Newsmakers and Market movers.
This is the pulse with friends in like. Well, good morning, everyone, and
welcome to the Pulse and Francine Lacqua here in London with the conversations
that matter. And here's what's coming up on today's
program. Iran's president and foreign minister
are killed in a helicopter crash in a mountainous part of the country.
Their deaths add further uncertainty to a region already in turmoil.
Cup resurgence to another record. Gold also hit a new high.
Well, investors bracing for Nvidia's earnings on Wednesday.
Plus, Ryanair warns that fares may be flat this summer and that Boeing
deliveries of the 737 max jets may actually slip further.
So first of all, let's take a look at markets.
I have to say, there's quite a lot going on, especially for a monday morning now.
Miners are actually keeping Europe's stock benchmark afloat this Monday
morning. Are prices for copper and gold surging
to an all time high? Oil also held in gains as the market is
watching out for any fallout from political ructions in two of the world's
major crude producers. We're, of course, thinking of Saudi
Arabia and Iran for the moment. There is a little bit of support overall
for these European markets, but of course, the timing of the Fed's likely
pivot to raise rates or to for actually to cut rates has shaped trading across
financial markets in recent days. We also have CPI in the U.K.
a little bit later on, but for the moment, you can see S&P futures
practically unchanged. Gold almost at a record and copper
definitely at a record over 10,900. If you look at the highest ever for
copper, it's extending months rally, of course, driven by investors who've piled
into the market in anticipation of deepening supply shortages.
But investors really keeping an eye on the Middle East after the Iranian
president died in a helicopter crash. So Iranian news agencies have confirmed
that the country's president, Ebrahim Raisi and foreign minister, have died in
this helicopter crash. Now, search teams located the wreckage
was in Iran's mountainous northwest region.
So for more on this and what this means going forward, let's get straight to
Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight.
We're also joined by Bloomberg's Middle East and Africa editor Ross Mathison.
So thank you both for joining us. Ross.
I mean, this is pretty shocking news. And of course, it's happening in a
region which is extremely volatile already.
What happens next in Iran? Well, that's the big question.
Obviously, this was a shocking development for Iran, the death of the
president and the foreign minister in this crash.
What we know is that, of course, Rice, his deputy, the first vice president,
takes over, at least for now. We expect an election to come within
about 50 days. That's part of the Iranian constitution.
So he's really there just to keep things going until they can be an election.
But that's then the real question, who would be the preferred candidate in that
election? It is an election and quite marks, but
of course, it's also quite a managed process.
So who's going to be the anointed person to be the candidate for that?
And then beyond that, of course, he was seen as a key successor potentially to
the supreme leader, Ayatollah Khamenei. And so with him gone, what does that
change, that process? Doesn't mean that many son becomes the
key person in line to take over eventually.
At some point, of course, the supreme leader is in his 80.
So there are longer term questions also about that.
But for Iran at the moment, policy wise, it doesn't probably mean any significant
change. Ross, can you tell us about and we
understand that Russia has also said that they would help with the
investigation. We also heard from the U.S.
that actually they don't think there was any foul play.
Well, that's right. And Israel has preemptively come out and
said it had nothing to do with this. And you can see from the footage
yesterday, the weather was appalling. I mean, the fog, now there's snow and
mud. I mean, the conditions were terrible
that they were flying. And maybe it raises questions about why
would you fly in those in those conditions?
And also there are questions about the maintenance and status of those
helicopters. Of course, they were very old given the
US sanctions where those helicopters are being properly maintained.
But at this point it doesn't seem to be anything other than a terrible accident.
And certainly there's no hint from from the US or others that they think
otherwise. As we're saying, this was I mean, this
is a very complex region. This is a very volatile region with
geopolitics. What's the immediate concern that you
have with the passing of the president? Few in Iran will mourn the passing of
Ebrahim Raisi, who was known as the Butcher of Tehran and
is thought to have presided over the execution of mass execution of political
prisoners. So what we're really looking at is an
internal power struggle within the leadership of Iran, the Supreme leader,
Ayatollah Khamenei, and the IRGC, the Revolutionary Guard.
There'll be a lot of hope that within the country that there could be some
possibility of a moderate taking over the leadership.
But as Rosalyn has said, the elections will be tightly managed.
And the obsession really with Iran's leadership is going to be controlling
that succession and not allowing any opening for its domestic rivals to to
exploit. But for experts on the ground, you know,
his election 2021 was largely seen as having been engineered by an unelected
upper chambers and also got rid of many candidates that wanted to put themselves
forward. Do we have any insight into that kind of
history replicating itself now, or what do we know about possible other
candidates? It's going to be a managed transition.
I think that they won't want to allow any daylight.
Now, there is some hope that given the extremely low turnout in the last couple
of elections, I mean, Iran does have elections, although they are tightly
controlled and managed. They might be able to boost turnout by
allowing some reformists, you know, so-called reformists, to run like Ajani
or others might get more people in the streets.
But given the protests of the last couple of years, the woman life, freedom
protests and the extreme pressure the regime finds itself under, you know, 50
years after the revolution with its aging leadership and a very young
population, plus the wider turmoil in the Middle East and the recent exchange
of ballistic missiles between Israel and Iran, I suspect they're going to have a
candidate candidates on the slate who will allow complete consistency, and
that goes for domestic and foreign policy.
It was, I guess, you know, with my understanding is our U.S.
did not have the kind of political clout that some of the previous presidents
enjoyed. You know, Mahmoud Mohammed Ahmadinejad
was extremely liked and had a big grassroots movement, and he was a
hardliner. Again, who can emerge actually in this
battle now? Well, that is the key question.
I mean, as Tina was saying. You know, he wasn't as popular.
The turnout was very low in 2021, but he was obviously endorsed by, you know, the
top leadership. And in a line that we've seen,
particularly, again, much more hawkish when it came to things like the nuclear
deal with the U.S. And recently, of course, you know,
Iran's been embroiled through the back door and more directly in the last month
when when it comes to Israel. But there's also been the relationship
between Iran and Saudi, and that I did that effort to try and normalize ties
there. So it's going to be a question of
consistency. However, it is, there isn't really room
at the moment for any kind of reformist to be more than a token candidate in the
election. So what we're looking at is, is is the
current first vice president. Is he the person who would be seen to be
getting the nod in the election to continue?
Because, again, he was handpicked by Raisi in 2021.
And would Russia actually try and give as much support as they can to Iran
right now? Well, clearly, they've been working very
closely together in a bunch of ways. I mean, Iran's been sending drones to
Russia to use in the war against Ukraine.
Russia has been a strong supporter of Iran against the West.
So there's a mutual relationship there that's going on.
And certainly we've seen Russia come out very quickly today to express
condolences. And that was very quick yesterday to
express their concern about this. So they've got a vested interest in the
status quo in Iran and obviously having, you know, a similar kind of leadership
after the election. So for Russia will just be simply about
ensuring that whoever is in power remains a hardliner.
And what does this mean for oil and oil markets?
I don't expect oil markets to move much on this news.
I mean, after all, oil markets didn't move much after this unprecedented
exchange of ballistic missile fire a few weeks ago.
And I think that it's going to be shortly quite clear that the president's
role is, you know, largely ceremonial, that there isn't likely to be a change
in government or leadership, rather, from the supreme leader, and that this
will be a carefully staged stage managed.
Will there be, for example, a replay of the 2008 2009 Green Movement?
Highly unlikely. And this regime has been all about
suppressing dissent. The other, of course, big news is that
Saudi Arabia's crown prince postponed a planned four day trip to Japan because
his father, the king, is sick. Well, that's right.
So we know that his father was in hospital.
He's got a bunch of ailments. He's now back at the palace, but he's
receiving treatment. And the fact that this was publicized
suggests that he's actually in pretty poor health.
And certainly concerning enough that the crown prince has delayed his trip to
Japan. I mean, obviously, the Saudi crown
prince has been the de facto leader for some time.
He's been doing the day to day governing of the country.
And you would imagine he would be the immediate successor at some point for
the king. But you never know with Saudi Arabia, we
know these successions can get a bit messy.
We know that suddenly there can be surprises out of the woodwork.
And so nothing is guaranteed in Saudi Arabia until it's done.
And obviously it's in the interests of the crown prince, those NBS at this
point to stay very close to home while we see what's happening with the king's
health. Yeah.
I mean, this as royals are saying, that feels like it.
You know, we could have it's not a surprise.
Certainly could change things in an already volatile region.
All of these developments are a great reminder that nobody controls the
narrative. Right.
And the discussions about the state of Middle East risk and geopolitical risk
more broadly are extremely fluid. We're talking about succession plans
that have always been opaque, whether it's Iran or Saudi Arabia being
accelerated to the fore in this case by very aging leadership.
In the case of Saudi Arabia, with a much clearer succession, it will be watched
closely. Of course, the potential passing of of
of of the king. But I don't think there's much question.
What is at issue, though, is, is the talks that are underway with the Saudis
and Israel and the United States about this path to normalization and could the
passing of the king interrupt that flow or perhaps reduce the risk appetite for
considering something like that? I'm inclined to say no, but it does put
a spanner in the works by the diplomacy that's underway.
Thank you both for joining us. Tina Fordham, geopolitical scientist and
founder of Fordham Global Foresight. And Bloomberg's EMEA news director was
Matheson. You can track all the developments on
the story on our website. On the terminal, we have a wonderful,
extremely interesting and insightful blogger onto Tel Aviv.
Go to get commentary analysis from our expert editors now coming up.
Stocks waver. While gold and copper surged to record
highs. One of the markets up next.
And this is Bloomberg. Welcome back.
This is the pulse, of course. We're keeping a very close eye on all
events in Iran after Iran's president Ibrahim Raisi has died in a helicopter
crash. Now, we just heard from the supreme
leader, of course, Ayatollah Khamenei, saying that the vice president will
manage the executive branch. He also says that the new presidential
election will be within max 50 days. That is the law in the country.
So we were expecting that 50 day delay. But looking ahead, Raisi successor
likely won't be able to count on oil production to power growth to the same
extent. And we just had a wonderful panel with
Tina Fordham. And it was Matheson trying to explain
really how things could change, whether they change.
And of course, the big question at the moment, who will take over after the 50
days? Now onto corporate news, Airbus.
Just in the last 10 minutes ago saying that they will have secured an order for
105 of its narrowbody jets from Saudi Arabia's flagship carrier.
As the kingdom also pours billions of dollars into turning the country into an
aviation and tourism hub. You can see Airbus gaining some 7/10 of
a percent. Nothing huge.
But again, there's a big difference between how Airbus has been performing
and, of course, how Boeing has been performing on two markets.
Copper and gold prices have surged to all time highs, with miners keeping
Europe's stock benchmark afloat. Oil holding on to gains as the market
watches for any political fallout from Iran and Saudi Arabia.
Two of the world's major crude producers.
Now for more on all of this, we're joined by about two men, the global
equity strategist at Citigroup Global Markets.
As always, thank you so much for coming in.
I mean, you're a great student of balance sheets, trying to understand
some of the industrials, some of the industries that will do better,
especially in your valuations. And then you have these big geopolitical
events that could change forces. How do you incorporate these big events
into how you actually measure valuations?
So how about this? We've been arguing that earnings
delivery and fundamental strength this year would be the main driver of the
markets. But the biggest risk to the markets
would be geopolitics this year. So, of course, geopolitical flare ups in
the times where markets are ripe and and quite bullish and euphoric.
Always a risk for some profit taking. But as long as margins remain strong and
we see that earnings are being delivered, if not even signs that they
could be upgraded, I think there is it's still a constructive path for equities
going forward. So what's the way forward here?
I mean, again, a lot of talk, you know, inflation is under control question
Mark, because the markets seem to think that it is in the US, but there's been a
lot of volatility. How much does impact at European
equities? So we argue that is going in the right
direction and especially in Europe. So that means we are going to get the
rate cuts out of ECB. We also think we are going to get rate
cuts out of the Fed, that the Fed will move ahead of inflation proper, the
levelling out because they are worried about the slowdown in the economy more
than waiting for the inflation to slow down more.
So overall, we think again, constructive set up for equities.
And of course some market participants are worried about elevated levels of
valuation. But of course that's really the case for
the US equities, which means in the international setup, the equities
outside of the US, Europe being one of them, look increasingly more attractive.
So what would you buy right now? What are the big market forces at play
that make you confident on certain sectors?
So in in our global equities portfolio recommendations, we are overweight
continental Europe and we are overweight Japan what we like.
So it's really pro-cyclical traits, right?
And going forwards, we think it's more about cyclicality, not value or growth.
It's about being in the right sector. So for example, in deep value, our
favorite sector is metals and mining in Europe.
And of course it's getting the headlines today, as you've mentioned.
Right. And on the on the more expensive side of
cyclicals, we like tech, for example, and tech, we have NVIDIA earnings on
Wednesday. How much does something like that
actually also permeate through European tech equities or is it you know, there's
just a lot more to rise because of valuations at the moment in Europe.
So the case for US tech or US stocks has been that it's been priced for
perfection, right? So all the eyes are going to be or how
much particular stocks overdeliver in the reporting.
Of course it will have effect on the on the tech in Europe as well.
But we would argue it's it's level down on the valuation expectations and end
market expectations overall. Thank you.
But at that time, empty stays with us global equity strategist at Citigroup
global markets. We have a lot more to talk about when it
comes to markets and corporates. This is Bloomberg. Welcome back, everyone.
Now still with us, Betterment the global equity strategist at Citigroup global
markets now better thank you so much for sticking around.
You're so constructive on a lot of equities.
What happens to margins in this kind of environment?
So much business is an interesting point.
There's been lots of worries about margins falling over.
Of course, margins have been helped by strong inflation, though inflation is
coming down. Will margins come down as well?
So we've just published a big piece with all the analysts in Europe taking their
view on particular sectors. And really the biggest takeaway is, yes,
we do worry about particular parts of margins.
So we worry that costs remain high and we will see
that prices are moderating. Right.
So that could affect negatively margins overall.
However, the positive side is that volumes are expected to go up at most of
the sectors and also organic growth is rising.
So that means let's note for margins overall for the market and for most of
the sectors, it's still directional but in a more moderated way that I find it
incredible, given what we've seen in terms of interest rates rise, you know,
through all of your great research so that you still see earnings per share to
go up in this kind of environment. So of course, last year, if you put
things in the context in Europe, we had a borderline of EPS recession for
European corporates and global EPS was almost flattish as well.
Right. So it's about where we are coming from
as well. And then of course, in Europe, it's
easier to argue with that. We are in this early cycle dynamics,
things are picking up that helps the market, that helps EPS helps the
margins. In fact, we actually see signs that our
analysts EPS growth for this year could be upgraded.
So we expect 6%. And there are some encouraging signs of
analyst upgrading against the seasonality patterns before the before
the earnings season has started, which has a very good track records for any
revisions to continue to be positive and also the overall EPS going up.
So if anything, for head to our forecast are on the conservative side for Europe.
Just stunning given what we've looked there in last 14 months.
Thank you so much for joining us there. Global equity strategist at Citigroup.
Global markets Coming up, gold surges to a record high on Fed rate cut.
Hopes and silver actually hitting a near 11 year high.
Well, we speak to the chief executive of Wheaton Precious Metals.
That's coming up next. And this is Bloomberg. Iran's supreme leader announces five
days of mourning as the country's president and foreign minister are
killed in a helicopter crash. Their deaths and a certainty or further
uncertainty to a region already in turmoil.
Copper surges to another record while gold also hits a new high.
Investors brace for invidious earnings on Wednesday.
Plus, Ryanair warns that fares may be flat this summer and that Boeing
deliveries of 737 max jets may slip further.
Well, good morning, everyone, and welcome to the Pulse and Francine Lacqua
here in London. Now, we're just getting some breaking
news out of South Africa. The constitutional court there has ruled
that the former president, Jacob Zuma, cannot run as a candidate for parliament
in this month's election. Now, the decision by the nation's top
court raises a risk that supporters of his new AK Party will stir unrest in the
run up to the May 29th vote or contest the outcome.
Well, party leaders have vowed to destabilize.
The Ballad of Zuma is barred from competing.
If you look at Rand, of course, the currency over there in South Africa,
it's extending some of the gains. We'll keep a very close eye on any kind
of development in South Africa. Our team on the ground is following the
developments very, very closely. Now, let's also return to our top story.
Iran's supreme leader has announced five days of mourning for President Ibrahim
Raisi. Now this after Rice's helicopter crashed
in a mountainous region in the northwest of the country.
Bloomberg Sylvia West now joins us with the very latest.
Sylvia, this was, I imagine, a bit of a shock to everyone because it was so
unexpected. What do we know about what happens next?
We heard from the supreme leader, Ayatollah Khamenei, that there will be
elections in the next 50 days. Do we know who could succeed?
Thank you very much. That's a very good question.
So I think there is this question about who will succeed as the president and
what could happen in elections. The general expectation is that that
sort of power base will remain in the hands of hardliners like Raisi himself.
You know, he was brought to power by a hardline base, and that looks unlikely
to change. That's the kind of direction Iran's been
on. But I think one of the bigger questions
we're looking at as well is that Rice was seen by many analysts as one of the
possible successors to the supreme leader himself.
He was a cleric. He had this judicial background.
So now with the supreme leader in his eighties, there is the question about
who will actually succeed him as well in that top authority role.
So there is an open question about who will become president after elections,
but also longer term, who will succeed the supreme leader as the overall leader
of Iran. The Russian president, Vladimir Putin,
also called the crash an enormous tragedy and described Raisi as a true
friend of Russia. What do elections and 12 days of
mourning mean for stability in the region?
Well, at the moment, I think I mean, the fact that the announcements have come
quite quickly, the expectation is we will move toward that.
I think, as I mentioned, there's great kind of questions open about the longer
term leadership of the country. We have seen that, you know, Iran has
been on this path of confrontation with the West.
More broadly, we have the Israel-Hamas war and the actions of Iran backed who
see who sees and other proxy groups in the region.
That's unlikely to change with any change in the leadership.
There is unlikely to be this continued stirring and turmoil in the region as
the Israel-Hamas war continues and there's unlikely to be too much change
in foreign policy. What has been interesting is that during
the recent period there has been a rapprochement between Iran and Saudi
Arabia, who have long been these great Middle East rivals.
And there's a question about how that will continue and whether that will be
continuing force in the region. And that has brought some kind of longer
term stability, at least regionally. Right now with this backdrop of the war
as well. Sylvia, thank you so much for joining
us. Bloomberg's managing editor for the
Government for Russia, Africa and the Middle East, Sylvia West.
Now you can track all the developments in the story on our website, but also on
the terminal. We have a really fantastic blog.
Go to our Ivy. Go to get commentary and analysis from
our expert editors as we try to understand the political and global
ramifications of what's going on in Iran.
Now, gold has surged to an all time high, boosted by optimism that the Fed
will start easing monetary policy this year.
Silver also trading at a near 11 year high on supply constraints.
Now for more, let's speak to Randy Smallwood, chief executive of Wheaton
Precious Metals. Randy, thanks so much for joining us.
I mean, there's so much going on in the metals and you're you're listed company,
you're a big company and basically you facilitate payments so that you, I
guess, understand maybe quicker than others about what kind of demand there
is for some of the precious metals. Well, yeah, we're a streaming company,
so we invest into mines. We don't actually operate mines, but
we're, we focus on the precious metals space as as the name implies, but it
does give us a broad exposure because we we invest into the new mine
construction, We supply capital around the world and there's just not a lot of
new production. So the supply side is getting squeezed
pretty tight and there's increasing demand all over the place.
So what happens to copper? We had some wonderful conversations, for
example, with Jeff Currie, ex Goldman Sachs, not Carlyle, saying, Look, we're
running out of everything. Yeah.
Is there a danger that there's now going to be an overcapacity or too much
investment and then there's going to be too much copper, or is there never is
not one thing as too much copper? The expectations in terms of needs for
copper, in terms of electrifying the world and in the way that we want to
move forward in this, in this in this world, there's just not enough copper
available for the next while. And so, you know, one of the challenges
is it's getting tougher and tougher to build mines, to build new mines in terms
of permitting and building them in your backyard.
Nobody wants a mine in their backyard. Unfortunately, we all want to consume
the product. And so so that that just keeps on going.
And so it's been there's been a lack of investment into the space.
And I think that's finally what's going to give us a squeeze in this market.
So when you look at, for example, you know, higher gold, higher silver prices,
what does it mean for a company like Sweden?
Oh, it's it's pretty good. We've we've got great, strong growth.
Our company has got about 40 to 50% growth over the next while.
So we're going to climb close to a million gold equivalent ounces per year
of production. And of course, with higher prices like
this, especially with a streaming company, because our costs are fixed.
We're not a traditional mining company. This sense that there's no cost risk on
our side. Our costs are defined by the contract
itself. And so this this upside in prices is
delivered directly to our shareholders. And it's one of the reasons why we're
also seeing record Wheaton share prices right now.
So I know I mean, I'm looking at your market cap is over $25 billion.
But when you look at what's sustaining the price of gold right now.
So part of it, I don't know how much of it is demand.
Part of it is basically central banks saying treasuries have political aspect.
Let me sell US treasuries and buy gold. Right.
Well, it's you know, I think what we saw is the US dollar, which is generally
considered the the main reserve currency of the world over the last few years.
It's it's had some cracks in the foundation, so to speak.
We're not talking about the fiscal mismanagement.
We're talking more about the fact that it's a political instrument.
And so so there's an increasing appetite for gold from all sorts of sovereign
central banks around the world, especially out of the Middle East and
over the Far East, China. There's a constant drive both at the
central bank level but also at the retail side.
And what I see and especially we're seeing silver move over over the next
over the last couple of weeks, we're starting to see silver pick up is I
think that that that that that interest is is spreading it's spreading to the
west. But so you make 40% of your revenue from
silver Right. What's sustaining silver right now.
I mean it's a different story to go this is not an inflation hedge is it.
Well so what's what's yeah silver. Silver is it's a precious metal but it's
also got it's one of the most critical minerals out there in terms of high
efficiency. It conducts electricity better than any
other metals. So the more silver we have in our phones
and in our mobile electronics, even in our in our cars, the more efficient they
are, the better power you get, the longer your batteries leave.
So there's an increasing demand for silver as we try and get, you know, get
more efficient around the world. So Silver Silver's got both that and the
precious metals demand and that's what we're seeing now is starting to be a
pick up in the precious metals demand. We do have a very clear idea of how much
more copper, how much more silver we need for the energy transition.
So if we're staying on this trajectory, is it 40% more copper in ten years or is
it. Yeah, I would say it's more than that.
I mean, really it does come down to how fast do we accept electric vehicles and
so over to that. That's the big demand driver on that.
But it is the the technology side though, too, as we want to get more as
we get to the Internet of Things, it all has to be connected somehow.
So copper needs to play a role in that. It really comes down to how fast can the
world afford to go forward. But what we need to do is start building
some new mines and not shutting them down, not having challenges with respect
to permitting, is it? It's getting tougher and tougher to
actually find the new deposits. I know that because our companies at the
leading edge of funding these new mine developments and we're just not seeing
the same number of opportunities that we've seen in years past.
But can you do it in a green way? Is this is this a concern?
Is it government permits, trying to, you know, keep a lot of the riches for their
own country or. Is this, you know, ethically concerning
for green issues? Well, and the challenges we need the
materials. And so I don't think any of us are.
We're always trying to improve in terms of how we actually produce the materials
that the society needs. We need these materials.
I would much rather produce these materials in well-regulated, well
administered jurisdictions than the ship put off into jurisdictions where you
don't have that same level. Right.
So it's way better to control that production in backyards where you have
good, strong environmental regulations, good, strong social requirements in
terms of that. So I'd rather produce it in good, clean,
green areas where you actually get that going forward.
So but we need that support and the M&A. I know I know you've been pretty
acquisitive in the past. What's on your mind now?
Yeah, I mean, for us it's about new opportunities, new assets to help fund
in terms of trading for the peers itself.
You know, we've seen enough opportunities to help fund new mine
construction that keeps us busy so we don't see a thing on that side.
Okay, Randy, great to speak to you. Thanks so much for coming on.
That was Randy Smallwood, chief executive of Wheaton.
Precious Metals was a market cap of over $25 billion.
Now, coming up, the European Reconstruction and Development Bank
faces challenges from natural disasters, conflict on multiple continents and
sticky inflation. We're discussing those challenges with
Basel, who has secured a second term as a bank's president.
That's next. And this is Bloomberg. Now a range of crises, including
conflict on multiple continents, natural disasters and sticky inflation, have put
pressure on the resources of the development banks around the world.
While one institution, the European Bank for Reconstruction and Development, has
committed to investing billions in Ukraine after managing to offset the
significant loss it sustained in the wake of Russia's invasion.
Now the bank returned to a net profit of €2.1 billion in 2023, which was also a
record year of investment for the organisation.
Well, to discuss all of this, I'm delighted to be joined by the EBRD,
recently re-elected President Yudhoyono. Basil Thank you, Madam President, for
joining us. I know the IBRD has just had their
annual conference in Yerevan. There are big issues in terms of your
funding members. It feels that the world is.
It's much more volatile, is much more concerning.
What does it mean for for a bank like yourself?
Is it more difficult or do you feel like it's more important to be there?
Both. I think it's more important to be there.
It makes our award more important than ever because I think that we can help
stabilizing and dealing help countries dealing with the emergency situation
because I mean, wars or natural disasters, but it also make it more
challenging. And that's why it was very important for
us to get the support from our shareholders.
And we got the decision to have a capital increase to give us the
financial strength to be able to do it, to deal with this volatility and to
continue to support our countries of operation, including Ukraine in front of
the challenges they were facing. I mean, it's extremely difficult to talk
about a reconstruction of a country that's still at war because you don't
know where it ends up and we don't know how many years it will take for that to
settle down. What are some of the conversations you
were having? No, I think our focus is very much to
support Ukraine now and of course, to be able to do more in reconstruction.
But indeed, currently Ukraine needs, of course, military support.
They also need budget support because they have a huge budget before needed to
finance a war and to keep the state functioning.
And they need economic support. And that's what we are providing to keep
private sector afloat. And last year we provided 2 billion
financing, €2 billion of financing, Half of it was for the private sector to keep
it, you know, working capital for for business, trade, finance and provide
financing to rebuild facilities, logistics capabilities and so forth.
But also half of it is for the infrastructure, energy, electricity,
transportation and railway and and so forth.
And this is very important to keep the economy functioning, generate revenues,
keep jobs for people. And that's part of the effort we need to
do for Ukraine. Now.
I mean, Ukraine just also got a big package from the US.
What happens if the US stops funding Ukraine in a couple of years?
How much more bandwidth do you have to step in and support?
I mean, the support from the US is very important.
It's a very positive news for Ukraine and I hope that the military material
will come very quickly and but and this is a continued effort.
So I think with the package, I mean this give some visibility, but continuing the
support will be absolutely key. You have to the EU package with now is
in place. So this all this is important to keep
the country going. I mean, the bank has was really started
as a lender for ex-communist world and now you're expanding into other areas.
But how worried are you about what's going on in Georgia?
We spoke to the president actually. Let's listen to the president on Friday
with this law that is named the Russian law and what that means also for civil
liberties. Here she is.
We might be losing a very important chance inductions might not come back to
in the future. And that would be the responsibility of
the government. So there is concern in the society.
There is concern among our partners. And the concern, I imagine, does it make
it more difficult to to the IBRD to try and step in?
I mean, we provide some financing to Georgia, but we are concerned that we
there is a development. Georgia, where the country has been a
country which Georgia and I think is for reform, impetus for reform and a very
dynamic economy. But of course, the geopolitical
development and the decision and this slow in creates a lot of uncertainty
because of the economic situation. And you've seen some impact on the value
of the companies and banking sector in particular, but also in the EU prospect.
And I think that that creates a lot of uncertainty and we are worried by this
development. I mean, do you worry about a pattern
actually in the in some of these countries of of Russia taking hold or
prime ministers that want to reflect and maybe even mirror what's happening in
Russia? Each country in a very different
situation. We were in Armenia, two very different
dynamics, a very strong willingness to develop relationship with Europe.
So very each country, very different situation.
But in Georgia, it's quite a worrying point I'm talking about.
So you're expanding really. You have plans for sub-Saharan Africa?
I think we have new member states, Kenya, Nigeria.
What do you see as some of those challenges?
So that would be that's a very exciting new chapter for the body because it
would be new geography. And the challenges are I mean, the
demographic dynamics are very important. So the key will be to create is to
create jobs. That's why our mandate, which is to
develop the private sector, is so important because you create job by
small businesses, big businesses, invest private sector investment.
So that will be one of the key challenge we will be trying to help with, as well
as climate change, because the continent is very much affected and financing
adaptation mitigation skills would be very important.
Is it more difficult now to talk about climate change and the transition,
giving all of the geopolitical certainty, but also the fact that many
companies, private companies, no longer really want to talk about it because
they fear of repercussion from the U.S.? On the one hand, you see some pushback
and some some some pushback, really. But on the other hand, big when you see
the reality of what's going on, droughts, floods and so forth, the
reality of climate change is also much more visible and the acceleration of the
crisis event. So I think there is also a feeling of
need to address it more quickly and definitely so.
So I mean, it's not a unified trend, but I think that from the bank like this is
a clear priority and we are going to continue to step our investments in this
area and to bring to try to bring private investors together with us.
And we see the positive news is that the cost of renewable, for example, has been
decreasing very, very significantly. So this is becoming a very cheap source
of energy. So there is a big trend and it's a big
opportunity for a number of countries in south of the Mediterranean in Africa.
That could be a huge opportunity also. And you have the right investors.
And how do you see, again, investors matching with politicians and policies
or where if you look at all the challenges actually for the transition,
is there a sticky point? I mean, the sticky point is that to find
the level of private financing that is needed and so to have the risk appetite
to invest in countries that are more risky, but also you need to bring in
private investors and to address some public policy elements, for example,
because if you want to develop renewable, you need to have the grids.
And this is very often is public sector investment, and you need to have this
very clear strategy, ambitious strategy, so as to have all the elements both
together and to really be able to develop and to expand these green energy
sources. I mean, in the last ten years, as some
of the institutions have, institutions, the World Bank, even the U.N.
have been challenged mainly by President Trump, but also a number of other actors
on the world stage. Has that hurt what you can do on the
ground? No, it doesn't hold.
I think I think that what what is a challenge for the MTV is that maturity
level of my bank is more that if the countries fragmenting and tension I mean
the impact of geopolitical tension is it creates, of course, some challenge
because by definition multilateral bank are there to create common views, common
consensus and working together. But that's why also we are much more
important even now, because we are we are a space where common decisions can
be taken and we have common challenges for the world that needs to be addressed
collectively. Do you think there is a collective
narrative, or at least that a lot of your member states, you know, have a
common goal? This was the worry four or five years
ago that everyone was kind of splintering, so it was difficult to have
a cohesive, structured narrative between them.
Our shareholders took the decision to increase our capital so as to be able to
support Ukraine and all our countries of operation.
And this is a very strong sign of unity and of cohesiveness.
So that's a positive, very positive sign, it would seem.
Thank you so much for joining us. That's the president of the European
Bank for Reconstruction and Development, Basel joining us this morning.
Coming up, Ryanair makes full year estimates but says it might need to
discount tickets to spur bookings. More on that next.
And this is Bloomberg. Well, Ryanair shares are lower this
morning after reporting full year earnings despite meeting estimates.
The Irish airline says ticket prices may be flat to modestly higher.
Now it says it's having to discount fares in three months to June in order
to spur bookings. Let's get more on the story with
Bloomberg's Sid Philip. Our experts in all things trains and
planes and automobiles. So what do these earnings in Good
morning what do these earnings actually mean for the rest of the industry during
the critical summer months morning? So Ryanair is already a bellwether for
the European summer travel demand. And summer is really when all the
European airlines make their money. And so for Ryanair, this is the most
crucial part of the year. And it sort of gives us an indicator
that sort of the revenge travel boom where people are willing to pay anything
for air travel may be coming to an end and people might be sort of holding out
for better deals. They may be holding out for better
prices, and people aren't really willing to spend as much as it takes to get to
the beach this summer. So what does it mean for these airlines?
Do they have to offer discount tickets? It does it does mean Ryanair's already
saying that they have to discount tickets, this in the first quarter,
which is the quarter until June. And I think that sort of really gives
them a sense of the fact that the demand is still there, still demand, but not
demand at any price. And the rest of the industry is going to
be watching that to see how it plays out for the rest of the summer.
And that a big news from Airbus. So they want a big order from Saudi
Arabia. Yeah.
So Airbus want to order 405 Airbus NARROWBODIES from Saudi Arabia.
Saudi Arabia is trying to build up its aviation industry that's trying to build
up a domestic and international industry and sort of reduce reliance on oil.
And so for the for Airbus, it's a big deal because they get the sort of they
already are big in Saudi Arabia. This gets them even bigger.
And it sort of also shows the remarkable demand for the A321.
I mean, the Saudis said that they were hoping to get more planes, but Airbus
doesn't have any more planes to sell. So Airbus is in a tricky place in terms
of trying to meet the demand for their planes.
So interesting. Sid, thank you as always.
Said Philip, there are aviation experts now.
Later today, Bloomberg is also speaking to Michael O'Leary.
It's never a dull interview. The chief executive right there on those
earnings that at 1:15 p.m. UK time.
Well Bloomberg Greece is up ahead Manus and Danny talk markets and of course
they talk geopolitics. This is Bloomberg.
