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

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Speaker 2: This is the Bloomberg Daybreak euro podcast. Good morning, It's Thursday,

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Speaker 2: the fourteenth of August. I'm Stephen Carolyn London. Coming up today.

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Speaker 2: The US President suggests he'll announce the next Federal Reserve

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Speaker 2: chair a little earlier as market's further ramp up rate

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Speaker 2: cut expectations from iPods to I robots. Bloomberg learns that

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Speaker 2: Apple's AI push will focus on tabletop virtual companions and

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Speaker 2: smart home security. Plus, we look at why Victor Orban's

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Speaker 2: once unshakable grip on power and hungary now appears to

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Speaker 2: be slipping. Let's start with a roundup of our top stories.

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Speaker 2: US trosuries have held on to gains after traders boosted

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Speaker 2: bets of the Federal Reserve will cut interest rates at

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Speaker 2: its next meeting. The bond rally shows how market sentiment

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Speaker 2: has shifted dramatically from two weeks ago, when expectations for

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Speaker 2: a September cut were less than fifty to fifty. Interest

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Speaker 2: rate swaps now fully priced in a quarter point move

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Speaker 2: next month, with some traders piling into batson at being

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Speaker 2: a half point. US Treasury Secretary Scott Besson believes that

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Speaker 2: should just be the start. Here's what he told Bimberg's

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Speaker 2: an Marie Hordern.

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Speaker 3: I do think we could go into a series of

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Speaker 3: rate cuts here, starting with a fifty basis point rate

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Speaker 3: cut in September.

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Speaker 1: Fifty basis rate cut in September.

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Speaker 3: Is that signal that the economy, though, is not doing well.

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Speaker 3: That signals that there's an adjustment and that the rates

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Speaker 3: are too constrictive. If you look at any model that

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Speaker 3: the if you we should probably be one hundred and

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Speaker 3: fifty one hundred and seventy five basis points lower. So

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Speaker 3: I think the committee needs to step back.

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Speaker 2: Scott Bassets was speaking as Chicago five President Austin Goolsby

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Speaker 2: said the next rate meetings will be live as policymakers

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Speaker 2: way mixed economic data and the US Center Bank isn't

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Speaker 2: the only one being pressured by the Treasury Secretary. Bessant

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Speaker 2: also told Bloomberg he believes the Bank of Japan is

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Speaker 2: falling behind the curve and addressing inflation, adding that they

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Speaker 2: are going to be hiking and need to get their

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Speaker 2: inflation problem under control. The list of candidates for the

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Speaker 2: next chair of the Federal Reserve is continuing to narrow

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Speaker 2: according to Donald Trump. The US president says he may

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Speaker 2: move sooner rather than later on naming his pick for

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Speaker 2: the job when Jerome Powell's term ends next May.

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Speaker 4: With more hairs.

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Speaker 2: Binberg's Charlie Palace.

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Speaker 4: Word came during the President's Kennedy Center news conference.

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Speaker 5: I'll be naming a new chairman sometime within the next

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Speaker 5: I think I'll name it a little bit earlier.

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Speaker 4: The new chairman.

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Speaker 5: I'm down to three or four names.

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Speaker 4: All good, all great, well keeping up his attacks on

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Speaker 4: fedchaer G.

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Speaker 5: Powell, and he got it all wrong. He's too late.

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Speaker 5: We call him Jerome too late Bell. It will live

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Speaker 5: with him forever. I believe that name will live with

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Speaker 5: him forever.

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Speaker 4: Trump has hammered Powell over the Central Bank's decision to

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Speaker 4: hold interest rates steady, repeatedly calling in the past for

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Speaker 4: him to resign. In New York Charlie Pellot Bloomberg Radio what.

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Speaker 2: Donald Trump says Vladimir Putin will face severe consequences if

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Speaker 2: he doesn't agree to a cease fire with Ukraine this week.

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Speaker 2: The two leaders are meeting tomorrow in Alaska for the

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Speaker 2: first time since the war in Ukraine began. Trump says

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Speaker 2: there will likely be further discussions.

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Speaker 5: There's a very good chance that we're going to have

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Speaker 5: a second meeting, which will be more productive than the first,

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Speaker 5: because the first is I'm going to find out where

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Speaker 5: we are and what we're doing. Again, this is Biden's world.

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Speaker 5: This isn't my work. He got us into this thing,

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Speaker 5: and they should have never happened. This war would have

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Speaker 5: never happened if our president. But it is what it is,

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Speaker 5: and I'm here to fix it.

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Speaker 2: Yes, President Adam that he hopes the upcoming talks with

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Speaker 2: Putin can be used to set up a quick second

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Speaker 2: meeting with Ukrainian leader Vladimir Zelenski after allies pressured him

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Speaker 2: to involve Ukraine in the discussions. Bloomberg understands that Trump

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Speaker 2: assured European leaders during a call yesterday that he wouldn't

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Speaker 2: negotiate on seeding Ukrainian territory to Putin. Apple is developing

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Speaker 2: a new suite of AI devices to try and corner

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Speaker 2: the demand for smart consumer electronics. A tabletop robot assistant,

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Speaker 2: a smart speaker, and cameras that can run a home

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Speaker 2: security system are part of the slate of planned releases

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Speaker 2: seen by Bloomberg, Our Managing editor, Mark German says it's

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Speaker 2: a very different approach to AI compared to the likes

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Speaker 2: of Chat GPT.

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Speaker 6: So the conventional wisdom is that Apple is lagging right now,

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Speaker 6: It has no future, the product pipeline is very limited.

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Speaker 6: They're struggling in AI. The world is ending and Tim

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Speaker 6: Cook should be fired as CEO. And it is true

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Speaker 6: that they are struggling terribly in AI. But at the

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Speaker 6: end of the day, Apple is a hardware company and

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Speaker 6: they have been planning this big new hardware pipeline.

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Speaker 2: Goverman's exclusive reporting details how Apple CEO Tim Cook is

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Speaker 2: telling employees the company must win in AI despite the

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Speaker 2: company's new budding products. OpenAI may threaten the company's home

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Speaker 2: term with its plans to build its own new AI

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Speaker 2: driven devices with the help of former Apple design chief

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Speaker 2: Johnny Ive. Short sellers are betting that Greggs's growth plans

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Speaker 2: are half baked. The proportion of the UK pastry chain's

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Speaker 2: stock out on loan reached nine percent of total shares

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Speaker 2: this week, the highest level since two thousand and eight.

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Speaker 2: Bloomberg's James Wilcock has more.

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Speaker 7: There is currently one greg shop for every twenty six

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Speaker 7: thousand people in the British population. That's the nearly two thousand,

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Speaker 7: six hundred and fifty stores, and the bakery chain wants

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Speaker 7: to expand to three thousand. So short sellers are asking

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Speaker 7: the loaded question how many sausage rolls is too many?

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Speaker 7: Between signed consumers opting for price er alternatives and the

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Speaker 7: rise of drugs like a zenpic, traders of this year

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Speaker 7: start a bet the stop price might flake in London.

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Speaker 7: James Wilcock Bloomberg.

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Speaker 2: Radio following house prices are more widespread than any time

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Speaker 2: in the past year, according to a key survey from

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Speaker 2: UK estate agents. The Royal Institution of Chartered Surveyors said

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Speaker 2: it's indicator tracking home values dropped six percentage points to

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Speaker 2: minus thirteen last month. That's the worst reading since July

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Speaker 2: twenty twenty four. The figures come as fears of tax

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Speaker 2: rises and a bleaker economic outlook way on demand, while

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Speaker 2: rising inflation pours cold water on hopes for future rate cuts.

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Speaker 2: Those are your top stories on the markets. The MSCIS

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Speaker 2: specific indexes down two tenths of one percent. The Niicke

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Speaker 2: in Tokyo is down by one and a half percent.

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Speaker 2: As we're looking at that strength in the Japanese yen

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Speaker 2: up by seven tents tw one hundred and forty six

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Speaker 2: forty two following those comments from US Treasury Secretary Scott

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Speaker 2: Bess and European stoft features looking pretty flat at the moment,

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Speaker 2: so to our Wall Street futures who do have the

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Speaker 2: producer price inflation numbers out later, which is an interesting

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Speaker 2: one to watch in terms of the categories that feed

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Speaker 2: into the Fed's preferred price gauge that's scheduled for later

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Speaker 2: this month. The tenure treasury yield holding on to the

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Speaker 2: gains from yesterday at four point two four percent. This morning,

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Speaker 2: the Bloomberg Dollar Spot index is a tenth weaker. Well,

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Speaker 2: in a moment, we'll bring you more on those ramped

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Speaker 2: up expectations for FED rate cuts, plus why Hungary's Victor

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Speaker 2: Orban is seeing his popularity slip and even in areas

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Speaker 2: which were once his strongholds. But in the story that

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Speaker 2: I've been reading this morning about how hotels spas are

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Speaker 2: now being marketed as a place for parents and their

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Speaker 2: children to go together, Alexis ben Vista has been writing

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Speaker 2: about this for Bloomberg Pursuits that while hotel spas were

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Speaker 2: once sanctuaries of adults, only serenity. They're now being marketed

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Speaker 2: as a quote multi generational wellness experience. The under sixteen

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Speaker 2: crowd is being seen as a lucrative next frontier for

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Speaker 2: these spas, so they've got special products formulated for younger

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Speaker 2: skin adapted treatments as even baby reflexology and services aimed

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Speaker 2: at teens and tweens are targeting things like the harmful

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Speaker 2: effect of screens. Take for example, the mandin Oriental in

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Speaker 2: Saint Vincent and Grenade's offering a texture's treat to leave

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Speaker 2: muscle tension for frequent phone use. Now the shift and

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Speaker 2: demand is also coming from parents who, instead of wanting

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Speaker 2: to escape their children, want to spend more time with

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Speaker 2: them in a bonding experience in the SPA. I have

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Speaker 2: to be on very skeptical about all of this. Alexis

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Speaker 2: does include that viewpoint in her piece too, but it

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Speaker 2: is a fascinating business strategy from these high endspos agree

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Speaker 2: more about it on bloombererg dot com. We'll put a

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Speaker 2: link to the article in our podcast show notes as well.

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Speaker 3: Well.

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Speaker 2: Let's bringing more now on the markets and how expectations

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Speaker 2: are in the fed's next move are rippling through them.

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Speaker 2: Comments from the US Treasury Secretary, also driving the Japanese

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Speaker 2: yen higher. Today our market's live strategy, Mary Nicola's with

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Speaker 2: me now for more, Mary, Markets are currently pricing at

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Speaker 2: about thirty basis points of easing from the FED at

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Speaker 2: its meeting next month. Talk to us about how that's

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Speaker 2: being perceived and playing out across markets.

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Speaker 8: Yeah.

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Speaker 1: So, actually we're seeing a positive response, especially from Asian currencies,

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Speaker 1: with most of them gaining ground against the dollar this morning.

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Speaker 1: The reaction in equities though, is a little bit less notable,

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Speaker 1: But we have to remember they had a really stellar

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Speaker 1: day yesterday and it's really Japan that's seeing the most

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Speaker 1: notable losses. But again, they had a strong couple of days,

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Speaker 1: and the stronger yen obviously adds to the pressure on

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Speaker 1: the equity markets, especially if their earnings outlooks looks less

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Speaker 1: supportive with a stronger yen.

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Speaker 2: What are the market perceptions now of the chance of

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Speaker 2: a fifty basis point cut now, like Scott Bessen was

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Speaker 2: talking about.

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Speaker 1: Yeah, so, so far we are not seeing any pricing

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Speaker 1: of a fifty basis point cut from the markets. You

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Speaker 1: could argue that dubvish signals from the FED chair powel

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Speaker 1: at Jackson Hole at the end of next week would

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Speaker 1: probably over excite traders and shift towards more aggressive pricing.

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Speaker 1: So I think we'd have to wait and see until

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Speaker 1: what unfolds in Jackson Hole to really get that aggressive push.

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Speaker 1: So as of now, as you mentioned, where the markets

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Speaker 1: are pricing in closer to thirty basis points of cuts

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Speaker 1: in September, but there's strong odds that the FED delivers

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Speaker 1: the same again at each of the final two meetings

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Speaker 1: of twenty twenty five.

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Speaker 2: Okay, so that's where we are in FED pricing now.

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Speaker 2: I wanted to come back to Japan though, because gott

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Speaker 2: bess and also did talk about the BOJ in that

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Speaker 2: interview with Bloomberg, saying it was behind the curve and

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Speaker 2: we're seeing some movement in the end as a result

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Speaker 2: of that.

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Speaker 1: Yeah, having the BOJ behind the curve is it nothing

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Speaker 1: new for markets, but it's interesting to see how the

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Speaker 1: EN is gaining ground and jgbs are faltering as a result,

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Speaker 1: especially after those comments coming through. And overall, what his

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Speaker 1: comments suggests is that not only will it put pressure

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Speaker 1: on the end to appreciate, but it also reiterates Washington's

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Speaker 1: bias for a weeker dollar, and if you look at

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Speaker 1: the yen specifically, it's under more pressure to strengthen given

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Speaker 1: how undervalue it is versus its long term averages. And

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Speaker 1: then if we look at JGBS, it's going to be

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Speaker 1: very difficult to escape its underperformance. There's a persistent market anxiety,

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Speaker 1: you see it ahead of all the different but you

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Speaker 1: also have that tension coming through because of quantitative tightening

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Speaker 1: stagflation risks which are brewing, and that could even escalate

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Speaker 1: tomorrow tomorrow when the country reveals its GDP numbers.

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Speaker 2: And Mary, I've been reading on the Market's live blog

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Speaker 2: as well. I've been writing two about the euro and

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Speaker 2: the Japanese yen and all of this as well.

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Speaker 4: What's going on there.

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Speaker 1: Yeah, I think we could see a lot more downside

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Speaker 1: for euro yen as a result of all this. So

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Speaker 1: we're seeing a kickstart and a push on the Japanese currency.

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Speaker 1: And if we look it's it's rallied quite significantly since

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Speaker 1: over the past year and so, and it's you know,

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Speaker 1: near near near the highs. And what we're seeing now,

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Speaker 1: if there's more pressure on the Bank of Japan to

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Speaker 1: to accelerate its rate hikes and to see upside pressure

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Speaker 1: on yields that actually plays in most with Euro with

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Speaker 1: euro yen because of the fact that the interest rate

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Speaker 1: differential is let's say, a lot than it is with

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Speaker 1: the US, so it will be more forgiving for investors

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Speaker 1: to actually bet on yen gains versus the Euro than

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Speaker 1: the dollars, so that they don't have to take on

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Speaker 1: such a big carry.

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Speaker 2: Okay, well, thank you for bringing that to our attention

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Speaker 2: as Well'm Marry Nicolo, our Markets Live strategist.

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Speaker 4: There.

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Speaker 2: We're turning to Hungary next, where the Prime minster, Victor Orban,

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Speaker 2: is watching his hold on power slip away, even in

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Speaker 2: areas which are once strongholds of support. Bloomberg is reporting

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Speaker 2: from the eastern city of Debretzen, where a multi billion

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Speaker 2: euro Chinese battery plant hasn't been enough to maintain the

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Speaker 2: popularity of Orban's FIDESH party. Bloomberg's Andras Gurgili joins me

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Speaker 2: now from Budapest for more. Andrew's great to have you

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Speaker 2: with us. Talk to us about Victor Orban's prospects heading

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Speaker 2: into elections due to take place next spring after a

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Speaker 2: decade and a half, and power is the urban era

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Speaker 2: about to end in Hungary.

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Speaker 9: Yeah, so good question. So until about last year or so,

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Speaker 9: it would have seen quite unthinkable for Hungry's small position

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Speaker 9: parties to beat Orban. After all, he has so much

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Speaker 9: of the media, the judiciary and other institutions on his side,

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Speaker 9: and of course he's a charismatic speaker who has delivered

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Speaker 9: already four victories in a row. So that all changed

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Speaker 9: past year when an equally telegenic challenger appeared in the

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Speaker 9: form of Peter Madjar, who now has the leader against

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Speaker 9: Orban's party in most polls. Of course, it is still

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Speaker 9: too early to write Orban off and it's a long

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Speaker 9: way to the elections in April.

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Speaker 2: How is Orban's alliance with Donald Trump shaping the conversation

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Speaker 2: around his popularity.

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Speaker 9: So he was Orban as the first in Europe to

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Speaker 9: indoors Trump quite early in the game, and for years

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Speaker 9: Republicans in the US have looked to Hunger as a

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Speaker 9: kind of role model for the kind of society they

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Speaker 9: want to build in the States. Perhaps, but that hasn't

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Speaker 9: translated into any sort of tangible gain for Orban in

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Speaker 9: the campaign. For example, you know, he can deliver sort

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Speaker 9: of a trade deal for Hungary with pump and that

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Speaker 9: would be difficult anyway because Hungary is part of the

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Speaker 9: European Union and has to trade via the Block with

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Speaker 9: the US.

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Speaker 2: So talk to us about the strategy being employed by

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Speaker 2: the opposition in Hungary now, even in places like de

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Speaker 2: Brett Sand, which is traditionally a stronghold of Orban's party.

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Speaker 9: Yeah, so the opposition leader, Peter Maliar, who is actually

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Speaker 9: a former insider in Orban's regime. He knows the regime,

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Speaker 9: you know, from the inside. So he's been exploiting that

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Speaker 9: to his advantage and he's been rising rapidly in the polls.

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Speaker 9: The economy is struggling, so that's not helping Orban and

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Speaker 9: so he's losing support even in some of his traditional bays.

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Speaker 9: And that's why we travel to debrett Cent for our reporting.

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Speaker 9: It's the most populous city after the Comfortable with Apesh.

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Speaker 9: If Worban loses that to the TIS party, then that's

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Speaker 9: probably quite a game changer.

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Speaker 2: One of the things that's really interesting about Debrettson as

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Speaker 2: well is that it's the location for this a guesst

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Speaker 2: foreign investment in Hungary, this Chinese battery plant.

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Speaker 9: That's that's right. So The background to this is that

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Speaker 9: the Europine Union has suspended billions of euros in funding

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Speaker 9: that Hungary was getting from the Block.

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Speaker 10: And and so Orbat has turned to China as one

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Speaker 10: of his main sources of financing an investment. He has

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Speaker 10: taken large loans from Chinese development banks for infrastructure projects

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Speaker 10: and and then turning to the bretson. So he is

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Speaker 10: having these these battery plants built and invited manufacturers, battery

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Speaker 10: manufacturers and car makers from China to move the European

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Speaker 10: hubs to Hungary. But that comes with springs attached, so

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Speaker 10: h and and also environmental risks, and that's one of

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Speaker 10: the things that the opposition has been able to exploit

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Speaker 10: and and and and and turn focused to and and

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Speaker 10: organize their resistance to urban about.

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