high

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Speaker 2: end London homes up for sale is at a record

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Speaker 2: In the latest sign of wealthy people leaving the country,

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Speaker 2: Lawnres data for May shows a twenty two percent year

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Speaker 2: on year jump in properties worth more than five million

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Speaker 2: pounds on the market. The property site says that the

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Speaker 2: bump is linked to Labour's tax changes, but that few

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Speaker 2: of the listings are actually selling. Bloomberg's James Walcock has.

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Speaker 10: The story the data from lnrez is the latest sign

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Speaker 10: there has been a sudden jump enrich people looking for

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Speaker 10: an exit from the UK. It comes as one of

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Speaker 10: the architects of the Labour government's non don policy tells

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Speaker 10: Bloomberg it was a mistake to ramp up inheritance taxes

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Speaker 10: from zero to forty percent overnight cent taxis Aaron ad

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Speaker 10: Varney says that created a sudden cliff edge for Britain's

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Speaker 10: wealthiest individuals, and there are now reports Chancellor vitel Reads

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Speaker 10: is looking again at the measures given the growing number

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Speaker 10: of data points suggesting non doms are on the move

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Speaker 10: in London.

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Speaker 3: James Wilcock Bloomberg Radio.

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Speaker 2: So those are top stories for you this morning. Thinking

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Speaker 2: about the markets, a check of oil prices seventy six

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Speaker 2: dollars fifty five for brak crewed futures. We've had a

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Speaker 2: very volatile trading week, but actually those brank creud futures

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Speaker 2: are now down two tenths of one percent despite the

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Speaker 2: uncertainty and the possibility of the US getting involved with

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Speaker 2: a direct strike on Iran. In terms of US stocks,

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Speaker 2: they closed little changed yesterday. Stop futures for the US

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Speaker 2: are in the red. European stock futures are currently down

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Speaker 2: by three of one percent. Also, you've got something of

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Speaker 2: a sell off in Asia, the hang saying is now

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Speaker 2: down almost two percent, and interestingly, Japanese companies I was

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Speaker 2: reading on Bloomberg today are delisting from the Tokyo Stock

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Speaker 2: Exchange at a record pace. The dollar, meanwhile, is stronger

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Speaker 2: against most major currencies. The Bloomberg Dollar Spot indexes up

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Speaker 2: by tenth of one percent. We have lots of great

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Speaker 2: decisions later today the UK, but also Switzerland, Norway, Turkey,

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Speaker 2: and remember that cash trading in treasuries is closed today

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Speaker 2: for the Juneteenth US holiday in America. So those are

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Speaker 2: the markets coming up. In a moment, though, we're going

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Speaker 2: to bring you to the latest on the events in

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Speaker 2: the Middle East, bring you all of the details, and

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Speaker 2: also mull over what happened with the Federal Reserve yesterday. Okay,

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Speaker 2: they didn't change interest rates, but there was a lot

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Speaker 2: that we could gain from the press conference and from

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Speaker 2: the projections and from the dot plot. But there's also

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Speaker 2: another story that I wanted to bring to you and

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Speaker 2: to talk about this morning. So UK consumer confidence has

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Speaker 2: jumped to the highest level this year, and we've been

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Speaker 2: thinking about why that is. Apparently it is down to

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Speaker 2: younger workers. So this is gen Z people born between

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Speaker 2: the mid nineties and twenty ten, so younger workers. This

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Speaker 2: is according to the BRC survey. This is the British

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Speaker 2: Retail Consortium. The CEO head and Dickinson says that it

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Speaker 2: may reflect the increase in the minimum wage from April,

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Speaker 2: so I had to go back look at what were

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Speaker 2: the was the minimum wage increase. Now, on the first

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Speaker 2: of April, the national living wage went up by six

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Speaker 2: point seven percent, so in percentage terms quite a lot.

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Speaker 2: Twelve pounds twenty one is the hourly rate. It actually

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Speaker 2: works out to only about seventy seven pence per hour though,

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Speaker 2: but even younger workers, so those sixteen to seventeen and

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Speaker 2: eighteen to twenty who have a separate minimum wage amount

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Speaker 2: in the UK, they also got big bumps higher sixteen

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Speaker 2: percent and eighteen percent high. It only equates like a

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Speaker 2: few pence per hour, but apparently it has made all

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Speaker 2: the difference. So yes, the pain for employers, the extra

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Speaker 2: burden really weighed on them, but it has done wonders

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Speaker 2: actually for how young people feel. Helen Dickinson saying that

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Speaker 2: their economic outlook and their expectations for their future finances,

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Speaker 2: they feel much more optimistic about those. So that was

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Speaker 2: one of the stories that I read this morning, and

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Speaker 2: I'll put a link to it in our show notes

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Speaker 2: as well, if you want to think about that. Let's

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Speaker 2: also turn our attention though to the Middle East. Senior

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Speaker 2: US officials are preparing for a possible US strike on

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Speaker 2: Iran in the next few days, but the situation remains

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Speaker 2: highly uncertain, both by design from President Trump and also

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Speaker 2: due to ongoing diplomatic talks. Joining US now has Binbig's

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Speaker 2: head of Middle East and North Africa coverage, Stuart Livingston Wallace, Stuart,

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Speaker 2: good morning. President Trump campaigned on the promise of being

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Speaker 2: a peacemaker, that was the word he used, keeping the

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Speaker 2: US out of Middle East wars. What do we know

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Speaker 2: about possible US involvement in the Israel Iran conflict?

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Speaker 4: Yeah, good morning. I mean, it's certainly true to say

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Speaker 4: that they are preparing to do it if they feel

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Speaker 4: it's necessary. And you know, we do have to stress

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Speaker 4: here that as far as we can tell, no final

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Speaker 4: decision has been made. But I think Trump wants to

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Speaker 4: be in a position where he candoed if he wants to.

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Speaker 4: So what does that actually look like. I mean, it

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Speaker 4: means refueling capacity is being moved into the region. It

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Speaker 4: means a carry a strike group that's currently the Indo

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Speaker 4: Pacific that could be here fairly shortly. It's already got

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Speaker 4: one in the area, and then it's got additional destroyers

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Speaker 4: in the East and mead. So in terms of its capability,

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Speaker 4: it's certainly there. And when we think specifically about this conflict,

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Speaker 4: you know, and the so called targets in this conflict,

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Speaker 4: which are these specifically the nuclear sides, it really is,

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Speaker 4: as far as we can tell, only US capabilities that

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Speaker 4: would be able to eliminate them altogether, because specifically they

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Speaker 4: are buried so deep underground that you really need these

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Speaker 4: sort of massive munitions, the so called bunker busters, in

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Speaker 4: order to be able to get down that far and

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Speaker 4: really wipe them out.

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Speaker 2: Yeah. Meanwhile, Ivan has rejected this idea of capitulation, the

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Speaker 2: demand from president from the foreign ministers also talked about

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Speaker 2: the country being committed to diplomacy. Can escalation be avoided

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Speaker 2: at this point? I know you've said that no decision

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Speaker 2: has been made by the US, but that's quite crucial.

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Speaker 2: Can diplomacy avoid escalation?

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Speaker 4: I mean, I think a lot of the parties would

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Speaker 4: would hope that it can, you know, And when we

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Speaker 4: look at the sort of the actors involved in this,

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Speaker 4: it is you know very much the Gulf States, and

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Speaker 4: I think they're looking at this with a high degree

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Speaker 4: of anxiety because, you know, it has to be said

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Speaker 4: that most of them have grown up with just these

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Speaker 4: endless wars around them, and I think over the last

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Speaker 4: several years they've come to conclusion that that is no

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Speaker 4: way forward. They would much rather go after economic prosperity

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Speaker 4: than continuing, you know, this endless fighting. So I know

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Speaker 4: they are trying very hard to come to some sort

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Speaker 4: of agreement. You know, similarly of the Europeans, I think,

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Speaker 4: and we saw those comments from Macon, the G seven

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Speaker 4: and not just him, you know, really pushing for some

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Speaker 4: sort of diplomatic solution. But the truth of the matter

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Speaker 4: is that if the demand from the US in Israel

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Speaker 4: is that Iran gives up all enrichment of uranium on

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Speaker 4: any capacity that is even up to a civilian use level,

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Speaker 4: and the Iranian's red line is that they must absolutely

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Speaker 4: retain the right to do that, it's very hard to

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Speaker 4: see how you can brok us some sort of agreement

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Speaker 4: with those conditions being set by both sides.

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Speaker 2: Yeah, indeed, and so if there is escalation, what does

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Speaker 2: that mean for the region.

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Speaker 4: I mean, it's a sort of slightly facile answer, but

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Speaker 4: the truth of the matter is that it's not good.

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Speaker 4: And I argue also that it's not good for the

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Speaker 4: wider world because the rest of the world is so

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Speaker 4: dependent on this region for energy supplies. You know that, yes,

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Speaker 4: they have diminished in importance in terms of what few

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Speaker 4: the global economy, but the global economy cannot function without it.

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Speaker 4: So in a scenario where this widens out and you

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Speaker 4: have a disruption, for instance, to energy supplies, that is

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Speaker 4: going to have a profound impact on economies pretty much

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Speaker 4: across the globe. That in turn is going to have

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Speaker 4: an impact on trade, It's going to have an impact

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Speaker 4: on interest rates, is going to have an impact on everything.

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Speaker 4: So in terms of why the world should care, yes,

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Speaker 4: there is an immediate danger to the region itself, but

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Speaker 4: it has far greater implications.

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Speaker 2: It's ours. Thank you so much, Stuart for being with

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Speaker 2: me this morning and for discussing this. Bloomberg's head of

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Speaker 2: Middle East and North Africa coverage, Stuart Livingston Wallace. Which

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Speaker 2: brings me to the next conversation around the US federal reserves.

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Speaker 2: They held interest rates, of course steady yesterday, but very

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Speaker 2: much thinking about oil prices, the inflationary impact as well

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Speaker 2: as tariffs, and ahead of other interest rate decisions from

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Speaker 2: the UK, Switzerland and others. Today, let me bring in

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Speaker 2: Bloomberg anchor you good to now on this Good morning Christy.

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Speaker 2: So look, the split in the FEDS dot plot is

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Speaker 2: also seen as very very key. This is what officials

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Speaker 2: expect interest rates to do. You know, they put it

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Speaker 2: up anonymously, but where they see interest rates going. Why

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Speaker 2: our views now so dispersed is that oil is it

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Speaker 2: character driven?

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Speaker 9: What is it?

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Speaker 11: It's a really fun combination of both, not to mention

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Speaker 11: the uncertainty that's being shown up in the markets as well,

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Speaker 11: and I think something that a lot of people preps

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Speaker 11: weren't listening to as clearly in the press conference but

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Speaker 11: also in some of the fedspeak leading up to this

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Speaker 11: moment has been that because financial conditions are so valid

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Speaker 11: on because you do see inflation expectations from the markets

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Speaker 11: being priced in to extremes on both ends, that actually

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Speaker 11: does have real consequences for the real economy. So that's

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Speaker 11: going to add into the other two elements that we're

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Speaker 11: talking about, which is that sustained oil pressure, and that's

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Speaker 11: of course going to be key for Americans who are

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Speaker 11: hitting the roads this summer. It is driving season in

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Speaker 11: the United States for the world's first BIGGAUS economy, but

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Speaker 11: also biggest oil consuming in the world. The other piece

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Speaker 11: of this is tariff's and if you look at the

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Speaker 11: last couple of months of data, we haven't seen that

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Speaker 11: show up in the CPI for example. We haven't seen

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Speaker 11: it shown up in the lab data as much. In fact,

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Speaker 11: the only crafts we've seen the labor data has been

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Speaker 11: the most recent job as claims number that have come

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Speaker 11: out in the United States, and even that was an

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Speaker 11: uptick that was ultimately seen as.

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Speaker 3: Only one data point.

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Speaker 11: Early indications of that tariff impact are starting to show

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Speaker 11: up in things like import prices, or factory prices or

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Speaker 11: producer prices for example, because you are now starting to

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Speaker 11: see that hard shipping data that we saw in terms

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Speaker 11: of fewer Chinese ships, for example, hitting those LA ports.

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Speaker 3: That is starting to show.

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Speaker 11: Up in the import data, but it takes a few

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Speaker 11: cycles for that to actually affect the end consumer. We're

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Speaker 11: not there yet because again, so many retailers have been

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Speaker 11: sitting and hoarding a lot of this merchandise in advance,

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Speaker 11: so it takes a little bit to kind of work through.

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Speaker 11: But that's the point that Chair Powell is making and

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Speaker 11: that we haven't seen it yet, but don't worry that

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Speaker 11: tariff impact is coming.

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Speaker 2: Yeah. Absolutely, And so we have also seen the dollar

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Speaker 2: cashing a bit amid these concerns, I mean, and we

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Speaker 2: also saw the downgrade to growth and the increase in

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Speaker 2: inflation expectations from the FED. But in terms of the

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Speaker 2: oil and the dollar impact maybe from these Middle East tensions,

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Speaker 2: that could also be very significant.

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Speaker 11: Absolutely, And the oil story is key here because, of course,

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Speaker 11: I think the highest we've hit in these latest rounds

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Speaker 11: of escalation in the Middle East has been a top

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Speaker 11: about seventy eight dollars a barrel intraday. That could there

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Speaker 11: are forecasts out there and hedges out there that suggest

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Speaker 11: it could go up to about one hundred. But the

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Speaker 11: flip side of that is that even though Middle East

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Speaker 11: tensions and specifically strikes coming from Vron create a floor

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Speaker 11: under oil prices, the teriff impact, the trade negotiations, that

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Speaker 11: risk to global growth creates a ceiling for oil prices,

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Speaker 11: which is why you continue to see oil spike but

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Speaker 11: not really cross at seventy eight dollars a barrel, and

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Speaker 11: I think it was at a high like sixty six

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Speaker 11: dollars a barrel before the Middle East, So only a

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Speaker 11: ten dollars change, which is a lot in the span

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Speaker 11: of a couple of days, but not a lot in

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Speaker 11: terms of the way to digest it. The risk is

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Speaker 11: when it is sustained at that level or even goes

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Speaker 11: potentially higher, and we saw an element of that in

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Speaker 11: twenty twenty one or twenty twenty two. This is showing

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Speaker 11: up in a really big way because this is where

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Speaker 11: that kind of split between the dot plot actually shows

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Speaker 11: up because we don't know for soft the escalation and

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Speaker 11: how long that'll last. It could be sorted out by tomorrow,

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Speaker 11: for example, and then negotiations would be on the table,

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Speaker 11: and that would bring oil prices right back down, and

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Speaker 11: we go back to a conversation that we had in

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Speaker 11: terms of trade negotiations in terms of driving that inflationary story.

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Speaker 3: The other piece of this, of course, is the labor market.

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Speaker 11: And again this is where even Neil Kashkari made the

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Speaker 11: point over at the Minneapolis Fed that it's very hard

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Speaker 11: to predict right now.

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Speaker 2: Yeah, absolutely, brief word then on what we're also expecting

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Speaker 2: today we're going heading towards a Swiss National Bank of

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Speaker 2: rate decision and also the Bank of England. Some thoughts

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Speaker 2: on those two.

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Speaker 3: They are both significant in very different ways.

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Speaker 11: The Bank of England is far more reactive but expected

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Speaker 11: to hold as well, So keep an eye on kind

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Speaker 11: of how maybe they're leading the charge and things like

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Speaker 11: quantitaive easing or quantitative tightening, for example, following the case

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Speaker 11: of either the BOJ or the Federal Reserve. So they're

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Speaker 11: an interesting case study. The S and B is very

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Speaker 11: important because the expectations are going to cut to zero

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Speaker 11: and there's a couple of folks out there who are

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Speaker 11: saying their head into negative territory. We haven't seen that

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Speaker 11: since COVID really, so could the S and B now

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Speaker 11: be a case study for where Europe is headed?

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