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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daymake podcast, available every morning on Apples, Spotify, or wherever

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Speaker 1: you listen. It's Thursday, the fifteenth of August here in London.

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Speaker 1: I'm Caroline Hepka and.

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Speaker 2: I'm Stephen Carroll. Coming up today. US inflation data drives

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Speaker 2: FED bets, as one policymaker tells US he's growing more

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Speaker 2: concerned about employment.

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Speaker 1: The World Health Organization declares a deadly mpox outbreak in

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Speaker 1: Africa a global health emergency.

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Speaker 2: Plus E Coli and dead fish. Bloomberg finds evidence that

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Speaker 2: sewage flowing into Europe's rivers is making people sick and

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Speaker 2: killing wildlife.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: The Federal Reserves, Austin Goolsby says he's growing more concerned

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Speaker 2: about the labor market than inflation. The Bank of Chicago

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Speaker 2: FED president has also told Bloomberg that current interest rates

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Speaker 2: are very restrictive. His comments followed data release yes today

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Speaker 2: showing a key measure of underlying US inflation eased for

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Speaker 2: a fourth straight month. David Kelly, chief global strategist at

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Speaker 2: JP Morgan Asset Management, says the numbers are heading in

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Speaker 2: the right direction. I think it's pretty good news.

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Speaker 3: In the actual transactions markets of the economy, where people

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Speaker 3: are sort of bidding and asking for in terms of prices,

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Speaker 3: inflation is disappearing. So I think that overall this very

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Speaker 3: much confirms the idea that inflation is heading down.

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Speaker 2: JP Morgan's David Kelly speaking there. The FED is widely

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Speaker 2: expected to lower interest rates in September, though investors and

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Speaker 2: economists are split on whether that will be by a

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Speaker 2: quarter point or a half point reduction.

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Speaker 1: The World Health Organization has declared an outbreak of EMPOS

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Speaker 1: in Africa a global health emergency. The call comes after

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Speaker 1: a mutated strain of the virus, which causes painful lesions,

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Speaker 1: spread to at least six African countries, infecting about fifteen

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Speaker 1: thousand people. Tedro's ad Naum Gabriezos, the Director General of

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Speaker 1: the World's Health Organization, says that the organization is working

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Speaker 1: hard to tackle the outbreak.

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Speaker 4: We're on the ground supporting case investigation and contact racing.

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Speaker 4: We're training health workers.

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Speaker 3: We're supporting countries to access voxines and develop the strategies

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Speaker 3: to roll them out.

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Speaker 1: Tetos Adnaw Gabriezo speaking there. More than five hundred people

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Speaker 1: have lost their lives to the disease in the Democratic

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Speaker 1: Republic of Congo alone. Officials and advisors are now drafting

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Speaker 1: guidance for affected countries.

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Speaker 2: Iran has still not carried out the retaliation it promised

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Speaker 2: two weeks ago for the killing of a senior Hamas

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Speaker 2: leader in Tehran, leading to Western fears about what escalation

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Speaker 2: may come. Officials have been saying an attack could come

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Speaker 2: at any time. Evelan Farcass is a US national security

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Speaker 2: expert who's worked at the Pentagon.

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Speaker 4: Every day that we have the Iranians poise to make

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Speaker 4: an attack is a day where the risk a real

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Speaker 4: escalation and all at war, a full you know, multiple

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Speaker 4: front war in Israel increases. So we're at a very

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Speaker 4: dangerous moment in time and negotiations, as you know, a

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Speaker 4: pure stall.

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Speaker 2: Executive director of the McCain Institute at Arizona State University,

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Speaker 2: Evelyn Farkas, speaking their US and EU officials have been

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Speaker 2: trying to encourage Israel and Hamas to attend ceasefire talks

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Speaker 2: on the calendar for later today. Both Iran and the

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Speaker 2: US have said a ceasefire in Gaza would have a

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Speaker 2: ripple effect of camming wider tensions in the region.

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Speaker 1: Now, in other news, the SEC has fined twenty six

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Speaker 1: financial firms a total of three hundred and ninety three

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Speaker 1: million dollars as part of its WhatsApp probe. The US

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Speaker 1: regulator says the companies fail to keep employees electronic communications

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Speaker 1: and broke federal securities law. The fines at to billions

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Speaker 1: already paid by big banks.

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Speaker 2: Apple is moving forward with it shift into robotics, with

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Speaker 2: hundreds of staff working on a new product designed to

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Speaker 2: rival them on Echo. The project is aiming to create

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Speaker 2: an iPad device attached to a robotic arm that can

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Speaker 2: follow you around the home and act as a smart

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Speaker 2: home command center. Bloomberks tech correspondent Mark German broke the story.

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Speaker 2: He says it's a sign of where the tech giant

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Speaker 2: thinks the future is.

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Speaker 5: They're all in on robotics right now. Robotics is the

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Speaker 5: next big thing at Apple. They're talking about humanoids, They're

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Speaker 5: talking about mobile robots that go around your home.

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Speaker 2: German also notes the move is part of a broader

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Speaker 2: effort to boost sales. Apple still gets roughly half its

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Speaker 2: revenue from the iPhone, which has seld sluggishly in recent quarters.

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Speaker 1: Citygroup has become the latest major bank to lift a

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Speaker 1: pre Brexit cap on bonuses in a boost for London bankers.

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Speaker 1: Bloomberg's Tiba Adebayo has the story.

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Speaker 6: It's the latest bank to do away with the limit

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Speaker 6: on performance related pay for some employees. City Group is

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Speaker 6: following in the footsteps of rival lenders, opening the door

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Speaker 6: for its material risk takers to earn up to six

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Speaker 6: times the base salary in additional compensation. The news, released

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Speaker 6: in an internal memo seen by Bloomberg, places the firm

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Speaker 6: just behind Wall Street Piers, JP Morgan and Barclay's, whereas

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Speaker 6: much as ten times base salary is up for grabs.

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Speaker 6: City Group's latest move comes nearly a year after the

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Speaker 6: UK lifted eu ERA salary restrictions as part of a

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Speaker 6: broader push to make post Brexit Britain more attractive. Investment bankers,

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Speaker 6: traders and even compliance personnel will be eligible for enlarged rewards.

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Speaker 6: A spokeswoman said the adjustments will allow the company to

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Speaker 6: remain quote highly attractive to talent in London. Teawa, added Bayo.

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Speaker 1: Bloomberg Radio Now in a moment, we'll bring you more

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Speaker 1: on the path ahead for the Federal Reserve. Plus look

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Speaker 1: at the problems that sewage spills are causing in the

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Speaker 1: water supplies of Europe. That in a moment, but before that,

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Speaker 1: this other story caught my eye. Perhaps it's trivial, but

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Speaker 1: priciest homes in London are not selling and apparently our

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Speaker 1: piling up.

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Speaker 2: I like this data.

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Speaker 1: It's from lawn red as it shows that deals for

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Speaker 1: homes of five million pounds or more have actually plunged

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Speaker 1: in July, they were down nineteen percent. I think it's

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Speaker 1: just quite interesting. You know that London has been obviously

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Speaker 1: so expensive on this super superor prime segment of the market,

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Speaker 1: we've actually seen quite a significant hit. That's not well

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Speaker 1: some senses is because sterling has weakened in some senses.

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Speaker 1: It's also because the kind of the peak of the

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Speaker 1: market is gone. But there's also a real worry and

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Speaker 1: this is a bit kind of political. It's about the

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Speaker 1: changes to taxation, how richer people are going to be taxed,

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Speaker 1: the idea of getting rid of non doms, which is

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Speaker 1: the sort of stated aim of the government of the

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Speaker 1: Labor Government after they won the election. So yeah, I

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Speaker 1: just thought that the data is really quite interesting.

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Speaker 2: Especial when we think about in the wider London prime market,

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Speaker 2: sales were up by about nine percent last month from

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Speaker 2: a year earlier, so there was some sort of a

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Speaker 2: post election bounce in sentiment as well, and the number

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Speaker 2: properties going under AFA also increasing in July two. So

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Speaker 2: despite the optic in sales, still concerns about that end

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Speaker 2: of the Marcus.

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Speaker 1: So that's one of the stories that we're watching for

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Speaker 1: you this morning on the Blueberg terminal. Now, let's also

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Speaker 1: get into the detail after yesterday's US inflation data, which

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Speaker 1: showed core CPI easy for a fourth month in a row.

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Speaker 1: Let's think about the rate path ahead then for the

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Speaker 1: Federal Reserve. Of course, we have more data coming to

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Speaker 1: day on retail sales and jobless claims been a big

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Speaker 1: opinion columnist Daniel Moss joins us now for more. Good morning, Daniel.

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Speaker 1: You've been writing recently about how this is the yes

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Speaker 1: but easing cycle. When you read what Osin Glesby told

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Speaker 1: Bloomberg about where interest rates are now, can there be

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Speaker 1: any hesitation about the Fed actually cutting in September.

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Speaker 5: As things stand, I don't think there's any doubt about that.

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Speaker 5: That column was as much about how central banks are

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Speaker 5: framed this moment as anything else. You know, we had

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Speaker 5: a great example of that from New Zealand yesterday the

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Speaker 5: central bank governor insisted the interest rate cut he enacted

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Speaker 5: minutes earlier was not an easy nope nope, We're not

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Speaker 5: nope nope. We're still restrictive, just slightly less restrictive. And

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Speaker 5: this is not an embrace of duvishness. This is a

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Speaker 5: because of the ghost of transitory and similar terms that

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Speaker 5: other monetary authorities use. Because that was such a jarring

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Speaker 5: once in forty years experience, they're kind of haunted by that.

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Speaker 5: So they want to emphasize that this is not a

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Speaker 5: full blooded two thousand and eight style easing. This is

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Speaker 5: not a twenty twenty style easing. You know, this is

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Speaker 5: kind of going to be a bit of a mid

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Speaker 5: term adjustment. We won't let down our guard. We're still

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Speaker 5: inflation targeters. Inflation hurts everybody. The best way we can

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Speaker 5: secure the job market is to defeat inflation. Now, you know,

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Speaker 5: j Powell's been, you know, giving a little bit more

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Speaker 5: lip service to the employment side of the Fed's mandate.

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Speaker 5: But you know this is not going to be We're

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Speaker 5: all out to prop up growth. This is going to

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Speaker 5: be we are in a position to be less tight

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Speaker 5: than we were.

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Speaker 2: Not easy. Is that not Central bancas just being sensible though,

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Speaker 2: to avoid the risk of, you know, in case inflation

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Speaker 2: flares up again and they have to roll back on

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Speaker 2: cuts they've already made. Is there them being too worried

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Speaker 2: about the markets?

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Speaker 5: Well, I think it's the ghost of transitory, you know.

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Speaker 5: And while that word became a sort of singular rallying

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Speaker 5: cry for police mistakes in twenty twenty one, you know,

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Speaker 5: I would emphasize other central banks used very similar terms,

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Speaker 5: and they've been struggling for a couple of years to

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Speaker 5: live that down. So you're not going to see them

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Speaker 5: embrace dubbishness. Okay, they'll talk about how their confident that

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Speaker 5: inflation is a retreating vigilances required. It's like the actions

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Speaker 5: have to be sort of shrouded in not quite subterfuge.

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Speaker 5: But you know, there'll be some hair splitting in the language.

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Speaker 1: Interesting also, though, what's going on in China, it's so

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Speaker 1: very different to what's happening in the US. The figures

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Speaker 1: out this morning showing China weakness in terms of investment,

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Speaker 1: in terms of consumption. Deflation is a much bigger concern

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Speaker 1: there than inflation is. And you've been writing about why

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Speaker 1: Bejing should consider an inflation target. Why so?

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Speaker 5: China these days gets no shortage of economic and financial advice,

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Speaker 5: some of it very well meaning, some of it clearly

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Speaker 5: aimed at curtailing or containing you know what China sees

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Speaker 5: as its rightful rise in the world. What was interesting

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Speaker 5: about commentary from an academic was it came from inside

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Speaker 5: the tent. This is an influential advisor to the People's

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Speaker 5: Bank of China saying, hey, why don't we adopt a

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Speaker 5: hard inflation target? Well, just like everybody else, and why

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Speaker 5: not put a two in front of it. Look, this

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Speaker 5: is something that has a lot of merit, and he

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Speaker 5: can say, well, why would China be worried about inflation?

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Speaker 5: If anything, it should be worried about deflation. The thing

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Speaker 5: we learned in the decade before co it was it

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Speaker 5: works both ways. Remember Janet Yellen declaring at a press

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Speaker 5: conference the absence of inflation was the great mystery of

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Speaker 5: our time. Okay, so policy can stay easy and be

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Speaker 5: aggressively easy if you want a lift up to two percent.

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Speaker 5: Now China is such a long way from two percent.

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Speaker 5: People were popping champagne when CPI increased zero point five

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Speaker 5: percent from a year earlier, never mind five, never mind

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Speaker 5: one point five. So they've got a real problem there,

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Speaker 5: and this idea has found itself in the mix.

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Speaker 6: Now.

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Speaker 5: It's not without its challenges. Inflation targeting. Central banks are

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Speaker 5: generally considered to be relatively independent of other parts of government,

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Speaker 5: and in China an independent anything can be shall we say, problematic,

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Speaker 5: but you can adopt the substance of an inflation target

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Speaker 5: without necessarily the full bore independence. You know, the election

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Speaker 5: of the Starma government had a lot of people recalling

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Speaker 5: the very very early days of the Blair government when

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Speaker 5: within days of Labour being elected in nineteen ninety seven,

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Speaker 5: Gordon Brown gave the Bank of England full monetary independence.

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Speaker 5: It had an inflation target five years earlier. So things

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Speaker 5: tend to go hand in hand, but don't have to

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Speaker 5: you know, China doesn't seem to have many ideas right

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Speaker 5: now on the monetary front.

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Speaker 2: This is one, okay, Daniel Masberg recommending economists, thank you

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Speaker 2: very much. Now, in Paris there was an unwelcome side

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Speaker 2: show to the Olympics. The city's sewage problem, which threatened

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Speaker 2: plans to hold swimming events in the sand, which did

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Speaker 2: eventually go ahead with some delays. In the UK, water

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Speaker 2: companies have faced scrutiny over untreated sewage finding its way

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Speaker 2: into rivers, but the problem isn't confined to France and Breton.

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Speaker 2: There are countries across Europe facing the same issues. At

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Speaker 2: Bloomberg Green, reporter Olivia Rudgardt has been writing about this

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Speaker 2: and she joins US now and morning to you, Olivia.

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Speaker 2: Why is untreated sewage ending up in rivers in Europe?

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Speaker 7: Well, the primary reason for this, the specific untreated sewage problem,

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Speaker 7: is that a lot of these systems are quite old.

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Speaker 7: So essentially, there are two ways you can build a

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Speaker 7: sewerage system. You can build it so that your rain water,

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Speaker 7: in your foul water or your sewage go into separate pipes,

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Speaker 7: or you can build it so they all go into

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Speaker 7: one pipe. And a lot of older systems will built

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Speaker 7: so that they all go into one pipe. And what

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Speaker 7: that means is that when it rains, the pipe gets

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Speaker 7: filled up, the system can't cope and you have these

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Speaker 7: escape valves, release valves that then put the mixture of

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Speaker 7: water into rivers. And the sea, which is it's supposed

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Speaker 7: to work that way to stop the water sort of

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Speaker 7: backing up into people's homes onto the streets, but obviously

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Speaker 7: it's not an ideal situation because you then end up

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Speaker 7: with all of the nasty stuff from people's homes and

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Speaker 7: businesses polluting rivers in the sea. And what we've seen

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Speaker 7: in the UK is that actually these systems are spilling

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Speaker 7: not only on those days when it's you know, raining

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Speaker 7: really really heavily, but much more frequently than that.

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Speaker 1: Yeah, and so the effect of all of this sewage

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Speaker 1: on people and wildlife.

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Speaker 2: Yeah, exactly.

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Speaker 7: So you know what you find that some of the

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Speaker 7: nasty stuff you find in sewage, you find, you know,

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Speaker 7: very high levels of nutrients, things like phosphorus and nitrogen.

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Speaker 7: And what that causes is, you know, build up of

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Speaker 7: things like algae in rivers and sort of other waterways,

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Speaker 7: which chokes out everything else. So all the all the

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Speaker 7: kind of nice you know, native sort of pond weed

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Speaker 7: and things like that that you might get that provides

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Speaker 7: a habitat and food for wildlife can't survive anymore. And

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Speaker 7: then you also get bacteria, so you get things like ecoli,

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Speaker 7: which obviously is you know what makes the headlines quite

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Speaker 7: frequently when people get sick they accidentally swallow some water,

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Speaker 7: some gets into their body in some kind of way. Sorry,

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Speaker 7: it's not very nice at this time of the morning,

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Speaker 7: and that obviously is not brilliant for people who are

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Speaker 7: sort of trying to enjoy the waterways, use them for

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Speaker 7: recreation and fun.

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Speaker 2: So what could be done to stop these spills then?

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Speaker 7: So, I mean the ultimate kind of silver bullet solution

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Speaker 7: is obviously to separate them out. And you know, we

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Speaker 7: talk to people for this story who said, if you

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Speaker 7: were starting from scratch now and a lot of newer systems,

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Speaker 7: you would separate them out. But unfortunately that's extremely disruptive

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Speaker 7: and expensive. You know, it cost probably in this country

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Speaker 7: where the estimate has been done, hundreds of billions of

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Speaker 7: pounds with the estimate, so it's really, really, really expensive.

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Speaker 7: There are things that you can do to reduce the

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Speaker 7: amount of water that actually ends up in the sewers,

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Speaker 7: and really the way that you do that is by

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Speaker 7: slowing the flow. So you know, instead of paving over everything,

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Speaker 7: creating more kind of rain gardens, creating more soakaways. What

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Speaker 7: they've done in Paris to try and reduce Their problem

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Speaker 7: was to essentially create sort of basins to store the

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Speaker 7: water to stop it flowing down into the system quite

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Speaker 7: so quickly. So you can kind of create a system

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Speaker 7: where you have valves that stops everything sort of sort

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Speaker 7: of going down right to the bottom straight away. So

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Speaker 7: they're you know, depending on your budget and how much

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Speaker 7: disruption you want to cause. There are a few different options.

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Speaker 1: Yeah, I mean budget is quite an important one, though,

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Speaker 1: isn't it. I mean, I suppose is why hasn't this

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Speaker 1: been addressed or fixed before? Is it climate change? I mean,

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Speaker 1: I know everyone's wild swimming now, but surely people knew

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Speaker 1: about this, you know, quite some time ago.

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Speaker 7: Yeah, I mean I think, you know, I've thought about

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Speaker 7: this a lot in the UK because the water companies

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Speaker 7: for sure knew that, you know, this was how the

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Speaker 7: systems work. But I think it came as quite of

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Speaker 7: a shock, as quite a shock to the general public.

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Speaker 7: I think it's one of those things where there have

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Speaker 7: been so many other issues with rivers, you know, especially

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Speaker 7: if you think about European rivers, they're also polluted by agriculture,

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Speaker 7: by industry. You know, there's there's mining, there's a lot

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Speaker 7: of other things. Going on that that it really hasn't

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Speaker 7: kind of risen to the forefront and before now. But

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Speaker 7: what's actually happened is regulation, you know, has tightened up

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Speaker 7: and tightened up and all these other sources of pollution,

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Speaker 7: and now you know, we're really getting to the stage

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Speaker 7: where the combined ser overflows are taking up a much

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Speaker 7: greater proportion of the problem. And I think the other thing,

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Speaker 7: as you say, is that people are increasingly you know,

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Speaker 7: looking to use the waterways for recreation. I think this

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Speaker 7: is something that happened a lot during COVID wild swimming

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Speaker 7: in the UK, and you know, I talked to some

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Speaker 7: really interesting camp is in Belgium who are sort of

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Speaker 7: trying to do the same thing, trying to get people

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Speaker 7: to engage with say the canals in Brussels or in

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Speaker 7: Ghent as something that's a resource. It's something nice that

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Speaker 7: you can use, you know, for fun, which is really

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Speaker 7: not possible right now, especially for swimming, because they're just

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Speaker 7: not clean enough.

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Speaker 2: Is this just a European problem or is it hasn't

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Speaker 2: been experienced in other parts of the world as well.

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Speaker 7: So it's not unique to Europe. There are combined systems,

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Speaker 7: especially on the sort of East Coast of America. The

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Speaker 7: older systems that were built sort of a little bit

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Speaker 7: longer ago tended to be combined. There are some combined

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Speaker 7: systems in China and Australia as well. I think the

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Speaker 7: thing about Europe is that because you know, some of

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Speaker 7: the first two systems in the world were in the

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Speaker 7: UK and that's where it's sort of spread from. You know,

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Speaker 7: we have a really really high proportion of them, so

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Speaker 7: it's about seventy percent I think that are combined, which is,

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Speaker 7: you know, that much higher than other parts of the world.

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Speaker 7: But I think there probably are other rivers that are

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Speaker 7: being polluted in this way and it's just not really

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Speaker 7: talked about or known about. So you know, I wouldn't

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Speaker 7: say it's unique to Europe, you know. I think it's

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Speaker 7: going to sort of raise it's going to raise up

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Speaker 7: the agenda everywhere.

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Speaker 1: In the world. Yeah, and there's also I was speaking

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Speaker 1: to a few months back one of the Conservative members

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Speaker 1: of the Environment Committee here in the UK on this

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Speaker 1: very issue, and what I was struck by is that

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Speaker 1: they were putting it into a much longer perspective, saying

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Speaker 1: that actually the regulation has tightened up and rivers are

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Speaker 1: much cleaner than they've ever been before. You know, they

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Speaker 1: were going back to the nineteen fifties as a comparison.

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Speaker 1: So there is another view that actually rivers have become

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Speaker 1: much less polluted than they were in the past. And

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Speaker 1: I suppose that brings me to the question about whether

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Speaker 1: regulators or the EU are doing something about this now.

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Speaker 1: What can they do about it now?

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Speaker 7: Yeah, I think that's you know, that is right to

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Speaker 7: some extent, Like certainly things like chemical pollution, like I

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Speaker 7: said before, you know that has been cleared up a lot,

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Speaker 7: which is why I think we're now getting to this stage, right,

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Speaker 7: this is the sort of final thing that hasn't been addressed.

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Speaker 7: So you know, the reason I think this is this

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Speaker 7: is really coming to a head for European countries. There's

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Speaker 7: a couple of eight bits of EU legislation that are

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Speaker 7: sort of even either being updated or sort of coming

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Speaker 7: down the track. So the rules that govern how urban

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Speaker 7: areas must treat their sewage, they've been tightened up this year.

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Speaker 7: They just agreed new rules that sort of make it

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Speaker 7: so that you have to monitor and sort of keep

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Speaker 7: an eye on more of your zero overflows. And then

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Speaker 7: there's another deadline coming down in twenty twenty seven for

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Speaker 7: the status the overall status of water bodies and the

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Speaker 7: last check in we had on that was twenty twenty one,

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Speaker 7: which showed that pretty much everyone was way off track

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Speaker 7: for meeting that.

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