WEBVTT - BAE Systems Gains, Barclays Falls, Capgemini Down

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

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<v Speaker 2>Stock Movers Report, your roundup of companies making moves in

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<v Speaker 2>the stock market, harnessing the power of Bloomberg Data.

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<v Speaker 3>Let's take a look at some of the stocks on

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<v Speaker 3>the move today here in Europe. I'm Caroline Hepgar with

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<v Speaker 3>Lizzie Burton, and we joined by Bloomberg with port of

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<v Speaker 3>Chloe Malay. Chloe. Good to speak to you the start

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<v Speaker 3>of this week. European defense stocks getting quite a significant

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<v Speaker 3>lift given the concerns around Greenland. How are the likes

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<v Speaker 3>of BA Systems and others reacting well.

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<v Speaker 1>Quite positively. It's been, as you mentioned, a really good

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<v Speaker 1>start to the year for defense stocks, and that has

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<v Speaker 1>given all the geopolitical tensions that have been happening. And

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<v Speaker 1>we are starting this week again quite strongly, and this time,

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<v Speaker 1>as you said, because of Greenland. So a group of

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<v Speaker 1>European countries, led by Germany and the UK, is discussing

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<v Speaker 1>plans at the moment for military presence in Greenland, and

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<v Speaker 1>that would be with the purpose of pushing back against

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<v Speaker 1>Trump's threats to take over that territory. You know, he

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<v Speaker 1>said previously that he wasn't ruling out the possibility of

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<v Speaker 1>military force to do so, and then also to really

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<v Speaker 1>show that Europe is serious about a security in the

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<v Speaker 1>Arctic region and that they have the situation they're under control.

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<v Speaker 1>Trump insisted on Sunday that the US would own Greenland,

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<v Speaker 1>saying that acquiring that territory was necessary for national security reasons.

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<v Speaker 1>So all of that points to growing tensions and growing

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<v Speaker 1>uncertainty really because it is still unclear what Trump is

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<v Speaker 1>actually planning to do, and that of course that uncertainty,

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<v Speaker 1>that tension is of course really beneficial for that defense

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<v Speaker 1>trade and we are seeing those defense stocks move high

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<v Speaker 1>NBA in particular, perhaps because the UK is one of

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<v Speaker 1>the big drivers behind behind this plan to put military

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<v Speaker 1>forces in Greenland.

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<v Speaker 3>Okay. Also turning to Barclays, we're looking at it down

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<v Speaker 3>this morning, Clary after Trump's comments on credit card rates,

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<v Speaker 3>talks through that story.

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<v Speaker 1>Yeah, so Trump called for a one year cap on

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<v Speaker 1>those credit card interest rates at ten percent and said

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<v Speaker 1>that credit card lenders would be in violation of the

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<v Speaker 1>law if they don't do that, and there's a deadline

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<v Speaker 1>of January twentieth. So Barclays was weaker this morning on

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<v Speaker 1>the back of that. It has a big US credit

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<v Speaker 1>card business, and then we can also probably expect US

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<v Speaker 1>payers like JP Morgan and City Group would also be

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<v Speaker 1>lower today. So the average interest rate is about twenty percent,

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<v Speaker 1>which is obviously quite steep for consumers. But banks have

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<v Speaker 1>argued that reducing those rates would be a threat to

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<v Speaker 1>profitability for them because there's you know, with credit cards,

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<v Speaker 1>there's no asset to repossess when there's a default, and

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<v Speaker 1>therefore there's no way to cushion that loss, and those

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<v Speaker 1>the arguments therefore is that lower rates might mean that Americans,

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<v Speaker 1>that many Americans could actually lose access to credit and

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<v Speaker 1>therefore be left to pay their lenders and loan sharks

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<v Speaker 1>and whatever. And so this is the argument from banks.

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<v Speaker 1>But we'll see if Trump keeps pushing this. But in

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<v Speaker 1>the meantime, we are seeing Barclays react quite negatively to that.

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<v Speaker 3>Yeah. Again, very interesting sort of intervention into a particular

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<v Speaker 3>business with sort of instant impact.

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<v Speaker 1>Really.

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<v Speaker 3>Morgan Stanley also talking about its preference for software over

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<v Speaker 3>IT services that having an impact on names hire in Europe.

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<v Speaker 1>Yeah. So cap Gemini in particular is down this morning

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<v Speaker 1>after Morgan Stanley downgraded a bunch of stocks in the

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<v Speaker 1>IT sector IT services sector in particular, saying that the

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<v Speaker 1>industry will not be seeing any kind of clear rally

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<v Speaker 1>in twenty twenty six. So one of the biggest threats

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<v Speaker 1>for cap Gemini in particular is actually AI because that

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<v Speaker 1>comes with what analysts have called disintermediation risks, so essentially

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<v Speaker 1>a fancy word just to say that the service is

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<v Speaker 1>provided by cap Gemini, and some of those piers could

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<v Speaker 1>actually become redundant in the AI era. And in addition

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<v Speaker 1>to that, the clients of cap Gemini are also quite

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<v Speaker 1>reluctant perhaps at the moment, to spend on those IT

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<v Speaker 1>services because of continued economic uncertainty. This is the only

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<v Speaker 1>cell rating on that stock don Jim and I, which

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<v Speaker 1>might mean that this is perhaps quite a contrariant take

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<v Speaker 1>from Morgan Stanley and the company might actually end up

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<v Speaker 1>being in better shape than fit. But we'll see if

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<v Speaker 1>Morgan Stanley analysts actually end up being proven right. But

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<v Speaker 1>in the meantime, this downgrade has led to a lot

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<v Speaker 1>of weakness in that stock.

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