>>, THIS IS "BLOOMBERG MARKETS
TODAY." HERE IS WHAT YOU NEED TO KNOW.
NVIDIA PLANS TO UPGRADE AIX ELEVATORS EVERY YEAR, UNVEILING
AGE OF 42025 AND A NEXGEN PLATFORM FOR 2026.
MEANWHILE FRANCE GETS A CREDIT DOWNGRADE AS THE BUDGET DEFICIT
LOOMS LARGE OVER ITS ECONOMY. IN THE UNITED STATES A SLEW OF
ECONOMIC DATA MAY UNVEIL AS M. THE LARGEST AIRLINES GATHERING
IN DUBAI, WE ARE LIVE ON THE GROUND WITH THE LATEST ON
SUPPLY CHAIN ISSUES AND THAT STORY. TOM: IT IS A RISK ON FOR THESE
MARKETS, A SOLID ASIAN SESSION, MANUFACTURING IMPROVING AROUND
THE EDGES, BUT THE NVIDIA CATALYST COMING THROUGH AND
SLIGHTLY SOFT INFLATION BRING, EUROPEAN STOCKS LOOKING TO ADD
A FULL PERCENTAGE POINT AS WE LEAD UP TO THE OPEN AT 8:00 U.K.
TIME. FTSE 100 LOOKING TO ADD .8 OF
1%. THERE WAS A BID FOR TREASURIES
ON THE BACK OF SOFTER CORE INFLATION DATA.
ECB EXPECTED A CUT FOR THE FIRST TIME IN THIS CYCLE ON
THURSDAY. "BLOOMBERG MARKETS TODAY"
STARTS RIGHT NOW. KRITI:
GOOD MORNING, WE ARE THRILLED TO HAVE YOU HERE.
THERE IS PLENTY JUST -- TO DIGEST. WE HAVE PLENTY OF
COVERAGE ON BLOOMBERG. WE HAVE TO EVALUATE WHAT
HAPPENED IN THE LAST 72 HOURS, DCE DATA, A FRENCH DOWNGRADE,
NVIDIA MAKING HEADLINES YET AGAIN JUST WHEN YOU THINK THE
BAR IS TOO HIGH, NVIDIA BEATS IT ONCE AGAIN.
LET'S START WITH THE MACRO FIRST, DCE STORY.
WE ARE STARTING TO GET EARLY CRACKS IN THE NARRATIVE AROUND
THE U.S. ECONOMIC RESILIENCE STORY. TOM: THIS IS WHAT HAPPENS WHEN KRITI
GUPTA IS TAKEN OUT OF THE U.S. CONSUMER BUCKET.
THIS IS INTERESTING, WE DID A DEEP DIVE ON THE HEALTH OF THE
U.S. CONSUMER AND SOME GREAT REPORTING FROM THE BLOOMBERG
TEAM, BUT IT IS THE STAVING RATES THAT STOOD OUT TO ME IN
TERMS OF THE SIX-MONTH LOW. TOPLINE HEADLINE CAME IN WITH
EXPECTATIONS, MONTH ON MONTH A LITTLE SOFTER.
THIS SEEMS TO BE WHAT THE FEDERAL RESERVE WANTS TO SEE. BUT YOU WILL GO BACK TO WORDS
FROM OFFICIALS SAYING THEY HAVE TO SEE THIS A NUMBER OF TIMES
TO HAVE THE CONFIDENCE THAT INFLATION IS HEADED IN THE
RIGHT DIRECTION, BUT THIS HAS TO BE A WIN FOR THE FED. LIZZY:
INTERESTING TO SEE THE MARKET REACTION.
IT WAS THE END OF THE MONTH AND THE S&P ENDING WITH ITS BEST
MONTH SINCE FEBRUARY. IT SPIKED IN THE LAST 20
MINUTES OF TRADING, AND INTERESTING START FROM GOLDMAN.
SINCE 1950 THERE WERE BEEN 21 YEARS THE S&P HAVE BEEN UP BY
MAY ONLY TWICE DID IT END DOWN. KRITI: THAT IS THE U.S.
STORY AS WE TALK ABOUT THE DATA AND WHETHER OR NOT THE STOCK
MARKET IS LISTENING TO THE DATA OR BUILDING ON THE IDEA THAT
THE FED MAY NOT BE CUTTING AND WHAT THAT DISCONNECT LOOKS LIKE.
GIVE ME THE STORY IN EUROPE WAS ABOUT THE FRENCH DOWNGRADE.
A G10 ECONOMY GETTING A CREDIT DOWNGRADE THAT HAS NOT BEEN
PRICED INTO THE MARKET TO GET, BECAUSE THE MARKETS WERE NOT
TRADING WITH THIS CAME OUT. TALKING ABOUT BUDGET DEFICIT
CONCERNS THAT WILL ONLY GET HIGHER.
IT IS NOT GOING TO GET THERE FAST ENOUGH SO S&P SAYING WE DO
NOT BELIEVE YOU. TOM: YOU WERE RELISHING THIS
DOWNGRADE FROM DIFFERENT SOVEREIGN.
THIS IS A BLOTCH ON THE RECORD OF MACRON.
HIS OWN TEAM WOULD SAY THERE WAS THE COVID SPENDING, THE
ENERGY SPENDING, THE KIND OF NARRATIVE WE HEAR IN THE U.K.
AS WELL. YOU MAY BE ABLE TO DRAW SOME
LINKS BECAUSE YOU LOOK AT THE U.K. IN GRANULAR DETAIL.
THERE WAS A BROADER STORY HERE. LIZZY:
WHAT HE HAS IN COMMON WITH THE RISHI SUNAK IS HE IS GOING TO
THE POLLS FIGHTING ON HIS ECONOMIC RECORD. DEFICIT AS PERCENT OF GDP HAS
BEEN RUNNING A DEFICIT SINCE COVID.
HE IS TRAILING MARINE LE PEN. THIS IS ALREADY BEING SEEN IN
THE POLITICS. KRITI: THIS WILL BE SOMETHING TO WATCH
CLOSELY AHEAD OF THE EU PARLIAMENTARY ELECTIONS AS WELL.
WE WILL DO A DEEP DIVE LATER INTO THE MARKET REACTION.
BRENT CRUDE IS MOVING BUT STILL AT THE $80 LEVEL ON BRENT.
LET'S TALK ABOUT NVIDIA AND CIRCLE BACK TO THE STOCK MARKET.
YOU WERE TALKING ABOUT THE MASSIVE MOVES YOU SAW.
OUR PRODUCER SAID TO MAY 31 TENDS TO BE A HEAVY VOLUME DAY.
YOU ARE THE NERD ON TECH. THEY KEEP RAISING THE BAR. TOM:
THEY COME WITH AN UPDATE. WHAT WE ARE LEARNING IS THIS IS
A YEARLY CYCLE. THIS WAS THE HEADLINE AND
COMING THROUGH. JENSEN TALKS A GOOD STORY AND
IS A REALLY GOOD STORY TO TELL ABOUT THE AI REVOLUTION, BUT
THE TOP LINE WAS WE ARE IN A CYCLE.
ITS COMPETITORS WILL TRY TO KEEP UP, THE LIKES OF AND.
THERE HAS BEEN CONCERNED HE WOULD GET A GAP.
THE H 100 IS WHAT THEY'RE SITTING ON NOW AND THE BLOOD
WELL. THERE WAS CONCERN SOME OF THEIR
BUYERS WOULD BE HOLDING BACK. MAYBE THAT IS A CHALLENGE FOR
THE NEXT YEAR, BUT THE FACT THAT THEY ARE UPGRADING SO
QUICKLY, SO SWIFTLY IS CONSEQUENTIAL, AND IT'S
COMPETITORS WILL TRY TO ADD TO THAT. LIZZY:
THE BIGGER POINT IS THEY ARE TRYING TO BROADEN THE CUSTOMER
BASE BEYOND CLOUD COMPUTING GIANTS, AND IT IS NO QUESTION
THEY MADE THIS ANNOUNCEMENT IN TAIPEI.
THE PATH TO IT BREAKTHROUGHS IS PAVED WITH SEMICONDUCTOR
SERVICES, ANY OF WHICH ARE MANUFACTURED IN TAIWAN. KRITI:
IS THIS THE CONCERN AROUND APPLE IS THAT THE DESIGN CYCLE
IS EVERY YEAR, SO THEY DO NOT DO THIS ANYMORE, BUT INITIALLY
IT WAS TO HAVE A NEW IPHONE EVERY YEAR AND YOU CANNIBALIZE
YOUR OWN DEMAND. IF YOU HAVE THAT SAME PROCESS,
COULD THERE BE AN ARGUMENT THAT SAYS WE WILL NOT UPGRADE OUR AI
ACCELERATORS NOW, WE WILL DO IT IN A YEARS TIME AND IT WILL NOT
MAKE MUCH OF A DIFFERENCE. TOM: CLEARLY THERE HAS TO BE A RISK
FOR THEM GOING FORWARD AS SPENDING PLANS I JUST AND
CHANGE. HE IS POINTING AT THE EFFICIENCIES THAT ARE GAINED
WITH EACH NEW CHIP AND DEFICIENCY OUTPUTS AND GAINS
ARE SIGNIFICANT WITH EACH INDIVIDUAL UPGRADE, SO THERE
WILL BE THAT ARGUMENT FROM SOME CFOS, BUT WE ARE NOT SEEING
THAT HAPPENING FOR NOW. KRITI: WHAT THE READTHROUGH ACTUALLY
LOOKS LIKE, BECAUSE THERE HAS BEEN THAT READTHROUGH IN THE
ASML STORY, BUT IT HAPPENED SOME DAYS WHERE IT IS NOT.
WE WILL BE MONITORING THAT THROUGHOUT THE REST OF THE WEEK.
YOU ARE NOT GOING TO BELIEVE THIS.
AS I WAS READING INTO WHAT WAS COMING OUT THIS LAST WEEKEND, I
GOT A MESSAGE FROM GUY JOHNSON ON LOCATION IN DUBAI WITH
VIDEOS AND PICTURES OF HENRIQUE IGLESIAS PERFORMING IN DUBAI.
TOM: WAS IT A CHILDREN'S PARTY? KRITI:
I THINK IT WAS A PROFESSIONAL EVENT. TOM:
GUY IS BECOMING A FAN. KRITI:
WE SHOULD GO TO THAT STORY, THE DIRECTOR GENERAL SAYS SUPPLY
CHAIN ISSUES THAT HAVE HELD UP THE DELIVERY OF NEW AIRCRAFT
GOOD STRETCH INTO 2026. GUY AT THE ASSOCIATION'S ANNUAL
MEETING, WILLIE WALSH ALSO WEIGHED IN ON THE STATE OF THE
CONSUMER. >> I THINK IT REMAINS QUITE
ROBUST. IT IS RECOVERING SLOWER AND SIMPLY BECAUSE OF THE
CHINESE MARKET IN TERMS OF INTERNATIONAL TRAVEL TO AND
FROM CHINA, BUT THAT IS A TIMING ISSUE, NOT A PLATEAU.
THAT MARKET WILL CONTINUE TO RECOVERING GET BACK TO 2019 BUT
TAKE LONGER THAN EXPECTED. KRITI:
GUY JOHNSON JOINS US FROM THE GROUND IN DUBAI.
ASIDE FROM THAT HENRIQUE IGLESIAS, WHAT IS THE LATEST?
GUY: WE OFTEN TALK ABOUT THE TAYLOR
SWIFT ECONOMY, THE HENRIQUE IGLESIAS ECONOMY, PEOPLE STILL
WANT TO TROUBLE, AND THAT DEMAND IS SO STRONG.
YOU CAN LOOK AT THE DATA YOU SOUGHT OUT ON FRIDAY OUT OF THE
UNITED STATES AND LOOK AT THE CONSUMER SLOWING DOWN BUT THE
CEOS ARE SEEING NO SIGN OF THAT RIGHT NOW.
I TALK TO AN AMBASSADOR FROM DELTA MAKING THE POINT THEY ARE
OPERATING CONSUMERS ARE SPENDING AND SPENDING STRONGLY
ON TROUBLE RIGHT NOW. I SPOKE TO MIDDLE EAST CARRIERS
OVER THE LAST 24 HOURS, TIM CLARK, THEY ARE TALKING ABOUT
STRONG CONSUMERS. SO THIS IS AN INDUSTRY NOT AT
THE MOMENT SEEING A CONSUMER THAT IS ROLLING OVER. THE INTRICATE IGLESIAS ECONOMY
IS ALIVE AND WELL. THE ISSUE IS THE ABILITY OF
AIRCRAFT. THEY ARE STRUGGLING WITH WHAT IS HAPPENING WITH THE BOEING,
WHITNEY ENGINES THAT GO ON TO AIRBUS AIRCRAFT, BUT THIS MAY
THROTTLE BACK THE AVAILABILITY OF NEW AIRCRAFT AND TO MEAN
THAT THE CYCLE FOR THIS INDUSTRY LESS A BIT LONGER. I TIED TOGETHER HENRIQUE
IGLESIAS AND AIRPLANES. LIZZY: YOU AND CHRISTIE ARE THE ONLY FANS I KNOW IN 2024, SO I WILL
BREEZE PASS THAT AND ASK YOU WHAT OTHER INTERVIEWS YOU HAVE
COMING UP, BECAUSE I KNOW YOU WILL BE BUSY. GUY:
WE HAVE GREAT INTERVIEWS COMING UP. WE HAVE SPOKEN TO A BUNCH OF
CEOS ALREADY. BEN SMITH, A CONSOLIDATION
STORY WE NEED TO TALK ABOUT COSBY IN EUROPE.
WHAT WILL HAPPEN WITH THE BUSINESSES IN PORTUGAL AND
ITALY. THE OLYMPICS IS COMING UP.
TALKING ABOUT THE EXPERIENCE ECONOMY, THAT WILL BE A BIG
STORY ALONG WITH THE FOOTBALL IN EUROPE.
WE WILL BE SPEAKING WITH SEAN WEISS AS WELL. HE PROMISES ME HE WAS WATCHING
INTRICATE IGLESIAS -- HENRIQUE IGLESIAS AS WELL. WE WILL BE SPEAKING TO SCOTT
KIRBY, THE CEO OF UNITED. HE HAS HAD A LOT TO SAY ABOUT
BOEING AND THE PROBLEMS HE IS EXPERIENCING.
MORE FROM SCOTT ABOUT WHAT IS HAPPENING WITH THE DEMAND STORY
AS WELL, SO GREAT JUST LINED UP THROUGHOUT THE DAY GIVEN US AN
IDEA WHAT IS HAPPENING ON THE ENGINEERING SIDE BUT THE
CONSUMER SIDE GLOBALLY. LIZZY: WE MISS YOU.
ENJOY HENRIQUE FOR US. TOM:
I DON'T KNOW WHERE TO GO FROM HERE.
WHAT ELSE IS ON YOUR AGENDA THIS WEEK?
GUY IS ON THE GROUND IN DUBAI AND DOES A FANTASTIC LINEUP OF
CEOS FROM THE AIRLINE INDUSTRY AND CONTINUES TO KEEP A GAUGE
OF HOW THINGS ARE EVOLVING IN THAT SPACE. LATER TODAY EU AND U.S.
PMI'S ADDING ONTO THE PICTURE OF THE HEALTH OF THESE
ECONOMIES. TUESDAY, THE BERLIN AVIATION
SUMMIT. ZEROING IN ON THE WORLD OF
PRIVATE EQUITY AND CAPITAL. WEDNESDAY, CENTRAL-BANK
DECISIONS FROM CANADA, POLAND AND EARNINGS FROM VOLVO AND
LULULEMON. THURSDAY, THE ECB DECISION,
EXPECTED TO CUT FOR THE FIRST TIME AT THE CYCLE.
ALSO DEVOTING FOR THE EU AND CITIZENS ACROSS OF THE EU WITH
THE PARLIAMENTARY ELECTIONS. FRIDAY, NONFARM PAYROLLS COMING
OUT ON FRIDAY SEEING HOW THAT ADDS TO THE PICTURE WHEN WE SEE
SOFTER COOLING. OUR B.I. RATE DECISION AND ECB SPEAKERS
INCLUDING SEVERAL. THEIR COMMENTARY IT WILL BE
INTERESTING IN TERMS OF WHERE THE CENTRAL BANK GOES FROM HERE.
LIZZY: WE WILL GO LIVE TO RIYADH WHERE
THE OPEC+ MEETING AS BEEN HAPPENING.
MINISTERS AGREEING TO EXTEND PRODUCTION CUTS BUT ALSO LAYING
OUT A PLAN TO BRING BACK BARRELS.
WE WILL ALSO DIVE INTO THE MARKETS WITH THE JP MORGAN
AFFECT STRATEGY GLOBAL HAD. THE ANC STARTED TALKS WITH
RIVALS TO FORM A COALITION GOVERNMENT AFTER FAILING TO WIN
A MAJORITY FOR THE FIRST TIME IN THREE DECADES.
IF YOU HAVE ANY QUESTIONS DO SENTIMENT ON IV PLUS BB TV <GO>.
THIS IS BLOOMBERG. KRITI:
PLENTY GOING ON IN THE ELECTION SPACE IN THE LESS OF IT TWO
HOURS. SOUTH AFRICA, MEXICO, INDIA.
THERE WAS A LOT GOING ON IN TERMS OF GEOPOLITICS, THIS IS
THE EUROPE ELECTIONS BUT WHAT DOES IT MEAN FROM A CURRENCY
PERSPECTIVE. JENNIFER ZABASAJJA LEADING
COVERAGE ON THE GROUND TALKING ABOUT WHAT A COALITION ACTUALLY
MEANS FOR INVESTORS AND THE RAND. THERE HAS BEEN A SERIES OF
OUTFLOWS WE HAVE SEEN QUITE A BIT.
THIS IDEA THAT EVEN THOUGH IT IS THE JUICIEST YIELD, THERE IS
STILL CONCERN ABOUT WHAT THE FUTURE OF THE COUNTRY LOOKS
LIKE. TOM: THE UNCERTAINTY IS THERE, THE
RENT IS UP 2% AGAINST THE U.S. DOLLAR AS MAYBE THEY GET MORE
DETAIL AND ANC SUGGESTING THEY ARE WORKING TO PUT TOGETHER THE
COALITION. THE QUESTION IS WITH WHO?
IF THEY PULL TOGETHER A COALITION OF THE PARTY WITH
ZUMA AND TOOK THIS 15% SHARE THAT MAY LEAD TO SOME CONCERNS.
IF THEY FORM A DEMOCRATIC ALLIANCE THAT SEEMS TO BE MORE
INVESTOR FRIENDLY. WHERE THEY LAND SEEMS TO BE KEY
THAT THERE WAS A MODEST RELIEF COMING THROUGH FOR THE RAND.
LIZZY: HOW MUCH POLICY CONTINUITY DO
YOU GET WHICH IS THE SAME THING HAPPENING IN MEXICO.
THE OLD PRESIDENT SAID HE WOULD RETREAT TO HIS RANCH.
ONE OF THE WORRIES IS SO MUCH SHE KEEPS HIS FINGERS IN ALL OF
THE PIES OF POLICY. KRITI: ONE OF HER MAJOR POLICIES, AND
DISCONNECTS QUITE NICELY TO INDIA IS WHAT DOES A
RELATIONSHIP WITH THE STATES LOOK LIKE?
WE KNOW WHAT MIGRATION HAS BEEN AN ISSUE, THE BORDER HAS BEEN A
BIG ISSUE AS WELL NOT TO MENTION WHAT EXPORTS LOOK LIKE
IN THE FACE OF A TRADE WAR WITH CHINA ORY MAGNIFIED TRADE WAR AND A TRUMP 2.0 OR BIDEN 2.0.
YOU'VE SEEN THAT ON THE CORPORATE LEVEL TO SOME EXTENT.
LET'S GO BACK TO THE POLITICAL STORY.
JENNIFER ZABASAJJA JOINS US WITH THE LATEST. WALK US
THROUGH WHAT INVESTORS ARE WATCHING NOW THAT WE HAVE THIS
ELECTION RESULT. JENNIFER: THIS IS REALLY AS ONE INVESTOR
PUT IT A FORK IN THE ROAD FOR THIS COUNTRY, BECAUSE WE KNOW
THE ANC GOT JUST OVER 40%, BUT THE QUESTION IS THEY NEED TO
FORM A COALITION GOVERNMENT, WHO IS THAT THEY WILL TEAM UP
WITH? GOING INTO THE ELECTION THE
MOST FAVORABLE OUTCOME FOR THE ANC TO PARTNER UP WITH THE
PARTY WOULD BE THE DEMOCRATIC ALLIANCE, POTENTIALLY HELPING THEM WITH THEIR POLICY
CONTINUITY, BUT POTENTIALLY THEY COULD LOOK TO THE FORMER
PRESIDENT JACOB ZUMA 'S PARTY AT THE DID SURPRISINGLY WELL IN
THIS ELECTION. THE ISSUE FOR THE ANC IS THE MK
PARTY DEMANDED THE PRESIDENT STEPPED DOWN, AND THE ANC SAID
NO, SO INVESTORS ARE WATCHING CLOSELY FOR WHAT THESE
DISCUSSIONS WILL LOOK LIKE AND WHAT IT WILL MEAN FOR POLICY
CONTINUITY HERE IN SOUTH AFRICA. TOM: JENNIFER ZABASAJJA ON THE
GROUND FOR US, THANK YOU VERY MUCH AS WE WATCH OF THE
COALITION TALKS WITH THE ANC AND POTENTIAL PARTNERS. ON THE FX SPACE, LET'S BRING IN
HEAD OF GLOBAL FX STRATEGY. WE WENT TO GET YOUR SPECIALITY
IN TERMS OF G10 AT THE DOLLAR AND EUROPE, BUT BROADLY ON EM,
AND ARE IDIOSYNCRATIC STORIES WE ARE UNPACKING, IS THERE AN APPETITE TO GET MORE EXPOSURE
BROADLY OR HAS THE DOOR CLOSE? >> THE MOST IMPORTANT THING WE
THINK ABOUT AT THE BANK IS NOT PAINTING EN WITH A BROAD BRUSH,
AND WHEN WE THINK ABOUT IT WE TRY TO IDENTIFY THE STORIES
THAT ARE LONGER-TERM, STRUCTURAL, AND THAT OFFER OUR
CLIENTS ARE ATTRACTIVE RETURNS WHETHER IT BE FROM THE EQUITY
SPACE WITH THE BOND SPACE. IMPORTANTLY, IT IS
INFLATION-ADJUSTED RETURNS. INDIA IF WE ARE THINKING ABOUT
ASIA IS ONE OF THOSE AREAS ARE IN EMERGING MARKETS WE THINK OFFERS OUR CLIENTS GOOD EQUITY
EXPOSURE. WE HAVE BEEN LOOKING AT THE
RELATIVE VALUE FOR A LONG TIME. WHEN I THINK ABOUT THE FX AND
BOND SPACE, MEXICO IS A PLACE THAT OFFERS VERY HIGH -- YOU
MENTIONED SOUTH AFRICA HAS THE HIGHEST NOMINAL RETURN IT BUT
MEXICO HAS THE HIGHEST REAL RETURN, AND THAT IS WHAT WE
CARE ABOUT FROM AN FX AND BOND PERSPECTIVE.
IS THERE ANYTHING BEING INJECTED INTO THE SITUATION
THAT WILL DERAIL WHAT IS ALREADY A VERY POSITIVE STORY
FROM A REAL RETURN PERSPECTIVE? EVERYTHING WE HAVE SEEN OVER
THE WEEKEND IS A "NO." FROM INFLATION-ADJUSTED RETURNS
AND FX PERSPECTIVE IS ONE OF THE BEST PLACES TO BE IF YOU
WERE LOOKING FOR OPPORTUNITIES IN EM. TOM:
HOW VULNERABLE IS THE U.S. DOLLAR TO DOMESTIC POLITICS? >> WE WATCH OF THIS CLOSELY AND
THERE ARE A COUPLE OF WAYS TO IDENTIFY IF THERE IS RISK
PREMIUM BEING BUILT UP. IF WE THINK ABOUT MODELING THE
DOLLAR AGAINST GROWTH EXPECTATIONS OR INTEREST RATE
DIFFERENTIALS, THE FUNDAMENTALS THAT YOU DICTATE THAT COME AT
DOLLAR LOOKS 5%, 10% TOO STRONG. WE WOULD EXPECT THAT TO INVERT
IF THERE WAS INCREASED RISK PREMIUM IN THE DOLLAR.
WE ARE NOT SEEING ANYTHING LIKE THAT.
IF THE DOLLAR WILL WEAKEN IT WILL BE BECAUSE OF CYCLICAL
REASONS, THE U.S. ECONOMY SLOWS, THE FED INTEREST
RATE CUTTING CYCLE COMES INTO VIEW.
THAT IS A LATE 2024, INTO 2025 STORY. KRITI:
LET'S BRING IT BACK TO THE G10 STORY.
THE DOLLAR AT THE WHIM OF THESE ELECTIONS.
I AM OBSESSED WITH THE DEFICIT STORY.
WE SAW IT WITH FRIENDS GETTING DOWNGRADED, TALKING ABOUT THIS
BUDGET DEFICIT LOOMING OVER THEIR ECONOMY.
IT IS A SIMILAR STORY IN THE STATES.
I AM CURIOUS WHY THE FX MARKET IS NOT REACTING OR PERHAPS IS.
WHAT DOES THAT LOOK LIKE? >> IT IS ONE THING TO SAY THE
U.S. FISCAL TRAJECTORY IS CONCERNING, IT MAY BE
UNSUSTAINABLE, BUT THE DOLLAR YOU CANNOT DENY IS AT THE
CENTER OF THE GLOBAL FINANCIAL SYSTEM, SO WHETHER WE LOOK AT
THE DOLLAR SHARE OF FOREIGN EXCHANGE RESERVES, 85% GLOBALLY
ARE CONDUCTED IN DOLLARS. 60% OF GLOBAL TRADE IS INVOICED
IN DOLLARS. BECAUSE OF THE DOLLAR'S CENTRAL
ROLE THE U.S. GETS MUCH MORE LEEWAY FOR MAYBE
ON NEVER COUNTRY THAT AT THE SAME EXTERNAL DEFICIT.
THE YOU CAN LOOK SIMILAR TO THE U.S., BUT WE PROBABLY SEE THOSE
CONCERNS START TO SHOW UP IN THE U.K.
BEFORE WE SEE IN THE U.S. BECAUSE OF THE DOLLAR'S ROLE IN
THE FINANCIAL SYSTEM, SO THOSE ARE THE THINGS WE PARSE. LIZZY:
I AM GLAD YOU BROUGHT US ONTO THE U.K.
YOU ARE ASSUMING IT WILL BE A LABOUR PARTY VICTORY ON JULY 4.
I AM WONDERING HOW SMALL A MAJORITY KEIR STARMER WILL NEED
TO WIN IN ORDER TO CONDUCT THE PARLIAMENT? >> I DON'T PRESUME TO KNOW
ANYTHING BUT THE POLLING LOOKS IN THAT DIRECTION.
I THINK THE NEXT GOVERNMENT IN THE U.K.
REGARDLESS OF WHO IT ENDS UP BEING WILL BE PHYSICALLY
CONSTRAINED, AND THOSE OF THE LESSONS AND SCARS LEARN FROM
WHAT WE SAW IN THE FALL 2022, SO WE ARE NOT EXPECTING MUCH IN
TERMS OF FISCAL EXPANSION. IF ANYTHING THERE WILL BE
FISCAL CONSOLIDATION. I DO NOT THINK THE POLITICAL
VICTORY WILL KNOCK THE POUND. I CAN APPLY THE SAME TYPE OF
ANALYSIS WE LOOK AT THE DOLLAR. ARE WE SEEING SIGNS THE POUND
IS TRADING WEAK. BASED ON INTEREST RATE
DIFFERENTIALS AND GLOBAL EQUITIES, IF WE STARTED TO SEE
THE PREMIUM BUILD UP THAT WOULD TELL US SOMETHING ABOUT WITH
THE MARKETING TO LABOR VICTORY, BUT THE POLLS HAVE BEEN SO
CONSISTENT. THE MARKETS BASE CASE IS A LA
BOUR VICTORY AND YOU HAVE NOT SEEN ANY RISK PREMIUM BUILDUP.
KRITI: MONETARY POLICY SEEMS TO BE ON
ICE. ELECTIONS, WE ARE WAITING FOR
THEM TO ROLLOUT. THERE IS NO ROOM INTO BUDGETS
TO DO ANYTHING. WHAT CHANGES THE PICTURE? >> I THINK IT IS GLOBAL GROWTH.
IF WE THINK OF WHAT IS HAPPENING IN THE GLOBAL
ECONOMY, GLOBAL GROWTH IS IMPROVING. IT IS IMPROVING, AND WHAT WE
TEND TO SEE WENT GLOBAL GROWTH IS STRONG AS VOLATILITY IS LOW.
THE TAIL RISKS TO THE GLOBAL ECONOMY ARE COMING IN.
BECAUSE LABOR MARKET CIRCLING AND INFLATION IS COMING DOWN
THERE WAS NO NEED FOR CENTRAL BANKS TO HIKE RATES, SO YOU
HAVE THE LEFT AND RIGHT TAIL COMING DOWN.
IF SOMETHING WERE TO INJECTED VOLATILITY I THINK IT WOULD BE
A SIGNIFICANT COOL DOWN. KRITI: CERTAINLY SOMETHING WE WILL BE
KEEPING AN EYE ON. WE WILL TAKE YOU ON A TOUR OF
THE WORLD. TOM: WELCOME BACK TO "BLOOMBERG
MARKETS TODAY." 30 MINUTES FROM THE START OF
TODAY'S TRADE AND EUROPEAN FUTURES POINTING UP BY ONE FULL
PERCENTAGE POINT. U.S. FUTURES ALSO IN POSITIVE
TERRITORY. SAUDI ARAMCO ACCORDING FORWARD
TO FUNDS WITH THE ROADSHOW IN THE U.S.
TOP EXECUTIVE SAID TO HOLD A SERIES OF EVENTS IN LONDON
BEFORE MOVING TO THE U.S. TO DRUM UP DEMAND FOR THE OIL
COMPANY'S $12 BILLION SHALE SELL FIVE YEARS AFTER IT
SCRAPPED THE ROADSHOW FOR ITS INITIAL PUBLIC OFFERING.
IT SEEMS LIKE THEY EXPECTED THERE WILL BE MORE FOREIGN
DEMAND FOR THE SHARE SALE OFFERING, SAUDI ARAMCO STARTING
IN LONDON AND MOVING TO THE U.S. LIZZY:
PEMBERTON ASSET MANAGEMENT ANNOUNCED A $1 BILLION
FINANCING STRATEGY WHICH WILL BE ANCHORED BY THE ABU DHABI
INVESTMENT AUTHORITY. FINANCING HAS BEEN CONSIDERED A
CONTROVERSIAL FINANCING AS IT LETS MANAGERS LAY ON MORE
LEVERAGE LATE IN THE CYCLE, BUT PEMBERTON SAYS IT EXPECTED TO
BECOME A PORTAL FOR MANAGERS. WE CAN DISCUSS THIS NOW WITH
THE CEO. GREAT TO HAVE YOU WITH US IN
THE STUDIO. WHAT IS THAT SIGNIFICANCE OF
THIS DEAL WITH THE ABU DHABI INVESTMENT AUTHORITY FOR YOUR
NET ASSET VALUE FINANCING STRATEGY? >> PEMBERTON HAS BEEN ONE OF
THE BELLWETHER INVESTORS AND HAS BEEN AT THE FOREFRONT OF
NEW ASSET CLASS GROWTH IN THE PRIVATE MARKETS, AND THERE IS
BEEN A LOT OF DISCUSSION ABOUT NET FINANCING OVER THE LAST 12,
18 MONTHS AS PRIVATE EQUITY IS SLOW DOWN TO MR. DEGREE -- TO A
CERTAIN DEGREE. BUT THIS IS AN ENDORSEMENT OF
WHAT IT WILL BECOME ONE OF THE KEY FINANCIAL TOOLS IN THE
MARKETS, AND IF YOU LOOK AT OUR STRATEGIC FINANCING, IT CREATES
TREMENDOUS ALIGNMENT BETWEEN THE PRIVATE EQUITY FIRM AND ITS
LPS, BECAUSE IN MANY CASES THEY ARE BORROWING MONEY AGAINST OF
THE MANAGER TO BUT THE MONEY BACK INTO FUNDS AND ALIGN
THEMSELVES WITH THEIR LPS. IT IS GREAT TO HAVE THE
ENDORSEMENT OF ONE OF THE MOST SOPHISTICATED INVESTORS
GLOBALLY INSIDE THE ASSET CLASS AND ONE OF THE LARGEST PRIVATE
EQUITY INVESTORS GLOBALLY. LIZZY:
CAN WE EXPECT MORE INVESTMENTS LIKE THIS? >> AS WE HAVE GONE THROUGH A
CHALLENGING 18 MONTHS OF CAPITAL RAISING IN PRIVATE
MARKETS, THE MIDDLE EAST HAS BEEN A HUGE FOCUS FOR INVESTORS
AND GENERAL PARTNERS IN THAT SPACE, THAT I THINK WHAT WE
HAVE SEEN IS A RECOVERY IN DEMAND FROM INSTITUTIONAL
INVESTORS COMING BACK INTO PRIVATE MARKETS AS THEY SEE THE
RELATIVE VALUE IN PRIVATE MARKETS HAS OPENED UP AGAIN.
I HAVE BEEN ON THE ROAD FOR THE LAST SIX WEEKS TALKING TO CIOS
AROUND THE WORLD AND THEY ARE VERY FOCUSED ON PRIVATE
MARKETS, BECAUSE THEY HAVE SEEN HOW WELL THEY ARE PERFORMED
OVER THE LAST 18 MONTHS. KRITI: THERE HAS BEEN SOME FRUSTRATION
AMONG HEDGE FUNDS HAVE ALLOCATED TO ALTERNATIVES
WANTING TO CHANGE THAT YIELD TO BUT NOT BEING ABLE TO GET THE
RETURN FAST ENOUGH. YET IT FEELS LIKE THE RETURN IS
SLOWING DOWN AND THEY ARE NOT ABLE TO DEPLOY THAT EQUITY INTO
THE PUBLIC MARKETS. TALK TO US ABOUT THAT.
IS THE MARKET GETTING TOO SATURATED?
WHERE ARE THE CRACKS IN THIS RECORD MOVE INTO THE PUBLIC
MARKETS? >> HEDGE COMING INTO PRIVATE
MARKETS CAN BE A MISALIGNMENT. HEDGE ARE VEHICLES DESIGNED TO
MOVE QUICKLY AND TO HAVE IT INVESTOR LIQUIDITY IN AND OUT
OF THEIR VEHICLES. IF YOU LOOK AT PRIVATE MARKETS,
IT IS TERM INVESTING DESIGN FOR INSTITUTIONS WHO WANT TO HAVE
LONG-TERM APPRECIATION IN THEIR PORTFOLIOS, SO WELL DESIGNED
FOR PENSION FUNDS, INSURANCE COMPANIES, ETC.
WHO HAVE LONG-TERM LIABILITIES AND WANT TO LOCK IN THOSE
RETURNS. WHY IS ADIO COMING TO EUROPE?
YOU TALKED ABOUT RATE CUTS AND THE GROWTH CYCLE COMING BACK
INTO EUROPE, BUT ONE OF THE THINGS THAT PEOPLE MISS IS
EUROPE IS IN A VERY EARLY STAGE OF SECTOR CONSOLIDATION AND
PRIVATE EQUITY IS BROUGHT $1 TRILLION OF CAPITAL INTO EUROPE
AND THE LAST DECADE FOCUSED ON THE MIDMARKET SPACE, BECAUSE
YOU HAVE FAMILY-RUN BUSINESSES WHICH WILL BE CONSOLIDATED INTO
MUCH LARGER MIDMARKET COMPANIES SIMILAR TO WHAT WE SAW IN THE
UNITED STATES 20 OR 30 YEARS AGO , SO THAT WAY FOR THE
INVESTOR LESSON FIVE, 10 YEAR INVESTMENT HORIZON THIS WILL BE
AN ENORMOUS OPPORTUNITY, AND IF YOU LOOK AT YIELDS AND
STRUCTURAL PROTECTION THE DEALS HAVE TODAY, IT IS ATTRACTIVE
FOR INVESTORS. KRITI: LET'S TALK ABOUT THE DEALS
STRUCTURE. THAT IS A GROWING TREND MET
WITH GROWING CONCERN AND YOU ARE SEEING SYNTHETIC PAYMENT IN
KIND. THESE ARE ALL FAIRLY RISKY STRUCTURES.
DO YOU FEEL LIKE TO ATTAIN MORE OF THAT OR HAVE MORE LONGEVITY,
THE BENEFIT TO THE DISCOUNT BEING INVOLVED INSIDE SOME OF
THESE DEAL STRUCTURES IS GROWING? >> I THINK YOU HAVE TO SELL IT
-- SEPARATE THE LARGE-CAP BUYOUT MARKET FROM THE MID-CAP
MARKET. THE LARGE-CAP MARKET HAS BEEN
GOING THROUGH AN ADJUSTMENT. VALUATIONS WERE HIGH, IT DEALS
WERE DONE AND THOSE DEALS WILL TAKE LONGER TO EXIT, AND SOME
OF THEM HAVE GUNNED UNDER FINANCIAL PRICES -- PRESSURES
AND THERE IS BEEN SOME PRESSURE ON EBITA. THAT MARKET IS STILL IN GROWTH
MODE, AND WHAT YOU ARE SEEING IS PRIVATE EQUITY FIRMS COMING
IN, BUYING A PLATFORM AND DOING SIGNIFICANT CONSOLIDATION ON A
PAN-EUROPEAN BASIS, AND THAT IS BRINGING CUSTOMER BASES
TOGETHER , DEVELOPING PLATFORMS AROUND OUTSOURCED BUSINESS
SERVICES, TECHNOLOGY, AND HEALTH CARE.
THE HEALTH CARE SYSTEM IN EUROPE IS MASSIVELY
UNCONSOLIDATED COMPARED TO THE UNITED STATES, BUT THESE ARE
SMALLER REGIONAL BUSINESSES THAN WHAT YOU SEE IN THE UNITED
STATES WHERE YOU HAVE THESE LARGE HEALTH CARE COMPANIES ON
THE EAST COAST, MIDWEST, AND THE WEST COAST OF THE UNITED
STATES, AND THAT IS WHERE PRIVATE EQUITY HAS A HUGE
OPPORTUNITY. IF YOU GO BACK TO NAV
FINANCING, IT BRINGS THEM THE OPPORTUNITY FOR PRIVATE EQUITY
FIRMS TO DIFFERENTIATE THEIR FINANCING STRUCTURE, SO YOU ARE
SEEING GP STAKES GROW TREMENDOUSLY OVER THE LAST
DECADE BUT YOU HAVE TO GIVE AWAY 1/3 OF YOUR FIRM. THAT DOES NOT NECESSARILY
CREATE AS MUCH ALIGNMENT, WHERE IF YOU LOOK AT NAV FINANCING,
YOU CAN BRING N, INCOME COMING OFF THE FUNDS WERE MANAGING,
TAKE THAT CAPITAL INPUTTED INTO THE FUNDS BESIDE YOU ARE LPS,
AND YOU ARE INCREDIBLY WELL ALIGNED. SO I THINK SOME OF THE PERCEPTIONS AROUND NAV
FINANCING IS MISALIGNED, AND ANY NEW ASSET CLASS WHEN IT
STARTS THERE ARE A LOT OF NEW SKEPTICS IN THE PROCESS.
I REMEMBER WHEN SUBSCRIPTION LINE STARTED EVERYONE WAS
HIGHLY CRITICAL. TODAY 90% OF FUNDS HAVE
SUBSCRIPTION LINES BECAUSE IT HELPS THE LP IN MANAGING ITS
CASH FLOWS. TOM: WHAT LEVEL OF DISTRESS YOU ARE
SEEING? >> EVERYONE HAS BEEN PLEASANTLY
SURPRISED FROM AN INVESTOR POINT OF VIEW HOW WELL
PORTFOLIOS HAVE PERFORMED, AND THAT HAS BEEN DRIVEN BY TWO
THINGS. IF YOU GO BACK TO 2006 WHEN WE
WENT INTO THE GSE, PRIVATE EQUITY WAS PUTTING IN 25%, 30%
PRIVATE EQUITY AND BORROWING THE REST OF THE MONEY.
PRIVATE EQUITY HAS BEEN PUTTING IN 50%, 60% OF THE MONEY, SO
THERE WAS A MUCH BIGGER CASH BUFFER INSIDE THE COMPANY FOR
THE ADJUSTMENTS WE HAVE HAD TO GO THROUGH WITH INFLATION AND
ALSO INTEREST RATES. THE SECOND PART IS PARTICULARLY
IN THE MIDMARKET SPACE, THIS IS GENUINE GROWTH. THIS IS ADDING CUSTOMERS,
REFINING BUSINESSES, TAKING THEM FROM FAMILY-OWNED INTO
PRIVATE EQUITY OWNED WHERE THEY CAN STREAMLINE COSTS, THINK
ABOUT DISTRIBUTION CHANNELS AND A MORE POWERFUL WAY AND
INCREASE THE VALUE INSIDE THE COMPANY, SO IF YOU LOOK AT THE
MARKETS TODAY THE PLAYERS LIKE OURSELVES HAVE GONE THROUGH THE
LAST 24 MONTHS WITH A MODEST PRESSURE INSIDE THEIR
PORTFOLIOS, AND WHERE THERE HAS BEEN PRESSURE ON SOME OF THOSE
COMPANIES PRIVATE EQUITY IS STEPPED IN AND PUT MORE CAPITAL
INTO THE COMPANY'S LOVE THEM TO THAT ADJUSTMENT PERIOD.
PERFORMANCE HAS BEEN STRONG. I THINK IT WILL CONTINUE TO BE
STRONG, AND WE ARE THROUGH THE WORST OF THE RATE CYCLE AND THE
INFLATION CYCLE. RATES WILL BE HIGHER FOR LONGER
AS WE HAVE ALL SEEN, BUT I THINK THE INDUSTRY IS IN A GOOD
POSITION. TOM: THANK YOU VERY MUCH.
YOU HAD A TARGET. ARE YOU CONFIDENT ON THE TARGET?
>> I SUPPOSE, PEOPLE DO NOT LIKE TO PREDICT EXACTLY, BUT I
THINK WE ARE ON TARGET TO HIT THAT NUMBER, SO WE ARE GROWING
VERY RAPIDLY AND I THINK THERE WAS A LOT OF CAPITAL COMING
INTO EUROPE. TOM: THANK YOU VERY MUCH INDEED.
REALLY INTERESTING TAKE. SIMON DRAKE BROCKMAN. KRITI:
WE WILL BE CONTINUING TO PRIVATE CREDIT AND EQUITY
CONVERSATION. I WILL BE LIVE IN BERLIN AT THE
WORLD'S LARGEST PRIVATE EQUITY EVENT TAKING OFF TOMORROW.
WE HAVE GOT A GREAT LINEUP. DAVID HIRSCHMAN, THE FOLKS OVER
AT MORGAN STANLEY AND RACHEL ARNOLD AND VISTA.
THE VC FROM SILICON VALLEY IN THERE AS WELL.
WE WILL TALK ABOUT THE CRACKS IN THIS MARKET, THE
OPPORTUNITIES IN THIS MARKET AND BIG NAMES AS WELL.
WE ARE VERY EXCITED. COMING UP ON THE PROGRAM, OPEC+
EXTENDING CUTS BUT LAYING OUT PLANS TO BRING BARRELS BACK.
WE ARE OUT TO RIYADH WHERE THE MEETINGS TOOK PLACE.
THIS IS BLOOMBERG. LIZZY:
ABOUT 16 MINUTES AWAY FROM THE OPEN, FUTURES POINTING TO A
HIGHER OPEN IN EUROPE, BUT LET'S LOOK BACK AT THE WEEKEND.
OPEC+ MEETING SETTING UP A PLAN TO RESTORE EARLY PRODUCTION AS
SOON AS OCTOBER, BUT THERE ARE ALSO CONCERNS ABOUT THE DEMAND
OUTLOOK. YOU ALSO HAVE ROBUST SUPPLY
FROM BE ON THE GROUP. WE HAVE JOUMANNA BERCETCHE.
IS IT FAIR TO SAY THE WINNER OF THE WEEKEND WAS THE UAE? >> THAT IS ONE OF THE MARKET
ASSESSMENTS WE GOT YESTERDAY AND UAE SEEMS TO BE THE WINNER
BECAUSE THEIR OWN PRODUCTION CAPACITY WAS INCREASED, BUT THE
BIG TAKEAWAY IS TWO FOLD. THE FIRST IS THAT THE GROUP
CUTS WERE EXTENDED TO 2025, AND THOSE SO-CALLED VOLUNTARY CUTS
INTRODUCED IN NOVEMBER 2023 BY EIGHT OF THE PRODUCING
COUNTRIES INCLUDING SAUDI ARABIA, RUSSIA, UAE, ALL OF
THEM WHO DESCENDED TO RIYADH YESTERDAY FOR THIS MEETING, WE
GOT MORE GRANULARITY ON WHAT THEY ARE EXPECTING TO DO.
WE FOUND OUT THEY WILL CONTINUE WITH THOSE CURVES UNTIL THE END
OF THE THIRD QUARTER OF THIS YEAR.
FROM OCTOBER OF THIS YEAR THEY WILL SLOWLY START PUTTING MORE
BARRELS BACK ON THE MARKET, SO THERE WAS A LOT TO DIGEST, AND
THE COMPLEX NATURE OF THE ANNOUNCEMENTS WITH THE QUOTAS
AND VARIOUS BASELINE LEVELS TOOK A WHILE FOR THE MARKET TO
PIECE TOGETHER. ULTIMATELY WE ARE LOOKING AT
OPEC POTENTIALLY PUTTING MORE BARRELS ONTO THE MARKET BY THE
END OF THE YEAR. HERE COMES THE CAVEAT, THEY SAY
SUBJECT TO MARKET CONDITIONS. IF THINGS DO NOT PAN OUT THE
WAY THAT THEY WOULD LIKE, AND THEY WILL LIKELY CONTINUE TO
KEEP TAKING OFF THESE BARRELS FROM THE MARKET.
OVER THE SUMMER YOU WILL LOOK AT DEMAND AND SEASONALITY.
PARTICULARLY THE SUMMER MONTHS ARE STRONG IN DEMAND FOR OIL.
WE SPOKE ABOUT U.S. INVENTORIES CONTINUING TO MOVE
FIRE, AND FINALLY THE MACRO. THE FED IF THEY DO START
CUTTING INTEREST RATES COULD BE SUPPORTIVE FOR THE SECTOR AS
WELL SO A LOT OF QUESTION MA KRS -- MARKS. TOM:
MEANWHILE, AND I KNOW YOU WERE LOOKING AT THIS, SAUDI ARAMCO
SUCCESSFULLY SELLING $12 BILLION STAKE IN THE BUSINESS.
WHAT DO WE TAKE FROM WHAT APPEARS TO BE A SOLID APPETITE
FOR THAT BUSINESS? >> THAT IS RIGHT.
YESTERDAY SAUDI ARAMCO DID ACTUALLY OPEN THE BOOKS FOR THE
SECONDARY SHARE SALE. AT THEY ARE LOOKING TO RAISE
$12 BILLION, AND ACCORDING TO OUR REPORTING, MATTHEW MARTIN
PUT OUT A COMMENT YESTERDAY SAYING IN THE VERY FEW HOURS OF
THOSE BOOKS BEING OPENED THEY MANAGED TO SATIATE ALL OF THAT
DEMAND JUST IN THE FIRST COUPLE OF HOURS OF THE BOOK BEING
OPENED, BUT THEY WILL KEEP ON WITH THE BOOK BUILDING PROCESS
THROUGHOUT THE COURSE OF THIS WEEK. MATTHEW PUT OUT AN ARTICLE
SAYING ARAUJO IS TAKING PLACE IN LONDON.
THE CEO OF ARAMCO IS FLYING THERE ALONGSIDE THE CFO, AND
THIS IS PART AND PARCEL TO ATTRACT AS MUCH INTERNATIONAL
INVESTORS DEMAND AS POSSIBLE. IN THE INITIAL IPO INVESTORS
HAD QUESTIONS ABOUT THE MARKET CAP, THE DIVIDEND PROSPECTS.
FAST FORWARD TO TODAY, AND THEY HAVE BEEN AVIDLY LEANING ONTO
THE FACT THAT THEY PAY OUT A JUICY DIVIDEND.
WHETHER OR NOT THAT IS ENOUGH TO BRING IN THE INTERNATIONAL
INSTITUTIONAL DEMAND WILL BE A BIG QUESTION MARK, BUT THE BOOK
BUILDING SO FAR HAS BEEN QUITE CONSTRUCTIVE. KRITI: SOMETHING WE WILL KEEP AN EYE
ON. WE THANK YOU FOR THAT CRUCIAL
CONTEXT. THERE SEEMS TO BE A LOT OF NEWS
COMING OUT OF THE MIDDLE EAST. THE OIL STORY IS INTERESTING.
PAUL DOBBS JOINS US THIS MORNING FOR OUR MARKET MINUTE.
WE WILL START WITH THE OIL STORY.
WE ARE TALKING ABOUT OPEC CUTS, WHICH WERE NOT PRICING THE
MARKETS, BUT YOU ARE STILL SEEING BRENT CRUDE AT $80 PER
BARREL. HOW MUCH DIFFERENCE DOES THIS
MAKE TO THE MACRO PICTURE? >> ANY SIGNS OF WEAKENING
PRICES IS A POSITIVE FOR THE GLOBAL MACRO PICTURE AT THIS
POINT. NOT LEAST FROM AN INFLATION
PERSPECTIVE. IF THERE IS ONE MORE THING
COOLING IN THE LABOR ECONOMY THAT WILL FEED THROUGH TO
PRICES AT THE PUMP, AND THAT WILL BE GOOD FOR CONSUMERS OF
GAS AND RELATED PRODUCTS AS WELL SO LONG AS IT IS NOT TOO
MUCH OF AN INDICATION OF BAD DEMAND AND BAD ECONOMIC GROWTH.
WHAT IS INTERESTING ABOUT CHINA IN PARTICULAR IS WHILE REFINERY
RUNS ARE SLOWER AND THERE IS NOT THAT MUCH DEMAND, HEART OF
IT IS BECAUSE OF THE BIG CHANGE WE HAVE SEEN IN THE MAKEUP OF
THE INDUSTRY ENDED THE BIG ROLLOUT OF ELECTRIC VEHICLES
EVERYONE IS TALKING ABOUT. IT MIGHT NOT BE ENTIRELY AS
NEGATIVE FROM THE DEMAND SECTION AS YOU MIGHT THINK,
SOME A COUPLE OF THINGS TO KEEP IN MIND, BUT IF WE ARE GOING TO
GET MORE SUPPLY COMING BACK TO US AT THE END OF THE YEAR, THAT
SHOULD QUESTION PRESSURES ON OIL PRICES. KRITI: IN THE CONTEXT OF THE
INFLATIONARY STORY, WE HAVE PLENTY OF ELECTION COVERAGE,
ECB MEETING ON THURSDAY BECAUSE WELL.
WHERE ARE THE CRACKING POINTS IN THE FX MARKET RIGHT NOW? >> I THINK THE ECB WILL BE
INTERESTING FROM THE PERSPECTIVE OF, EVERYONE KNOWS
IT IS BEEN TELEGRAPHED, BUT HOW MANY CUTS WILL THEY BE INKING
INTO THEIR FORECAST FOR THE REST OF THE YEAR AND HOW FAST
WITHOUT NOT LOOK RELATIVE TO WHAT THE U.S.
WILL DO, THE BOE AND HOW THAT CAN SHAKE THINGS UP?
THE FRAGILE POINT IS ON THE OTHERS THE WORLD, THE PLACE
THAT IS NOT HIKING QUICKLY AND HAS A MUCH LOWER INTEREST
RATES, WHICH IS THE YEN. WE STILL SEE THE WEAKENING
PRESSURE AND FRACTURES, AND IF THAT STARTS TO BLOW UP THAT
COULD BE THE THING THAT OBSESSED THE REST OF THE MARKET.
KRITI: WE THANK YOU SO MUCH. WE WANT TO CONTINUE THE
CONVERSATION. OIL, FX, AND NOW THE STOCK
MARKET PICTURE. JOE EASTMAN IS STANDING BY. >> KEEPING AN EYE ON ON-CHIP
STOCKS WITH A LOT OF EXCITEMENT AROUND THE LATEST COMMENTS FROM
NVIDIA SPEAKING AT A TRADESHOW IN TAIWAN.
THEY DID ANNOUNCE A WAVE OF NEW CHIPS AND SAID THEY WILL
UPGRADE THEIR ACCELERATOR CHIPS EVERY YEAR GOING FORWARD.
THE CEO WAS TALKING UP THE REST OF GENERATIVE AI SAYING IT IS A
NEW INDUSTRIAL REVOLUTION, AND THEY EXPECT EVERY SECTOR YOU
WILL EMBRACE IT. WE DID SEE COMMENTS FROM
ADVANCED MICRO DEVICES AS WELL ABOUT THE SAME CONFERENCE, BUT
NVIDIA THE FOCUS IS. A 3% GAIN IN DEEP BLOOMBERG
ASIA-PACIFIC SEMI CONDUCTOR INDEX.
WE WOULD EXPECT TO SEE SOME OF THOSE GAINS FOLLOWING THROUGH. ASML, ST MICRO, MIXED
YEAR-TO-DATE JUDGING BY THOSE NUMBERS ON THE SCREEN, BUT WE
COULD SEE POSITIVES COMING THROUGH. WE ARE LOOKING AT LASCAUX
SMITHKLINE. A JUDGE IN DELAWARE SAYS GSK
WILL HAVE TO FACE TRIALS OVER THE ZANTAC DRUG SAID TO CAUSE
CANCER. THERE ARE 75,000 SUITS
OUTSTANDING. PREVIOUSLY WE SAW A FLORIDA
JUDGE THINK THEY WOULD NOT HAVE TO FACE TRIAL, BUT A JUDGE
GOING THE OTHER WAY. THIS WAS THE DROP WHEN THESE
CLAIMS ARE FIRST CAME INTO THE NEWS, AS RECOVERED A BIT SINCE
THEN, BUT LOOKING NEGATIVE. WE ARE ALSO LOOKING AT THE ASCO
CONFERENCE GOING ON AT THE MOMENT.
LOTS OF DRUGS, LOTS OF DATA COMING UP. ONE OF THEM TO WATCHES GENMAB,
THEIR ANTITUMOR DRUG SINK THEY HAD A STRONG WEEKEND AND THEY
THINK THE SHARES WILL REACT POSITIVELY.
THE DRUG SHOWING POSITIVE RESULTS. LIZZY:
JOE EASTMAN WITH OUR STOCKS TO WATCH.
WE THANK YOU AS WE LOOK AHEAD TO THE OPEN. KRITI: ONE OTHER STORY, SOMEONE
ANNOUNCING THEY WILL BE LEAVING AT THE END OF THE SEASON.
THE CONFIRMATION COMES AFTER A BEAT ON SATURDAY TO WIN THE
CHAMPIONS LEAGUE FOR RECORD EXTENDING 15TH TIME.
I DO NOT THINK YOU WATCH THE GAME. LIZZY:
I THINK YOU STILL CALL IT SOCCER. KRITI:
I AM VERY INTO REAL MADRID. TOM:
WE NEED TO WRING THAT OUT OF YOU. IT IS A BIG MOVE. HE HAS FINALLY SIGNED.
DISAPPOINTING HE IS LEAVING REAL MADRID.
CLEARLY, GOTTA WATCH MBAPPE. LET'S HOPE HE DOES NOT PERFORM
FOR FRIENDS. KRITI: THAT WAS THE CONCERN, THIS IS
FRANCE'S STAR PLAYER. NOT THE WORLD SERIES, BUT THAT
WAS A QUESTION A CONCERN ABOUT WHETHER HE WOULD GO TO REAL
MADRID. THERE IS A LOT OF EXCITEMENT
AMONG THE PEOPLE WHO WERE WATCHING THIS, AND IT WAS NOT
JUST ME. LIZZY AND TOM WERE NOT A PART
OF THIS. WE ARE EXCITED ABOUT THE
EUROPEAN OPEN. KRITI:
WELCOME BACK TO "BLOOMBERG MARKETS TODAY."
THERE IS A LOT GOING ON THIS SO WE, ECB ON THURSDAY, COMMENTS
COMING OUT OF DUBAI WHEN IT COMES TO EUROPEAN AIRLINES IN
PARTICULAR, THE PRIVATE EQUITY CONFERENCE GOING ON AS WELL,
NOT TO MENTION PAYROLLS AND EU PARLIAMENTARY ELECTIONS, SO A
LOT TO DIGEST. IT FEELS LIKE THERE MAY BE MORE OF A CATCH OF
A CATCH-UP TRADE FROM NVIDIA. WE ARE WATCHING A COUPLE OF
RETAIL STOCKS. TOM: WE WILL BE LOOKING AT THE OIL
SPACE, THE ENERGY SPACE, AND THE TECH STORY.
NVIDIA TALKING ABOUT THE UPGRADE CYCLE FOR THESE CHIPS,
AND WE LOOK AT THE LIKES OF ASML LISTED IN THE NETHERLANDS
AS WE COUNT ONTO THE OPEN, BUT GAMESTOP IS ANOTHER STORY. THE MEME STOCK IS BACK.
A POST ON REDDIT, A SCREENSHOT OF WHAT LOOKS LIKE A $160
MILLION HOLDING IN GAMESTOP PLUS OPTIONS. WE ALSO WENT ON TO X AS WELL
AND POSTED A PICTURE OF A REVERSE UNO CARD.
THERE ARE STILL RETAIL INVESTORS WANTING TO GET AN
ACTION. KRITI: I SEE THE KITTY, I SEE THE UNO
CARD. I NEVER THOUGHT I WOULD BE
SAYING THAT. LIZZY: IT IS VERY WEIRD, I AM SO GLAD
THE MARKET OPEN IS COMING FOR US SO WE CAN STOP TALKING ABOUT
TOM AND THE KITTY PICTURE. WE ARE LOOKING FOR A
READTHROUGH FROM THE NVIDIA STORY.
DO WE SEE IT WHEN WE GET TO THE MARKET OPEN. CURRENTLY HIGH AT .3%.
AND IF WE BREAK DOWN BY SECTOR, WE HAVE LEFT RECORDS OF THEM IN
POSITIVE TERRITORY. UTILITIES IN THE GAME AS WELL.
THE BOTTOM OF THE BASKET IS TECH. DOWN 1.3%.
I PROMISED YOU LOOK AT THE CHIP STOCKS. >> IT IS INTERESTING.
WE LOOK AT THE STOCKS ECCENTRIC, WE SEE THOSE LOADING.
THIS IS LIKE THE BIGGEST IN NEXT CONTRIBUTION. >> TECH IS NEAR THE TOP. >> IS HIGHER. >> IT IS COMING OFF THE NVIDIA
STORY. WE ARE TALKING ABOUT THIS MASSIVE RISE IN THE LAST 30
MINUTES OF THE U.S. SESSION. THAT IS GOING TO BE A
HIGH-VOLUME TRADE AS WELL. I'M CURIOUS HOW MUCH OF THIS IS
A CATCH UP TO THAT IN ADDITION TO THE NVIDIA STORY. >> ABSENTLY GIVEN THE DATA SEEM
TO CONFIRM THAT SOME WORK IS BEING DONE FOR THE FED.
CONSUMER AS WELL SEEMING TO PULL BACK A LITTLE BIT IN THE
U.S.. AN INFLATION INDEX, THE FED
SCRUTINIZES COMMON LOWER THAN EXPECTED.
THE FED CAN CUT, WILL CUT THIS YEAR.
TRAVEL AND LEISURE THE SECTOR SEEMS TO BE A TOPLESS RIGHT NOW.
TECHIES UP THERE. RETAIL LOOKING AT ENERGY AS
WELL. IT IS COMPLICATED. ENERGY IS A CENTER 1% ON THE
NEWS OF THESE CUTS. IT WILL REDUCE THE INTENT OF
THOSE CUTS FROM OCTOBER OF THIS YEAR. >> LETS TALK WITH SOME OF THE
INDIVIDUAL MOVERS. ONE OF THE DOWNSIDE MOVERS IN
SANTA FE. THIS IS IMPORTANT WHEN IT COMES
TO THE SPINOFF. GOLDMAN AND MORGAN STANLEY NOW
GETTING ON PART OF THAT DEAL. THIS IS POTENTIALLY ONE OF THE
BIGGEST SPINOFFS IN HISTORY WHEN IT COMES TO SOME OF THOSE
EUROPEAN DEALS. THAT IS SEEING A LITTLE BIT OF
A DROP THIS MORNING. TO YOUR POINT, ONE OF YOUR ONLY
LACQUERS IN THE ENTIRE SECTOR. QUICK STILL UP .3%.
EVERY SECTOR HIGHER. TECH AT 1.3% HIGHER.
MUST BE THE GUY JOHNSON EFFECT. QUICK PUSHING IT HIGHER PERHAPS.
A LOT TO DIGEST. THE COMMODITY SECTORS WHEN INTERESTING HERE.
THE BREATH YOU ARE SEEING IN THE EUROPEAN MARKET IS
INTERESTING. SOME OF US FAR MORE FAMILIAR
WITH EUROPEAN EQUITIES. I LOOK LIKE THERE'S A VERY BIG
MARKET NARRATIVE AT THE POINT. IS THAT THE CHASM TO THE NVIDIA
STORY. IS THAT HOW YOU’'RE READING IT?
WE'VE HAD A COUPLE OF WEEKS WHEN MARCUS DRIFTED A LITTLE
BIT AND THEY BEEN CLIMBING ONTO THIS GREAT STORY IN PARTICULAR.
THEY MAY BE TOOK A LITTLE BIT OF THE AIR OUT OF THAT.
THAT DRIFT LOWER IS SLIGHTLY REVERSING BUT NOT WITH ANY
GREAT CATALYST. >> NOT EVEN BRITISH PEOPLE WERE
INTERESTED IN THE U.K. ELECTION LAST WEEK.
THE TRUMP STORY DOMINATING ATTENTION.
THAT IS THE BENEFIT GIVEN ITS INTERNAL DISRUPTIONS.
LET ME ASK YOU ABOUT THE U.K. MARKET. IS IT BOTHERED ABOUT THE
ELECTION AT THIS POINT? >> NOT YET.
I THINK YOU'RE GETTING POCKETS OF REACTION WITH THE MARKET AT
THE MOMENT. WHILE UTILITIES AT THE MOMENT,
THERE'S BEEN A LOT OF FOCUS ON THAT ALREADY.
THERE WAS A LITTLE BIT OF A DRIFT LOWER IN SHARES. I THINK WE ARE WAITING FOR NOW
IS THE MANIFESTOES. ONCE YOU GET THE MANIFESTOES,
YOU GOT A REAL CLEAR IDEA. AT THE MOMENT IT IS KIND OF
PIECEMEAL. YOU ARE GETTING A QUESTION
ABOUT THE BANKING SECTOR, WHATEVER IT MAY BE. THAT IS WHEN YOU CAN GET THAT
REAL ASSESSMENT OF WHAT'S GOING TO HAPPEN.
AT THE MOMENT THE MOST IMPORTANT ONE WILL BE THE
LABOR'S MANIFESTO. IS THAT A CATALYST?
IT WOULD BE PRICED INTO A VERY LARGE EXTENT.
HOW ARE YOU THINKING ABOUT THE UCB AND THE GUIDANCE HERE?
I THINK IT HAS BEEN PROCESSED. IT IS TAKING A LONG TIME TO
PROCESS. THE UCB HAVE BEEN QUIETLY
EVERYONE A WHILE NOW. THAT JUNE IS VERY MUCH IN PLAY. THE MARKET -- MARCUS HAVE
REALLY ONLY JUST GOT THERE. WHEN THAT HAPPENS THAT KIND OF
TASTE HE SAID HIS NEXT LEG OF THE CYCLE BECAUSE THERE WILL BE
AN ACTUAL RATE CUT. THIS QUESTION OF DIVERGENCE
BETWEEN DIFFERENT RANKS. IT IS REALLY JUST ROLLING OVER
THAT NEXT LEG OF THE CENTRAL BANK STORY. YOU GET MORE FROM HIM AND THE
TEAM ON THE FRONT PAGE OF THE BLOOMBERG U.K. WEBSITE.
WE STILL GET A QUICK CHECK ON SOME OF THE WEIGHT HEADLINES.
WE HAVE THE SENSATIONAL SIX. ALL IN POSITIVE TERRITORY.
IF YOU LOOK AT IT FROM AN INDEX CONTRIBUTION LEVEL, IT IS
ALWAYS 2% HIGHER ON THE DECK. THEN YOU SCHNEIDER ELECTRIC AS
WELL. I JUST WANT TO REMIND US THAT
EVEN THOUGH THAT IS A UTILITY, THERE IS NOT A UI -- AND I READ
THROUGH HERE. EVEN THIS BY .7%. IN LINE FOR SOME OF THAT
CONSUMER STOCK PILE UP WE'VE SEEN LATER.
THAT IS THE PICTURE FROM A LARGER MEGACAP STANDPOINT.
THEY WILL TRACK AND SOME OF THE OTHER INDIVIDUAL STOCKS. >> WE'VE GOT JUST AN OPENING
PRICE ON THAT. A BIG DROP. WE ARE DOWN ALMOST 9%.
THAT LITERALLY JUST OPENED. WE HAD A DELAYED OPENING.
THE STOCKS TO WATCH WILL FACE POTENTIALLY 75,000 CLAIMS THAT
THE ZANTAC TREATMENT CAUSE CANCER. WE WILL ALSO SEE THAT -- AND
WITH THE SPINOFF YOU GUYS HAVE BEEN DISCUSSING. BOTH COMPANIES ARE SAYING THEY
WOULD APPEAL THE RULING. THAT IS THE WORST PERFORMING
STOCK IN THE U.K. AND I THINK IN EUROPE AS WELL. ASTRAZENECA HAD STRONG DATA OUT
OF THE ONCOLOGY CONFERENCE IS GOING ON IN THE U.S.. WE ARE SEEING THAT STOCK UP
ALMOST 4%. THAT IS COMING OUT IN THAT.
WE ARE KEEPING AN EYE ON A NUMBER OF THE STOCKS. THEN IN TERMS OF YOUR CHIPS,
OVEREXCITED WITH THE AI BIT FROM NVIDIA. IN A NUMBER OF OTHERS GETTING
TODAY. NAMELY -- THEN WE WILL FLIP
OVER TO FOOTBALL. TAKE A LOOK AT WORLD WRITTEN
DOWN 7% AFTER LOSING THE CHAMPIONS LEAGUE FINAL.
THEY GET IT. 15 MILLION EUROS WORTH OF PRIZE
MONEY. THEY WOULD GET A BIT OF A BONUS
FROM THE JUDE WILLIAM TRANSFER. FOLLOWING THAT LOSS OVER THE
WEEKEND. THEN WE HAVE A COUPLE OF
MORNING CALLS TO BRING YOU. ONE OF THEM IN THE U.K.. J.P.
MORGAN LIKES THIS ONE. A SELLOFF DUE TO SOME
REGULATORY CHANGES AFTER GIVEN THE CONSUMERS RETURN ON THEIR
INVESTMENT. BUT GOING THE OTHER WAY IS
CONGRESS BANK. THEY GET A DOWNGRADE BECAUSE OF
THE FITTING INTEREST-RATE RISERS STARTING TO WAIT ON THE
NEXT INTEREST INCOME ACCORDING TO ANALYST CITY.
THAT WAS DOWN 1.3% OVER IN GERMANY THIS MORNING. >> WE THANK YOU FOR THOSE
MOVERS. EIGHT MINUTES INTO THE OPEN. THE STOCKS AT HIGHER THAN A
10TH OF 1%. GUY JOHNSON IS WAITING IN THE
WINGS FOR US WITH THE CEO OF AIR FRANCE KALE LEFT OFFERING
US HIS TAKE ON THE STATE OF THE INDUSTRY. THAT IS NEXT.
THIS IS BLOOMBERG. QUEST BOEING IS STILL YEARS
AWAY FROM A REBOUND. A STRING OF BAD NEWS BUT
ULTIMATELY OF COURSE IT LED TO A CHANGE IN THE SIERRA.
TIM CLARK SPOKE TO MARCUS TODAY. >> IF YOU ASK ME, THIS WOULD BE
A FIVE YOUR HAPPINESS -- FIVE YEAR HIATUS STARTING NOW.
THIS IS A CHALLENGE AT THE MOMENT GIVEN THE PRESSURES
THEREUNDER. SO I THINK ONE STEP AT A TIME. >> TIM HART SPEAKING TO GUY
JOHNSON ON THE GROUND AT THE EVENT IN DUBAI WHERE A GUY IS
STANDING BY WITH ANOTHER GREAT GUEST. >> WE ESPY -- SITTING BY WITH
TIM SMITH. ARE YOU READY FOR THE OLYMPUS? >> THINK SO.
A ONCE-IN-A-LIFETIME EVENT. THEY SPENT A LOT OF TIME
PREPARING. I THINK IS GOING TO BE A GREAT
SHOW. BECAUSE EVERYBODY IS VERY EXCITED.
BUT THERE ARE ALSO CONCERNS AROUND THE CUES.
I TALKED TO AMERICAN FRIENDS WHO SAID THE CUES ARE STILL
FAIRLY LONG THERE. THIS COULD POTENTIALLY CAUSE
PROBLEMS. ARE YOU CONFIDENT WE WILL SEE
ANY VIRGINS EMERGING? >> MOST SUMMERS WERE WELL OVER
90% LOAD FACTOR. WE ARE GOING TO BE FLYING TO
THE TWO AIRPORTS IN PARIS. THERE WILL BE AN INCREASED
NUMBER OF PASSENGERS. LESS CUSTOMERS CONNECTING. BUT IN TERMS OF CAPACITY, IT
SHOULD BE ABOUT THE SAME AS LAST YEAR. >> AND KNOW BUSINESS TRAVELERS
ARE VOTING PARIS. >> TEPIDLY DIFFERENT MIX.
WE ARE SEEING A REDUCTION IN THE NUMBER OF BUSINESS
CUSTOMERS. WE ALWAYS SEE THAT. THIS IS RIGHT NEAR THE END OF
JULY AND EARLY AUGUST. BUT IT IS -- WE HAD A LOT OF VOLUME. WE THINK AND WHAT WE SEE IT --
THERE WILL BE A LOT OF PRESSURE ON THE BAG SYSTEMS. THOSE OF
THE TYPES OF THINGS CONCERNING US.
BUT THE AIRPORT IS ALREADY DONE A VERY GOOD JOB OF REPAIRING
FROM WHAT WE SEE. THERE IS ALWAYS A FOCUS ON
LABOR. WE HAVE A GOOD RELATIONSHIP
WITH OUR 17 EUROS. WE LABEL AND FRANCE, YOU ALWAYS
HAVE TO KEEP RELATIONSHIPS HEALTHY. >> YOU TALK ABOUT WHAT IS
HAPPENING, WHAT DO THE MARKETS LOOK LIKE RIGHT NOW? >> FOR THE SUMMER, IT IS STRONG.
WE WILL SEE HOW PRICING WORKS OUT. >> YOU BRING UP PRICING. THIS IS WHAT WE ARE SETTING UP
THE MOMENT, TALKING ABOUT SOFTER ICING, SOFTER FEDS OVER
THE SUMMER. ANY CHANCE THAT WILL BE AS A
STORY FOR YOU? " WE ARE NOT A LOW-COST CARRIER.
WE DO HAVE A LOW-COST CARRIER BUT AS FAR AS AIR FRANCE GOES,
THE TRAFFIC WE ARE SEEING IN ALL OF OUR SEGMENTS IS HOLDING
UP. FOR ASIA WE ARE STILL NOT BACK
TO WHERE WE WERE. INABILITY TO FLY OVER RUSSIA. TRANSATLANTIC IS GOOD. I HEAR SOME OF THE DISCOUNT
CARRIERS ARE NOT ABLE TO REACH SOME OF THE INCREASES IN YIELD
THEY WERE HOPING FOR. WE ARE NOT IN A STEADY STATE.
TWICE WHAT IS HOLDING YOU BACK RIGHT NOW?
IT DOESN'T SOUND LIKE IT IS DEMAND.
WE SPENT A LOT OF TIME ALREADY AT THIS CONFERENCE TALKING
ABOUT GOING AND WHAT IS HAPPENING.
IS THAT WITH THE CHALLENGE LIES RIGHT NOW?
WHERE IS THE CHALLENGE THAT IS HOLDING YOU BACK? BECAUSE I WAS A AT THE BASE,
NOT THE ABILITY TO SOURCE STUFF FOR HIGHLIGHTS.
WE HAVE ISSUES ON THE MAIN SIDELINE. A LOT OF COMPETITION. THERE ARE A LOT OF
OPPORTUNITIES FOR MECHANICS THAT ARE AN ISSUE FOR US.
AN AIRPLANE ON THE WIDE-BODY SIDE.
WE HAVE THE AIRPLANES WE NEED. WE ARE TWO MONTHS LATE.
THAT IS NOT THE ISSUE. I WOULD SAY IT IS GETTING THE
PILES IN THE RIGHT SEAT. -- PILOTS IN THE SEAT.
THERE ARE LITTLE LITTLE BIT SAID THINGS HERE AND THERE.
I WOULD SAY IF YOU LOOK AT OUR CAPACITY 2090, WHEN YOU COMPARE
THAT TO OTHER EUROPEAN AIRLINES, WE ARE SORT OF AT THE
TOP. QUICK TO TALK ABOUT A FEW OF
THE AIRCRAFT THERE, ARE YOU HOLDING ONTO ANY OF THE OLDER
LONGER? >> WE HAVE ABOUT 180 WIDE-BODY
AIRPLANES. WE ARE HOLDING BACK A LITTLE
LONGER. NOT JUST TO KEEP A LITTLE BIT
OF RESERVE BUT ALSO OLDER AIRPLANES WITH MISSING CARS.
WE NEED EXTRA PLANS FOR BACKUP. NOW IN THE SUPPLY CHAIN, WE ARE
HAVING TROUBLE SOURCING PARTS FOR INTERIOR CABINS, INTERIOR
TYPES OF THINGS. QUICK LET'S TALK ABOUT WHAT IS
HAPPENING. YOU TALKED IN THE BEST ABOUT IT
BEING A MUST IN EUROPE. HE DOESN'T LIKE THE COMMISSION
IS AGREEING WITH YOU BUT IT SEEMS WE MUST SEE CONSOLIDATION
AMONG THE EUROPEAN CARRIERS. WE ARE WATCHING WHAT IS
HAPPENING WITH THIS VERY CAREFULLY.
IT LOOKS LIKE THEY ARE STRUGGLING TO GET THE DEAL OVER
THE LINE. WOULD THAT BE A FIT FOR AIR
FRANCE KAYLA? >> I THINK IT IS -- WE ARE TOTALLY FOR CONSOLIDATION AND
WHEN I SAY CONSOLIDATION, I MEAN GLOBALLY.
I THINK EUROPE IS THE MOST REPETITIVE REGION FROM
INTER-EUROPE, INTRA-EUROPE -- EUROPEAN PERSPECTIVE. I THINK EUROPEAN COMMISSION IS
FOCUSED ON WHAT WE THINK IS WRONG, SHOWING EUROPEAN
AIRLINES GLOBALLY. I BELIEVE WE ARE DISADVANTAGED.
TO GET THE ECONOMIES OF SCALE OR TO MAINTAIN RELEVANCE
COMPARED TO GULF CARRIERS, AMERICAN CARRIERS.
THE FOCUS SHOULD BE ON ANY OF THESE TRANSACTIONS.
OR COMPETITIVENESS. WE BELIEVE THAT THEY WILL. BUT ARE YOU STILL OPEN-MINDED
ABOUT ANY OF THESE? YOU HAVE THEM COMING UP WITH
SAS. ARE YOU OPEN-MINDED ABOUT
PURSUING SOME OF THE OTHER OPTIONS?
ARE YOU RUNNING THE NUMBERS ON SOME OF THESE? >> WE RUN THE NUMBERS. WE HAD AN INVESTMENT TWICE. WE LOOKED AT IT A THIRD TIME. IT IS A DIFFICULT MARKET WHEN
YOU GO TO TWO AIRPORTS IN MILAN. A LOT OF FOREIGN COMPETITION IN
MILAN. IT WAS A BUSINESS CASE TO BE
HAD, I THINK WE WOULD BE PURSUING IT A LOT. FOR OUR FRIENDS AND
COMPETITORS, THEY HAVE DIFFERENT PRESENCE.
I ASSUME THAT IS VERY DIFFERENT. >> SEEMS LIKE THAT IS STILL IN
KNOW AT THIS POINT. >> IT WOULD BE A HARD THING TO
GET TO. >> WE DID PURSUE SAS.
IT IS EXACTLY WHAT WE WERE EXPECTING.
OUR PARTNERS WERE INVESTING AND CO-INVESTING WITH US.
WE DON'T WANT TO TAKE ON TOO MANY THINGS AT THE SAME TIME. THERE ARE GOING TO BE OTHER
OPPORTUNITIES IN EUROPE. WE WILL GET THEM HOPEFULLY
COMPLETED AND THEN WE'LL KEEP AN EYE OUT ON ANY OTHER
INTERESTING OPPORTUNITIES. IT WAS A BIG DECISION THAT WE
WERE WAITING FOR. WE WOULD LIKE TO KNOW WHAT IS
THE TRANSITION. GOING TO LOOK LIKE?
WE'LL BOTH AIRPORTS REMAIN OPEN? THAT IS VERY IMPORTANT FOR ANY
PARTICULAR AIRLINE. >> ALWAYS GOOD TO CATCH UP.
ABSENTLY FANTASTIC. THAT WAS THE CEO OF AIR FRANCE
ALM. >> GUY JOHNSON THERE WITH US. HE IS A FAN OF IT BUT TO WHAT
EXTENT IS AFTER LOOKING AT THE ITEM? GUY ALSO SPOKE TO THE DIRECTOR
WILLIE WALSH WHO WEIGHED IN ON THE STATE OF CONSUMER.
TAKE A LISTEN. WEST OUT WE'VE PLATEAUED IN
TERMS OF PROFITABILITY. WE ARE STILL IN THE RECOVERY
PHASE FROM A FINANCIAL POINT OF VIEW.
THIS IS GOOD OPPORTUNITY FOR THE INDUSTRY MOVE FORWARD.
WE CLEARLY HAVE SOME CHALLENGES. A FEW COSTS. WE ARE LOOKING AT 31% TO THE
COST BASE. WE CONTINUE TO SEE SOME ISSUES
THERE BUT I THINK WE ARE GOING IN THE RIGHT DIRECTION. OUR INDUSTRY IS NOT ONE THAT IS
HIGHLY PROFITABLE IN TERMS OF MARGINS. THE BEST WAS A 5% NET MARGIN IN
2015 AND 2017. THIS YEAR WE ARE LOOKING AT
3.1%. I THINK THERE'S FURTHER ROOM
FOR GROWTH AND MARGIN. >> WHAT ABOUT FURTHER ROOM FOR
GROWTH IN DEMAND? >> I THINK IT REMAINS ROBUST.
YOU WILL HEAR, IS FROM CERTAIN CEOS ABOUT SOFTENING DEMAND.
PARTICULARLY IN LEISURE MARKETS. I THINK DEMAND IS HIGHER THAN
WE WOULD'VE EXPECTED TO BE. AND THE OUTLOOK IN TERMS OF
CERTAIN MARKETS WHICH ARE STILL IN RECOVERY.
SO INTERNATIONAL TRAVEL INFORMATION IS STILL IN
RECOVERY COMPARED TO WHERE WE WERE IN 2019.
I THINK THERE IS STILL A SCOPE FOR THAT TO GROW. THERE WAS LOWER THAN WE HAD
EXPECTED PRINCIPALLY BECAUSE OF INTERNATIONAL TRAVEL TO AND
FROM CHINA. I THINK THAT IS A TIMING ISSUE.
I THINK THE MARKET WILL CONTINUE TO RECOVER AND GET
BACK TOWARD WHEN 19. REQUEST THAT WAS MARCUS THERE.
GUY JOHNSON SPEAKING TO THE INDUSTRY MEETING IN JULY.
FROM AIRLINES TO THE DRUGMAKERS RIGHT NOW.
TAKING A BACON IN THE SESSION RIGHT NOW.
A FULL 10% ON THE NEWS THAT A DELAWARE COURT HAS ORDERED THIS
COMPANY AND OTHERS MUST FACE TRIAL OVER ALLEGATIONS THAT
IT'S HEARTBURN DRUG, ZANTAC CAUSES CANCER.
THOSE ARE ALLEGATIONS. THIS COULD OPEN UP GSK TO
70,000 CASES AND POTENTIALLY UP TO $3 BILLION IN TERMS OF COSTS
AROUND LITIGATION. THE GSK IS CURRENTLY GOT A FULL
10%. >> WE HAVE THE LATEST SPANISH
MANUFACTURING NUMBERS. THE PMI BEAT ON THE EXPECTATION
IS 52.6%. ANALYSTS EXPECTED 54. THAT IS THE REASON THAT WE HAVE
HERE. THERE IS NO MOVEMENT IN TERMS
OF SPANISH SHIELDS UP THE BACK OF THIS. AN INTERESTING READ ON THE
ECONOMY. LOOK AT THE ITALIAN FACTORY PMI.
LONDON TIME FOR ME AS WELL. WE CONTINUE TO SEE LEASED ON
THE PERIPHERY THAT IT IS BUILDING UP PERFORMANCE.
LET'S GET SOME LIVE SHOTS HERE AT A MEXICO CITY. CLAUDIA SCHENDEL MS. -- CLAUDIA
SHEN BY MS. INHERITING A LEGACY OF PHYSICAL DEATH, VIOLENCE AS
WELL AND IT FEEDS INTO THIS REGION AND ALSO THE GLOBAL OIL
STORY AS WELL BUT YOU CAN ALREADY SEE THEY ARE CELEBRATED
THE VICTORY QUIT AGGRESSIVELY WHETHER OR NOT IS ACTUALLY
SHOWING UP IN THE CURRENCY IS A DIFFERENT STORY.
YOU DID SEE THE MEXICAN PESO INITIALLY STRENGTHEN ON THE
LANDSLIDE VICTORY. THEY AGREE TO OPENING PRAYER.
WHAT THAT RELATIONSHIP WITH THE UNITED STATES LOOKS LIKE UNDER
A TRUMP OR BIDEN PRESIDENCY IS YET TO BE SEEN. CHRIS WIEBE AND HIS PIERCING
INFLATION FOR SO LONG IN GENERAL-PURPOSE COMPUTING.
NOW THAT WE FINALLY -- WE FINALLY DETERMINED TO CELEBRATE
-- THERE IS AN ENORMOUS AMOUNT OF CAPTURE LOST THAT WE CAN NOW
BEGIN. A GREAT DEAL OF CAPTURED, RETAINED WASTE THAT WE CAN NOW
RELIEVE OUT OF THE SYSTEM AND THAT WILL TRANSLATE INTO
SAVINGS. >> NVIDIA'S CEO SPEAKING IN
TAIWAN TALKING ABOUT CAPITATION INFLATION, THE UPGRADE CYCLE AT
THE LOOKAHEAD THE NEW HARDWARE AND SOFTWARE. LET'S BRING IN A BROADER LOOK
IN TERMS OF THE MARKETS. HOW ARE YOU THINKING ABOUT THIS
UPGRADE CYCLE FROM COMPANIES LIKE NVIDIA?
HOW DO YOU DEPLOY CAPITAL AROUND THAT?
HOW POTENTIALLY SIGNIFICANT IS THE SITUATION? >> I THINK IT IS VERY
SIGNIFICANT. I THINK IT IS ABOUT TRYING TO
FIND THE COMPANIES. PERHAPS IT IS FINDING THE HAND
THAT WILL SELL TO NVIDIA OR THE OTHER KEY COMPONENTS WITHIN
THAT RALLY CHAIN. THERE ARE SOME POINT
INTERESTING PLACE. COMPANIES THAT ARE
WELL-POSITIONED TO HELP SUPPORT AND DRIVE THAT.
IN THE EXTRACTOR THAT FOR -- THEIR FAIR SHARE OF VALUE FROM
THAT AS WELL. REQUEST A VALUATION GAP OR
VALUATION STORY AROUND SOME OF THOSE EUROPEAN NAMES, DO THEY
MAKE THEM MORE APPEALING FOR SOME OF OUR U.S. COUNTERPARTS?
TO WHAT EXTENT IS THE WINDOW OPEN ON THE STORY?
BECAUSE I THINK IT IS ALL ABOUT DELIVERY AT THE END OF THE DAY.
THEY ARE NOT OUTRAGEOUS. AND IF THESE INTENT TO COME
THROUGH, THEY COULD BRING VALUE INDEED WHERE YOU ARE IN THE
EARLY STAGES AND THEN OFFERING THE POTENTIAL GROWTH
OPPORTUNITIES. IT IS NOT JUST ABOUT STARTING
MULTIPLES BUT ALSO WHAT THE END WILL BE.
QUEST OUTSIDE OF TECH YOU PREFER INTERNATIONAL EQUITIES
OVER THE U.S. IF I'M NOT MISTAKEN.
DOES THAT INCLUDE THE U.K. CUSTOMER REQUEST IT DOES
SELECTIVELY. I THINK IT IS VERY MUCH THE
CASE WHEN WE LOOK AT IT. HIS 65% THE RIGHT AMOUNT?
CAN YOU NOT FIND GREAT OPPORTUNITIES AROUND THE REST
OF THE WORLD? IF YOU LOOK AT HOW THE U.S.
EQUITIES HAVE PERFORMED, A LOT OF IT HAS COME FROM A SMALL
AMOUNT OF COMPANIES. BUT WHAT YOU ARE REALLY LOOKING
FOR IS COVERING UP THE RISK ON NVIDIA.
WHAT ABOUT THE OTHER 50%? WE COULD SEE A REALLY
ATTRACTIVE COMPANY LEVEL OPPORTUNITIES IN THE MARKETS. >> IS THE U.K. CHEAP?
OR IS IT BECAUSE OF THE FUNDAMENTALS? >> IT IS ALL ABOUT STOCK LEVEL
OPPORTUNITIES. THE CONNECTION BETWEEN MACRO
MICRO SEEMS TO BE ELUSIVE. I WOULDN'T CONNECT UKRAINE --
YOU CAN MACRO PERFORMANCE WITH U.K. STOCK PERFORMANCE. THERE ARE STILL SOME REALLY
ATTRACTIVE OPPORTUNITIES IN THE U.K.. IN IF THIS AIN'T DON'T THE
MARKETS BECAUSE YOU LIKE THE MACROECONOMIC PICTURE.
QUEST LET'S TALK ABOUT ONE OF THOSE OPPORTUNITIES.
WE ARE GOING TO EUROPEAN ELECTIONS THIS WEEKEND.
THAT IS A MAJOR TOPIC HERE. IS THERE SOMETHING FACTORING IN
YOUR PLAYBOOK? >> IT IS A QUESTION WE ARE
GETTING ASKED MORE AND MORE. DEFENSE IS A REAL IF DEBATE
ABOUT HOW YOU FACTOR THAT INTO THE FOOTPRINT. IT IS SOMETHING -- THERE IS
SOPHISTICATION TO THAT DATE. THE PROSPECTS FOR THOSE
COMPANIES LOOK RADICALLY DIFFERENT TODAY. THE OPPORTUNITIES ARE
DEFINITELY THERE. FROM A SUSTAINABILITY
PERSPECTIVE, WE DO WANT TO MAKE SURE THEY END UP IN THE HANDS
OF THE RIGHT PLACES. THERE IS A GREAT JOB OF MAKING
THAT HAPPEN. >> WE SEE THESE MASSIVE
VALUATIONS IN THE TECH SPACE. NO REAL CLARITY ON HOW THAT
TURNS AROUND AND WHEN IT RETURNS -- RETURN COMES FROM AN
INVESTOR STANDPOINT. THERE IS ACTIVE MANUFACTURING
RAMP-UP AND THEN YOU'RE NOT SEEING THEM TRADE AT THE SAME
VALUATION AS TECH COMPANIES. >> I THINK THIS DEGREE ABOUT
HOW SUSTAINED THAT IS GOING TO BE -- WE ARE JUST TRYING TO SEE
DEMAND COMING THROUGH. THERE ARE FISCAL REALITIES.
IF YOU SPEAK TO ANOTHER HEARING. THAT IS SORT OF A 50% INCREASE. IF WE WERE SPEAKING TO JP
MORGAN BANK EARLIER, THERE WAS A PRETTY DESTRUCTIVE PICTURE
PAINTED OF THIS GLOBAL ECONOMY. GROTHE STARTED TO PICK UP.
THE CUT IN THE SNB IS THERE. THEN MAYBE THERE IS SOME
DIVERGENCE THERE. >> I THINK IT IS A FINELY
BALANCED SITUATION. STABILITY IN EUROPEAN CONTACT
IS GOOD. I THINK YOU STARTLED TO THE
RISK IN THE U.S.. YOU SEEK DECELERATION COMING
THROUGH IN TERMS OF INDUSTRY BECAUSE.
QUICK STAGFLATION IN THE U.S. IS A CONCERN.
BECAUSE I THINK THAT IS THE BIGGEST RISK FOR MARKET
PARTICIPANTS FOR SURE. DISCOUNT RATES COMING DOWN,
INFLATION LARGELY OUT OF CONTROL.
I THINK THAT COCKTAIL IS PRETTY ATTRACTIVE ACROSS A LOT OF
INTERNATIONAL MARKETS. BUT THEN IF WE SEE THAT SORT OF STAGFLATION DEVELOP IN THE U.S.,
OF COURSE, THE HEALTH OF SO MANY DEPENDS ON THE OUTLOOK FOR
CHINA. QUEST 50% OF REVENUES PER GROUP.
I THINK IT IS IMPORTANT FOR SENTIMENT AND FOR INVESTORS
LOOKING TO PUT CAPITAL TO WORK OUTSIDE OF THE UNITED STATES.
SUCH A BIG PART OF THAT MARKET. I WOULD WANT TO GET OVERLY
EXCITED ABOUT THE DOMESTIC PICTURE IN CHINA.
WE CERTAINLY SEE THE -- SEEN THE ECONOMY BOTTOMING.
WE SEE MORE STANDARD POLICY ACTIONS.
AGGRESSIVE ACTION TOWARD THEIR OWN COMPANIES.
AND I GUESS YOUR POLITICAL ISSUES AROUND TAIWAN ARE BEING
PUSHED TO THE LEFT. A NUMBER OF THOSE BIG NEGATIVES
NOT AS SIGNIFICANT AS THEY HAD BEEN.
IT IS THE STABILIZATION WITH THE OTHER PENDING --
UNDERPINNED INVESTMENT INSIDE THE U.S.. IS THIS PRESIDENT? IRRELEVANT?
QUEST IT IS ALL ABOUT THE DIRECTION OF TRAVEL.
WE HAVE SEEN CUTS IN SWEDEN, CUTS IN SWITZERLAND.
I THINK IT IS ABOUT THAT DYNAMIC. THERE COULD BE SOME CURRENCY
WEAKENING. AGAINST THIS BACKDROP OF A
STABLE ECONOMIC OUTLOOK. I THINK THERE WILL BE A GOOD
COCKTAIL FOR COMPANIES. IS THAT PRESTON?
PROBABLY NOT AS DEVELOPED OVER THE SECOND YEAR.
QUEST THERE IS CONCERN ABOUT WHETHER THIS IS A CONSECUTIVE
CUP STORY AND WHETHER WE HAVE A CUT IN JUNE OR WHETHER WE SEE
ONE TILL SEPTEMBER. WHAT ABOUT WHAT THAT MEANS FOR
THE EQUITY PICTURE WHEN YOU HAVE NO TAIL WIND UP WITH THREE
MONTHS IN BETWEEN? BECAUSE IT DEPENDS ON YOUR TIME
HORIZON. >> WHAT ABOUT YOUR TIME HORIZON?
WHAT DO YOU THINK? >> I THINK YOU HAD TO SIT BACK
AND BE RELATIVELY RELAXED. WE DON'T KNOW EXACTLY HOW MANY.
INCREASES ARE SEVERELY UNLIKELY FROM WHERE WE ARE.
BUT I THINK THAT IS A PRETTY GOOD SET UP FROM WHERE WE ARE.
THE DIRECTION OF THE TREND IS SUPPORTIVE. >> YOU TOUCHED ON THE TECH
SECTOR. YOU TOUCHED A BIT ON YOUR
REGIONAL PREFERENCE. IN TERMS OF YOUR SECTOR
PREFERENCE, YOUR CHECK, WHERE DOES THAT LIE?
WHAT YOU IMPORTING? I SWEAR ALWAYS SORT OF
BOTTOM-UP. WE STILL MAINTAIN SOMETHING IN
OUR PORTFOLIO REALLY DRIVEN BY WHERE WE SEE THE BEST COMPANY
OPPORTUNITIES COME TO 23 WITH BIG EARTHQUAKES, CONSUMER
DISCRETIONARY. OTHER PARTS IN THAT SPACE
INTACT. THAT WAS DRIVEN BY STOCK LEVEL
OPPORTUNITIES THAT WE SAW THERE RATHER THAN A TOP-DOWN CALL.
THAT IS THE PLACE TO BE OVER THE LAST 18 MONTHS.
WE CONTINUE TO SEE ALL OF THIS AS WE BEEN GOING.
A LITTLE BIT OF CONFIDENCE. ALL OF THIS COULD BE A DECENT
SPOT TO BE. >> THE ARE MARKET EQUITIES.
THE REVIEW ON HOW TO MAKE IN THIS MARKET.
A LITTLE BIT OF CAUTION I SENSE FROM YOU IN TERMS OF THE GLOBAL
ECONOMY BUT A FEW OF THOSE ELEMENTS IN PLACE TO POSSIBLY
KEEP THINGS GOING. MAYBE SOME CAUTION AROUND THE
U.S.. COMING UP, AS 370 MILLION PEOPLE PREPARED TO VOTE IN THIS
WEEK'S EUROPEAN ELECTIONS, WE ARE GOING TO GET A PREVIEW OF
WHAT IS AT STAKE. STAY WITH US. THIS IS BLOOMBERG. ♪ >> I THINK LOTS IS AT STAKE.
BECAUSE THIS IS THE MOST IMPORTANT ELECTION. >> WHAT IS AT STAKE IS THE
FUTURE OF EUROPE. MIGRATION COMING TO GREENDALE.
I THINK UKRAINE WILL BE THE DEFINING ISSUE. >> WHAT WE ARE FACING RIGHT NOW
IF THERE IS A SEARCH OF THE FAR RIGHT, THE WHOLE PROJECT IS
GOING TO BE IN QUESTION. >> KEY FIGURES FROM THE EU'S
BIGGEST POLITICAL GROUPS THERE UNDERLYING WHAT'S AT STAKE IN
THIS WEEK'S ELECTIONS TO THE EUROPEAN PARLIAMENT.
FAR RIGHT PARTIES LOOKING TO MAKE AGAINST THESE ELECTIONS
WHEN THEY GO TO VOTE ON THURSDAY.
370 MILLION PEOPLE GO THROUGH THE POST ACROSS 27 COUNTRIES.
WE HAVE OUR BLOOMBERG RADIO ANCHOR.
GOOD TO HAVE YOU WITH US, STEPHEN.
QUEST THEY ARE LOOKING AT THAT MASSIVE RALLY FOR VICTOR IN
HUNGARY. ALREADY TRAILING MARINE LE PEN
IN THE POLLS. TALK TO US ABOUT HOW BIG A
FORCE THE RIGHT WING IS GOING TO BE IN THESE ELECTIONS.
WHAT IS BEAST OF THE NATURE OF THESE ELECTIONS.
ON THE ONE HAND PEOPLE ARE VOTING FOR THE 720 MEMBERS OF
THE EUROPEAN PARLIAMENT. PEOPLE WHO WILL HELP SHAPE THE
POLICY DIRECTION OF THE EUROPEAN UNION OVER THE NEXT
FIVE YEARS. ON THE OTHER HAND, PEOPLE ARE
VOTING IN 27 DIFFERENT COUNTRIES SO THERE ALSO DEALING
WITH COMPETING ISSUES ON A NATIONAL LEVEL.
WHAT WE'RE LOOKING AT WHEN WE TRY TO EXAMINE WHAT WE TAKE
AWAY FROM THIS ELECTION IS BOTH WHAT PEOPLE WANT OUT OF THE
EUROPEAN UNION BUT ALSO IN A LOT OF CASES WHAT PEOPLE WANT
IN THEIR OWN COUNTRIES. THESE ELECTIONS ARE OFTEN
REFERRED TO AS SECOND ORDER ELECTIONS BY POLITICAL
SCIENTISTS. PEOPLE PUT ON THESE ISSUES IN A
WAY THAT THEY WOULDN'T VOTE IN A NATIONAL ELECTION.
IN FRANCE, A BIG FOCUS ON HOW EMMANUEL MACRON'S PARTY SEES
THIS AS A MIDTERM ELECTION FOR HIM. BUT THAT ALSO FEEDS INTO
PERFORMANCE OF THE FAR-RIGHT GROUPS.
ON THE EUROPEAN LEVEL, TWO DISTINCT GROUPS. ALSO WITH THE MEANS FOR THE
POLICY DIRECTION GOING FORWARD. QUICK SPEAKING OF THE POLICY
DIRECTION HERE, THERE IS THIS DEFENSE RAMP UP BE HAS ONLY
GUEST HER SHOW THIS MORNING SAY THAT DEFENSE RAMP-UP IS IN SOME
OF THE MARKERS CAN REALLY WRAP THEIR MINDS AROUND BECAUSE THEY
DON'T THINK THERE IS MONTH -- THERE IS ENOUGH BUDGET FOR THEM.
DOES THAT AFFECT YOUR PAEAN STORY?
QUEST IT IS A QUESTION BUT ALSO HOW THE YOU WILL USE THEIR
POLICY INSTRUMENTS. IMPORTANT TO REMEMBER THAT
TRYING TO GET 27 COUNTRIES TO AGREE ON ANYTHING IS VERY
DIFFICULT. AND ALTHOUGH THE EUROPEAN
PARLIAMENT HAS A CO-DECISION POWER FOR MIKULA, ULTIMATELY A
LOT OF THE DECISION-MAKING LIES OF THE NATIONAL GOVERNMENT.
WHEN IT COMES TO THIS IS DEFENSE, COUNTRIES ARE VERY
UNWILLING TO TRY TO SEE THAT YOU EUROPEAN LEVEL.
THE ISSUES -- THEY ARE PROMISING MORE ACTION TOWARDS
THE DEFENSE INDUSTRY, BE IT SUPPORT IN PRODUCTION AND
AVAILABILITY, THE ABILITY TO RAMP UP PRODUCTION AT EUROPEAN
LEVEL. IT REQUIRES A CERTAIN AMOUNT OF
DEFENSE SPENDING. THERE HAS ALREADY BEEN 1.5
MILLION EARMARKS TO WORK TOWARD THAT NEED ACCORDING TO THE DEBT
ON 100 BILLION IS WHAT HE WANTS EUROPEAN COUNTRIES TO SPEND.
THE BUDGET DOESN'T HAPPEN AT THE MOMENT.
YOU HAVE TO REALLOCATE WHAT IS IN THE BUDGET.
I WILL HAVE AN APP IN AND THE QUESTION OF HOW MUCH SCALE
EUROPE AND APPLY TO THIS GIVEN THERE IS AN AWFUL LOT OF MONEY
AND EVERY COUNTRY WANTS A PIECE OF WHAT THE EUROPEAN -- WHERE
THE REVIEW BUDGET GOES. YOU HAVE TO MAKE DIFFERENT
CHOICES ABOUT WHERE TO TAKE THEM FROM. >> WHERE THEY FIGHTING THAT
FROM? WHAT IS THE STICKING POINT?
QUEST THERE IS MONEY BUT IS IT A QUESTION OF HAVING TO MAKE
DECISIONS -- WE THOUGHT THERE WOULD BE A LARGE AMOUNT OF
SPENDING. THE HEALTH BUDGET WAS DECREASED
-- INCREASED DRAMATICALLY. IF YOU WANT TO TAKE MONEY AWAY
FROM PUBLIC HEALTH PROGRAMS, WHERE YOU PUT THEM TO?
HEALTH ISN'T UNDER NORMAL TIMES A HUGE EXPENDITURE ON THE LEVEL
OF EUROPEAN UNION. THIS IS PART OF THE RECOVERY
FUND. THAT MONEY HAS NOT BEEN SPENT.
WHEN YOU'RE LOOKING FOR MORE JOINT BORROWING. IT IS A QUESTION OF THE
APPROVALS WILL BE LOOKING INSIDE AND SOME MORE MONEY
SPENT ASIDE. OR COULD BE OVERLY TARGETED TO
CERTAIN AREAS. TO THE INQUIRY TO FUNDS?
HOW DO YOU DO IT? THEN HE FEEDS INTO THE NATIONAL
PLAYBOOKS AS WELL. CERTAIN COUNTRIES WANT THAT
MONEY TO BE ABLE TO FUND COUNTRIES THAT ARE STRONGER IN
THEIR OWN AREA. QUEST HOW DOES THAT BRING
CHANGE IF WE GET TO THIS SHIFT TO THE RIGHT? THERE ARE EXAMPLES IN ITALY
THAT HAVE THEM MODERATING REVIEWS AND POLICIES. THEN YOU HAVE THE LIGHTS OF THE
NEW DUTCH LEADER. A BIT OF MODERATION THERE. THEN VICTOR OR BEN. WE CAN SEE HOW ALL THESE
LAWMAKERS ARE ABLE AND ARE WILLING TO ADAPT AND TO WHAT
EXTENT THAT COULD BE A STICKING BLOCK AS WELL.
A STUMBLING BLOCK MAYBE. QUESTION SHOWS YOU HOW EUROPEAN
POLITICS WORK. >> YOU DID THAT.
BUT THIS IS WHAT HAPPENS. YOU SET THE SHIP ON COURSE AND
THEN YOU DECIDE TO MOVE THE FIRST BIG BOAT IS GOING TO BE. URSULA VON DER LEYEN IS SEEKING
TO GET -- WHO DOES SHE NEED TO GET HIS OR HER COALITION TO GET
ELECTED? SHE ONLY HAD A MAJORITY OF NINE
AND THAT'S DESPITE THE FACT THAT IF YOU PUT TOGETHER
PARTIES AND HER COALITION, SHE HAD A MUCH LARGER NUMBER IN
SECRET BALLOTS BUT NOT EVERYONE IN THOSE NATIONAL GROUPINGS
WILL CIVILLY LOOK FOR THE CANDIDATE THEY ARE SUPPOSED TO.
THAT IS PART OF THE HORSE TRAIL THAT WILL GO ON BEHIND THE
SCENES. IT IS REALLY CONTROVERSIAL TO
SEE IF URSULA AND HER EP PARTY WILL DO BUSINESS WITH EUROPEAN
CONSERVATIVES FOR ONE OF THOSE HARD RIGHT GROUPS AND THE
SOCIALISTS WERE PART OF THE GOVERNING COALITION ARE NOT
PART OF THAT. CENTRIST PARTY ARE NOT TERRIBLY
HAPPY ABOUT IT EITHER. THIS IS ALL STARTS AFTER THESE
ELECTIONS. WE KNOW THE MAKEUP OF THE
POTOMAC, WHERE THE DIRECTION GOES, WHAT POLITICAL DIRECTION
THESE POLICYMAKERS WANT TO SET THE E IN THE DIRECTION OF AND
WHAT THAT MEANS IN TERMS OF WHO THEY DO BUSINESS WITH, WHO THEY
TRY TO DO WITH AND WAS APPOINTED TRY TO WIN.
HE CONCESSIONS. THERE IS A BIG DEBATE OVER
VICTOR AURBURN'S PARTY. THERE COULD BE SOME RESHUFFLING
IN THOSE GROUPS. PART OF THE SHIFTING GROUPS. >> THERE IS SPECULATION ABOUT
MARIO DRAGHI WHICH BRINGS ME ONTO THE YOU SEE THE.
WE ARE ALL EXPECTING A RATE CUT ON THURSDAY TO COINCIDE WITH
ALL OF THIS. THE BANK OF ENGLAND IT OFF THE
TABLE. IT IS NOT FACTORED INTO SO MANY
OF THE DECISIONS HERE. PARTLY BECAUSE OF THE FACT THAT
EUROPEAN CENTRAL BANK IS A POLICYMAKER FOR THE MEMBER
STATES THAT USE THE EURO. THE QUESTION THAT IS MORE
BROADLY AROUND THE VISION OF THE EUROPEAN ECONOMY -- NOBODY
BETWEEN THURSDAY WHEN THAT RICK HAS HAPPENED -- NONE WILL SEE
THEIR MORTGAGE COSTS COME DOWN. THIS IS SOMETHING THAT HAS A
LONGER-TERM IMPACT. IT DOES POINT TO AN IMPROVEMENT
IN THE EUROPEAN ECONOMY. BUT HONESTLY THIS IS A STORY
FOR DECADES NOW. WE WERE TALKING ABOUT
RELATIVELY TEPID GROWTH AND FACING THE NEXT PARLIAMENT, THE
NEXT COMMISSION. WHERE DO YOU LEVERAGE THE
EUROPEAN MONEY? WERE YOU PUT IT? YOU TRY TO COMPETE WITH THE
MASSES? THE SUBSIDIES, THE UNITED
STATES OR OF COURSE FROM CHINA AS WELL.
IT MAKES FOR A VERY DIFFICULT POLITICAL LANDSCAPE BUT THAT
THEME IN UKRAINE IS KEY TO ALL OF THAT.
EVERY POLICYMAKER HAS TALKED ABOUT THE KEY NATURE OF THAT.
BUT FROM A BIG PICTURE QUESTION OF THE FUTURE OF EUROPE AND
ALSO THAT THE KEY ISSUE OF WHERE THE INDUSTRY GOES. QUEST THAT WAS SEEING CAROL
ABOUT WHAT TO THINK ABOUT. THANK YOU VERY MUCH INDEED.
STAYING ON THE STORY OF EUROPE, WE HAVE SOME DATA COMING
THROUGH ITALY IN TERMS OF MANUFACTURING PMI.
SLIGHTLY SOFTER THAN THE APRIL NUMBER. 4.56 -- 45.6 VERSUS 47.3.
IT IS A SOFTENING IN TERMS OF MANUFACTURING.
50 IS THE LINE BETWEEN EXPANSION AND CONTRACTION.
FIRMLY A CONTRACTIONARY TERRITORY. LARGELY CHANGE CURRENTLY AT 108
ON THE CURRENCY. LET'S GET BACK TO THE MARKETS
TODAY. GUY JOHNSON IN DUBAI AT THE
CONFERENCE. QUICK SOME REALLY INTERESTING
LIES YOU BEEN TEASING OUT OF YOUR GUESTS. WHAT STOOD OUT TO YOU IN TERMS
OF WHERE THIS INDUSTRY IS? AS A GRAPPLES WITH SOME OF THE
SUPPLY CHAIN ISSUES? >> IT IS NOT DEMAND CONSTRAINT.
THAT IS THE TAKEAWAY. I THINK THAT IS COMING THROUGH
LOUD AND CLEAR FROM THE DELEGATES HERE.
IT IS INTERESTING BECAUSE THERE WAS A SCARE A FEW DAYS BACK TOM
WHEN AMERICAN CAME OUT AND CHANGED ITS GUIDE SIGNIFICANT
LAY. THAT SEEMS TO BE AN ISOLATED
INCIDENT. THERE SEEMS TO BE OTHERS OF THE
IDEA THAT THE CONSUMER IS STILL RELATIVELY STRONG.
WE SAW THE DATA COMING OUT OF THE STATES FRIDAY.
THAT DOESN'T SEEM TO BE SHOWING UP IN THE AVIATION SECTOR RIGHT
NOW. THE ISSUE IS AROUND WHAT IS HAPPENING WITH THE SUPPLY SIDE. WE JUST HEARD FROM BEN SMITH
TALKING ABOUT THE FACT THAT HE IS STRUGGLING GET PARTY NEEDS
TO FIX AIRPLANES TO MAKE SURE THEY CAN UNIFY.
IT IS A MANUFACTURING STORY. IT IS THAT STORY THAT IS LOUD
AND CLEAR RIGHT NOW. PRETTY MUCH EVERYBODY WE ARE
TALKING TO. THE QUESTION IS HOW MUCH LONGER
DOES THIS CONTINUE FOR? THAT IS REALLY PRESSING ISSUE. HOW CYCLICAL ARE WE SEEING THIS
INDUSTRY GOING FORWARD? IS IT THE RIGHT MOMENT?
PARTICULARLY AT A TIME WHEN WE ARE SEEING THAT FINANCIAL
MARKETS GET INTO A HIGHER GEAR HERE IN THIS REGION.
IT IS A QUESTION POSED TO TIM CLARK.
I HAVE TO SAY TO TIM CLARK OVER AT EMIRATES, THINKING ABOUT
MAYBE A MORE CAUTIOUS STANCE. MANY ARE SPECULATED WHETHER ABU
DHABI COULD BE THE FIRST OFF THE BLOCK IN TERMS OF THE MAJOR
CARRIERS HERE TO GO TO MARKET. WE DID IN THE LAST HOUR OF THIS
PROGRAM, TALKING ABOUT THIS VERY ISSUE.
THIS IS WHAT HE HAD TO SAY. >> NEVER AN END GAME.
JUST ANOTHER SOURCE FOR US. VERY CLEAR. YOU RUN DISCOVERY LIKE YOU'RE
RUNNING A COMPANY THAT IS A PUBLIC COMPANY. YOU WERE VERY HARD TO MAKE IT
HAPPEN. >> YOUR DAY IS NOT OVER.
STILL A BUSY DAY AHEAD. WELCOME -- LOCUS FOR YOUR
LINEUP. >> HE SAYS HE HAS A NEWS.
HE ALSO HAS AN INTERESTING IDEAS ABOUT HOW TO THROW.
WE WILL SPEAK TO THE CL OF PEGASUS OUT OF TURKEY.
WHAT COMES DEMAND ARE THEY GOING TO SEE OUT OF THE SUMMER
AS WELL? WE WILL BE CATCHING UP WITH
SCOTT KIRBY. THE CEO OF UNITED AIRLINES.
CATCHING UP WITH HIM A LITTLE LATER ON IN THE DAY.
BACK TO YOU. REQUEST THAT GUY JOHNSON ON THE
GROUND. HE HAS PLEDGED MORE COMING UP
IN THE NEXT COUPLE OF HOURS. THAT'S THE ONLY THING WE ARE
WATCHING ON OUR RADAR. TOM AND ANNA WILL BE MANNING
THE STUDIO. THERE IS PLENTY OF COVERAGE IN
THE DAYS AHEAD. YOU DO NOT WANT TO MISS IT.
JUST SOME OF THE TASTE OF THE LAND THAT WE'RE GOING TO GET ON
THIS SHOW. DON'T GO ANYWHERE. THE PULSE IS UP NEXT.
