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

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Speaker 1: Day Bank You podcast, available every morning on Apple, Spotify

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Speaker 1: or wherever you listen. It's Monday, the twelfth of August

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Speaker 1: here in London. I'm Caroline Hepka.

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Speaker 2: And I'm Stephen Carroll. Coming up today, Israel boasters its

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Speaker 2: defenses amid a heightened risk of an attack from Iran.

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Speaker 1: Markets bet on more volatility ahead of US inflation numbers

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Speaker 1: due this.

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Speaker 2: Week, plus Vladimir Putin retaliates after Ukraine's surprise cross border attack.

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

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Speaker 2: Israel is bolstering its defenses as it faces a heightened

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Speaker 2: risk of attack from Iran or its proxies. It follows

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Speaker 2: the recent assassination of the Hamas political leader is Melhania,

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Speaker 2: which Iran has vowed to avenge. Iran's president has accused

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Speaker 2: the US and other Western nations of double standards when

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Speaker 2: it comes to Israel, saying it poses a significant threat

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Speaker 2: to global security. His remarks follow a deadly Israeli strike

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Speaker 2: on a school in Gaza that through international condemnation. US

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Speaker 2: Vice President Kamalahara says the death toll was.

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Speaker 3: Far too many civilians have been killed. I mean Israel

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Speaker 3: has a right to go after the terrorists are Hamas,

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Speaker 3: but as I have said many many times, they also

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Speaker 3: have I believe that an important responsibility to avoid civilian cant.

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Speaker 2: It's Kamalahara speaking there. Israel's military said the strike was

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Speaker 2: aimed at a Hamas command and control center embedded within

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Speaker 2: a school and adjacent mosque. Leaders of France, Germany in

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Speaker 2: the UK visued a joint statement calling on Iran to

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Speaker 2: refrain from attacks that could inflame tensions and jeopardize a ceasefire.

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Speaker 1: Now, a fire has broken out at a Russian occupied

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Speaker 1: nuclear power plant in southern Ukraine. In a post on x,

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Speaker 1: Ukrainian President Vladim Zelenski says that Russian troops are responsible

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Speaker 1: for setting the blaze. The incident follows Ukraine's shocking incursion

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Speaker 1: into the border region of Kersk last week, forcing Russia

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Speaker 1: to evacuate more than seventy six thousand people from the

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Speaker 1: border region. This woman was among them.

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Speaker 4: Well, heath will be horn.

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Speaker 1: So we closed the gate and rushed through the gardens.

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Speaker 5: No one knew where we ran out, Where should we go?

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Speaker 1: What should we do?

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Speaker 5: He went along the street and there was a boom.

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Speaker 5: What should we do?

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Speaker 1: A woman evacuated from the Kersk region. They're speaking vari translator.

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Speaker 1: According to the Russian Ministry of Defense, four missiles and

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Speaker 1: thirty five drones over Kersk and neighboring regions were downed overnight. Meanwhile,

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Speaker 1: during his nightly address, Ukraine's President Vlodomir Zelenski thanked his

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Speaker 1: forces for creating quote pressure on the aggressor.

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Speaker 2: The European Central Bank is expected to cut interest rates

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Speaker 2: six times by the end of next year, according to

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Speaker 2: a new Bloomberg survey of economists, that moves the expected

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Speaker 2: right path earlier than previous forecasts as experts are just

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Speaker 2: too sluggish economic data. Growth in the euro area's private

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Speaker 2: sect took ground to a halt in July, and Germany

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Speaker 2: remains a dead weight for the rest of the region.

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Speaker 1: To US politics, now, Vice President Kamala Harris has raised

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Speaker 1: over twelve million dollars from donors in her political home

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Speaker 1: base of San Francisco on Sunday. It came after a

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Speaker 1: tour of swing states, starting in Pennsylvania, where she introduced

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Speaker 1: running mate Tim Walls, then going on to Wisconsin, Michigan, Arizona,

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Speaker 1: and Nevada. According to a campaign spokesperson, Harris has now

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Speaker 1: raised three hundred and ten million dollars in the month

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Speaker 1: of July. Meanwhile, the Republican vice presidential candidate floated the

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Speaker 1: prospect of more than doubling the federal child tax credit

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Speaker 1: to five thousand dollars on ABC's This Week. Jd Vance

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Speaker 1: sought to reframe his stance as pro family after being

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Speaker 1: attacked for referring to Democrats as childless cat ladies.

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Speaker 6: They have turned this into a policy proposal that I

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Speaker 6: never made.

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Speaker 1: And I do think.

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Speaker 6: Look, when you're a parent and you have children, you

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Speaker 6: obviously have a different perspective. And that's and I said

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Speaker 6: that too, and I certainly believe that.

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Speaker 1: To Devans there now in New York Times and Siena

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Speaker 1: College poll taken conducted last week showed Harris with fifty

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Speaker 1: percent support among likely voters in battleground states Wisconsin, Pennsylvania,

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Speaker 1: and Michigan. That's compared to Trump's forty six percent in

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Speaker 1: each state.

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Speaker 2: The UK government is proposing to double the amount of

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Speaker 2: water companies pay out for bad customer service. The move

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Speaker 2: is a response to public anger over illegal sewage spills

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Speaker 2: and chronic leaks Boomberg James Wilcock has more.

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Speaker 4: Four in ten people are unhappy with their water supply,

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Speaker 4: and those stats are from the regulator Environment Seculy Stever,

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Speaker 4: Reed says the industry is broken and is increasing the

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Speaker 4: minimum fee for any failure to forty pounds. That's still

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Speaker 4: only ten percent of the average household bill, but the

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Speaker 4: move sets the tone for difficult negotiations ahead. The industry

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Speaker 4: is seeking permission to raise customer bill by more than

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Speaker 4: thirty five percent over the next five years, and Britain's

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Speaker 4: largest company, Thames Water, faces bankruptcy and possible nationalization in London.

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Speaker 4: James Wilcock, Bloomberger Radio.

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Speaker 1: Lastly, these salaries of Britain's top bosses rose to the

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Speaker 1: highest levels on record, yet still lag far behind similar

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Speaker 1: roles in the US. The median pay for a fifty

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Speaker 1: one hundred CEO is now four point one nine million pounds,

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Speaker 1: two percent high than last year. S and p five

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Speaker 1: hundred CEO pay went up by twelve and a half

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Speaker 1: percent in the same time period. The data from the

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Speaker 1: High Pay Center is likely to be a sore point

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Speaker 1: for the LSC CEO, Julia Hoggart and other top city

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Speaker 1: bosses who say that low executive pay stops Britain from

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Speaker 1: attracting top global talent. Now in a moment, we'll bring

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Speaker 1: you up to date on the events in the Middle East,

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Speaker 1: plus briefview on how markets are starting the week after

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Speaker 1: last week's turmoil. But another story that caught our eye

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Speaker 1: after last night's Olympic closing ceremony spectacular the arrival of course,

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Speaker 1: of Tom Cruise on the roof of the stud de France.

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Speaker 1: Pretty amazing stuff. I watched all sorts of Olympic Athletics

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Speaker 1: and other events over the weekend. You know whose rules

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Speaker 1: I was desperately trying to learn or understand from the commentary.

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Speaker 2: I mean, look, it's been a I think it's fair

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Speaker 2: to say it's been a pretty sccessful Olympic. Yes for France,

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Speaker 2: they've managed to put off the hosting of it with

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Speaker 2: spectacular effects and the closing ceremony bringing that to an end.

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Speaker 2: But a story from our colleague Jacob Breed caught my

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Speaker 2: eye this morning about how Olympic gold medals, of course

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Speaker 2: worth their weight in metaphorical gold, but an actual gold

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Speaker 2: are worth more than they ever before because the caster

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Speaker 2: of the price of gold has gone up by so much.

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Speaker 2: So Jacob's been looking at what makes up the actual

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Speaker 2: medals in them in the medals, and they're worth about

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Speaker 2: nine hundred dollars each after the surge. That's the gold medals.

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Speaker 1: I should say, yeah, well, look, I did see all

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Speaker 1: of the athletes, you know, sort of pretend biting down

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Speaker 1: in their you know, to sort of show their wins.

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Speaker 1: I hadn't actually realized that the medals were really made

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Speaker 1: of gold.

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Speaker 2: Yeah, and they all in fact, the medals this time

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Speaker 2: around also contained a small piece of the Eiffel Tower

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Speaker 2: apparently too, one of the things. So I mean, you

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Speaker 2: probably get more money for it, selling us as its

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Speaker 2: value was an Olympic medal and melting it down for

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Speaker 2: the constituent medals. But worth thinking about all that glitters

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Speaker 2: when it comes to medals.

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Speaker 1: Okay, let's have a thing about the markets then, how

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Speaker 1: they're starting this week. After the wild swings last week,

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Speaker 1: things are looking calmer and we look ahead to key

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Speaker 1: data points, of course, including the USCPI reading on Wednesday.

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Speaker 1: Our Markets Live stretch is Mary Nicola joins us now

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Speaker 1: for more on this. Mary, you were so helpful last

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Speaker 1: week as we were navigating through the markets have markets

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Speaker 1: returned then to relative calm today?

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Speaker 5: Do you think it seems like it this morning? So

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Speaker 5: you see this morning, it seems like a beacon of solitude,

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Speaker 5: especially compared to what we were seeing last week at

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Speaker 5: this exact same time. It helps also that Japan's on

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Speaker 5: hot today, especially since they were one of the important

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Speaker 5: sources of the market turbulence. But there's also several market

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Speaker 5: events this week that's going to have and keep investors

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Speaker 5: on the sidelines until we get more clarity of how

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Speaker 5: to proceed and whether this volatility is actually over.

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Speaker 2: So has anything fundamentally changed in markets in the last week.

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Speaker 2: We've been talking an awful lot, for example, about the

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Speaker 2: unwind and the carry trade, But is there a fundamental

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Speaker 2: difference to where we are this week compared to last week?

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Speaker 5: You know, not really, so if you look at it

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Speaker 5: the carry trade online. The main thing is that you know,

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Speaker 5: according to a lot of estimates, is that almost three

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Speaker 5: quarters of it is done. But there's still the concerns

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Speaker 5: lingering about the US economy and whether that soft narrative

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Speaker 5: still holds. And that's an important one to lay, especially

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Speaker 5: because there are still a lot of market fears that

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Speaker 5: were stemming from that specifically. Obviously we had a really

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Speaker 5: strong rebound following the US initial jobless claims, but that's

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Speaker 5: really second third tier data. We need, you know, something

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Speaker 5: like retail sales this week, something like USCPI to really

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Speaker 5: garner support for the equity markets and whether this volatility

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Speaker 5: is actually over.

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Speaker 1: So tell us a bit more than about the US CPI.

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Speaker 1: Put in particular, the inflation data. Is that a catalyst

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Speaker 1: for more volatility? It does seem to be. The investor

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Speaker 1: a lot about that.

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Speaker 5: Yeah, absolutely, So if you look, you know, investors are

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Speaker 5: going to be looking for US inflation data that's not

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Speaker 5: too hot and activity readings from the US that just

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Speaker 5: aren't too cold. So a hot number is just going

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Speaker 5: to evoke a more cautious stance from the Fed. And

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Speaker 5: we get a number of FED speakers this week as well,

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Speaker 5: because all view that their job on inflation is still

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Speaker 5: not done, because remember, it's about making sure that that

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Speaker 5: inflation genie not only goes back in the bottle, but

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Speaker 5: also stays there, and that's going to be one of

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Speaker 5: their primary mandates. Even though even if they see that

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Speaker 5: growth is slowing down or whether they're seeing that there

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Speaker 5: are cracks in the labor market. But of course the

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Speaker 5: other key part of their mandate is still going to

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Speaker 5: be inflation, and so of course we've had a really

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Speaker 5: strong rally in US treasury markets, so there's there's there's

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Speaker 5: some concern of course, especially with how treasuries are doing,

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Speaker 5: of how that unwinds and and the bias could could

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Speaker 5: be that we get yields push higher if of course

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Speaker 5: the data doesn't come in as as we'd like.

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Speaker 2: So apart from the US CPI print, then there's other

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Speaker 2: data out this week as all that markets be watching

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Speaker 2: closely to China, the UK as well, and we've also

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Speaker 2: got a center bank stasion in New Zealand. What are

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Speaker 2: the other market stories we should be watching.

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Speaker 5: Yeah, I think the three key events obviously besides CPI

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Speaker 5: and retail sales, is going to be China's monthly barrage

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Speaker 5: of data GDP out of Japan, and then of course

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Speaker 5: UK CPI. So let's start with China. So the activity

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Speaker 5: data is going to still be highly scrutinized, of course

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Speaker 5: because concerns about how it's likely to miss its five

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Speaker 5: percent growth target without more easing. So the weaker data,

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Speaker 5: the weaker the data, the more authorities will have to do.

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Speaker 5: And then second one will be Japan. Japan still remains

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Speaker 5: under the limelight, especially with the BOJ shifting towards a

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Speaker 5: hawkish stance, so that Q two GDP number from Japan

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Speaker 5: will validate whether the boj's recent hawkish tone is a

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Speaker 5: fact in fact there and does it validate their stance

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Speaker 5: and is a reflation theme actually undergoing in Japan after

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Speaker 5: all these years. And then of course you have a

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Speaker 5: UK CPI. It's another important one given BOE expectations where

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Speaker 5: markets are looking for about another two cuts this year,

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Speaker 5: so if services in core inflation remain high, we're going

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Speaker 5: to have to see a repricing of those expectations. And

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Speaker 5: then finally, OURBNZ you have the OIS markets pricing in

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Speaker 5: about a sixty six percent chance of a cut at

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Speaker 5: this meeting, even though the bank has looking for a

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Speaker 5: pivot in Q one twenty twenty five. So there are

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Speaker 5: a few key things outside of CPI and of course

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Speaker 5: retail sales that are drive markets.

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Speaker 1: Okay, Mary, thank you so much for being with us.

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Speaker 1: Our market's live strash is Mary Nicola there with more

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Speaker 1: on how we are starting this Monday, of course in

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Speaker 1: the market. Interesting then to also think about that UK

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Speaker 1: inflation data and forecasses do expect official data on Wednesday

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Speaker 1: to show inflation accelerating to two point three percent in July,

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Speaker 1: so a slight take higher bit of a hotter inflation

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Speaker 1: print expected for the UK.

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Speaker 2: That's turned to the Middle East now is A continuing

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Speaker 2: its preparation for a potential retaliatory attack by Iran after

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Speaker 2: the assassination of the Hamas political leader is Smelhaneia and

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Speaker 2: Tehran almost two weeks ago. Meanwhile, in Israeli attack at

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Speaker 2: our school in Gaza strom internet national condemnation. Are EMA

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Speaker 2: news director Rosalad Mutson is with us now OS good morning.

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Speaker 2: Starting with that attack on the school in Gaza. Israel

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Speaker 2: says it was a Hamas command center, but many countries

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Speaker 2: have raised concerns about the civilian casualties involved.

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Speaker 6: Well, that's right, and this has been something that Israel

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Speaker 6: has said throughout. It's very very difficult to sort of

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Speaker 6: like in a place like Gaza, you know, a small territory,

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Speaker 6: people are crowded in and to work out sometimes like

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Speaker 6: where Hamas is in all of that, and they've often

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Speaker 6: accused Hamas of putting their fighters, putting their operatives in

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Speaker 6: these places like refugee centers, schools and so on for

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Speaker 6: that reason to safeguard them from attack. And so they're

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Speaker 6: saying that there was a cluster of Hamas operatives in

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Speaker 6: the area, including some quite senior figures for that group,

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Speaker 6: and that therefore they went in. You've got the US,

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Speaker 6: so the EU and others sort of expressing strong concern about,

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Speaker 6: you know, targeting such a site given the proximity to civilians.

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Speaker 6: Hamas says that one hundred people or so died. That

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Speaker 6: can't be verified. Israel says they suspect it was less

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Speaker 6: than that, but either way, well, again, it just shows

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Speaker 6: that the difficulty in this war is that you've got

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Speaker 6: Hamas is quite a nebulous organization. You've got groups of

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Speaker 6: fighters operating perhaps in tunnels underneath you know, civilian areas,

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Speaker 6: and so how do you target Hamas without also targeting

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Speaker 6: civilians As a result.

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Speaker 1: It's been almost two weeks since Iran and Hezbola they

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Speaker 1: pledged to avenge the assassinations of militant leaders in Beirut

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Speaker 1: and Tehran. Have they had second thoughts?

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Speaker 6: We're kind of a wondering when it's going to happen,

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Speaker 6: because they really telegraphed its when, not if. But it

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Speaker 6: has been almost two weeks since this, since this event

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Speaker 6: where they said they were going to have to respond,

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Speaker 6: and they're still saying they're going to respond, but they

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Speaker 6: haven't done anything. It might be a reflection of the

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Speaker 6: fact it was like right at the brand new administration

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Speaker 6: to come into Iran, so they're still trying to work

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Speaker 6: out from their own dan what is a calibrated response.

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Speaker 6: It's possible they're also just still trying to see what

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Speaker 6: happens with these ceasefire talks for the war in Gaza,

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Speaker 6: because you know, for them a sees fire would be

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Speaker 6: important if it's a pathway to the end of the

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Speaker 6: war between Hamas and Israel. So they might want to

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Speaker 6: see how those talks go this week before they respond.

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Speaker 6: But they have kind of indicated they're going to respond,

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Speaker 6: so at some point they have to. The question is again,

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Speaker 6: what does that response then look like.

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Speaker 2: And indeed we've been reporting on some of the preparations

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Speaker 2: underway in Israel for that potential attack as well. I mean,

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Speaker 2: it's an interesting reflection on how people in Israel are

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Speaker 2: preparing for this.

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Speaker 6: Well, that's right, and of course a lot of it's

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Speaker 6: about safeguarding infrastructure as well. I mean for parts of Israel,

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Speaker 6: you've got that Iron Dome missile show, which is really important,

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Speaker 6: has proved quite effective in repelling attacks both from Hezbollah

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Speaker 6: and Hamas, so that's one thing that is in play.

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Speaker 6: But also you know, safeguarding infrastructure because Israel is an

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Speaker 6: important center for high tech investment, for example for startups,

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Speaker 6: so you don't need the power going out for extended

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Speaker 6: So we know that they're bringing diesel generators even into

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Speaker 6: some of these places to help keep the lights on

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Speaker 6: if need be. They're also stop piling everything from transistor radios,

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Speaker 6: you know, very old fashioned kit to be able to

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Speaker 6: communicate if needed. And so they're really girding for something again,

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Speaker 6: and I guess for people living in Israel, they've been

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Speaker 6: girding now for almost two weeks and wondering if something's

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Speaker 6: going to happen.

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Speaker 2: This is Bloomberg Daybreak Europe. You're morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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