1 00:00:02,480 --> 00:00:10,080 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:10,160 --> 00:00:13,319 Speaker 1: Day BAQ podcast, available every morning on Apple, Spotify or 3 00:00:13,320 --> 00:00:16,160 Speaker 1: whatever you listen. It's Tuesday, the twenty second of October. 4 00:00:16,200 --> 00:00:18,200 Speaker 1: Here in London. I'm Caroline Hepkin. 5 00:00:18,040 --> 00:00:21,360 Speaker 2: And I'm Stephen Carroll coming up today. Bonds are selling 6 00:00:21,400 --> 00:00:25,840 Speaker 2: off everywhere as traders trim their expectations for federal reserve 7 00:00:25,920 --> 00:00:26,520 Speaker 2: rate cuts. 8 00:00:26,880 --> 00:00:30,639 Speaker 1: Russia hosts its biggest gathering of global leaders since it 9 00:00:30,760 --> 00:00:32,040 Speaker 1: invaded Ukraine. 10 00:00:32,200 --> 00:00:35,839 Speaker 2: Plus from a gen Z focused financial chatbot to carbon 11 00:00:36,000 --> 00:00:41,040 Speaker 2: fiber vehicle parts, Bloomberg's top twenty five UK startups to watch. 12 00:00:41,159 --> 00:00:42,960 Speaker 1: Let's start with a round up of our top stories. 13 00:00:43,520 --> 00:00:46,400 Speaker 2: Bonds are selling off around the world as investors look 14 00:00:46,400 --> 00:00:50,240 Speaker 2: again at a robust US economy and whether federal reserve 15 00:00:50,320 --> 00:00:54,280 Speaker 2: rate cut expectations are overdone. The tenure Treasury yields jump 16 00:00:54,280 --> 00:00:57,600 Speaker 2: to eleven basis points to four point two percent on Monday, 17 00:00:57,840 --> 00:01:02,279 Speaker 2: as expectations of an increased FED hold in November and 18 00:01:02,400 --> 00:01:06,160 Speaker 2: the likelihood of a Trump election victory grew at that 19 00:01:06,480 --> 00:01:10,680 Speaker 2: Cautious FED officials like Minneapolis Fed President Neil Kashkari, He 20 00:01:10,760 --> 00:01:14,320 Speaker 2: says he favors reducing interest rates at a slower pace 21 00:01:14,400 --> 00:01:15,560 Speaker 2: than the coming quarters. 22 00:01:16,000 --> 00:01:20,640 Speaker 3: Right now, I forecast in some more smartest cuts over 23 00:01:20,640 --> 00:01:24,240 Speaker 3: the next several quarters to get to something around neutral, 24 00:01:24,520 --> 00:01:26,039 Speaker 3: but it's going to depend on the data. 25 00:01:26,720 --> 00:01:31,160 Speaker 2: After Cashgary's comments, overnight indexed swaps suggests a twenty five 26 00:01:31,480 --> 00:01:35,120 Speaker 2: basis point FED cut next month is no longer certain. 27 00:01:35,560 --> 00:01:39,040 Speaker 2: Some traders are also pointing to the IMF's warnings of 28 00:01:39,080 --> 00:01:42,600 Speaker 2: a one hundred trillion dollar debt problem, saying its driven 29 00:01:42,760 --> 00:01:44,760 Speaker 2: concerns about debt supply. 30 00:01:46,120 --> 00:01:49,320 Speaker 1: HSBC is to merge two of its largest businesses outside 31 00:01:49,400 --> 00:01:51,960 Speaker 1: the UK and Hong Kong as part of a regional 32 00:01:52,000 --> 00:01:55,560 Speaker 1: restructure of the bank. It will combine its global commercial 33 00:01:55,600 --> 00:01:58,880 Speaker 1: and investment banking operations, as well as creating a new 34 00:01:59,000 --> 00:02:03,600 Speaker 1: international Wealth and Premier banking business. The changes are part 35 00:02:03,760 --> 00:02:07,800 Speaker 1: of new CEO George el Hedri's plan to reign in costs. 36 00:02:08,120 --> 00:02:12,200 Speaker 1: HSBC also announced the appointment of Pam Kor as Chief 37 00:02:12,240 --> 00:02:13,160 Speaker 1: Financial Officer. 38 00:02:14,520 --> 00:02:18,080 Speaker 2: President Vladimir Putin is hosting Russia's biggest gathering of world 39 00:02:18,160 --> 00:02:21,000 Speaker 2: leaders since the invasion of Ukraine. The leaders of thirty 40 00:02:21,040 --> 00:02:24,120 Speaker 2: two countries, including India, China and South Africa will be 41 00:02:24,200 --> 00:02:27,559 Speaker 2: at the Bricks Summit after membership of the group expanded. 42 00:02:27,880 --> 00:02:30,120 Speaker 2: For Putin, the event has a chance to show the 43 00:02:30,240 --> 00:02:33,200 Speaker 2: US and its allies that he's no pariah. In the 44 00:02:33,240 --> 00:02:35,840 Speaker 2: business part of the summit last week, he compares the 45 00:02:35,880 --> 00:02:39,000 Speaker 2: bricks growth to the G seven countries. 46 00:02:39,880 --> 00:02:42,360 Speaker 4: In the last ten years, more than forty percent of 47 00:02:42,400 --> 00:02:46,680 Speaker 4: the growth of global GDP of the entire world economics 48 00:02:46,720 --> 00:02:49,320 Speaker 4: came from the brick states. According to the results of 49 00:02:49,320 --> 00:02:51,760 Speaker 4: the current year, the average rate of economic growth in 50 00:02:51,840 --> 00:02:55,240 Speaker 4: bricks is projected at four percent. This is higher than 51 00:02:55,280 --> 00:02:57,640 Speaker 4: the rates in the G seven countries. There it is 52 00:02:57,680 --> 00:03:01,520 Speaker 4: only one point seven percent, and higher than the global rates. 53 00:03:01,600 --> 00:03:05,480 Speaker 4: The global rates will be three point two percent, said 54 00:03:06,200 --> 00:03:08,359 Speaker 4: Pregnance Flatimi. 55 00:03:08,440 --> 00:03:11,400 Speaker 2: Putin's comments through a translator. They are come as China 56 00:03:11,480 --> 00:03:14,239 Speaker 2: is on track to become the largest market for Russia's 57 00:03:14,280 --> 00:03:17,639 Speaker 2: pipeline gas this year, overtaking Europe. 58 00:03:18,360 --> 00:03:20,840 Speaker 1: US Secretary of State Anthony Blincoln arrives in the Middle 59 00:03:20,880 --> 00:03:24,200 Speaker 1: East for his eleventh trip since the October seventh attack. 60 00:03:24,280 --> 00:03:27,960 Speaker 1: America's top diplomat has been trying to engineer a cease 61 00:03:28,000 --> 00:03:31,240 Speaker 1: far between Israel and Iran back to militants since the 62 00:03:31,280 --> 00:03:34,280 Speaker 1: attack on Israel more than a year ago. Bloomberg's Paul 63 00:03:34,320 --> 00:03:38,040 Speaker 1: Wallace says this round of talks, though is unlikely to change. 64 00:03:37,720 --> 00:03:41,000 Speaker 5: That Israel at the moment sees itself as on the 65 00:03:41,040 --> 00:03:46,360 Speaker 5: front foot and degrading Hamas and Hezweller to a massive degree, 66 00:03:46,560 --> 00:03:49,720 Speaker 5: and it thinks that these military gains that it's been 67 00:03:49,760 --> 00:03:53,080 Speaker 5: making in the last several weeks, if not a few months, 68 00:03:53,240 --> 00:03:55,560 Speaker 5: are very much in its favor when it comes to 69 00:03:56,080 --> 00:04:01,520 Speaker 5: eventual diplomatic talks and eventual ceasefire negotiations. 70 00:04:02,680 --> 00:04:06,320 Speaker 1: Bloomberg's Paul Wallace ads that Blincoln's visit comes as Israel's 71 00:04:06,320 --> 00:04:10,080 Speaker 1: retaliation against Iran is still yet to come. The US 72 00:04:10,120 --> 00:04:13,840 Speaker 1: maintains that Israel's killing of the Hamas leader Yaha Sinhwa 73 00:04:14,000 --> 00:04:17,280 Speaker 1: last week may open the way for a breakthrough, even 74 00:04:17,320 --> 00:04:21,719 Speaker 1: though Hamas leaders and Netnya, who have both vowed to fight. 75 00:04:21,839 --> 00:04:26,200 Speaker 2: On China's wealth fund, it issued a record twenty nine 76 00:04:26,279 --> 00:04:30,680 Speaker 2: billion dollars worth of bonds this year. Central Hawaijin Investment, 77 00:04:30,880 --> 00:04:33,919 Speaker 2: a unit of the country's sovereign fund, has now sold 78 00:04:34,000 --> 00:04:37,240 Speaker 2: the most notes annually since it first tapped the onshore 79 00:04:37,279 --> 00:04:41,680 Speaker 2: credit market in twenty ten. Bloomberg understands. The fresh issuance 80 00:04:41,720 --> 00:04:45,600 Speaker 2: includes nine billion yuan of three year debt securities and 81 00:04:45,720 --> 00:04:49,440 Speaker 2: fifteen billion yuan of five year bonds. The firm's bond 82 00:04:49,480 --> 00:04:53,080 Speaker 2: offering documents say that sale proceeds will be used to 83 00:04:53,160 --> 00:04:58,039 Speaker 2: optimize its debt structure and replenish working capital for other 84 00:04:58,160 --> 00:05:00,200 Speaker 2: purposes approved by regular. 85 00:05:01,360 --> 00:05:05,280 Speaker 1: Now to the UK, Thames Water's quest to raise equity 86 00:05:05,360 --> 00:05:09,560 Speaker 1: has begun. The indebted utility provider needs a cash injection 87 00:05:09,720 --> 00:05:12,919 Speaker 1: to stay afloat. Bloomberg's Tea Adebayo has more. 88 00:05:13,680 --> 00:05:16,880 Speaker 6: Three point three billion pounds is the figure Thames Water 89 00:05:17,000 --> 00:05:20,919 Speaker 6: needs to avoid collapse. The UK's largest water and sewage 90 00:05:20,920 --> 00:05:23,880 Speaker 6: operators started the process to raise those funds over the 91 00:05:23,920 --> 00:05:29,120 Speaker 6: past week, granting investors access to sensitive information. Alongside its 92 00:05:29,160 --> 00:05:33,360 Speaker 6: advisors from Rothschild, Thames have approached numerous sources of capital, 93 00:05:33,440 --> 00:05:38,360 Speaker 6: including private equity shops, Brookfield Asset Management and the Carlisle Group. 94 00:05:38,520 --> 00:05:41,520 Speaker 6: With only enough money to sustain itself until next May, 95 00:05:41,920 --> 00:05:44,799 Speaker 6: time is of the essence, but the firm is still 96 00:05:44,800 --> 00:05:48,520 Speaker 6: awaiting a ruling from regulator off What which will determine 97 00:05:48,560 --> 00:05:52,520 Speaker 6: the allowed return on equity for investors. The utility is 98 00:05:52,560 --> 00:05:55,400 Speaker 6: seen as too big to fail and without new funds, 99 00:05:55,480 --> 00:05:59,520 Speaker 6: it will likely be nationalized temporarily in London. Tea at 100 00:05:59,560 --> 00:06:00,920 Speaker 6: Abayo Bloomberg Radio. 101 00:06:01,279 --> 00:06:04,400 Speaker 1: In a moment, we're going to look at what hosting 102 00:06:04,440 --> 00:06:08,680 Speaker 1: the Bricks Summit means to Russia's President Vladimir Putin. Plus 103 00:06:08,680 --> 00:06:11,840 Speaker 1: bring you are reporting on why European central bankers are 104 00:06:11,920 --> 00:06:15,560 Speaker 1: worried about Donald Trump winning the US election. But first 105 00:06:15,560 --> 00:06:19,119 Speaker 1: we also wanted to mention some fantastic reporting. Bloomberg's list 106 00:06:19,320 --> 00:06:22,159 Speaker 1: of the top twenty five startups to watch here in 107 00:06:22,160 --> 00:06:25,120 Speaker 1: the UK. It's just been published this morning. What did 108 00:06:25,160 --> 00:06:25,680 Speaker 1: you make of it? 109 00:06:25,800 --> 00:06:25,880 Speaker 6: One? 110 00:06:25,920 --> 00:06:29,000 Speaker 2: Surprisingly, lots of AI mentioned in this list as well. 111 00:06:29,040 --> 00:06:31,640 Speaker 2: Some of the names maybe those that you've heard of before, 112 00:06:31,680 --> 00:06:34,200 Speaker 2: like the autonomous driving company Wave, so they're on the 113 00:06:34,240 --> 00:06:36,120 Speaker 2: list as well. A few of those that I liked. 114 00:06:36,120 --> 00:06:39,719 Speaker 2: There's one called Anna, which stands for Absolutely No Nonsense Admin. 115 00:06:40,040 --> 00:06:42,880 Speaker 2: So it's an app to help small businesses do things 116 00:06:42,960 --> 00:06:45,400 Speaker 2: like taxes are accounting ten minutes a week. They say 117 00:06:45,440 --> 00:06:48,720 Speaker 2: that that it takes for them to do that and 118 00:06:48,760 --> 00:06:51,520 Speaker 2: it does things all via their app as well. So 119 00:06:51,520 --> 00:06:53,640 Speaker 2: that's one of the companies I picked out. There's also Her, 120 00:06:53,760 --> 00:06:57,839 Speaker 2: which is an online fashion rental marketplace for luxury brands. 121 00:06:58,640 --> 00:07:00,360 Speaker 2: And also I found this one really interest as well, 122 00:07:00,360 --> 00:07:03,000 Speaker 2: a company called Sibstar. It has a debit card and 123 00:07:03,080 --> 00:07:05,599 Speaker 2: app for families living with dementia as a way to 124 00:07:05,680 --> 00:07:08,200 Speaker 2: help those who are suffering from the ellis to avoid 125 00:07:08,240 --> 00:07:11,480 Speaker 2: being scammed, overspending, or losing money. So there's some really 126 00:07:11,520 --> 00:07:12,720 Speaker 2: interesting ideas on this list. 127 00:07:12,840 --> 00:07:15,680 Speaker 1: Yeah, absolutely, there's lots of AI. There's also lots of 128 00:07:15,800 --> 00:07:20,280 Speaker 1: biotech and pharmer type businesses which are really quite interesting 129 00:07:20,360 --> 00:07:24,960 Speaker 1: getting the latest and medical advances to market more quickly, 130 00:07:25,040 --> 00:07:25,800 Speaker 1: those sorts of things. 131 00:07:26,040 --> 00:07:28,840 Speaker 2: Yeah, some of us growth engine the Chancellor will be hoping. 132 00:07:28,600 --> 00:07:34,080 Speaker 1: For absolutely in the budget of course. Yeah, let's focus 133 00:07:34,080 --> 00:07:37,040 Speaker 1: though on the bricks. This morning, Russia is hosting its 134 00:07:37,080 --> 00:07:40,600 Speaker 1: biggest gathering of world leaders since the invasion of Ukraine. 135 00:07:40,640 --> 00:07:43,960 Speaker 1: It's happening about four hundred and fifty miles east of Moscow. Now. 136 00:07:44,000 --> 00:07:47,320 Speaker 1: The Russian president is keen to use this summit to 137 00:07:47,440 --> 00:07:50,360 Speaker 1: show the US and its allies that he's not a 138 00:07:50,400 --> 00:07:54,320 Speaker 1: pariah on the international stage. Are Russia. Economics and Government 139 00:07:54,440 --> 00:07:57,840 Speaker 1: editor Greg Sullivan joins us now for more on this. Greg, 140 00:07:57,880 --> 00:08:01,760 Speaker 1: Good morning, who is do you you to attend this meeting. 141 00:08:01,880 --> 00:08:04,360 Speaker 1: Are they all supporters of Putin? 142 00:08:05,760 --> 00:08:07,360 Speaker 7: Well? As you said, this is one of the biggest 143 00:08:07,400 --> 00:08:10,000 Speaker 7: gatherings of world leaders since the invasion of Ukraine. There 144 00:08:10,000 --> 00:08:12,680 Speaker 7: are leaders from thirty two nations, which is obviously bigger 145 00:08:12,680 --> 00:08:15,800 Speaker 7: than the BRICKS Group itself, and others like UN Secretary 146 00:08:15,880 --> 00:08:19,560 Speaker 7: General Antonio Gutierres who will be there. Leaders include India's 147 00:08:19,640 --> 00:08:24,040 Speaker 7: Narendra Modi, China's Juijenping, but also Turkey's recip Erdowan, whose 148 00:08:24,040 --> 00:08:26,280 Speaker 7: country is eager to join BRICKS but not quite a 149 00:08:26,320 --> 00:08:29,520 Speaker 7: member yet. The Brazilian president Luise and Nacio Lula da 150 00:08:29,520 --> 00:08:31,360 Speaker 7: Silva had to cancel at the last minute due to 151 00:08:31,400 --> 00:08:33,480 Speaker 7: a head injury sustained at home, but it's still an 152 00:08:33,480 --> 00:08:37,280 Speaker 7: impressive group. Those in attendance they vary. G has been 153 00:08:37,320 --> 00:08:42,720 Speaker 7: critical to propping up Rutta economically and diplomatically amid the sanctions, 154 00:08:42,880 --> 00:08:46,120 Speaker 7: but others have been more restrained, especially amid the war 155 00:08:46,160 --> 00:08:49,480 Speaker 7: in Ukraine. So there's not everyone has been a vocal 156 00:08:49,520 --> 00:08:52,839 Speaker 7: outright supporter, but clearly some have been critical to propping 157 00:08:52,920 --> 00:08:53,400 Speaker 7: up Russia. 158 00:08:54,000 --> 00:08:57,600 Speaker 2: How important is hosting a meeting of this size on 159 00:08:57,679 --> 00:09:01,040 Speaker 2: with these important global figures to vlasimyor Payton. 160 00:09:02,280 --> 00:09:04,760 Speaker 7: Well, it's definitely important. As you said, this is a 161 00:09:04,840 --> 00:09:07,400 Speaker 7: chance for Putin to demonstrate that he's still a player 162 00:09:07,440 --> 00:09:10,320 Speaker 7: on the international stage, and that's even as the US 163 00:09:10,320 --> 00:09:13,160 Speaker 7: and its allies have stopt to isolate and diplomatically as 164 00:09:13,200 --> 00:09:17,000 Speaker 7: punishment for the war. It also shows that Putin's message 165 00:09:17,000 --> 00:09:19,920 Speaker 7: of reshaping the US led global order that actually is 166 00:09:19,960 --> 00:09:23,240 Speaker 7: resonating among some countries and clearly is attractive for others 167 00:09:23,280 --> 00:09:26,480 Speaker 7: who are seeking to join BRICKS, even if some countries 168 00:09:26,520 --> 00:09:30,320 Speaker 7: do insist that BRICKS is not anti Western one for instance, 169 00:09:30,400 --> 00:09:32,840 Speaker 7: the UAE is a new member of the BRICKS group, 170 00:09:33,160 --> 00:09:37,319 Speaker 7: still maintains good ties with the US. But another aspect 171 00:09:37,400 --> 00:09:39,439 Speaker 7: of this summit is that it's a chance for Putin 172 00:09:39,480 --> 00:09:41,839 Speaker 7: to meet with other leaders and groups and one on 173 00:09:41,840 --> 00:09:44,200 Speaker 7: one and that's the time when travels complicated for him 174 00:09:44,240 --> 00:09:47,160 Speaker 7: because of that international arrest warrant. It's out for him 175 00:09:47,240 --> 00:09:47,920 Speaker 7: from the ICC. 176 00:09:49,400 --> 00:09:51,559 Speaker 1: What are the key issues then on the agenda, I 177 00:09:51,640 --> 00:09:55,240 Speaker 1: mean the possibility also in the background of trying to 178 00:09:55,360 --> 00:09:57,199 Speaker 1: challenge US dollar dominance. 179 00:09:58,760 --> 00:10:01,800 Speaker 7: There's several issues and that is one of the main ones. Clearly, 180 00:10:01,880 --> 00:10:04,560 Speaker 7: alternatives to the US dollar are definitely on the agenda. 181 00:10:05,000 --> 00:10:09,000 Speaker 7: Rescoud recently presented a long list of ideas for possible 182 00:10:09,080 --> 00:10:11,680 Speaker 7: changes to cross border payments. It's really been struggling with 183 00:10:11,760 --> 00:10:15,320 Speaker 7: those amid distinctions regime. The group as a whole does 184 00:10:15,440 --> 00:10:19,080 Speaker 7: favor greater use of their national currencies in bilateral trade, 185 00:10:19,240 --> 00:10:22,000 Speaker 7: but Ruthless really in a unique situation and being heavily 186 00:10:22,040 --> 00:10:25,080 Speaker 7: thinktened and cut off from the financial system. Other members 187 00:10:25,080 --> 00:10:27,959 Speaker 7: of BRICKS are not, and so they remain. Some of 188 00:10:28,000 --> 00:10:30,240 Speaker 7: them do remain skeptical about the need to replace the 189 00:10:30,320 --> 00:10:34,240 Speaker 7: dollar the reserve currency. India, for one, rejects promoting China 190 00:10:34,280 --> 00:10:37,319 Speaker 7: as you want as an alternative to the dollar for reserves. 191 00:10:37,800 --> 00:10:40,400 Speaker 7: Another key issue for BRICKS beyond the currency will be 192 00:10:40,520 --> 00:10:44,120 Speaker 7: further expansion. The group expanded to six additional nathans last year, 193 00:10:44,440 --> 00:10:47,480 Speaker 7: but some members the post further expansions, so that's one 194 00:10:47,480 --> 00:10:49,839 Speaker 7: of the divisions that could be discussed at the meeting. 195 00:10:50,520 --> 00:10:53,200 Speaker 2: Are we likely to hear any discussion of the Russian 196 00:10:53,200 --> 00:10:54,840 Speaker 2: invasion of Ukraine. 197 00:10:55,240 --> 00:10:57,200 Speaker 7: It's certainly going to be a topic that is hanging 198 00:10:57,280 --> 00:11:01,600 Speaker 7: over this this summit, as it always has. It's unclear 199 00:11:01,600 --> 00:11:03,480 Speaker 7: whether Putin's going to bring it up or how he'll 200 00:11:03,520 --> 00:11:05,160 Speaker 7: bring it up and discuss, but it will be there 201 00:11:05,200 --> 00:11:06,800 Speaker 7: in the background and it will be on the minds 202 00:11:06,840 --> 00:11:09,680 Speaker 7: of commentators and observers. I mean, it's clearly been an 203 00:11:09,720 --> 00:11:14,840 Speaker 7: issue for Rutta economically. It's really been with the sanctions 204 00:11:14,920 --> 00:11:19,439 Speaker 7: that's made RepA have to realign and reorient itself towards 205 00:11:19,559 --> 00:11:21,839 Speaker 7: countries like China, which will be in attendance at the 206 00:11:21,840 --> 00:11:24,600 Speaker 7: Bricks meeting. So even if not directly discussed, it will 207 00:11:24,640 --> 00:11:30,400 Speaker 7: always be there in the background informing discussions and coloring 208 00:11:30,520 --> 00:11:32,360 Speaker 7: the way the summer proceeds. 209 00:11:33,240 --> 00:11:35,120 Speaker 1: Okay, Greg, thank you so much for being with us 210 00:11:35,160 --> 00:11:38,640 Speaker 1: this morning. Our Russia Economics and Government editor Greg Sullivan, 211 00:11:38,679 --> 00:11:41,240 Speaker 1: thank you for bringing yourself to speed on the Bricks summits. 212 00:11:41,920 --> 00:11:44,480 Speaker 2: There are two weeks to go onto the US presidential election, 213 00:11:44,640 --> 00:11:47,560 Speaker 2: and central bankers in Europe, who were already worrying about 214 00:11:47,600 --> 00:11:51,720 Speaker 2: slowing growth now have another concern. How much damage Donald 215 00:11:51,760 --> 00:11:54,520 Speaker 2: Trump could do if he returns to the White House. 216 00:11:54,600 --> 00:11:58,360 Speaker 2: Policymakers fear his appetite for new trade wars threatens the region, 217 00:11:58,360 --> 00:12:00,520 Speaker 2: and his position is far weaker than the last time 218 00:12:00,800 --> 00:12:03,840 Speaker 2: that he was president. Our Euro Area economy reporter Alex 219 00:12:03,880 --> 00:12:05,719 Speaker 2: Weber has been writing about this, and he joins us 220 00:12:05,760 --> 00:12:09,120 Speaker 2: now for more. Alex, good morning. How would another election 221 00:12:09,280 --> 00:12:13,160 Speaker 2: win for Donald Trump impact European economies and wire officials 222 00:12:13,160 --> 00:12:13,640 Speaker 2: so worried? 223 00:12:14,640 --> 00:12:17,800 Speaker 8: Yeah, good morning. So there are lots of things for 224 00:12:17,840 --> 00:12:22,520 Speaker 8: europe to worry about, of course, like Donald Trump's security ideas, 225 00:12:22,559 --> 00:12:26,080 Speaker 8: But for the most problematic idea for the European economy 226 00:12:26,200 --> 00:12:30,240 Speaker 8: is the one about tariffs. So you know, Donald Trump 227 00:12:30,280 --> 00:12:32,920 Speaker 8: has proposed to impose a sixty percent hour on all 228 00:12:32,960 --> 00:12:35,839 Speaker 8: goods from China and as much as twenty percent on 229 00:12:35,880 --> 00:12:39,480 Speaker 8: everyone else. And if he gets elected, even the threat 230 00:12:39,720 --> 00:12:42,280 Speaker 8: doesn't even have to be imposed. But even the threat 231 00:12:42,480 --> 00:12:45,760 Speaker 8: and the uncertainty it creates would probably amount to a 232 00:12:45,800 --> 00:12:47,640 Speaker 8: sizable hit for the European economy. 233 00:12:48,559 --> 00:12:52,960 Speaker 1: Why is the current moment economically so delicate when facing 234 00:12:53,400 --> 00:12:54,319 Speaker 1: a threat like this? 235 00:12:55,960 --> 00:12:58,400 Speaker 8: Yeah, In short, it's because the economy is already doing 236 00:12:58,480 --> 00:13:02,480 Speaker 8: quite bad. The recovery that officials have long predicted isn't 237 00:13:02,520 --> 00:13:06,120 Speaker 8: really getting off the ground. Germany is probably headed for 238 00:13:06,160 --> 00:13:10,120 Speaker 8: another annual contraction. France is preparing use spending cuts and 239 00:13:10,160 --> 00:13:13,959 Speaker 8: tax increases. Even last week, the ECB had to accelerate 240 00:13:14,000 --> 00:13:18,480 Speaker 8: another rate cut because consumers are so hesitant investment this week, 241 00:13:18,520 --> 00:13:20,839 Speaker 8: and those are exactly the things that will probably get 242 00:13:20,920 --> 00:13:25,200 Speaker 8: hit by the uncertainty created by another potential Trump win. 243 00:13:26,640 --> 00:13:30,000 Speaker 2: How does this situation compare to when Donald Trump was 244 00:13:30,040 --> 00:13:31,120 Speaker 2: president the last time? 245 00:13:32,480 --> 00:13:35,200 Speaker 8: Yeah, when you think back to twenty seventeen, it really 246 00:13:35,200 --> 00:13:37,520 Speaker 8: seems from another world that war in Ukraine hadn't fully 247 00:13:37,559 --> 00:13:41,000 Speaker 8: broken out, there was no pandemic, inflation wasn't a concern, 248 00:13:41,080 --> 00:13:44,119 Speaker 8: So the initial situation was much better for European economies. 249 00:13:45,160 --> 00:13:48,320 Speaker 8: But even back then you saw after two years that 250 00:13:48,720 --> 00:13:53,160 Speaker 8: the global economy was heading for a slowdown after Trump's 251 00:13:53,240 --> 00:13:55,960 Speaker 8: terraces that he introduced on some Chinese and European goods 252 00:13:56,000 --> 00:13:58,800 Speaker 8: such as steel and aluminum, and the IMF back then 253 00:13:58,920 --> 00:14:02,040 Speaker 8: warned that trade tend were a major reason behind the slowdown. 254 00:14:02,160 --> 00:14:05,160 Speaker 8: So first forward to now you have a weaker starting 255 00:14:05,200 --> 00:14:08,800 Speaker 8: position and positively an even bigger impact because of the 256 00:14:08,920 --> 00:14:11,720 Speaker 8: wide ranging ideas on trade that Trump has. 257 00:14:12,240 --> 00:14:16,320 Speaker 1: What a central bankers said on this issue, So for this. 258 00:14:16,440 --> 00:14:19,960 Speaker 8: Piece, we spoke with the Governor of the Swedish Central Bank, Riktidan, 259 00:14:20,080 --> 00:14:24,400 Speaker 8: who wannted that additional trade barriers obviously aren't great, especially 260 00:14:24,400 --> 00:14:28,520 Speaker 8: for a country like Sweden that's really reliant on international trade. 261 00:14:29,440 --> 00:14:32,600 Speaker 8: The president of the Buddes Bank, him Nagel, also recently 262 00:14:32,640 --> 00:14:37,080 Speaker 8: warned of the adverse impact of any new tariffs. He 263 00:14:37,200 --> 00:14:40,280 Speaker 8: was also concerned that it might spark another round of inflation, 264 00:14:40,360 --> 00:14:43,040 Speaker 8: although the impact there is a bit less clear cut. 265 00:14:43,440 --> 00:14:46,440 Speaker 8: And we asked ECB President Christine Lagard in a press 266 00:14:46,440 --> 00:14:49,800 Speaker 8: conference last week, and she also sounded pretty concerned and 267 00:14:49,880 --> 00:14:53,040 Speaker 8: said that it's clear downside risk for the economy. And 268 00:14:53,120 --> 00:14:56,680 Speaker 8: we're probably gonna hear more along these lines when officials 269 00:14:56,680 --> 00:15:00,400 Speaker 8: meet in Washington this week for the International Monitor Funds 270 00:15:00,400 --> 00:15:01,600 Speaker 8: annual meetings. 271 00:15:02,720 --> 00:15:06,040 Speaker 2: Okay, and what sort of response could we expect from 272 00:15:06,120 --> 00:15:09,840 Speaker 2: those central bankers or governments if there are negative impacts 273 00:15:09,840 --> 00:15:10,920 Speaker 2: on the European economy. 274 00:15:12,880 --> 00:15:16,200 Speaker 8: So there's now a bit less fiscal space of the pandemic, 275 00:15:16,240 --> 00:15:18,920 Speaker 8: governments have simply more debt after dishing out so much 276 00:15:18,960 --> 00:15:23,200 Speaker 8: aid to companies and households, so that probably means central 277 00:15:23,240 --> 00:15:26,160 Speaker 8: bankers would once again be on the front line here. 278 00:15:26,320 --> 00:15:30,800 Speaker 8: And the good thing is that interest rates are now 279 00:15:30,840 --> 00:15:33,520 Speaker 8: a bit higher, so there's a bit more room to cut. 280 00:15:33,600 --> 00:15:37,760 Speaker 8: But it would certainly central bankers would certainly prefer the 281 00:15:37,840 --> 00:15:40,760 Speaker 8: sort of Goldilock scenario that they had predicted, which was 282 00:15:40,800 --> 00:15:44,080 Speaker 8: for a gradual recovery to take hold, inflation to come down, 283 00:15:45,000 --> 00:15:48,720 Speaker 8: and that would allow gradual interest rate cuts and another 284 00:15:48,800 --> 00:15:52,280 Speaker 8: hit to the economy that's already weaker than predicted, would 285 00:15:52,760 --> 00:15:54,400 Speaker 8: probably saw all of that out of planet. 286 00:15:54,880 --> 00:15:57,640 Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the 287 00:15:57,680 --> 00:16:00,760 Speaker 2: stories making news from London to Wall Street and beyond. 288 00:16:01,040 --> 00:16:05,000 Speaker 1: Look for us on your podcast feed every morning, on Apple, Spotify, 289 00:16:05,120 --> 00:16:07,040 Speaker 1: and anywhere else you get your podcasts. 290 00:16:07,080 --> 00:16:10,120 Speaker 2: You can also listen live each morning on London Dab Radio, 291 00:16:10,160 --> 00:16:13,920 Speaker 2: the Bloomberg Business app, and Bloomberg dot Com. 292 00:16:13,960 --> 00:16:16,680 Speaker 1: Our flagship New York station is also available on your 293 00:16:16,760 --> 00:16:21,480 Speaker 1: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 294 00:16:21,680 --> 00:16:23,000 Speaker 1: I'm Caroline Hepka and. 295 00:16:22,960 --> 00:16:25,600 Speaker 2: I'm Stephen Carroll. Join us again tomorrow morning for all 296 00:16:25,640 --> 00:16:28,040 Speaker 2: the news you need to start your day right here 297 00:16:28,080 --> 00:16:32,560 Speaker 2: on Bloomberg Daybreak Europe.