Speaker 1: This is the Blueberg Dab, a curate podcast available every
Speaker 1: morning on Apple, Spotify or wherever you listen. It's Wednesday,
Speaker 1: the twelfth of June in London. I'm Caroline Hepkett.
Speaker 2: And I'm Stephen Carroll. Coming up today, the French finance
Speaker 2: minister warns of a Liz Trust type deck crisis if
Speaker 2: Mallion Le Penn's party wins upcoming parliamentary elections.
Speaker 1: Conservatives tell Bloomberg they believe there's little chance Rishi Sunak's
Speaker 1: manifesto tax cuts will shift the polls.
Speaker 2: Plus, as Italian Prime Minister Georgia Maloney's star keeps rising internationally,
Speaker 2: problems lurk back home. We have a special report.
Speaker 1: Let's start with a roundup of our top stories.
Speaker 2: France's finance minister has warned that his country could face
Speaker 2: a Liz Trust scenario of bond market turmoil if the
Speaker 2: far right were to win this month's parliamentary elections. Bloomberg's
Speaker 2: teaba at A Baio has more.
Speaker 3: Speaking at a campaign event, Bruno Lemaire suggested policies the
Speaker 3: National Rally Party of Marine le Penn have supported in
Speaker 3: the past, like cutting VAT or reducing the retirement a
Speaker 3: could cost billions of euros. His comments follow French President
Speaker 3: in Manuel Mecon's decision to call snap elections after his
Speaker 3: party was trounced by La Penz in European Parliament voting
Speaker 3: on Sunday. Prime Minister Gabriel Lettel and the President of
Speaker 3: the National Assembly at Yale Born Puvis are both opposed
Speaker 3: to the move, according to a person familiar with their thinking.
Speaker 3: In London, tiwa Adubayo Bloomberg Radio.
Speaker 1: In the UK, Rishisunak's own party took aim at his manifesto,
Speaker 1: saying there is little chance that it will shift opinion polls.
Speaker 1: Ahead of the fourth of July, Bloomberg was told by
Speaker 1: multiple conservatives on the left to add right wings of
Speaker 1: the party that their election pitch lacks game changing policies.
Speaker 1: The Prime Minister had a message for skeptics at the
Speaker 1: manifesto launch.
Speaker 4: I'm not blind to the fact that people are frustrated
Speaker 4: with our party and frustrated with me. Things have not
Speaker 4: always been easy and we have not got everything right.
Speaker 4: Are the only party in this election with the big
Speaker 4: ideas to make our country a better.
Speaker 1: Live where she see. NAC's policy platform includes plans to
Speaker 1: cut national insurance tax, save twelve billion pounds by cutting
Speaker 1: welfare spending and a boost to defense spending.
Speaker 2: Labor Shadow Chancellor Rachel Reeves says the Conservative's desperate policies
Speaker 2: put the UK economy at risk.
Speaker 5: If they did believe that THEIRS sums added up, if
Speaker 5: they thought that they would get the all clear from
Speaker 5: the Office of Budget Responsibility, they wouldn't have put these
Speaker 5: plans in a manifesto. They would have put them in
Speaker 5: a budget. They know their numbers don't add up.
Speaker 2: Reeves will launch her rival manifesto tomorrow. It comes as
Speaker 2: former Labor leader Neil Kinnock has told Bloomberg his party
Speaker 2: would be wise not to overpromise on ruling out tax rises.
Speaker 2: He says the party, which is widely polled to be
Speaker 2: the next government, needs fiscal room for a reneuver.
Speaker 1: Bloomberg understands that the EU is poised to delay key
Speaker 1: parts of global bank capital rules by a year. The
Speaker 1: decision was reportedly taken to avoid putting European lenders at
Speaker 1: a disadvantage to their US counterparts because of wrangling over
Speaker 1: plans to make Wall Street banks hold more capital, which
Speaker 1: are not yet finalized, known as Basil III. The regulations
Speaker 1: are designed to prevent a repeat of the two thousand
Speaker 1: and eight financial crisis, but they are already running two
Speaker 1: years behind schedule. The EU is due to implement the
Speaker 1: rules on the first of January.
Speaker 2: The Federal Reserve is expected to hold interest rates steady today,
Speaker 2: a decision that will come just hours after May's CPI reading.
Speaker 2: The Fed will be looking for evidence that inflation is
Speaker 2: still moving down towards its two percent target, but markets
Speaker 2: will also be closely watching the projections for future inflation
Speaker 2: as part of the dot plot here Citadel's Global Hell
Speaker 2: of Rate Trading.
Speaker 6: Michael DePass the focus really will be on the FMC,
Speaker 6: and in particular, what does a dot plot show for
Speaker 6: the number of expected cuts for the rest of this year.
Speaker 6: Numbers obviously come down materially over the course of this year,
Speaker 6: and the markets split between I think somewhere between one
Speaker 6: and two cuts, so there'll be a little bit of
Speaker 6: a reaction whatever the outcome.
Speaker 2: Michael Depassas is also cautious about putting too much faith
Speaker 2: in the Fed's outlook beyond this year. We'll bring you
Speaker 2: the USCPI data live at one thirty pm London time
Speaker 2: follow by this FED decision at seven pm with Federal
Speaker 2: Reserve Charge your own powers that to speak thirty minutes later.
Speaker 1: The US is considering further restrictions on China's access to
Speaker 1: the chip technology used for artificial intelligence. Bloomberg has learned
Speaker 1: the measures would limit the country's ability to use chip
Speaker 1: architecture known as GAIT all Around, which promises to make
Speaker 1: semiconductors more powerful. Companies including Nvidia and Intel are looking
Speaker 1: to start using the design next year. Bloomberg's Nick Turner
Speaker 1: says that these potential sanctions aren't the same as previous restrictions.
Speaker 7: It's a little different than the earlier ones that really
Speaker 7: kind of focused on advanced chips, which is what in
Speaker 7: video cells or chip making equipment that's used to make it.
Speaker 7: This is really kind of trying to go after a
Speaker 7: chip architecture that's still kind of cutting edge and just
Speaker 7: being commercialized now and put into chips. It has potitial
Speaker 7: to make chips more powerful, and especially when they're applied
Speaker 7: to task like AI.
Speaker 1: Our senior technology editor Nick Turner, speaking there, President Biden
Speaker 1: is also expanding restrictions on the sale of chips and
Speaker 1: other technology to Russia, targeting third party sellers in China
Speaker 1: and elsewhere. An announcement on that is expected today. Now
Speaker 1: in a moment, we'll get more on the French election,
Speaker 1: plus focus on the rise of Italy's Prime minister as
Speaker 1: Georgia Maloney prepares to host the G seven leader's summit.
Speaker 1: But another story that caught our ray this morning as
Speaker 1: we've been thinking about the looming elections in the UK
Speaker 1: and Francis is Leonel laure who's been writing about TikTok
Speaker 1: and his experience on the app when he's been seeking
Speaker 1: out political content.
Speaker 2: So I mean it was a bit of a thought experiment,
Speaker 2: I think for Lionelle. He downloaded the app, signed up.
Speaker 2: First thing he looked for was Emmanuel Macron's official feed,
Speaker 2: watched the video of that, and then he just let
Speaker 2: the algorithm take him to whatever their suggested content was
Speaker 2: after that, and he says that he took it, took
Speaker 2: him down what can only be described as a very
Speaker 2: putent friendly rabbit hole. The first video said in bold
Speaker 2: letters that Macron had declared war on Russia by offering
Speaker 2: to train military instructures in Ukraine, while others attacked him
Speaker 2: for not inviting Russia to D Day ceremonies, and it
Speaker 2: sort of snowballed from there in terms of how disturbing
Speaker 2: the content got.
Speaker 1: Now.
Speaker 2: Lionel then contacted TikTok, who said the videos that he'd
Speaker 2: seen did breach their guidelines and they took them down.
Speaker 2: But this is, as l points out on the piece,
Speaker 2: the pressure chose, the pressure that's on the controls against
Speaker 2: disinformation on a platform like this, despite the fact they
Speaker 2: have thousands of people working on this, And he said
Speaker 2: it would be ludicrous for us to blame just technology
Speaker 2: for polarization and democracy or for misinformation, you know, which
Speaker 2: has been around for a long time before social media loaded.
Speaker 2: But he points to the dangers, the fact that more
Speaker 2: particularly young people are getting their news from TikTok, and
Speaker 2: the idea that you know, a democracy benefits from an
Speaker 2: informed electrician responsible speech. It's hard to shrug it off
Speaker 2: as neutral either, that there is this much disinformation flows
Speaker 2: around such a popular social media and outwork.
Speaker 1: Yes to do and look, it's about quantity and speed,
Speaker 1: isn't it in terms of miss and disinformation. But obviously
Speaker 1: in a year of such closely watched elections and so
Speaker 1: many of them around the world, I think this is
Speaker 1: going to be the year that is going to be
Speaker 1: widely analyzed. I mean, obviously in the UK election campaign,
Speaker 1: of course, you know all of the campaigning is online,
Speaker 1: but it takes time actually to understand what messages are
Speaker 1: hitting on social media. But it's pretty fascinating. I mean,
Speaker 1: even the Conservatives in the election manifesto yesterday we're talking
Speaker 1: about a ban or one of their pledges being a
Speaker 1: ban on phones for kids in schools. So you can
Speaker 1: start to see the social media impact actually an election campaign.
Speaker 2: Look, we've just given the surface of vitely now got
Speaker 2: into in the piece, but well worth a look at
Speaker 2: day down TikTok's disinformation rabbit hole. You'll find it at
Speaker 2: Bloomberg dot com for it slash opinion.
Speaker 6: Now.
Speaker 1: The French election campaign, of course, is heating up after
Speaker 1: Emanu and Macron's surprise announcement of a snap poll on
Speaker 1: Sunday night. Later today, the president will officially launch his
Speaker 1: party's election campaign, as the first poll indicates that he's
Speaker 1: trailing the far right party of Marine Le Penn Stephen,
Speaker 1: this is obviously a story that you've been following closely,
Speaker 1: you know, a longtime resident of France. You've looked at
Speaker 1: the politics for so many years. It's been a very
Speaker 1: rough start to the campaign though for President Macron's party
Speaker 1: by the looks of it.
Speaker 2: Yeah, I mean, look, the announcement court almost to everyone,
Speaker 2: it seems afguard, including someone in Macron's own party, and
Speaker 2: they're having to get back into campaign note after a
Speaker 2: particularly bruising campaign that they've had for the European elections
Speaker 2: as well, and this time around many of those in
Speaker 2: the party are at risk of losing their own seats
Speaker 2: as well. And what we've been learning since the announcement
Speaker 2: is some of the most senior figure is in the
Speaker 2: Renaissance Party were opposed to the President's called to do this.
Speaker 2: One source telling Bloomberg that Prime Minister Gabriel l Tale
Speaker 2: and the President of the National Assembly Jael le Bron
Speaker 2: Pivey were also opposed to it. Lebron Privy actually saying
Speaker 2: in an interview that there were other options to calling
Speaker 2: an election, looking at things like coalitions that the president
Speaker 2: could have taken. One MP telling us that it was
Speaker 2: like Macron sending them into battle. The first poll that
Speaker 2: we've heard since the announcement won't help these things as well.
Speaker 2: It puts the far out party of the national Rally
Speaker 2: of Marie Leapenn on thirty five percent of the vote
Speaker 2: in the first round of the election, Macron and his
Speaker 2: allies on around eighteen percent. The left wing parties that
Speaker 2: they all got together would have around twenty five percent
Speaker 2: of the vote as well. There's a course of margin
Speaker 2: of error in this as well. It's also worth remembering
Speaker 2: that there's a two round election system in France, so
Speaker 2: you poll the first round makes it much more difficult
Speaker 2: to predict how the parties align themselves for runoffs that
Speaker 2: will happen in most constituencies a week later.
Speaker 1: Okay, that's interesting, But it's not just MP's as you've
Speaker 1: mentioned a number who are worried. It's also the markets
Speaker 1: who are looking more scared. Particularly they've certainly taken fright
Speaker 1: to some extent.
Speaker 2: Yeah, the selloff we've seen on Monday continued on Tuesday.
Speaker 2: The yield on ten year French bonds known as oats
Speaker 2: jump by as much as ten basis points. The spread
Speaker 2: over German bonds the safe having in Europe widened the
Speaker 2: highest level or to the widest level rather since the
Speaker 2: start of the COVID nineteen pandemic. On a closing basis.
Speaker 2: We saw U sell off at Italian bonds as well,
Speaker 2: so that's indicating the potential risk that investors are seeing
Speaker 2: affecting broader Europe Two equities down for a second day,
Speaker 2: a two day decline of two point seven percent. That's
Speaker 2: the biggest in a year. This is what Bruno la
Speaker 2: Maier was talking about when he spoke at that event
Speaker 2: in his former constituency in northern France. He says the
Speaker 2: policies the National Rally Party have put forward in the past,
Speaker 2: things like lowering the retirement age back to sixty in France.
Speaker 2: Cutting VAT for example, would cost hundreds of billions of euros.
Speaker 2: That's where he drew the comparison to Liz Truss, by
Speaker 2: the way and the guild market prices here in twenty
Speaker 2: twenty two, saying a Liz trust scenario is possible. We
Speaker 2: should expect to hear more of this from Macron's party
Speaker 2: during this campaign as well, but now in the first
Speaker 2: round or the thirtieth of June. But remember that Macron's
Speaker 2: own party have struggled at fiscal consolidation as well. Were
Speaker 2: expected to get the European Commissions verdict on France's public
Speaker 2: finances when finance ministers meet on the nineteenth of June.
Speaker 2: That's going to be a topic of discussion there as well.
Speaker 2: That could come at a very bad time. The latest
Speaker 2: economic forecast in the Bank of France not providing much comfort.
Speaker 2: They're seeing growth this year zero point eight percent, and
Speaker 2: they down graded the growth forecast for the next two
Speaker 2: years as well.
Speaker 1: Okay, so that on the economy of France. I mean
Speaker 1: we will here for Macwan later, I mean briefly on
Speaker 1: that the idea. He's been in power, what's seven years.
Speaker 1: There are rumors potentially that he might step down if
Speaker 1: the elections go badly.
Speaker 2: This was part of the market termol we saw yesterday.
Speaker 2: There was a report on one French media organization that
Speaker 2: he was considering stepping down if the results didn't go
Speaker 2: his way. He then spoke to the FIGUREO after that
Speaker 2: as well, saying that that wasn't the case. His position
Speaker 2: won't be affected by the result of these elections. He
Speaker 2: says that the institutions are clear, so is the place
Speaker 2: of the president whatever for the result. He says that
Speaker 2: it's not the national rally that rights the constitution. That
Speaker 2: doesn't mean that he's not under pressure though. We may
Speaker 2: see him face more questions like this later as well
Speaker 2: when he holds that press conference, and that's really his
Speaker 2: position is one of the key questions being watched internationally.
Speaker 2: If the national rally were to win this election, how
Speaker 2: does that affect Macron's position on the international side, and
Speaker 2: crucially within the European Union, where he's expected to play
Speaker 2: a leading role in the choreography that's playing as in
Speaker 2: Brussels over the next top jobs in the EU.
Speaker 1: Yeah, absolutely well. She turned our attention then to that Stephen,
Speaker 1: because the Italian Prime Minister, Georgia Maloney is preparing to
Speaker 1: host G seven leaders in Apulia, of which Macron is
Speaker 1: one of course. But while she's focusing on the international stage,
Speaker 1: there are problems lurking for her back home, with allies
Speaker 1: that she can't quite trust and an economy operating on
Speaker 1: borrowed time. This as we speak to Italian politics correspondent
Speaker 1: Donato Paolo Mancini, who's joining us now from Rome and
Speaker 1: who's been writing about the challenges facing Georgia Maloney, another
Speaker 1: key player in Europe. Good morning at Donato, Georgia Maloney,
Speaker 1: the forefront of international events. Tell us about what has
Speaker 1: brought her to this point. I mean, now that she's
Speaker 1: been leader for a couple of years in Italy.
Speaker 8: Thanks so much for having me. Good morning. So we
Speaker 8: actually just published a story this morning that talks about
Speaker 8: how she has this incredible allure and how her rising star,
Speaker 8: how her star keeps rising internationally. She's getting ready to
Speaker 8: host a D seven Leaders of Summit leaders which some
Speaker 8: of leaders on which is where I am. I'm not
Speaker 8: actually in Rome. And she basically has this very strong
Speaker 8: reputation abroad, and she's worked really, really hard to attain it.
Speaker 8: She's brought on board people that were highly skeptical of her,
Speaker 8: like Macron, like Schultz. These people were intensely skeptical of
Speaker 8: her origins in the hard right essentially, and now she's
Speaker 8: become this very swift able, capable diplomatic operator. She's able
Speaker 8: to speak to everyone across political divides in the U.
Speaker 8: But at the same time there are issues lourking in
Speaker 8: the background. And the two main issues are the economy,
Speaker 8: which is Italy's eternal problem in a way. Italy has
Speaker 8: an immense public debt that is projected to keep expanding.
Speaker 8: It has a deficit which the European Union will soon
Speaker 8: put under the microscope, turning the attention to the dysfunctional
Speaker 8: economy of the country. And she's surrounded by people that
Speaker 8: she doesn't quite trust, that she respects, but doesn't quite
Speaker 8: trust enough to delegate to perhaps, and that has directly
Speaker 8: to do with the fact that she is a very
Speaker 8: tribalistic politician.
Speaker 2: So how important is the G seven meeting for her?
Speaker 8: Then it's micro break essentially, I think she knows so
Speaker 8: Judgmentley was voted in two years ago. She had been
Speaker 8: in opposition for a long time, had been seen as
Speaker 8: a fringe politician belonging to the hard rights. Two years ago,
Speaker 8: Italians catapulted her to the top of the polls made
Speaker 8: her Prime Minister. She is, in a way and a
Speaker 8: figure that doesn't belong to the establishment. She is from
Speaker 8: a working class background. She is she didn't go to university,
Speaker 8: for example, and these are things that she works with pride.
Speaker 8: And the problem is that now essentially she knows that
Speaker 8: this kind of juncture of events is coming at her.
Speaker 8: You have the economy that's not going well in the
Speaker 8: European Union that will soon turn its attention to what
Speaker 8: he's doing with the money, and so she needs all
Speaker 8: the good will she can muster, and she essentially needs
Speaker 8: the G seven to kind of cement this reputation as
Speaker 8: a swift diplomatic operator, was able to speak to everyone
Speaker 8: and who can be trusted essentially, because if difficult political
Speaker 8: decisions are coming down the line, and that's seen as
Speaker 8: essentially a certainty from the sources that we've spoken to,
Speaker 8: then she will need a lot of leeway to keep
Speaker 8: both her voters happy but her allies happy as well.
Speaker 1: Yeah, I mean it's easy to see the sort of
Speaker 1: the parallels between France and Italy, or the comparisons between
Speaker 1: Georgia Maloney and potentially Marine Lapin about whether you know,
Speaker 1: a far right leader can moderate and can operate in government.
Speaker 1: I mean in terms of Italy specifically, though, some of
Speaker 1: the issues that you're talking about about debt and leadership
Speaker 1: and the role within Europe and those aren't those aren't new.
Speaker 8: No, those aren't too luckily new. That's a very good observation.
Speaker 5: I Mean.
Speaker 8: There's one thing to say, which is they think the
Speaker 8: judgment only kind of has softened her stance on many things.
Speaker 8: She's become an orthodox in foreign policy. She is completely
Speaker 8: mainstream for certain things. So I think government has softened her.
Speaker 8: There was another figure that was as charismatic as her,
Speaker 8: whose main I mean, there were several headaches for this person,
Speaker 8: and it's Severe Bodle Scorni, the late Severe Bootlescornie who
Speaker 8: founded fust to Italia back in the nineties and his
Speaker 8: government ended abruptly in twenty eleven because of debt. Now,
Speaker 8: to be completely clear and to be sure, we're not
Speaker 8: in the same situation, Italy has stabilized its debt. It
Speaker 8: stabilized the spread, which is a differential with German sovereign debt.
Speaker 8: Essentially that gives investors a measure of how sustainable it
Speaker 8: is in the long term. But the problems are still
Speaker 8: the same. The structural issues within Italy in its economy
Speaker 8: are still the same, and it seems like every leader
Speaker 8: that surpasses the two year harmark at some point has
Speaker 8: to deal with them. And so what Jorjaminally is trying
Speaker 8: to do now, she's trying to kind of use the
Speaker 8: strategy that she's used to kind of soften her stance
Speaker 8: and diplomatic issues on foreign policy by saying, well, the
Speaker 8: problem with debt is that because of Italy's structure of power,
Speaker 8: essentially we keep having governments that are unstable, and so
Speaker 8: I want to make the prime minister's off of the
Speaker 8: prime minister's position more powerful. Therefore, if you make me
Speaker 8: more powerful, she won't need to referend them to do this.
Speaker 8: Most likely, then debt will likely go down, which is
Speaker 8: I think a very interesting experiment and testament of her
Speaker 8: political skills.
Speaker 2: I think, I mean, does she have the political capital
Speaker 2: to be able to pull off something like that, because
Speaker 2: you know, as you say, we're used to the instability
Speaker 2: that leaders can face kind of all of a sudden.
Speaker 2: So can Georgia Manoni pull something like that off.
Speaker 7: That's a good question.
Speaker 8: Look, if she look at her peers, I think she's
Speaker 8: the only one that's emerged from the European election over
Speaker 8: the weekend with on the front foot. Right, there's been
Speaker 8: a massive like break across Europe. The whereas Italian's voting
Speaker 8: for the European Parliament essentially said, look, we're happy with
Speaker 8: the status. Quote, sure, let's give Georgian couple more percentage
Speaker 8: points in the polls. Your position has also surged, but
Speaker 8: it's still second, it's still the runner up. So I
Speaker 8: think she might actually have the political stability to do that. Internally,
Speaker 8: and I think what matters to her now is that
Speaker 8: she gets that good will solidified in Europe. So when
Speaker 8: she needs the leeway necessary to keep her voters happy
Speaker 8: but also kind of keep her allies happy, she's got
Speaker 8: kind of the groundwork to do that.
Speaker 2: Essentially, this is Bloomberg Daybreak Europe, your morning brief on
Speaker 2: the stories making news from London to Wall Street and beyond.
Speaker 1: Look for us on your podcast feed every morning on Apple, Spotify,
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Speaker 1: Caroline Hepka.
Speaker 2: And I'm Stephen Carol. Join us again tomorrow morning for
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Speaker 2: here on Bloomberg Daybreak Europe