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Speaker 1: This is Bloomberg Daybreak for this Monday, the fifteenth of

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Speaker 1: May in London.

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Speaker 2: Coming up today.

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Speaker 3: Headed for a runoff, Erduan looks unlikely to have secured

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Speaker 3: an outright victory in Turkey's presidential election.

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Speaker 1: Running out of headroom, Biden and McCarthy will resume debt

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Speaker 1: ceiling talks as default looms.

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Speaker 4: Time for closer ties.

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Speaker 3: The UK gets set for trade talks with Switzerland to

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Speaker 3: boost services, the.

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Speaker 5: EU's London clearing headache BOE prepares to water down borrowing rules,

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Speaker 5: and the Tories vow to clamp down on low skilled migration.

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Speaker 5: Those are the stories we're looking at in today's papers.

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Speaker 4: And I'm Leanne Gerrin's.

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Speaker 1: Plus a glittering deal. Australian bullion giant seal a nineteen

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Speaker 1: billion dollar tie up to dominate the global gold mining industry.

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Speaker 6: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 6: news you need to start your day in just one

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Speaker 6: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 6: and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Caroline Hitker and I'm Lizzie Burden.

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Speaker 3: Here are the stories we're following today. Rechef Perduan is

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Speaker 3: unlikely to avoid a runoff in Turkey's presidential election. With

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Speaker 3: more than ninety eight percent of votes counted, he's still

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Speaker 3: short of the fifty percent vote share needed to be

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Speaker 3: declared the winner. Bloomberg's Simin Dema Khan explains why he's

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Speaker 3: under so much pressure After twenty years in power.

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Speaker 7: President Assmer has come under fire for his unorthodox economic policies.

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Speaker 7: Of course, inflation has surged double digits twenty four year high,

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Speaker 7: and rather than hiking rates like most central banks have

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Speaker 7: been doing around the world, he has been cutting rates,

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Speaker 7: and this, of course has really impacted the economy. The

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Speaker 7: lira under pressure. It's one of the worst performers in

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Speaker 7: emerging market currencies for the past year.

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Speaker 3: Bloomberg's Turkey Simin Demo Khan reporting there from Istanbul. The

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Speaker 3: runoff would pit Urduan against top rival Kemal Kilich Droghlu,

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Speaker 3: who has the backing of the nation's broadest ever grouping

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Speaker 3: of opposition parties.

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Speaker 1: President Biden and how Speaker McCarthy are planning to meet

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Speaker 1: tomorrow for discussions on the debt sealing stand off. The

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Speaker 1: President and the Republican Speaker have been locked in a

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Speaker 1: disagreement for months over raising the government's thirty one point

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Speaker 1: four trillion dollar boring limit, but National Economic Council directed

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Speaker 1: Lael Brainard says that talks so far have been productive.

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Speaker 8: So the staff is very engaged. I would characterize the

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Speaker 8: engagement as serious as constructive. When I talk to CEOs

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Speaker 8: to business leaders around the country, they tell me things

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Speaker 8: are actually going very well, but their biggest concern is

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Speaker 8: that Congress might fail to prevent default and that that

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Speaker 8: would be catastrophic.

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Speaker 1: Speaking on CBS's Face the Nation, Brainard also warned the

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Speaker 1: failure to secure deal will lead to higher boring costs

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Speaker 1: for all. This is Bloomberg's latest Markets Live Pulse survey

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Speaker 1: showed financial professionals believe ed fault is more likely now

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Speaker 1: than during the twenty and eleven standoff.

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Speaker 3: The UK Trade Secretary will meet her Swiss counterpart later

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Speaker 3: for talks aimed at modernizing the trade deal between the

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Speaker 3: two countries.

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Speaker 4: Billiombergs U and pots.

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Speaker 9: How's the story the UK and Switzerland the kickioff negotiations

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Speaker 9: for a new free trade agreement to boost trade in services.

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Speaker 9: Trade Secretary kemmy Beagenot will fly to burn for a

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Speaker 9: meeting with her Swiss counterpart today, with former negotiations set

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Speaker 9: to begin next week. The existing deal was in the

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Speaker 9: two countries, rolled over from when Britain was in the EU,

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Speaker 9: and predates the Internet and even the home computer. Switzerland

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Speaker 9: is the UK's tenth biggest commercial partner, with bilateral trade

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Speaker 9: amounting to more than fifty billion pounds a year. The

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Speaker 9: price for the two sides is the reduction in trade

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Speaker 9: barriers in areas like finance and legal and professional services.

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Speaker 9: In London, I'm you in pots Bloomberg Daybreak Europe.

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Speaker 1: The ECB will hold interest rates at their peak for

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Speaker 1: longer than previously thought, according to the economists polled by Bloomberg.

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Speaker 1: Those surveys still expect rates to peak at three point

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Speaker 1: seventy five percent this summer, but now they don't anticipate

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Speaker 1: a cut until mid twenty twenty four. The ECB raised

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Speaker 1: its deposit rate by twenty five basis points to three

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Speaker 1: point two five percent this month and has pledged to

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Speaker 1: keep rates high for as long as is necessary.

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Speaker 3: And finally, it turns out that all that glitters is gold.

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Speaker 3: Bullion mining giant Newmont has secured a nineteen point two

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Speaker 3: billion dollar deal to buy Australian rival New Crest with more.

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Speaker 4: Here's Doug Krisner.

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Speaker 10: Newmont first approached its Australian rival back in February with

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Speaker 10: a non binding bid worth seventeen billion dollars, but it

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Speaker 10: was rejected by the board at New Crest. Then in April,

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Speaker 10: Newmont sweetened the offer by more than two billion dollars

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Speaker 10: and described it as the best and final offer. Well,

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Speaker 10: now Newcrest has accepted terms worth roughly nineteen point two

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Speaker 10: billion dollars. This deal would create the world's largest gold producer,

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Speaker 10: with assets in North and South America, Africa, Australia and

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Speaker 10: Papa New Guinea. Newmont will also expand its exposure to copper,

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Speaker 10: a key metal in the clean energy transition. In New York.

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Speaker 10: I'm Doug Krisner. Bloomberg Daybreak Europe.

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Speaker 1: Right, there's a few of our top stories for you

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Speaker 1: this morning. There's a very interesting Bloomberg editorial on the

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Speaker 1: terminal curbing Europe's inflation cannot be left to the ECB.

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Speaker 1: So the editorial board making the argument that Christie Lagard

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Speaker 1: can't do all the heavy lifting, that inflation curn'tly at

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Speaker 1: seven percent, it has to be brought down not just

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Speaker 1: by interest rates, but also by sort of combined action

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Speaker 1: by European governments. This is an argument we've had a

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Speaker 1: number of times, you know, banking union and so on.

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Speaker 1: This is a long standing issue that Europe has. But

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Speaker 1: I think the editorial board makes it really clear that

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Speaker 1: with high interest rates the action has to happen now.

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Speaker 3: Yeah, and in the UK context, Muhammadalarian was making the

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Speaker 3: same argument about the government's role to support the Bank

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Speaker 3: of England. But I've spoken to different economists who say that, look,

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Speaker 3: it's the Bank of England's job to cut inflation. The

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Speaker 3: government can only reach distribute the effects or not make

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Speaker 3: it worse.

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Speaker 2: Yeah, absolutely, so have a read of that.

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Speaker 1: Also, though, what caught my eye was, you know, we

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Speaker 1: often talk about rents and how exhaution they are in London.

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Speaker 1: I was watching Eurovision, which took place in Liverpool over

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Speaker 1: the weekend. Of course, massive song contest. Well, if you

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Speaker 1: are trying to rent in that citsual. Frankly anywhere outside

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Speaker 1: of London now you're going to pay more than one

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Speaker 1: thousand pounds a month for the first time to rent

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Speaker 1: anything outside of even the capitol.

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Speaker 2: I thought those are quite shocking numbers. From Hampton's.

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Speaker 3: Yeah, you're seeing the Bank of England's twelve state straight

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Speaker 3: rate increases feeding through to the real economy, landlords passing

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Speaker 3: on the higher mortgage costs, and that shows the lag

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Speaker 3: in military transmission that the doves on the MPC worn about.

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Speaker 3: Expect more and more of this to feed through.

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Speaker 2: Oh ouch, Okay.

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Speaker 1: Let's move on then and talk about the presidential election

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Speaker 1: in Turkey, probably really the most important vote in Europe

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Speaker 1: this year. Well, it looks likely now to go to

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Speaker 1: a runoff in two weeks time, adding more volatility to

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Speaker 1: markets and pressure on the Lira. President Recep type Urduan

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Speaker 1: will face opposition candidate come I'll Doroglu again in a

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Speaker 1: second round, potentially on the twenty eighth of May. Basically, Lizzie,

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Speaker 1: both the candidates failed have failed so far to reach

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Speaker 1: fifty percent of the total votes that took place on Sunday.

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Speaker 1: They need that fifty percent in order to win the

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Speaker 1: first round, otherwise we get two more weeks of uncertainty.

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Speaker 1: It's very very difficult, and it does look as if

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Speaker 1: it was actually the third presidential candidate that managed to

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Speaker 1: split the vote, so that perhaps was one of the

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Speaker 1: big issues.

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Speaker 3: Yeah, I've got my eye on the lira this morning.

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Speaker 3: This Turkish lera spot is down two tens of percent

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Speaker 3: currently not looking good. Given all of this is hanging

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Speaker 3: in the balance at the moment, investors really waiting for

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Speaker 3: whether Turkey becomes a buy again because airs grew for

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Speaker 3: all costs policies have of course debased the currency, so

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Speaker 3: they've exited. You had in the first ten years of

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Speaker 3: Erduan's rule, foreign only flooding in.

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Speaker 1: Yeah.

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Speaker 4: Can that return?

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Speaker 1: Yeah?

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Speaker 2: Absolutely? I mean I think this, I think this is

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Speaker 2: the issue.

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Speaker 1: Isn't it that the criticism has been around the cost

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Speaker 1: of living crisis for Turkey, But actually the first decade

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Speaker 1: under due was actually pretty positive economically. It's the last

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Speaker 1: sort of ten years and when the present started to

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Speaker 1: encroach on and then completely disrupt the independence of the

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Speaker 1: central bank in twenty eighteen that things really turned around.

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Speaker 1: But let's see, apparently the turnout for this vote was

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Speaker 1: extremely high. So that's another issue that we are going

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Speaker 1: to discuss. Let's go live now to Istanbul or Bloomberg

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Speaker 1: anchor Yusif Gabel el Din. So it does look as

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Speaker 1: if REXP type one is in the lead, but perhaps

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Speaker 1: not enough to win outright, yusif the third candidate perhaps

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Speaker 1: split the vote, what do we know about the vote count?

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Speaker 11: Yeah, so, I mean there has been a lot of

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Speaker 11: debate in the last few hours, and this has been

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Speaker 11: a sleepless night for much of Turkey. But the state

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Speaker 11: broadcast at TRT says with ninety nine percent of that

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Speaker 11: vote has counted that early On got forty nine point

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Speaker 11: four percent of the vote, Clitch Derulu forty four point

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Speaker 11: nine and seen an og On five point three percent.

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Speaker 11: There has been rhetoric from both sides. I mean, I

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Speaker 11: wouldn't interpret too much into that as it stands, because

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Speaker 11: the signals are strong that there is going to be

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Speaker 11: a runoff on May twenty eight, even though there's still

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Speaker 11: some counting to do, both within Turkey and in terms

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Speaker 11: of the overseas ballots as well. Being Clitch the RULU

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Speaker 11: is confident that he can win in the second round.

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Speaker 11: What is clear is that Early One pulled in a

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Speaker 11: strong showing, maybe stronger than a lot of the observers

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Speaker 11: would have believed going into this, and with the parliamentary

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Speaker 11: initial results, he gets another tailwind as well, so you

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Speaker 11: could argue that Earlier One is actually better positioned for

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Speaker 11: the second round than he was in the first round,

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Speaker 11: and that's going to make the oppositions work a lot

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Speaker 11: more tricky.

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Speaker 3: And Yusef as I say, it's not a happy morning

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Speaker 3: for the lera with all this uncertainty. How does this

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Speaker 3: how should markets interpret all of this political turmoil?

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Speaker 11: Well, the lera is about it a two months low

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Speaker 11: right in the early Monday morning trade. We understand, according

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Speaker 11: to people familiar with the matter, that state banks intervened

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Speaker 11: in the leer of trade center banks the client to comment.

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Speaker 11: And that gives you a bit of an idea that

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Speaker 11: the authorities that we must try to continue and micromanage

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Speaker 11: the currency, especially as we count down to a potential

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Speaker 11: runoff on May twenty eight. Onths everything gets finalized, so

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Speaker 11: that makes the next two weeks the most tense in

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Speaker 11: Turkish politics, probably since our party in early one came

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Speaker 11: to power about two decades ago. I would also keep

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Speaker 11: an eye out on some of the Turkish bonds and

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Speaker 11: the equity market here in the nation because it rallied

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Speaker 11: in the run up to round one. Does it get

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Speaker 11: you know, a bit of recalibration based on the lack

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Speaker 11: of clarity from the results that we got overnight, So

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Speaker 11: a lot of work to do for investors and for

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Speaker 11: the think tanks out there. This is something we did

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Speaker 11: not expect, and that there's going to be a lot

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Speaker 11: of reflection and reassessment that's going to happen.

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Speaker 1: Okay, a lot of reassessment. Do we think potentially that

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Speaker 1: there could be any policy u turns? You know, depending

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Speaker 1: on the vote outcome, will anything significantly change you think?

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Speaker 11: You know, it depends on whether early on one can

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Speaker 11: pull off a win in the second round. There is

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Speaker 11: no consensus on whether, even if he were to stay

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Speaker 11: in power, whether that necessarily means that the status quo

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Speaker 11: would go on. I've spoken to a few experts who

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Speaker 11: suggest that because the economic realities are beginning to buy

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Speaker 11: hard and we can't pull off unorthodox monetary policies at

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Speaker 11: a time when liquidity is drying up, that there is

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Speaker 11: going to have to be a bit of a tweak

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Speaker 11: on the monetary policy side of things, but also in

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Speaker 11: terms of the widest thinking to the new Turkey economy idea.

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Speaker 11: So that's something that we will have to wait and

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Speaker 11: see whether that actually lives up to some of the

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Speaker 11: initial debates that we've seen. It's still a little bit

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Speaker 11: too early. I wouldn't read too much into it. Let's

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Speaker 11: get to the second round, being what kind of parliament

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Speaker 11: numbers come in, be what happens with the actual presidential contender,

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Speaker 11: and then we'll be able to be in the we'll

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Speaker 11: be in a better position to make a final call

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Speaker 11: on what's to come.

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Speaker 3: You is great to have you live from Istanbul. That's

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Speaker 3: our Bloomberg Anka, Yusuf Gamal Eldan, thank you.

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Speaker 1: Up next the EUS London clearing headache, the Bank of

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Speaker 1: England prepares to water down borring rules, and the Toys

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Speaker 1: vow to clamp down on low skilled migration.

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Speaker 6: Now the Paper Review on blue Bird Daybreak Europe the

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Speaker 6: news you need to know from today's papers.

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Speaker 3: So we've got LeAnn Garrin's with us in the studio

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Speaker 3: to take us through the front pages today, Lee and

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Speaker 3: the Financial Times headlines EU under pressure to extend access

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Speaker 3: to London clearing houses.

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Speaker 4: Lizzie, good morning to you.

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Speaker 5: Yes, So, since Brexit, the EU has been intent on

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Speaker 5: moving the clearing houses of these strategically important European trades

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Speaker 5: to the continent from the city of London as soon

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Speaker 5: as is practical. However, the EU is now coming under

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Speaker 5: mounting pressure from Europe's biggest clearing houses to rethink its

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Speaker 5: plan on this. And this is all according to the

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Speaker 5: story that we're reading this morning in the FT finance

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Speaker 5: bosses are warning of huge risk to financial stability which

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Speaker 5: the blueprint in Brussels poses.

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Speaker 4: Now, this is a big argument.

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Speaker 5: The biggest derivative houses here in Europe, including BNP, Parobar,

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Speaker 5: Deutsche Bank and also sock Gen oppose the EU's plans.

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Speaker 5: They fear extra costs and less efficient clearing will happen

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Speaker 5: when the change comes into place in the next couple

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Speaker 5: of years. And London's clearing house, the Alseaters, also now

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Speaker 5: pushing for a rethink as they actually risk losing the

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Speaker 5: most in this move that will happen. And clearing is

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Speaker 5: the only area where the EU has granted London temporary equivalence,

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Speaker 5: and that's all in the aftermath of Braxit, allowing the

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Speaker 5: city's clearing powerhouse to continue handling these Euro denominated swap

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Speaker 5: trades that stood at one hundred and thirty three trillion euros.

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Speaker 4: As of Friday's close.

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Speaker 5: So now we're hearing echoes that this caroline could be

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Speaker 5: something that could cause a lot of disruption. There's pushback

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Speaker 5: against it, however, the EU saying the deadline for the

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Speaker 5: move is still June twenty twenty five.

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Speaker 2: Yeah, okay.

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Speaker 1: The London europe Push Pull Telegraph says the rank of

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Speaker 1: England is to water down rules for lenders to boost

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Speaker 1: Britain's competitiveness.

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Speaker 4: Yes again, pretty much.

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Speaker 5: Let's say that this is going to happen in the

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Speaker 5: same year, so twenty twenty five a lot.

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Speaker 4: Happening there now.

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Speaker 5: The UK will be adopting these new international capital rules

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Speaker 5: from twenty twenty five in the wake of the financial crisis,

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Speaker 5: but the BOE is preparing to water down some changes,

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Speaker 5: according to the Telegraph, to its post crisis rule book.

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Speaker 5: Now this is after lenders are really warning plans to

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Speaker 5: raise bank buffers will strangle small businesses here in the country. Now,

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Speaker 5: the Prudential Regulation Authority has already published a consultation that

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Speaker 5: was actually last year suggesting British lenders will be forced

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Speaker 5: to hold back billions of pounds more in the EU

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Speaker 5: rivals because of the UK strict rules that will come

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Speaker 5: into place now. Ensuring UK banks and businesses are not

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Speaker 5: left at this competitive disadvantage is one of the most

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Speaker 5: potentially sensitive issues for the Bank of England as it

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Speaker 5: finalizes the next stage of the so called Basil rules

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Speaker 5: introduced in the wake of the two thousand and eight

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Speaker 5: financial crisis. So we now know that BOI is examining

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Speaker 5: ways to lower that burden on banks when the UK

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Speaker 5: adopts these rules that are coming into play.

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Speaker 2: Yeah, absolutely, the buzzer rules.

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Speaker 1: I mean, while the gardener has the headline around sell

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Speaker 1: Bravman rebuffing cabinet calls for the easing of visa rules.

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Speaker 1: So this is all around low skilled migrants. Thank you

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Speaker 1: so much early and goings.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 3: You can also listen live each morning on London DAB Radio,

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Speaker 3: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 1: Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.

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Speaker 2: I'm Caroline Hepka.

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Speaker 4: And I'm Lizzie Burden.

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Speaker 3: Join us again tomorrow morning for all the news you

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Speaker 3: need to start your day right here on Bloomberg Daybreak

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Speaker 3: Europe