>> NEWSMAKERS AND MARKET MOVERS.
THIS IS "THE PULSE" WITH FRANCINE LACQUA. FRANCINE:
GOOD MORNING EVERYONE AND WELCOME TO "THE PULSE."
I'M FRANCINE LACQUA IN LONDON AND HERE'S WHAT'S COMING UP ON
TODAY'S PROGRAM. THE FRENCH PRESIDENT ANNOUNCES
A SNAP PARLIAMENTARY VOTE. IN GERMANY, OLAF SCHOLZ' SOCIAL
DEMOCRATS SUFFER IN THE EURO SLUMPING, EUROPEAN STOCKS
FALLING WITH FRANCE'S CAC 40 LEADING THE LOSSES.
LET'S LOOK AT THE EUROPEAN MARKETS MAP.
A LOUT -- A LOT OF THE STOCKS DROPPING.
IF YOU LOOK AT EXACTLY THE CONCERN OUT THERE IS I GUESS
GAINS FOR THE FRENCH FAR RIGHT IS A -- BECAUSE THEY PROMPTED
MACRON TO CALL A SNAP ELECTION AS HE CEASES -- HOPES TO CEASE
THE RISE OF HIS RIVAL MARINE LE PEN.
SOME THE THINGS WE SHOULD WATCH OUT FOR, STABILITY IS THE ONE
THING INVESTORS LIKE. THE EURO WAS ON THE BACK FOOT
HEADING INTO A WEEK AFTER SUFFERING ITS BIGGEST LOSS ON
FRIDAY IN TWO MONTHS. STRONGER-THAN-EXPECTED U.S.
JOBS DATA. OF THINGS WE ARE WATCHING OUT
FOR APART FROM THESE RESULTS COMING IN AND -- THE FRENCH
YEAR , WE ARE TRYING TO FIGURE WHAT THIS IS MEANING FOR
POLICIES THAT EUROPEAN PARLIAMENTARIANS WILL TRY TO
BRING BACK HOME. WE CONTINUE THE FOCUS ON THE
FED IS THE UPDATE THEIR FORECAST ON WEDNESDAY.
WE HAVE A FULL ROUNDUP OF WHAT'S HAPPENING.
AND WHAT'S HAPPENING WITH SOME OF THESE YIELDS. THE FRENCH PRESIDENT EMMANUEL
MACRON FOLLOWING HIS PARTY'S CRUSHING DEFEAT. HIS RENAISSANCE PARTY CAME A
DISTANT SECOND TO MARINE LE PEN'S FAR RIGHT NATIONAL. >> THIS IS A SERIOUS AND
WEIGHTY DECISION. ABOVE ALL AT AN ACT OF TRUST.
CONFIDENCE IN YOU MY DEAR COMPATRIOTS AND THE ABILITY THE
FRENCH PEOPLE TO MAKE A JUST CHOICE FOR THEMSELVES AND THE
GENERATIONS. >> HIS GERMAN COUNTERPART DID
NOT FARE MUCH BETTER WITH THE SOCIAL DEMOCRATS PROJECTED TO
SUFFER THE WORST EVER PERFORMANCE IN THE ELECTION. LET'S ALSO GET TO CAROLINE IN
PARIS. WHEN MARKETS ARE WORRIED ABOUT
AND MACRON'S POSITION WILL NOT BE DIRECTLY AFFECTED.
WE COULD BE AFFECTED IS THE ABILITY TO PUSH THROUGH
LEGISLATION. >> HIS RESPONSE LAST NIGHT WAS
SHOCK IN RESPONSE TO ANOTHER SHOCK.
HE HAD NOT MUCH CHOICE AFTER THE RESULTS IN THIS EUROPEAN
ELECTIONS. 32% FOR THE NATIONAL RALLY
CANDIDATE. MORE THAN TWICE THE SCORE OF
THE CANDIDATE OF EMMANUEL MACRON'S PARTY WHO HAS BEEN
STRUGGLING TO EXIST IN THIS CAMPAIGN. JORDAN DID CALL EMMANUEL MACRON
TO ENCOURAGE HIM TO CALL FOR SNAP ELECTIONS.
THE OPPOSITION SAID HE SHOULDN'T HAVE LISTENED TO WHAT
THEY ARE ASKING FOR BUT HE DID NOT HAVE MUCH CHOICE HERE.
HE HAD TO LISTEN, HE ALREADY TRIED TO CHANGE THE PRIME
MINISTER, TRIED TO RESHUFFLE THE GOVERNMENT SEVERAL TIMES.
THIS TIME HE HAD TO SHOW HE IS TAKING INTO ACCOUNT THESE
ELECTION RESULTS AND YOU CAN SEE THE HEADLINES OF THE FRENCH
NEWSPAPERS THIS MORNING. REALLY EVERYONE CONSIDERING
THIS IS GOING TO BE A GAMBLE BUT HE DIDN'T HAVE MUCH CHOICE. >> I GUESS THE QUESTION IS DO
WE THINK THE GAMBLE IS MORE IMPORTANT, WHAT ARE -- DOES
THAT TRANSLATE TO THE REST OF EUROPE? >> MARINE LE PEN HAS MOVED AWAY
FROM HER IDEA OF THE FRENCH EXIT OF THE EUROPEAN UNION
BECAUSE SHE KNEW THIS IS A BIG PART OF THE ELECTORATE.
SHE HAS ALSO TRIED TO BREAK UP WITH THE AFD IN GERMANY.
SHEEP -- SAYING SHE COULDN'T ACCEPT ANY MORE.
SO SHE IS TRYING TO DETOXIFY HER PARTY, NORMALIZE HERSELF
AND AS A RESULT SHE IS APPEALING TO A BIGGER PART OF
THE FRENCH ELECTORATE. BECAUSE THE LEGISLATIVE
ELECTIONS ARE A BIT DIFFERENT FROM THE EUROPEANS.
IT'S A TWO RUN SYSTEM WHICH USUALLY PUTS THE FAR RIGHT WING
IS IT -- AT A DISADVANTAGE BUT CLEARLY SOMETHING FOR THE
NATIONALITY. THEY WILL HAVE TO FIND SOME
ALLIANCES OR PERHAPS EVEN LEAVE COHABITATION HAVE A PRIME
MINISTER NOT FROM HIS PARTY. >> LET'S ALSO GO TO BERLIN WITH
OLIVER CORRECT. HOW MUCH OF A SETBACK IS THIS
FOR OLAF SCHOLZ. DOES IT UNDERSCORE HIS AX --
INCREASING DIFFICULTY THE GERMAN GOVERNMENT IS FACING IN
TRYING TO LEAVE EUROPEAN POLITICS. >> COMPLETELY FRANCINE AND I
THINK THAT'S THE TWO PARTS OF THIS.
HOW IS THIS A REFERENDUM ON SCHULTZ HIMSELF AND THE
QUESTION ABOUT GERMANY'S POSITION IN LEADERSHIP OF
EUROPE. THE BIGGEST WINNER LAST NIGHT
WAS THE CDU, THE TRADITIONAL RIGHT OF GERMANY.
WHAT EVERYBODY WAS VERY SORT OF INTERESTED IN FINDING OUT IS
HOW THE AFD WOULD DO. THE EXTREME RIGHT OF GERMANY DID BETTER THAN SHOALS IS, HE
HAD THE WORST OUTCOME EVER FOR THE EU PARLIAMENT AT FOR MANY
PEOPLE THAT WAS A LOT BETTER FOR THE AFD THAN HAD BEEN
ANTICIPATED. THEY WERE BESET BY THESE
CONTROVERSIES THAT CAROLINA ALLUDED TO. A NUMBER OF AIDS INVESTIGATED
FOR GIVING INFORMATION. THEY ONLY GOT 35% OF THE VOTE
WHICH IS REALLY VERY LITTLE WHEN YOU CONSIDER THEY GOT MORE
THAN 50% FOR THE NATIONAL ELECTION.
THIS CALLS INTO QUESTION WHO IS GOING TO PICK UP THAT
LEADERSHIP OVER IN EUROPE BECAUSE BOTH IN FRANCE AND
GERMANY YOU HAVE BASICALLY NATIONAL VOTES THAT HAVE GIVEN
A REBUKE TO THE RULING PARTY AND SO TO UNDERMINE THE
LEGITIMACY IN SOME WAY. OUR CURRENT SOLUTION IS MAYBE
THE FRENCH PEOPLE ARE NOT WILLING TO PUT IN THE NATIONAL
POLITICS WHAT THEY'RE WILLING TO PUT IN THE EU PARLIAMENT.
HE DOES NOT HAVE THAT LEVERED APOLLO.
THE QUESTION OF COURSES ALL OF THAT IS IMPORTANT BUT AS YOU
KNOW IN EUROPEAN POLITICS VIBE IS A BIG QUALITY AND MOMENTUM
AND GIORGIA MELONI HAS IT RIGHT NOW. FRANCINE: SHE SEEMS TO -- OVERALL WITH
SOME OF THESE FAR RIGHT PARTIES DOES IT MEAN THAT THIS COULD
CHANGE THE POLICY AGENDA SO THAT MIGRATION COMES ON TOP? >> THAT IS GENERALLY HOW WE SEE
THINGS GOING TO A CERTAIN DEGREE.
THE GREENS GOT THE BIGGEST REBUKE IN GERMANY, 2019 WAS THE
GREEN WAVE ACROSS EUROPEAN PARLIAMENT AND THAT IS ALL BUT
SORT OF EVAPORATED. STILL THE CENTER-RIGHT AND
CENTERLEFT ARE BROADLY SPEAKING ON BOARD WITH THE GREEN AGENDA
SO WE MAY HAVE A LITTLE BIT LESS MONEY GOING THERE.
THEIR QUESTIONS OF COMBUSTION ENGINE CARS.
COULD THEY PUSH OUT THE DEADLINE FOR THAT.
THAT'S ONE THING WE ARE WATCHING CLOSELY.
THIS IS A REFERENDUM ON THESE MAINSTREET POLITICIANS WHO NEED
TO BRING INTO QUESTION WHAT THEIR EFFECTIVE MESSAGING IS AN
INEVITABLE YOU'LL SEE IMMIGRATION FLOW UP TO THE TOP
MAYBE THAT SOMETHING CLOSER TO THE CENTER-RIGHT MIGHT BE ON
BOARD WITH. FRANCINE: LET'S GET MORE FROM ROSALIND
MATHESON. THIS KIND OF CHANGES EVERYTHING.
WHY DO YOU THINK THE FAR RIGHT IS SO POPULAR. >> WE SEEN A LOT OF TRACTION IN
FRANCE AND GERMANY IN PARTICULAR FAR RIGHT, A HARD
RIGHT SPLITTING HAIRS. THE CENTER DID HOLD IN ALL OF
THIS. THEY ARE STILL THE BIGGEST BLOCK IN BRUSSELS.
THE QUESTION IS HOW MUCH DID PEOPLE VOTE ONE WAY, CAN YOU
MAKE A PROTEST VOTE AND HOW DO YOU VOTE IN A NATIONAL ELECTION
WITH YOUR OWN DOMESTIC POLICIES AT STAKE AND THAT'S CLEARLY THE
GAMBLE EMMANUEL MACRON IS TAKING. WHAT THEY'VE DONE IS
COLLECTIVELY TAPPED THE MOVE AROUND THINGS LIKE MIGRATION
AND TIED THOSE TWO THINGS TOGETHER.
SO LINKED MIGRATION TO THE STATE OF THE ECONOMY AND WE ARE
SEEING THAT IN THE U.K. ELECTION AS WELL WHICH IS
COMING UP. SO YOU'RE SEEING THAT DEBATE
AROUND MIGRATION AND ECONOMIC STATUS.
PEOPLE FEELING THEY ARE NOT BETTER OFF AND THE ECONOMY IS
DOING BETTER SO THAT GAP BETWEEN REALITY AND EXPECTATION
THAT GOVERNMENTS ARE STRUGGLING TO DEAL WITH THAT'S REALLY WHAT
THEY'VE TAPPED. IMPORTANT TO NOTE AND ALL OF
THIS IS THESE PARTIES HAVE DONE WELL IN THIS ELECTION PRETTY
MUCH IN LINE WITH WHAT THEY WERE SAYING.
THEY ARE NOT A UNITED BLOCK THESE FAR RIGHT, A HARD RIGHT
PARTIES IN ITALY, GERMANY AND FRANCE.
THEY ARE NOT A UNIFIED ENTITY. THEY ARE QUITE LIKE SQUABBLING
COUSINS IN A WAY. CAN THEY TAKE THIS WITH
MOMENTUM OR DO THEY HAVE ONLY THIS OR A DOMESTIC AGENDA AT
HAND? FRANCINE: WHAT DO WE KNOW ABOUT MARINE LE
PEN REACHING OUT TO GIORGIA MELONI'S PARTY.
ARE THEY ABLE TO FORM A COALITION IN THE EUROPEAN
PARLIAMENT OR IS THAT TOO SOON BECAUSE THE WAY IT WORKS IS
THEY TRY TO GET TOGETHER TO COUNTER SOME OF THE CENTRIST ON
THE LEFT. ROSALIND: POSSIBLY, BUT THERE'S NOT A LOT
OF CONSIDERED COLLABORATION THERE.
WE SEE THAT VERY PUBLICLY AND AWAY FROM THE COMMENTS GIORGIA
MELONI HAS MADE. SHE'S TRY TO SHIFT YOURSELF
AWAY FROM THESE TAGS FAR RIGHT, EXTREME RIGHT.
SHE IS -- YOU SEE MARINE LE PEN DOING THE SAME, BUT THEY ARE
VERY MUCH TRYING TO DISTANCE THEMSELVES FROM EACH OTHER IN A
WAY AND POSITION THEMSELVES AS A CENTRIST LEADER IN THEIR OWN
COUNTRY. SO IS THERE COLLABORATION,
PERHAPS ON SOME ISSUES BUT THEY ARE ALSO COMPETING. >> IS EMMANUEL MACRON TRYING TO
SEE IF THAT TRANSLATES TO MYSTICALLY OR DOES HE THINK IF
THERE SOME KIND OF POWER-SHARING WITH THE FAR
RIGHT LET'S SEE HOW GOOD THEY ARE BEFORE THERE'S A
PRESIDENTIAL ELECTION IN TWO YEARS. ROSALIND:
ONE COULD BE THAT THEY DON'T DO AS WELL IN THE ELECTION BECAUSE
WE HEARD IT'S NOT SO STRAIGHTFORWARD WHEN IT COMES
TO A LEGISLATIVE ELECTION IN FRANCE.
THERE IS THE ASPECT OF DO THEY DO WELL AND HOW DID THEY GO?
IT'S ONE THING TO BE ON THE SIDE THAT'S OPPOSITION IT'S
ANOTHER TO SET POLICY AND NAVIGATE PARLIAMENT AND BE ON
THE HOOK IF THINGS DON'T GO SOMEWHERE ELSE.
PERHAPS IF THEY HAVE THAT MAJORITY IN FRANCE AND ON THE
AGENDA THEY WILL HAVE TWO OR THREE YEARS BEFORE THE 2027
PRESIDENTIAL ELECTION AND THAT MIGHT SET THE NARRATIVE AGAINST
THEM IN THE RUN-UP TO THAT. THE ONE THING THEY'RE REALLY
THINKING ABOUT IN THE END IS HIS LEGACY.
IT HAPPENS AFTER 2027 AND DOES HE WANT HIS LEGACY TO BE
TANGLING WITH MARINE LE PEN. FRANCINE:
COMING UP, OF THE EURO IS IN FOCUS AFTER THE FRENCH
PRESIDENT CALLS FOR A SNAP ELECTION.
WE LOOK AT THE MARKET REACTION NEXT AND THIS IS BLOOMBERG. FRANCINE:
THE EURO WEAKENED TO ITS LOWEST LEVEL AFTER THE FRENCH
PRESIDENT CALLED FOR A SNAP VOTE IN THE WAKE OF HIS PARTIES
CRUSHING DEFEAT IN THE EUROPEAN PARLIAMENT ELECTIONS. EUROPEAN SHARES ARE LOWER, I'M
NOW JOINED BY THE P JIM FIXED INCOME EUROPEAN ECONOMIST AND
BLOOMBERG'S JUSTINA LEE. THANK YOU CATHERINE FOR COMING
ON. THIS IS MORE OF A MARKET EVENT
THAN WE THOUGHT IT WOULD. WHAT ARE MARKETS INTERPRETING
THIS AS. >> THE BIG CONCERN IS AND WHAT
MARKETS LIKE TO SEE IS UNITY IN EUROPE, A DEEPER INTEGRATION.
MORE AGREEMENT AROUND FUNDING FOR COMMON EUROPEAN GOODS SO
THIS ELECTION AT THE MARGIN MAKES THAT PROSPECT A BIT MORE
UNCERTAIN. AND THAT IS WHAT I ASK IS
SUSPECT MARKETS ARE REACTING TO. OVERALL THE ELECTION RESULTS I
THINK WERE PRETTY MUCH IN LINE WITH EXPECTATIONS BUT OF COURSE
THE SURPRISE IS WHAT WE ARE SEEING IN FRANCE. FRANCINE: IS THERE CONCERNED THAT SOME OF
THE LEGISLATION PRESENT MACRON COULD'VE PUSHED THROUGH MAY NOT
HAPPEN IF HE LOSES BADLY IN PARLIAMENT? KATHERINE: WHAT WE ARE SEEING NOW IS
REALLY SOMETHING THAT HAS BEEN SORT OF WRITING ON THE WALL FOR
FRANCE FOR QUITE A NUMBER OF YEARS NOW. MACRON ORIGINALLY HAD
CAMPAIGNED ON A PLATFORM OF REFORMS BUT ALSO AROUND FISCAL
DISCIPLINE AND WE'VE SEEN THOSE REFORMS BUT WE HAVE NOT SEEN A
LOT OF THE FISCAL DISCIPLINE. IN THE MEANTIME WE HAVE HAD A
PANDEMIC AND WE HAD A RUSSIAN INVASION OF UKRAINE AFFECTING
ENERGY PRICES BUT THIS FRAGMENTATION POLITICALLY IS
JUST MAKING THE PROSPECT OF ANY SORT OF FISCAL DISCIPLINE AND
FRANCE LOOK EVERMORE UNLIKELY. SO RATINGS AGENCIES HAVE BEEN
DOWNGRADING FRANCE. WE HAD ONE JUST A WEEK AND A HALF AGO OR SO FROM S&P AND SO
THIS BIGGER PICTURE OF CONCERNS AROUND THE TRAJECTORY WAS THERE
ALREADY BEFORE THE OUTCOME OF TODAY.
THIS IS WHAT'S CRYSTALLIZING SOME OF THOSE CONCERNS. >> IS IT THE MOVING EURO WHICH
IS ALSO BECAUSE OF COURSE WHAT HAPPENED WITH DOLLAR AND THAT
JOBS REPORT LAST WEEK. OR IS IT THAT THE MARKET IS
REACTING TO SOME KIND OF POLITICAL NEWS WE HAVEN'T SEEN. >> I GUESS WE SAW THAT WITH
EMERGING MARKETS. COMING TO DEVELOPED COUNTRIES
AS WELL. I THINK THIS MOVE IS INTERESTING BECAUSE ON ONE HAND
IT'S A REACTION AS WELL TO PEOPLE PUSHING BACK FURTHER THE
PROSPECT OF A RATE CUT IN THE U.S.
WHILE WE'VE GOT THIS OPEN AND CUT IN EUROPE.
THESE ELECTION RESULTS AND THE WEAKER EURO PUTS THE ECB IN
MIND BECAUSE THE CURRENCY WEAKNESS WILL HAVE AN EFFECT ON
INFLATION SO THAT WILL HAVE IMPLICATIONS FOR WHAT THEY CAN
DO FURTHER DOWN THE LINE ESPECIALLY WITH SOME DATA
SHOWING INFLATION MIGHT NOT BE AS WEAK AS WE EXPECT IT IN
EUROPE AS WELL. >> DOES THAT IMPACT WITH THE
CENTRAL BANK DOES? THE ECB THERE WERE THE FIRST
ONES TO CUT. CERTAINLY BANKING THAN IN THE
FED. IT HAPPENED WITHOUT A BIG HITCH.
DOES IT PUT THE NEXT ONES IN PLAY? KATHERINE:
MY SENSE FROM THE TONE WE GOT FROM THE PRESS CONFERENCE IS
THEY ARE VERY KEEN TO POLICE GIVE THEMSELVES THE OPTIONALITY
OF DELAYING ANY FURTHER CUTS BY A BIT MORE THAN PERHAPS WHAT
THEY HAD BEEN SORT OF SIGNALING & POSTING, NOT THAT LONG AGO.
I THINK JUSTINA IS VERY RIGHT IN SAYING AT THE MARGIN OF
COURSE A WEAKER EURO IS GOING TO BE MORE INFLATIONARY.
THE EURO AREA IS A VERY LARGE ECONOMIC REGION.
IT WILL HELP IN THE COMPETITIVENESS FRONT WE SEE
MANUFACTURING IS STRUGGLING AND SO WHETHER THIS IS ENOUGH TO
TURN THE NEEDLE I THINK REMAINS AN OPEN QUESTION BUT THE
PROSPECTS FOR SUPPLY-SIDE REFORMS I THINK HAS MUCH MORE
OF A? ON THE BACK OF THESE ELECTION
RESULTS. FRANCINE: WHAT IS IT MEAN FOR YOUR
APPETITE FOR SOME OF THE GERMAN BONES? KATHERINE:
THE REMARKABLE THING IS COMING OUT OF THE PANDEMIC EUROPE HAS
BIG PICTURE HAD A PRETTY MUCH SMOOTH RIDE WHEN IT COMES TO
MONETARY POLICY SETTING. SEEN PERIPHERAL SPREADS
NARROWING, THERE IS A BIT OF A FEEL-GOOD FACTOR AND MY SENSE
IS THAT IT'S GOING TO BE A BIT MORE OF A BUMPY RIDE NOT JUST
FOR CORE COUNTRIES LIKE FRANCE BUT EVEN FOR ITALY THEY'VE GOT
A TOUGH BUDGET COMING UP THIS FALL SO IT'S GOOD TO BE HARDER
FOR MARKETS TO DIGEST SOME OF THIS. FRANCINE:
DO YOU LOOK AT GOLD OR VIC'S? JUSTINA: GOLD IS KIND OF FUNNY.
WE GOT THE NEWS CHINA STOP BUYING GOLD AFTER THIS LONG
SHOPPING SPREE. ARENA FOCUS MORE ON THE
FUNDAMENTAL DRIVERS ESPECIALLY WITH THE FED POSSIBLY HOLDING
FOR LONGER BUT ALSO PUSHING BACK THOSE RATE CUTS. FRANCINE:
THIS IS BLOOMBERG. FRANCINE:
WELCOME BACK ARE WITH THE P JIM FIXED INCOME EUROPEAN
ECONOMIST. WHEN YOU LOOK AT THE DRIVER FORWARD WHAT IS IT?
KATHERINE: IT'S A DIFFICULT QUESTION
PRAYED MY SENSE IS SOMETHING WOULD NEED TO HAPPEN TO TRIGGER
A SIGNIFICANT MOVE AWAY FROM THE CONSENSUS THERE IS NOW WITH
STRONG CONSENSUS OF THIS HIGHER FOR LONGER AND VERY SMALL
PROBABILITY OF RISKS ON EITHER SIDE OF THAT EITHER THE MARKET
SEEING THE PROSPECT OF RATE HIKES FROM HERE OR INDEED A
PATH OF VERY AGGRESSIVE CUTS WE WERE EXPECTING.
WHAT DOES THAT REFLECT? I THINK THE SENSE IS THAT THE
BAR IS VERY HIGH FOR CENTRAL BANKS TO RAISE RATES FROM HERE.
WE ARE SEEING IN EASING. WE ARE SEEING SOME COOLING IN
THE RATE ECONOMY. WE ARE NO -- THERE'S NO CYMER
ON THE BRINK OF SOME SIGNIFICANT SLOWDOWN.
FOR CENTRAL BANKS TO CUT. THAT COULD BLUNT ANY DOWNSIDE
SO VERY STRONG CONSENSUS FOR THIS HIGHER THAN LONGER.
SOMETHING TO TRIGGER THAT IS HARD TO PREDICT WHAT THAT COULD
BE. >> THERE'S THIS IDEA THAT
HIGHER FOR LONGER DOESN'T NECESSARILY MEAN THE WORLD ENDS.
EXTREMELY INTERESTING WHAT ARE YOU EXPECTING? >> I WOULD NOT BE SURPRISED TO
SEE THEM DO JUST DIPPING THEIR TOE INTO THE WATER OF
QUANTITATIVE TIGHTENING, ONE OF THE REALLY FASCINATING THINGS
FOR ME AT LEAST HAS BEEN THE EXPERIENCE WE CAN DRAW ON
BALANCE SHEET POLICIES FROM THE CENTRAL BANKS COMING OUT OF THE
PANDEMIC. BEFORE THE PANDEMIC WE ONLY HAD
ONE OBSERVATION FROM THE FED OF WHAT WAS HAPPENING IN TERMS OF
BALANCE SHEET CONTRACTION. SINCE THEN WE'VE SEEN THESE OTHER CENTRAL BANKS, A BANK OF
ENGLAND, YOU NAME IT. A LOT OF EXAMPLES OF
QUANTITATIVE TIGHTENING AND WHAT WE'VE SEEN IS IT'S
HAPPENING MUCH EARLIER IN THE INTEREST RATE HIKING CYCLE THAN
I THINK WHAT PEOPLE MIGHT'VE EXPECTED AND HAS BEEN MORE
AGGRESSIVE SO DON'T BE SURPRISED THAT THE BANK OF
JAPAN FOLLOWS THAT PLAYBOOK AND ACTUALLY STARTS TO SHRINK ITS
BALANCE SHEET PRETTY EARLY IN THIS HIKING CYCLE AND HAVING
DIPPED ITS TOE IN AND SEEN THAT IT CAN BE DIGESTED IN AN
ORDERLY FASHION IT COULD BECOME MORE AGGRESSIVE. BUT LET'S SEE.
FRANCINE: MORE TO COME, WE ARE LIVE IN
BRUSSELS NEXT. FRANCINE:
THE FRENCH PRESIDENT ANNOUNCES A SNAP PARLIAMENTARY VOTE IN A
BID TO STOP HIS RIVAL AFTER A CRUSHING DEFEAT IN THE EU
ELECTION. OLAF SCHOLZ SOCIAL DEMOCRATS
SUFFER AS THEY SERVE -- PLUS THE POLITICAL SHOCKWAVES ROCKED
THE MARKET. EUROPE'S -- THE EURO SLUMPING
WITH THE CAC 40 LEADING THE LOSSES.
WELCOME TO THE PULSE, I'M FRANCINE LACQUA IN LONDON.
LET'S LOOK AT THE MARKETS MAP AND THE STOCKS DROPPING AFTER
THAT EU VOTE. THERE IS A QUESTION MARK WHEN
YOU LOOK AT THE POLITICIANS AND POLITICAL AGENDA IN FRANCE.
ABOUT WHAT HAPPENS NEXT. PRESIDENT MACRON HAS PLUNGED
FRANCE INTO POLITICAL UNCERTAINTY WITH THAT THREE
STAGES OF HIS PERENNIAL BATTLE WITH FAR RIGHT RIVAL MARINE LE
PEN. WE ARE SEEING THIS DOWN A LOT
MORE THAN SOME OF THE OTHER MARKETS ACROSS EUROPE.
THERE ARE QUESTION MARKS IN THE MARKET IF HIS POSITION WHICH IS
NOT DIRECTLY AFFECTED BY THE UPCOMING VOTE AS HEAD OF STATE
BUT WHETHER THAT WILL AFFECT HIS ABILITY TO PUSH THROUGH
LEGISLATION SO THAT WILL BE SOMETHING WE NEED TO KEEP A
CLOSE EYE ON. VOTERS IN FRANCE AND GERMANY
HAVE DEALT A MASSIVE BLOW TO THEIR LEADERS AS FAR RIGHT
PARTIES. THE RESULT STEALING A BLOW TO
EMMANUEL MACRON WHO AS WE WERE SAYING CALLED FOR A SNAP
ELECTION. >> THIS IS A SERIOUS AND WAITED
DECISION. IT IS AN ACT OF TRUST. IN THE ABILITY OF THE FRENCH
PEOPLE TO MAKE A JUST CHOICE FOR THEMSELVES AND FOR FUTURE
GENERATIONS. >> LET'S GET MORE ON THIS WITH
STEVE AND CAROL WHO'S IN BRUSSELS.
I THINK WE NEED TO REMIND EVERYBODY THE PERFORMANCE OF
THE FAR RIGHT WAS MORE OR LESS EXPECTED AND WHILE MACRON AND
SCHULTZ BOTH SUFFERED ALSO REVERSES A FAR RIGHT PIRATES --
THE FAR RIGHT PARTIES ONLY MADE MODERATE GAINS ACROSS THE BLOCK.
>> IT WASN'T THAT MUCH OF A
SURPRISE LOOKING AT THE NUMBERS SO IT EMMANUEL MACRON IS
GAMBLING ON OR SOME ARE DESCRIBING IS AN AUDACIOUS BOLD
STEP IS TRYING TO CONSOLIDATE HIS POWER GIVE THE ELECTORATE
THE CHOICE OF LETTING THE NATIONAL RALLY -- PULLING THE
NATIONAL RALLY INTO A FORM OF POWER IN THE FRENCH GOVERNMENT.
COULD IT BE A RETURN OF THE FAMOUS COHABITATION WE LAST SAW
IN FRANCE IN THE 1990'S WHERE YOU HAVE A PRESIDENT FROM ONE
PARTY AND A PRIME MINISTER FROM ANOTHER.
THAT COULD BE THE SCENARIO IF THE NATIONAL RALLY PARTY CAME
OUT ON TOP AND HAD A MAJORITY IN THE NEXT PARLIAMENT.
MACRON'S PARTY ALTHOUGH THEY ARE THE BIGGEST AND THE CURRENT
PARLIAMENT THEY DON'T HAVE A MAJORITY WHICH MAKES
POLICYMAKING DIFFICULT. YOU'VE SEEN HIM HAVING TO USE
HIS PRESIDENTIAL OVERRIDE TO GET THOSE PASSED BY DEGREE IN
FRANCE. THERE'S BEEN A DEGREE OF POLICY
STAGNATION UNDER THIS ADMINISTRATION SINCE THE LAST
ELECTIONS IN 2022. SO WHAT HE'S DOING NOW IS
THROWING IT OVER TO THE ELECTORATE AND SAYING YOU CAN
MAKE YOUR DECISION. WHAT WE COULD END UP AND THIS
IS PARTLY TO EXPEND SOME OF THE MARKET REACTION IS A SITUATION
WHERE WE USUALLY HAVE A COHABITATION SITUATION WITH THE
PRESIDENT FROM ONE PARTY AND PRIME MINISTER FROM ANOTHER.
FRANCINE: WHAT ABOUT THE FAR RIGHT
ELSEWHERE IN EUROPE? STEPHEN: IT'S A DIFFERENT STORY IN EACH
COUNTRY AS WELL. OLAF SCHOLZ, HIS PARTY TAKING A
TICKING WITH THE WORST PERFORMANCE THEY'VE REGISTERED
IN THE EUROPEAN PARLIAMENT ELECTION ALTHOUGH WAS THE
CENTER RIGHT CDU THAT CAME OUT ON TOP IN THE GERMAN EUROPEAN
PARLIAMENT VOTE. THE FAR RIGHT PARTY THERE
GAINING GROUND PICKING UP SEATS ALONG THE WAY AND THAT'S PART
OF THE STORY OF THE PUNISHMENT OF THOSE PARTIES THAT ARE IN
POWER IN GERMANY AT THE MOMENT. IF YOU LOOK AT ITALY, OF THE
PARTY OF ITALIAN PRIME MINISTER GIORGIA MELONI DOING EXTREMELY
WELL PICKING UP A MASSIVE AMOUNT OF THE VOTE SHARE
COMPARED TO THEIR LAST PERFORMANCE IN 2019 AS WELL.
DISCUSSING WHAT THIS MEANS WITH THE PRESIDENT OF THE EUROPEAN
PEOPLE'S PARTY. >> THE KEY QUESTION IS NOW ARE
WE READY TO COME TO A QUICK DECISION-MAKING PROCESS. WE ARE THE WINNERS BUT WE ARE
READY FOR COMPROMISE FOR THE NATION IN THE LANDSCAPE TO
AVOID THE EXTREMES. EURO MUST BE GOVERNED FROM THE
CENTER. STEPHEN: ALL OF THE PARTIES PART OF THAT
COALITION KEY TO POINT OUT THEY DID WIN, THEY MAINTAIN THEIR
MAJORITY. THE THREE PARTIES THAT SUPPORTED URSULA VON DER LEYEN
AND 2019 STILL OF A MAJORITY IN THE EUROPEAN PARLIAMENT.
THAT BODES WELL FOR HER AS SHE IS SEEKING A SECOND TERM BUT
COURSE THAT IS IN THE GIFT OF THE LEADERS OF THE 27 MEMBERS
OF THE EUROPEAN UNION, THEY ARE THE ONES THAT PUT FORWARD THE
ACCOUNT TO BE VOTED ON IN PARLIAMENT.
THEY ARE STARTING THOSE DISCUSSIONS A WEEK FROM TODAY
WITH THE FIRST INFORMAL DINNER ON THE ISSUE. FRANCINE:
THE CENTRALIST COALITION HELD DOES THAT MEAN URSULA VON DER
LEYEN WILL GET ANOTHER TERM? STEPHEN: NOT NECESSARILY.
FIRST VALUE OF THE EUROPEAN LEADERS FACTOR.
THEY MIGHT SHE WAS ELSE LIKE THEY DID WHEN THEY WERE
SUPPOSED TO CHOOSE IN 2019 WHEN URSULA VON DER LEYEN WAS
BROUGHT IN AS A SURPRISE CANDIDATE.
IT IS SOMETHING THAT COULD HAPPEN.
THEN IT'S A QUESTION OF WHETHER URSULA VON DER LEYEN CAN WRAP
UP THE SUPPORT SHE NEEDS TO VOTE FOR HER IN THE EUROPEAN
PARLIAMENT. IF YOU PUT THE PARTIES TOGETHER
SHE HAS IT ON PAPER BUT ALREADY WE WERE HAVING CONVERSATIONS WHAT IF THE GREENS LEAD
CANDIDATE, HE SEEMED OPEN TO THE IDEA.
HE POINTED TO SOME OF THE GREENS VOTING RECORD ON THAT AS
WELL. THE HORSE TRADING BEGINS NOW.
URSULA VON DER LEYEN IS MEETING HER CURRENT PARTNERS TO TRY AND
SECURE THEIR SUPPORT STARTING TODAY AND WE WILL ALSO SEE A
BIG RESHUFFLE OF SOME OF THE PARTIES IN THE EUROPEAN
PARLIAMENT AS WELL AND SHIFT THE POLITICAL LANDSCAPE HERE IN
BRUSSELS AND I WOULD BE THE NEXT STEP TO WATCH TO SEE
WHETHER OR NOT SHE CAN MAKE IT TO THAT WHEN THE EUROPEAN
PARLIAMENT IS DUE TO VOTE IN JULY. >> A LOT GOING ON, STEPHEN
THANK YOU SO MUCH WITH THE LATEST ON THESE EU ELECTIONS.
BENJAMIN NETANYAHU'S MAJOR DOMESTIC RIVAL HAS RESIGNED
FROM THE EMERGENCY GOVERNMENT OVER THE HANDLING OF THE WAR
AGAINST HAMAS. IN A TELEVISED NEWS CONFERENCE
BENNY GANTZ SAID NETANYAHU WAS PREVENTING ISRAEL FROM
ACHIEVING TRUE VICTORY IN THE WAR SANG POLITICS WAS GETTING
IN THE WAY OF STRATEGIC DECISIONS.
LET'S GET MORE IN TEL AVIV. WHAT DOES THE DEPARTURE MEAN
FOR NETANYAHU AND CAN HIS GOVERNMENT STAY IN POWER? >> HIS GOVERNMENT CAN STAY IN
POWER AT THIS TIME BECAUSE THEY HOLD BASICALLY FOR SEAT
MAJORITY IN ISRAEL'S PARLIAMENT SO HIM WALKING OUT OF
GOVERNMENT DOES NOT MEAN THAT THE GOVERNMENT COLLAPSES AT
THIS TIME AND THE RULING COALITION WILL REMAIN IN POWER
AT LEAST FOR THE TIME BEING. IT DOES STILL NEED TO NAVIGATE
SOME PRETTY EXPLOSIVE TOPICS THAT ARE ON THE TABLE LIKE
ISRAEL'S BUDGET FOR THE YEAR 2025 NEEDS TO BE WRITTEN UP AND
APPROVED IN GOVERNMENT AND PARLIAMENT AND THIS IS A
DIFFICULT BUDGET THAT WILL NEED TO ACCOMMODATE THE EXPENSES
ISRAEL HAS AT THIS TIME IT IS ALSO A BIG INVESTIGATION OF
CONSCRIPTING JEWISH ORTHODOX MEN INTO THE ISRAELI MILITARY.
THIS IS SOMETHING THEY HAVE BEEN DEALING WITH FOR MANY
YEARS BUT IS NOW MORE RELEVANT BECAUSE THEY NEED MORE SOLDIERS
AS THE WAR IN GAZA CONTINUES SO IT WILL HAVE SOME PRETTY TRICKY
SUBJECTS TO NAVIGATE OVER THE NEXT TWO WEEKS AND MONTHS BUT
IT SHOULD BE ABLE TO STAY IN POWER AT LEAST FOR THE
FORESEEABLE FUTURE. FRANCINE: WHAT WAS THE CORE OF THE
DISAGREEMENT? >> I THINK THAT HE WAS SEEN BY
BOTH DOMESTIC AND INTERNATIONAL OBSERVERS IS A VERY MODERATE
FORCE THAT KIND OF BALANCED OUT THE PRIME MINISTER'S GOVERNMENT
WHICH IS COMPRISED OF FIVE PARTIES THAT ARE ALL VERY
RIGHT-LEANING NATIONALIST PARTIES, SOME ARE JEWISH
ORTHODOX PARTIES AND HE WAS CONSIDERED TO BE A MODERATE
VOICE AMONG THEM. NOW SOME WOULD ARGUE OVER THE
PAST MONTHS HIS VOICE ON THIS WAS NOT INFLUENTIAL ENOUGH AND
WAS NOT HEARD AND MAKING A DIFFERENCE IN THE CABINET AND
THIS IS THE REASON HE CHOSE TO RESIGN TO BEGIN WITH.
IT REMAINS TO BE SEEN. THERE IS A CHANCE THAT
INTERNATIONAL PRESSURE ON ISRAEL WILL INCREASE NOW
BECAUSE U.S. ENVOYS THAT HAVE BEEN COMING ON
TO ISRAEL HAVE SEEN IN HIM SOMEONE WHO IS EASIER TO TALK
TO AND MORE PERHAPS REASONABLE POLITICAL PERSONA THAT MAY BE
ALIGNS WITH THEIR VIEWS OR THE NET AND YAHOO!
AND HIS OTHER COALITION PARTNERS. WE HAVE THE U.S.
SECRETARY OF STATE VISITING ISRAEL THIS AFTERNOON SO IT
WILL BE INTERESTING TO LISTEN TO HIS TONE OF VOICE DURING
THIS VISIT AND OF COURSE HIS TONE AND OTHERS IN THE WEEKS TO
COME. FRANCINE: DOES THIS MEAN ISRAEL COULD BE
HEADING FOR AN ELECTION SOONER THAN 2026? >> SO NOT NECESSARILY. GANTZ IN A STATEMENT CALLED FOR
ELECTION AS EARLY AS THIS COMING FALL IN SEVERAL MONTHS
BUT IN ORDER TO ACHIEVE THAT HE NEEDS A MAJORITY IN PARLIAMENT
WHICH HE DOES NOT HAVE NOW. TO ACHIEVE THAT SORT OF
MAJORITY HE WOULD NEED TO PULL AT LEAST FIVE MEMBERS OF
NETANYAHU'S RULING PARTY AND HAVE THEM WORK WITH HIM TO
PROMOTE AN EARLY ELECTION AND THERE IS VERY SLIM CHANCE OF
THAT HAPPENING NOW. SO AT LEAST FOR NOW IT DOESN'T
SEEM LIKE HE WILL HAVE THE MAJORITY IN PARLIAMENT TO
PROMOTE AN EARLY ELECTION FOR THE BOTTOM LINE IS IF FROM
MINISTER NETANYAHU CAN SURVIVE THIS SEAT OF PARLIAMENT WHICH
ENDS AT THE END OF JULY. IF HE CAN SUSTAIN HIS
GOVERNMENT UNTIL THE END OF JULY THEN HIS GOVERNMENT IS
PROBABLY SAFE UNTIL THE END OF THIS YEAR AND WELL INTO THE
FIRST QUARTER OF 2025. SO YOU'RE NOT SEEING AN EARLY
ELECTION ON AT THIS TIME. HOWEVER IT DOES NEED TO BE SAID
PUBLIC PROTESTS AGAINST NETANYAHU'S GOVERNMENTS ARE
RAMPING UP AND WE DON'T KNOW HOW THAT WILL PLAY OUT.
FOR NOW IT SEEMS NETANYAHU IF HE CAN SURVIVE UNTIL THE END OF
JULY AND PROBABLY SURVIVE UNTIL THE BEGINNING OF 2025. FRANCINE:
AN INTERESTING ROUND OF NEWS HAPPENING IN THE MIDDLE EAST.
LET'S TURN TO THE RUSSIAN INVASION OF UKRAINE.
THE KREMLIN HAS FORCED THOUSANDS OF MIGRANTS AND
STUDENTS TO FIGHT ALONGSIDE RUSSIAN TROOPS.
BLOOMBERG UNDERSTANDS MOSCOW HAS INCREASINGLY THREATENED TO
BLOCK VISA EXTENSIONS FOR AFRICAN STUDENTS AND YOUNG
WORKERS UNLESS THEY AGREE TO JOIN THE MILITARY.
LET'S DISCUSS ALL OF THIS. ALBERTO, OF COURSE -- FIRST OF
ALL THANK YOU FOR COMING ON. SENDING MIGRANTS AND STUDENTS
IN BATTLE UNDER DURESS SEEMS LIKE AN INCREDIBLE TOPIC PRAYED
IS THERE A PRESIDENT -- PRECEDENT FOR THIS. >> HUNDREDS OF YEARS AGO MAYBE.
THIS STARTED WITH THE WALK -- WAGONER MERCENARY GROUP. WHAT THEY STARTED TO ENROLL
PRISONERS AND AMONGST THOSE PRISONERS THERE WERE ALSO
MIGRANTS AND FOREIGNERS. WHAT'S HAPPENING NOW IS THEY
ARE EXPANDING THAT TO AT LEAST 21 COUNTRIES.
SOME OF THESE INDIVIDUALS WILL BE JOINING THE MILITARY FOR
MONETARY REASONS. OTHER TACTICS THEY USE THEY
LOOK IN DATABASES FOR PEOPLE IN THE PAST TWO APPLIED FOR WORK
IN RUSSIA. THEY'RE BEING LURED TO RUSSIA
WITH THE PROMISE OF A JOB AND THEN THEY CAN JOIN THE MILITARY.
AND WHAT OUR STORY FOCUS ON, YOUNG STUDENTS AND WORKERS WHO
ARE READY IN RUSSIA AND HAVE VISAS NOW MOSCA IS THREATENING
THEM WITH DEPORTATION AND ONCE THEY ARE IN RUSSIA, IT'S VERY
HARD TO RESIST THOSE THREATS. >> DOES THIS SIGNAL HOW MUCH
PRESSURE RUSSIA IS UNDER TO FIND PEOPLE TO PUT ON THE
BATTLEFIELD. >> THE LACK OF MANPOWER, AS
BECOME A SIGNIFICANT ISSUE NOT JUST FOR RUSSIA BUT ALSO
UKRAINE. INCREASED ESTIMATES BY THE
DEFENSE MINISTRY SAY RUSSIA HAS LOST 500,000 PEOPLE SINCE THE
BEGINNING OF THE WAR. CURRENTLY THAT SET A RECORD
HIGH. LAST MONTH THE U.K. SAYS RUSSIA LOST 1000 200
PEOPLE ON AVERAGE PER DAY SO THEY HAVE TO FIND PEOPLE FROM
WHEREVER IT CAN IT'S ALSO WORTH MEMORY VLADIMIR PUTIN HAS TRIED
TO RESIST A FORM MOBILIZATION SO HE'S TRYING TO GET PEOPLE TO
VOLUNTEER TO JOIN THE ARMY AND TO GET PEOPLE FROM WHEREVER HE
CAN. >> COULD THIS HELP PERSUADE
ALLIES IN THE GLOBAL SOUTH TO PROVIDE AID TO UKRAINE. >> SUMMER DISCUSSING SHARING
WHAT THEY KNOW WITH AFRICAN COUNTRIES ABOUT THESE TACTICS.
SOME GLOBAL SOUTH COUNTRIES HAVE BEEN MORE SYMPATHETIC TO
UKRAINE AND HAVE CALLED OUT SOME OF THESE PRACTICES PRAYED
INDIA LAST MONTH SAID SOME INDIANS HAD BEEN SENT TO FIGHT
UNDER DURESS PRAYED THE CHALLENGE FOR UKRAINE AND ITS
ALLIES IF YOU LOOK AT THE GLOBAL SOUTH PICTURE
COMPREHENSIVELY IS THERE ARE SOME KEY COUNTRIES SUCH AS
CHINA FOR EXAMPLE WHO CLAIM TO BE NEUTRAL WHILE THEY ARE
SUPPORTING RUSSIAN TECHNOLOGIES AND USE GOODS.
BEFORE WANTING TO PARTICIPATE IN PEACE TALKS THEY SAY RUSSIA
HAS TO BE ON BOARD. SO THEIR BIGGER ISSUES AT STAKE
HERE WHEN THESE COUNTRIES DESPITE THE STORIES ARE
STICKING TO THEIR OVERALL POSITION. FRANCINE:
AS ALWAYS THANK YOU FOR COMING. THE VERY LATEST ON THIS PRETTY
INCREDIBLE BLOOMBERG SCOOP. APPLES DEVELOPERS CONFERENCE
WILL SHOW WHETHER IT CAN BE A FORCE IN THE AI INDUSTRY PRAYED
THIS IS BLOOMBERG. FRANCINE:
APPLE SET TO LAY OUT ITS VISION FOR AI AT ITS ANNUAL WORLDWIDE
DEVELOPMENT CONFERENCE. MATT, THERE'S SO MUCH
EXCITEMENT FOR THESE KIND OF EVENTS TO FIGURE OUT THE LATEST
GADGETS. THIS IS -- WHAT'S IN FOCUS FOR
YOU TODAY. >> THE OLD AI TOPIC IS THE
FOCUS THEIR LAYING OUT THIS IS HOW WE ARE LAYING OUT
GENERATIVE AI INTO OUR SOFTWARE. IT'S INTERESTING WERE EXPECTING
THESE FEATURES WILL ONLY BE AVAILABLE TO IPHONE 15 PROS. ONE OF THE BIG QUESTIONS WILL
BE IS THIS CAN BE ENOUGH AT THE START OF A NEW SUPER CYCLE.
PEOPLE BEEN HOLDING ONTO THEIR SMARTPHONES FOR LONGER.
IF PEOPLE THINK I REALLY LIKE THIS.
I'M GOOD HAVE TO UPGRADE MY SMARTPHONE THAT COULD
POTENTIALLY KICK IN. FRANCINE: IT'S LIKE I'M TALKING TO MY
PHONE AND IT DOES STUFF FOR ME? >> THIS COULD BE A LOT OF
DIFFERENT ANNOUNCEMENTS SO THERE'S NOTHING TO BE ONE
KILLER THING. THIS PARTNERSHIP WITH A CHATBOT
INTERFACE, THIS COULD BE A LOT OF SUMMARIZE ASIAN TOOLS,
SAFARI WILL DO MORE INTELLIGENCE, THERE MIGHT EVEN
BE AN AI PROMPTED REPLY FOR EMAILS AND MESSAGES.
LOTS OF FEATURES AND THEIR FAMILIAR APPS ELEVATING TO THE
NEXT LEVEL. >> I'M STILL THINKING OF
WHETHER I SHOULD UPGRADE QUICKLY NVIDIA. >> THE SHARE PRICES UP TO $1000.
THEY WANT TO MAKE THIS THE BROAD APPEAL EVERYONE'S
INTERESTED IN HOW DO I HAVE AI AGAIN.
IF YOU ARE A REAL TAIL -- IF YOU ARE A RETAIL INVESTOR.
FRANCINE: THANK YOU SO MUCH AS ALWAYS FOR
JOINING US. COMING UP, GROWING CONCERNS
ABOUT BRAIN DRAIN AT THE NEW YORK FEDERAL RESERVE AND HOW IT
INFLUENCES ARE AFFECTING WALL STREET. FRANCINE:
THERE ARE GROWING CONCERNS ABOUT BRAIN DRAIN AT THE
FEDERAL RESERVE. AT LEAST 11 SENIOR OFFICIALS
WITH MORE THAN A DECADE EXPERIENCE EACH LEFT OR RETIRED
IN THE PAST TWO YEARS. TRADERS AND ECONOMISTS ARE
WORRIED ABOUT THE EXITS OF TALENT.
LET'S BRING IN BLOOMBERG'S ALEX HARRIS WHO'S BEEN KEY IN
INSTRUMENTAL WITH THE REPORT WE HAVE TODAY.
FIRST OF ALL HOW MUCH OF A WORRY IS THIS BECAUSE THE NEW
YORK FED HAS PLAYED AN INSTRUMENTAL ROLE DURING THE
FINANCIAL CRISES. >> I WOULD LIKE TO START OFF BY
SAYING THEY ARE STILL DOING THEIR JOB.
OBVIOUSLY WE ARE NOT DEALING WITH ANY MAJOR CRISES.
THINGS ARE CONTINUING TO RUN, MARKETS ARE FUNCTIONING.
WE ARE NOT SEEING THESE AGREE JUST QUANTITATIVE TIGHTENING
YET. HOWEVER PEOPLE ARE CONCERNED
THAT THE NEW YORK FED HAS ALWAYS BEEN A THOUGHT LEADER IN
THIS SPACE IN THE INTERSECTION OF MONETARY POLICY AND MARKETS
AND THEY THINK OVER THE LAST FEW YEARS IN PARTICULAR WE ARE
STARTING TO SEE LESS OF THAT INFLUENCE AND NOW YOU'RE SEEING
IT SPREAD THROUGH THE SYSTEM WITH LORI LOGAN'S ELEVATION TO
THE DALLAS FEDERAL AND THEN GOLDMAN SACHS'S BETH HAMMETT
BEING NAMED TO THE FED. THEY CAN PICK UP THE PHONE AND
CALL NEW YORK, SO IT IT'S NICE TO HEAR FROM PEOPLE LIKE LORI,
OTHERWISE WHAT IS NEW YORK HAVE TO SAY ABOUT IT GIVEN THEY ARE
THE BANK DESIGNATED FOR CARRYING OUT AND IMPLEMENTING
THESE POLICIES. FRANCINE: WHAT EXACTLY IS THE WORRY,
PEOPLE READ -- PEOPLE LEAVING FOR AN UNDERSTANDING OF MARKETS
OF THERE'S A CRISIS. ALEX:
I THINK THERE'S CONCERNED ARE THE RIGHT THINGS BEING
MONITORED, ARE THEY BEING AGGRESSIVE AND WHAT THEY ARE
MONITORING. THEY STILL HAD A VERY DEEP
BENCH IN 2019. AND THEY STILL MISSED THE BLOW
IN THE REPO MARKET. THAT'S ALSO SOMETHING ABOUT HOW
THINGS CAN TURN IN THESE MARKETS ESPECIALLY WHEN IT
COMES TO FUNDING. BUT THE OTHER PROBLEM IS WHAT
IS LEFT ARE THE PEOPLE WHO LOOK FOR SORT OF THESE DARK SPOTS,
WHO LOOK FOR THESE DARK CORNERS OF THE MARKET WHERE YOU'RE
SUPPOSED TO BE A LITTLE BIT CYNICAL AND THINKING OF THE
WORST AND EVERYTHING. YOU NEED THOSE PEOPLE TO COME
IN BUT YOU ALSO NEED PEOPLE TO IMPLEMENT THESE TOOLS AND WE'VE
LOST A LOT OF THOSE PEOPLE WHO CAN GET THESE FACILITIES UP AND
RUNNING, THAT KNOW EXACTLY WHAT NEEDS TO BE DONE AND THAT'S
WHAT YOU'RE REALLY MISSING HERE EVEN IF THEY ARE TRAINING AND
YOU TRAIN THE NEXT GENERATION, IF THERE IS NOTHING
INCENTIVIZING THEM TO STAY AND THEY LEAVE, YOU ARE REALLY
LACKING THERE AND THAT'S ALSO CONCERNING PEOPLE. FRANCINE: ALEX, GREAT REPORTING FROM YOU
AND THE TEAM ON TODAY'S BIG TAKE.
WE ARE ALSO LOOKING FOR THE EURO AND SOME KIND OF MARKET
REACTION FROM THE FACT FRENCH PRESIDENT EMMANUEL MACRON HAS
CALLED EARLY ELECTIONS. THE FRENCH PRESIDENT CALLED
THESE -- THIS VOTE IN THE WAKE OF SUFFERING CRUSHING DEFEAT IN
THE EUROPEAN PARLIAMENTARY ELECTIONS.
