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

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Speaker 1: Daybacurate podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Friday, the twenty first of June in London.

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Speaker 1: I'm Caroline Hepkeaar.

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Speaker 2: And I'm Stephen Carroll. Coming up today, Financial industry voices

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Speaker 2: warned that Emmanuel Macran's election gamble in France is risking

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Speaker 2: Paris's hard fought status as a rising European hub.

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Speaker 1: Kis Starmer's Labor Party prepares to deliver a planning reform

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Speaker 1: blitz if they win next month's election.

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Speaker 2: Plus, with the end of the cheap money era, the

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Speaker 2: world's biggest real estate investor, Blackstone, is moving into risk

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Speaker 2: your new terrain. We have a special report.

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

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Speaker 1: the latest polls show the far right National Rally holding

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Speaker 1: its lead, with President Emmanuel Macon's group still trailing in

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Speaker 1: third place. But the far right and left wing politicians

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Speaker 1: face the hostile from business leaders yesterday as they laid

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Speaker 1: out competing visions for the country. Speaking to Bloomberg outside

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Speaker 1: the event, National Rally president Jordan Bardella refused to accept

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Speaker 1: that his party's policies have spooted the markets, instead seeking

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Speaker 1: to blame the media and left wing parties.

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Speaker 3: I think you're the one causing the concerns on the markets.

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Speaker 3: In a pointless manner, we have decided to widen our

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Speaker 3: majority because I think there is a real danger today

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Speaker 3: to see Jean lu Melanjean and the far left coming

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Speaker 3: to power, which would make friends like Venezuela without the oil.

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Speaker 1: Despite National Rally President Jordan Bardella's view, investors have already

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Speaker 1: voted with their feet. More than two hundred and fifty

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Speaker 1: billion dollars was wiped off the market capitalization of French

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Speaker 1: firms last week, pushing the country below the UK as

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Speaker 1: Europe's largest stock markets.

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Speaker 2: Germany is exploring whether to copy the UK and Italy

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Speaker 2: in outsource asylum procedures to a third country. Chancellor Lef

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Speaker 2: Schaltz and the leaders of sixteen German states discussed a

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Speaker 2: plan to reduce the number of migrant arrivals after the

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Speaker 2: right wing Alternative for Germany Party surged in European elections

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Speaker 2: this month. Schultz's pledged to speed up the asylum process

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Speaker 2: and send back applicants who were turned down to their

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Speaker 2: home countries.

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Speaker 1: The Bank of England gave traders fresh hope of a

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Speaker 1: rate cut soon. Policymakers voted seven to two to hold

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Speaker 1: interest rates steady on Thursday, but said their decision was

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Speaker 1: quote finely balanced, but it makes UK correspondent Lizzie Burden

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Speaker 1: says that higher than expected inflation did not change minds.

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Speaker 4: The bottom line is August looks live by any inflation surprises.

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Speaker 4: But it's interesting in the guidance they actually talked about

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Speaker 4: that services inflation number. Yes, some people thought that it

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Speaker 4: was a risk that there would be second round effects,

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Speaker 4: but others dismissed it because actually this is a backward

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Speaker 4: looking reading and we've been past the peak of services inflation.

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Speaker 1: Lizzie Burden added that investors have now priced in more

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Speaker 1: than a fifty percent chance of a move at the

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Speaker 1: next meeting in August. It comes as UK consumer confidence

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Speaker 1: rose to the strongest level in two and a half

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Speaker 1: years according to GfK, reflecting an improved economic outlook ahead

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Speaker 1: of the general election.

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Speaker 2: Turning next to the news from retail sales here in

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Speaker 2: the UK some breaking news this hour. The latest retail

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Speaker 2: sales data growing stronger than expected in May than excluding fuel,

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Speaker 2: showing expansion of two point nine percent last month that

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Speaker 2: follows a contraction of one point four percent in April.

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Speaker 1: Meanwhile, Bloomberg has learned that the Labor Party is preparing

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Speaker 1: a planning reform blitz if it wins the election. Kirs

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Speaker 1: Starmer's party would reportedly use ministerial orders to speed up

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Speaker 1: the implementation of its housing policy, including its pledge to

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Speaker 1: deliver one and a half million new homes over five years.

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Speaker 1: Bloombag's James Orcock has more.

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Speaker 5: With multiple polls predict a record victory for Labour in

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Speaker 5: two weeks time. Attention is turning to what they would

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Speaker 5: do in power, sources tell Bloomberg. A Kith Starmer government

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Speaker 5: would unleash a flurry of officialdom, reinstating mandatory building targets,

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Speaker 5: starting leasehold reform, and instructing local planners to go ahead

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Speaker 5: with building projects all across the UK. It remains to

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Speaker 5: be seen if they can make their ambitious housing target

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Speaker 5: a reality, though a bloombug investigation found that the average

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Speaker 5: annual funding in local government planing departments has tumbled by

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Speaker 5: nearly half since twenty ten. In London, James Wilcock Bloomberg Radio.

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Speaker 2: A pair of large bets and the FED funds futures

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Speaker 2: markets are attracting attention on Wall Street. The multimillion dollar

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Speaker 2: wagers stand to benefit from a ramp up on expectations

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Speaker 2: that US policymakers will reduce rates as soon as July.

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Speaker 2: While it's an unlikely outcome, the bets underscore momentum in

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Speaker 2: the market behind a cut, and that's despite the latest

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Speaker 2: commentary from those setting rates. Minneapolis Fed President Near Kashkari

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Speaker 2: says the central bank will return inflation to the FEDS

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Speaker 2: two percent target, but warns it will take some time.

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Speaker 2: It'll probably take a year or two to get all

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Speaker 2: the way back down to our two percent target.

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Speaker 6: The good news in all.

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Speaker 2: Of this is that the labor market has remained remarkably strong.

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Speaker 2: Wage growth is still pretty good for workers. By some measures,

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Speaker 2: might be still a little bit too high to get

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Speaker 2: back to our two percent inflation target. So getting all

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Speaker 2: the way back to two percent is going to take

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Speaker 2: a little more time, but I'm confident that we're going

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Speaker 2: to get there. Neil Kashgari's comments were echoed on the

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Speaker 2: same day by Richmond FED President Thomas Barkin. He says

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Speaker 2: he needs more clarity on inflation before cutting interest rates.

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Speaker 2: In a moment, we'll bring you more in how the

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Speaker 2: financial industry in Paris is viewing the upcoming elections. But

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Speaker 2: another interesting read that caught our eye this morning from

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Speaker 2: our drinks newsletter, Top Shelf Society, always worth the reason

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Speaker 2: a Friday morning for thinking about the weekend. This is

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Speaker 2: about ghost distilleries rising from the grades. So two parts

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Speaker 2: of this story. One is that casks of whiskey which

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Speaker 2: are from disillery they are no longer operating, are attracting

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Speaker 2: huge premiums rarity value. Unsurprising perhaps they're One example, Little

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Speaker 2: Mill forty five, which is a bottle from Scotland's first

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Speaker 2: licensed distillery which closed down in nineteen ninety four, hitshells

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Speaker 2: for twelve and a half thousand pounds.

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Speaker 3: Ok.

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Speaker 2: But then there's the question two of the reopening of

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Speaker 2: some of these old distilleries in Scotland as well. Diagio

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Speaker 2: investing forty six million dollars in resurrecting two shuttered sites,

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Speaker 2: Brora and i port Allen as well. This is something

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Speaker 2: that could see a return. They're trying to recreate the

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Speaker 2: conditions that were there before. Some of these distilleries were

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Speaker 2: mouth bowled, so trying to recreate course. Lolon won't be

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Speaker 2: producing any whisky for a while because you know, it

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Speaker 2: takes a while to get it. Get it, John, Well,

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Speaker 2: I mean line first.

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Speaker 1: Maybe there's been the London gin craze right of the

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Speaker 1: last few years to BIGI views.

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Speaker 2: Of the London gym craze. Yes, that's very different.

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Speaker 1: No, they're two very different weekends. So yeah, I think

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Speaker 1: it's a lovely story. And also this is a huge

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Speaker 1: Scottish export, isn't it the Rarity fact a big investment

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Speaker 1: as well. Yeah, absolutely, so it's a really nice piece.

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Speaker 1: Brad Jaffe has it for you on the Blueberg terminal

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Speaker 1: this morning.

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Speaker 2: Let's get you more details now on our top story

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Speaker 2: and how the French elections could threaten Paris's place as

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Speaker 2: rising hub for European finance. Our Paris banking reporter Alex

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Speaker 2: Rosbandari joins us now for more. Alex, good morning. How

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Speaker 2: are the big financial firms, many of whom have been

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Speaker 2: building their presence in Paris since bragsit thinking about these elections.

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Speaker 7: Yeah, as you say, most Wall Street lenders have been

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Speaker 7: moving traders and moving billions of assets in various over

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Speaker 7: the past years, just less Mont Micron was entertaining all

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Speaker 7: of those leaders in Versailles. The decision has plinsided them.

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Speaker 7: But when you speak to people familiar with them, there's

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Speaker 7: no plan to back peddle on those expansion plans for now,

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Speaker 7: because they've invested with a long term view and the

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Speaker 7: uncertainty is not going to affect us decisions for now. However,

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Speaker 7: when you speak to lobbyists elsewhere, be it in Germany

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Speaker 7: or Italy or even in the UK, people are starting

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Speaker 7: to wonder whether their own country is going to be

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Speaker 7: a bit more competitive for firms willing to set a

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Speaker 7: foot on the continent.

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Speaker 1: So which policies are these financial firms they are actually

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Speaker 1: most worried about. I mean, obviously with the snap poll,

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Speaker 1: everybody's still trying to figure out what the policies might be.

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Speaker 7: Yes, well, it's really unclear what the outcome of this

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Speaker 7: election is going to be. A topic that comes a

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Speaker 7: lot in conversations is taxation, because on both sides of

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Speaker 7: the political spectrum, being the far right or the left

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Speaker 7: wing alliance, they are likely to provide a wealth text

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Speaker 7: that will be quite a change for the financial industry here.

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Speaker 7: But Another thing is immigration because the fire Right's tough

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Speaker 7: stens and immigration historically is sparking some worries that banks

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Speaker 7: will not be able to issue work visas for traders

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Speaker 7: and bankers they want to relocate to Paris, So that

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Speaker 7: comes to mind quite often.

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Speaker 2: What about the concerns over policy paralysis, because as you say,

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Speaker 2: the outcome of the election is still very unclear at

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Speaker 2: this stage. Of course, still weeks of campaigning to go,

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Speaker 2: but also the eventual makeup of the parliament could actually

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Speaker 2: mean they're not very much gets done at all. Is

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Speaker 2: that something that financial firms are worried about too, right?

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Speaker 7: Well, the biggest issue for investors, for instance, is in certainty.

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Speaker 7: I was speaking to the chairman of the p lobby

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Speaker 7: here that said that it's in't like it, of course,

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Speaker 7: and that the current and certaince is going to be

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Speaker 7: short lived because even if there's a policy paralysis, eventually

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Speaker 7: this is something that people can live with it. It

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Speaker 7: appears the problem is doing certain tistions lasts too long

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Speaker 7: because then it can be kind of putting for investors

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Speaker 7: and the funds that were billions that work in the country.

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Speaker 1: In terms of the market reaction, it has been very severe.

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Speaker 1: Is there any expectation that some of the money that

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Speaker 1: has flowed out might return. What is your reading of

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Speaker 1: the kind of temperature of investors in there thinking about

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Speaker 1: Paris right now?

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Speaker 7: Well, it's been quite a sell of in the past week.

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Speaker 7: If you look at figures, the party has raised most

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Speaker 7: of its gains last week. It picked up a bit

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Speaker 7: more recently, but it's really u't clear what's going to

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Speaker 7: happen when invests are going to think. When you look

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Speaker 7: at a Bank of America survey, the Paris dog market

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Speaker 7: was their favorite last month, but it's become their least

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Speaker 7: fervid now, so it really is the jury still out.

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Speaker 2: Okay, Alex, thank you very much for joining us. Alex Rosbondari.

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Speaker 2: There are Paris Banking reporter bringing us details of his

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Speaker 2: latest reporting around how the financial industry is feeling. Of course,

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Speaker 2: we had that big event yesterday hosted by the metaf

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Speaker 2: Business Lobby Group, and we've been hearing from Carolyne Conna

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Speaker 2: our colleagues interviews with some of the politicians she spoke

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Speaker 2: to there, including the National Rally president gen Dan Baldella,

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Speaker 2: talking about how he blamed the media for the market

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Speaker 2: turmoil that there had been and saying that you know,

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Speaker 2: it's it's not their fault that the markets are worried

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Speaker 2: about this.

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Speaker 1: Well, that's very Liz Chust, isn't it. I mean, if

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Speaker 1: you think, if you think about what happened, if you're

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Speaker 1: making that comparison potentially about the France in the UK,

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Speaker 1: that there's that issue into two.

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Speaker 2: We also spoke to your next CEO, Stefan bush Now

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Speaker 2: and Bloomberg Television yesterday on this issue too, and he

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Speaker 2: was talking about how it's understandable that people are puzzled

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Speaker 2: and trying to analyze what's going on in France because

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Speaker 2: France doesn't usually have snap elections, but he said he

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Speaker 2: doesn't see this as dismantling any of what has made

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Speaker 2: France attractive to businesses until now, or the position that

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Speaker 2: it's had over the past ten years of being able

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Speaker 2: to attract more businesses too. So some caution I think

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Speaker 2: also from business leaders there, although the rhetoric from the

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Speaker 2: politicians is still pretty concerning as well. The left wing

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Speaker 2: interesting Eric Cockrell from the France and Bowed Party on

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Speaker 2: the left that Carolyne spoke to in Paris yesterday as well,

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Speaker 2: saying that it was a Manual Macron's fault that was

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Speaker 2: this chaos in the markets, because he's the one who

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Speaker 2: called the election.

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Speaker 1: Okay, all right, that's clear. So that's when it comes

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Speaker 1: to what's happening in France now to property. As the

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Speaker 1: era of cheap money is far behind us, now, a

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Speaker 1: big investor is moving in on the hunt for some

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Speaker 1: stellar returns. Blackstone's co head of its massive property on

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Speaker 1: Nadi Meggie and Kathleen McCarthy have sixty five billion dollars

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Speaker 1: of dry powder to deploy on deals, and our Bloomberg

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Speaker 1: real estate reporter Jack Siders has been digging into this story. Jack,

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Speaker 1: very good to have you on the program. Good morning. Firstly,

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Speaker 1: I suppose what is Blackstone actually looking for in terms

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Speaker 1: of the sorts of real estate deals that they want.

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Speaker 6: Morning, Thanks for having me on.

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Speaker 8: Yeah, it's decided to do this story now because it's

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Speaker 8: an interesting time to look at private equity real estate investing.

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Speaker 8: We're in this you know, completely new landscape. Interest rates

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Speaker 8: significantly higher, therefore property yields much higher, and so it's

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Speaker 8: really changing the way that investors are having to approach

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Speaker 8: thing and Blackstone is the biggest real estate investor that

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Speaker 8: there is so it's a look at really how.

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Speaker 6: Their approach might evolve in this new world. I guess.

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Speaker 8: Traditionally, Blackstone made its name in real estate for you know,

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Speaker 8: buying things, fixing them and selling them, and history the

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Speaker 8: two big areas of commercial real estate have been offices

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Speaker 8: and retail. We know what online shopping did to retail,

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Speaker 8: and now we've seen what working from home and various

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Speaker 8: other challenges are doing to office.

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Speaker 6: So where are they going to put to work?

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Speaker 8: This just massive amount of capital that they have to deploy,

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Speaker 8: and over the last few years they've become very very

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Speaker 8: sort of sectoral focus, and that seems to be continuing

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Speaker 8: as they start to deploy this capital and this new landscape.

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Speaker 6: So they're going down a few different niches.

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Speaker 8: Still very much into logistics, so betting on that sort

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Speaker 8: of e commerce and.

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Speaker 6: Reordering a supply chains theme.

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Speaker 8: But the really big one that they go for this

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Speaker 8: cycle seems to be data centers. Huge amounts of capital

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Speaker 8: going into this, which is which is quite a different

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Speaker 8: thing for an investor like Blackstone, but really betting on

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Speaker 8: that massive AI boom which is going to cause huge

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Speaker 8: demand for these sort of server farms of the future.

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Speaker 2: What are the risks for Blackstone in making this change.

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Speaker 8: It's an interesting time because I guess I mean, you

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Speaker 8: could go back as far as nineteen eighty one and

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Speaker 8: you had basically forty plus years of the cost of

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Speaker 8: government borrowing getting squeezed ever lower.

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Speaker 6: And what that meant was that property returns were also

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Speaker 6: getting squeezed lower.

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Speaker 8: So that was this huge tailwind for anyone who was

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Speaker 8: investing in property. But that's come to an end for

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Speaker 8: how long we don't know, but I think the consensus

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Speaker 8: the moment obviously is things are going to be higher

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Speaker 8: for longer. So the way you make money in this

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Speaker 8: environment is not necessarily with your capital market sacumen and

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Speaker 8: being very clever on that side of things, which obviously,

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Speaker 8: you know, the big private equity firms and Blackstone, the

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Speaker 8: biggest of the lot, have had huge success with. The

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Speaker 8: way you make money in real estate now is by

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Speaker 8: driving the other side of the equation, which is the

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Speaker 8: rent the income.

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Speaker 6: And for that that's like the hands on nitty.

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Speaker 8: Gritty of real estate investing, you know, finding the right

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Speaker 8: building in the right place, making it better, adding value,

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Speaker 8: which you know, Blackstone is obviously an enormous organization.

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Speaker 6: Now data science, this all sorts of people to help

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Speaker 6: them do this.

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Speaker 8: But when you're talking about deploying, you know, thirty billion

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Speaker 8: dollar funds and real estate is an inherently granular asset class.

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Speaker 8: It's a really intriguing challenge.

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