♪ >> NEWSMAKERS AND MARKET
MOVERS. THIS IS "THE PULSE WITH FRANCINE LACQUA." FRANCINE:
GOOD MORNING GET -- ANNA: GOOD MORNING AND WELCOME TO
"THE PULSE." I AM ANNA EDWARDS IN LONDON.
THE GLOBAL SELLOFF CONTINUES AFTER PRIVATE HIRING DATA IN
THE UNITED STATES COMES IN MORE THAN TWICE ESTIMATES, DRIVING
UP TREASURY YIELDS. JANET YELLEN VOICE HIS CONCERNS
OVER CHINA'S METALS CURBS BUT SAYS THE U.S.
NEEDS TO DIVERSIFY, NOT DECOUPLE, FROM CHINA.
ALIBABA SURGES AFTER A REPORT THAT CHINA WILL ANNOUNCE A $1.1
BILLION FINE ON ITS ANT FINTECH AFFILIATE, DRAWING A LINE UNDER
THE PROBE. WELCOME TO "THE PULSE."
IT IS FRIDAY MORNING. WE CAN SEE THE STOXX PICTURE
FOR EUROPE IS A NEGATIVE ONE. THIS FOLLOWS REAL WEAKNESS
YESTERDAY. WE WERE DOWN ON THE STOXX 50 BY
2.9% YESTERDAY. THE PAIN REALLY FALLING ON
EUROPE YESTERDAY, AS THE U.S. RECOVERED A BIT YESTERDAY.
WE THOUGHT THE EUROPEAN SESSION MIGHT BE BRIGHTER, IT IS NOT.
WE ARE DOWN ANOTHER 0.3%. IN TERMS OF SECTORS, MOST
SECTORS AND NEGATIVE TERRITORY. IT IS SOME OF THE DEFENSIVE'S
THAT ARE LOWER, LIKE UTILITIES. AND SOME OF THE MORE RELATED TO
THE GLOBAL ECONOMY LIKE BASIC RESOURCES AND CHEMICALS GOING
HIGHER, ALONG WITH TRAVEL AND LEISURE AND BANKS.
INTERESTING SECTOR BREAKDOWN. U.S. FUTURES POINTING LOWER.
TWO-YEAR YIELD IS AT 4.97%. YOU CAN SEE WE'VE GOT SOME
BUYING OF THAT TWO-YEAR GOING ON AND THAT YIELDS GOING DOWN
JUST A TOUCH, 1.0872 ON THE EURO-DOLLAR.
WE WILL LINGER ON THE MAP TO SHOW YOU WHAT IS HAPPENING ON
ACROSS THE EUROPEAN EQUITY MARKETS.
WE'VE GOT A GLOBAL MAP, WHICH IS VERY SPECIAL.
THE EUROPEAN PICTURE, YOU SEE THE ASIAN PICTURE, THAT'S THE
HANDOVER WE ARE DEALING WITH IN EUROPE.
THE ASIAN PICTURE, WE ARE STILL QUITE BACKWARD LOOKING, DOWN ON
MSCI ASIA-PACIFIC. THAT FLOWS INTO THE EUROPEAN
SESSION AND WE ARE NEGATIVE FOR MUCH OF EUROPE.
JOINING US NOW, KRISTINE AQUINO HERE TO TAKE US THROUGH SOME OF
THE MARKET MOVING FOR US THIS MORNING.
WHAT DO YOU MAKE OF THIS MARKET SESSION? THE PROFILE OF THE U.S.
SESSION YESTERDAY WAS A BIG SELLOFF ON THE ADP NUMBER,
RIGHTLY PERHAPS, BECAUSE OF CONCERNS ABOUT WHAT THAT DOES
TO YIELDS, RATES, BUT WE MANAGED TO RECOVER.
WE THOUGHT PERHAPS EUROPE WOULD GET A BIT OF A BOUNCE.
THAT'S NOT COME TO PASS. KRISTINE:
NO SUCH THING AS A TURNAROUND FRIDAY.
I THINK THAT SPEAKS TO HOW FRAGILE MARKET SENTIMENT IS AT
THE MOMENT. WHAT WE SAW YESTERDAY WAS
INCREDIBLE, ESPECIALLY IN TERMS OF HOW YIELDS GOT TO HIGHS WE
HAVE NOT SEEN SINCE 2008 OR EVEN EARLIER.
I THINK THIS SPEAKS TO THE MARKET BEING VERY, VERY JITTERY
ABOUT WHERE THE FEDERAL RESERVE AND ALL OF THESE INTEREST RATES
ARE GOING TO GO NEXT. IT SEEMS ALL PATHS LEAD TO EVER
HIGHER INTEREST RATES FROM HERE. THE ADP FIGURE DEFINITELY
CONTRIBUTE INTO THAT. WE HAVE NOT SEEN A TREND WHERE
NONFARM PAYROLLS ARE DIVERGING FROM WHAT WE SEE IN THE ADP
FIGURE SO FAR. THE EXPECTATION IS WHAT WE WILL
SEE FROM THE OFFICIAL STATISTICS IS MORE CONFIRMATION
OF A ROBUST U.S. LABOR MARKET. ANNA:
LOOKING FOR 230,000 OR SO IN THE NONFARM PAYROLLS REPORT.
THERE IS NOT ALWAYS THAT ROBUST LINK BETWEEN ADP AND NONFARM.
I GUESS WE BEAR THAT IN MIND. AS PAUL DOBSON WAS POINTING OUT
EARLIER, THE WHISPER NUMBER HAS BEEN RISING ON NONFARM'S POST
ADP. KRISTINE: ABSOLUTELY. BECAUSE I THINK INVESTORS HAVE
BEEN BURNED BEFORE IN THINKING THAT, YOU KNOW, NOT NECESSARILY
-- SO PERHAPS THERE COULD BE OPPORTUNITIES TO TRADE THE
DIFFERENCES. BY AND LARGE, THE DEFENSIVE --
DIRECTION OF TRAVEL REALLY POINTING TO A VERY STRONG
MARKET. DESPITE THE FACT WE HAVE BEEN
SEEING RATE HIKES FROM THE FEDERAL RESERVE FOR MORE THAN A
YEAR NOW. IN SOME WAYS, THAT IS A
POSITIVE FOR THE FED, ESPECIALLY IF WE SEE OTHER
SIGNS OF INFLATION COOLING, BECAUSE THEN YOU GET THE IDEAL
FED SCENARIO, FULL- EMPLOYMENT BUT ALSO COSTS UNDER CONTROL.
ANNA: KRISTINE AQUINO JOINING US WITH
THOUGHTS ON THE MARKETS SO FAR. WE SEE THIS NEGATIVE SENTIMENT
FOR RISK ASSETS. LET'S FOCUS ON SOME GEOPOLITICS
FOR A MOMENT. U.S. TREASURY SECRETARY JANET YELLEN
IS MEETING THE CHINESE PREMIER LI QIANG LATER TODAY AFTER
DISCUSSIONS WITH THE PBOC WHICH AN OFFICIAL DESCRIBED AS
SUBSTANTIAL. SHE SPOKE AT A ROUNDTABLE WITH
U.S. BUSINESS LEADERS OPERATING IN
CHINA, SAYING SHE WAS CONCERNED ABOUT BEIJING'S EXPORT CURBS.
HERE IS WHAT ELSE SHE HAD TO SAY. SEC. YELLEN: I'VE MADE CLEAR THAT THE UNITED
STATES DOES NOT SEEK A WHOLESALE SEPARATION OF OUR
ECONOMIES. WE SEEK TO DIVERSIFY AND NOT TO
DECOUPLE. A DECOUPLING OF THE WORLD'S TWO
LARGEST ECONOMIES WOULD BE DESTABILIZING FOR THE GLOBAL
ECONOMY, AND IT WOULD BE VIRTUALLY IMPOSSIBLE TO
UNDERTAKE. ANNA: DIVERSIFY, NOT DECOUPLE, THAT
MANTRA WE'VE HEARD FROM MANY U.S., AND PERHAPS EUROPEAN
OFFICIALS, VISITING CHINA. LUCILLE LIU JOINS US WITH
ANALYSIS. WHAT ELSE ARE WE EXPECTING FROM
THIS VISIT? >> I MEAN, SO THE MEETING WITH
THE PREMIER WE ARE EXPECTING TO HAPPEN IN THE NEXT HOUR.
JANET YELLEN HAS ALREADY MET WITH SOME OF CHINA'S ECONOMIC
TEAM. THE U.S. IS BASICALLY CAST LESS,
REESTABLISHING THOSE LINES OF COMMUNICATION SORT OF WITH OLD
FRIENDS, BUT ALSO WITH THE NEW LEADERS, ESPECIALLY AS CHINA
HAS GONE THROUGH THIS LEADERSHIP -- TWICE DECADE SORT
OF LEADERSHIP RESHUFFLE. WIEST. E HAVE SEEN MANY PEOPLE
COME IN PLACE IN THE TOP POSITIONS.
WE HAD DAVID ON, WHO SAID THIS IS ABOUT YOU WANT TO BUILD
THOSE RELATIONSHIPS BEFORE A CRISIS HAPPENS.
I THINK IT DEPENDS ON HOW MUCH YOU PUT IN SORT OF PERSONAL
RELATIONSHIPS AND TRUST, ESPECIALLY WITH HOW THE
U.S.-CHINA RELATIONSHIP HAS BEEN GOING.
OF COURSE, ON THE OTHER HAND, WE HAVE ALSO SEEN QUITE
PROBABLY CHINESE ACADEMICS SAYING YOU COULD TALK EVERYDAY,
BUT IF THE TWO SIDES ARE GOING TO TAKE ACTION THAT'S GOING TO
HURT EACH OTHER'S CORE INTERESTS, THOSE TALKS ARE JUST
GOING TO BE SYMBOLIC. ANNA: JANET YELLEN TALKING ABOUT WHAT
IT IS THAT MOTIVATES THE UNITED STATES AND WHAT IT IS THAT DOES
NOT DEBATE THE U.S. YELLEN IN THAT PRESS CONFERENCE
A LITTLE EARLIER, THOSE COMMENTS WE SAW WITH THE
BUSINESS LEADERS, VOICED SOME U.S. CONCERN OVER CHINA'S EXPORT
CONTROLS ON TWO KEY METALS. THIS VISIT COMES AFTER WE HAVE
HEARD FROM CHINA ON ITS LIMITS ON A COUPLE OF METALS.
WHAT IS THE RISK FOR CHINA IN INTRODUCING THESE NEW
RESTRICTIONS? LUCILLE: YEAH, I MEAN,. .
ABSOLUTELY WE'VE SEEN THIS IN BEFORE. IN 2010 WHEN WE HAD THAT
FISHING BOAT INCIDENT WITH JAPAN, AND BETWEEN JAPAN AND
CHINA, CHINA, OF COURSE, PUT ON THESE TEMPORARY CURBS.
THAT HAS LED TO CHINA ACCOUNTING FOR BASICALLY 90% OF
GLOBAL OUTPUT ON THE RARE EARTH AND IN A DECADE TIME GOING DOWN
TO SOMETHING LIKE 70%. IT RISKS HUGE, YOU KNOW, THERE
IS THE RISK OF BACK FIRE WITH SOMETHING LIKE THIS WHERE OTHER
COUNTRIES WHO ARE READY CURRENT STASH WHO ARE ALREADY
CONSIDERING DIVERSIFYING SUPPLY. CHAINS WOULD LOOK TO DO SO IT
SIGNALS CHINA IS WILLING TO PUT OUT THESE NEW INITIATIVES THAT
ARE GOING TO INFLICT REAL PAIN BUT MAY ALSO HAVE COLLATERAL
DAMAGE. ANNA: WE SAW BLINKEN IN CHINA, WE'VE
SEEN JANET YELLEN IN CHINA. WHAT ARE THE OTHER HIGH-LEVEL
TALKS WE ARE EXPECTING THIS YEAR? LUCILLE: YEAH, WE HAVE HAD SOME PEOPLE
FAMILIAR REPORTING THAT JOHN KERRY MAY BE COMING, MAY BE MID
THIS MONTH. WE'VE ALREADY HAD THE COMMERCE
CHIEF FROM THE CHINESE SIDE GO OVER TO WASHINGTON, AND THE
FOREIGN MINISTER HAS ALSO PLEDGED TO GO SOMETIME THIS
YEAR AFTER HIS TALKS WITH THE BLINKEN.
WE ARE SEEING THOSE HIGH-LEVEL TALKS HAPPENING AT A VERY RAPID
PACE. I THINK EYES ARE, OF COURSE, ON
THE G20, SEPTEMBER, AIPAC IN NOVEMBER TO SEE IF THE
PRESIDENTS OF THE TWO COUNTRIES WILL MEET AND MAYBE, YOU KNOW,
BUT THIS RELATIONSHIP BACK ONTO, AS THEY SAY, MORE STEADY
FOOTING. ANNA: LUCILLE LIU JOINING US WITH THE
LATEST ON THAT MEETING BETWEEN JANET YELLEN AND MANY SENIOR
CHINESE OFFICIALS. LET'S BRING BLOOMBERG'S
KRISTINE AQUINO BACK INTO THE CONVERSATION.
SOME OF THE BRIGHTER MOOD MUSIC AROUND THAT MEETING, YOU MIGHT
HAVE EXPECTED THAT WOULD BOOST RISK SENTIMENT ON ANY OTHER DAY.
GIVEN THE JOBS PICTURE FROM YESTERDAY AND THE HIGH-YIELD
STORY, THAT IS REALLY OVERRULING ANY POSITIVITY THAT
MIGHT COME FROM CONVERSATIONS TAKING PLACE BETWEEN THESE TWO
GLOBAL POWERS. KRISTINE: ABSOLUTELY.
SURE RIGHT NOW IS JUST TOO MUDDY. EVEN WITH THE U.S.-CHINA RELATIONSHIP AND HOW IT IMPACTS
MARKET SENTIMENT, IT'S BEEN A LUKEWARM AND LACKLUSTER IN
TERMS OF THAT EFFECT. WE HAD ANTONY BLINKEN VISITING
CHINA RECENTLY AS WELL. WE'VE HEARD SOME VERY
CONCILIATORY WORDS. WE HEARD THIS WHOLE
DIVERSIFICATION, DECOUPLING LINE FROM SEVERAL U.S.
OFFICIALS NOW. WHEN YOU LOOK AT, THE ACTIONS
OF BOTH COUNTRIES IT KINDA POURS A LITTLE BIT OF COLD
WATER OVER THOSE VERY WARM, CONCILIATORY -- ANNA:
, YES AND WE ARE STARTING TO SEE SOME OF THAT
DIVERSIFICATION COMING THROUGH IN SOME OF THE TRADE DATA.
WE ARE STARTING TO SEE AS A PERCENTAGE OF TRADE THEIR
RELIANCE ON EACH OTHER DECLINE, SO THAT'S INTERESTING.
THANK YOU VERY MUCH. KRISTINE AQUINO JOINING US WITH
HER THOUGHTS ON WHAT IS GOING ON ON THE MARKETS TODAY.
WE SIT HERE IN EUROPE DOWN 0.4% ON THE STOXX 600. ♪ >> I REMAIN CONCERNED ABOUT
WHETHER INFLATION WILL RETURN TO TARGET IN A SUSTAINABLE AND
TIMELY WAY. AND I THINK MORE RESTRICTIVE
MONETARY POLICY WILL BE NEEDED TO ACHIEVE THE FOMC'S GOALS OF
STABLE PRICES AND MAXIMUM EMPLOYMENT. ANNA:
THAT IS LORI LOGAN SAYING MORE RATE HIKES WILL LIKELY BE
NEEDED TO CONTAIN INFLATION. LET'S SPEAK TO MYLES BRADSHAW,
GLOBAL HEAD OF AGGREGATE STRATEGIES FOR FIXED INCOME AT
J.P. MORGAN ASSET MANAGEMENT. LET ME GET YOUR TAKE ON BOND
MARKETS AS A RESULT OF THAT ADP PRINT YESTERDAY.
IT WAS TWO TIMES WHAT HAD BEEN EXPECTED IN TERMS OF JOB
CREATION. HAS THIS SHIFT AT YEAR VIEW OF
HOW HIGH RATES GO IN THE U.S. OR IS IT STILL IN THE REALMS OF
WHAT YOU EXPECTED? MYLES: WELL, THE DATA WAS SURPRISINGLY
STRONG BUT I THINK WE. . NEED TO THINK CONTEXT ADP IS
TRADITIONALLY NOT A GOOD LEADING INDICATOR ON WHAT IS
GOING TO HAPPEN TO PAYROLL. THE PMI'S SERVICE DATA AND
GENERAL RESILIENCE OF THE ECONOMY, IT FITS THE NARRATIVE
THAT NOT JUST THE U.S., BUT THE GLOBAL ECONOMY, IS ACTUALLY
MORE RESILIENT THAN PEOPLE WOULD HAVE THOUGHT THREE TO SIX
MONTHS AGO AND THAT'S WHY YOU ARE SAYING BOND YIELDS
ADJUSTING HIGHER. FROM OUR
PERSPECTIVE, WHAT MATTERS IS WHERE WE ARE IN THE ECONOMIC
CYCLE AND THE VALUATIONS YOU GET FROM INVESTING IN BONDS.
FROM OUR PER EFFECTIVE -- PERSPECTIVE, THIS IS BECOMING
AN INTERESTING OPPORTUNITY. ANNA: WHERE DO YOU DO THAT?
MYLES: IN TERMS OF GLOBALLY, I THINK
THE U.S. IS THE MOST INTERESTING PART.
YOU HAVE RATES THAT HAVE MOVED THE MOST, A VERY INTEREST
SENSITIVE ECONOMY, AND YOU'VE GOT PLENTY OF ROOM TO CUT RATES.
I THINK THE U.K. IS BECOMING VERY INTERESTING.
U.K. BONDS ARE VERY CHEAP VERSUS BOTH OF THE U.S. AND EUROPE.
MARKETS ARE EXPECTING RATES TO GO UP TO 6.5%. I THINK THE STRUGGLE IN TERMS
OF POSITIONING IS THE TIMING OF RECESSION AND WHAT APPEARS TO
BE THE LEGS IN MONETARY POLICY BEING LONGER THAN THEY USED TO.
FROM A GEOPOLITICAL PERSPECTIVE I THINK THE, U.S. AND U.K.
ARE MORE. THERE ARE A LOT OF CHEAP
SECTORS IN FIXED-INCOME. GOVERNMENT RELATED BONDS ARE
ALSO ATTRACTIVE IN TERMS OF THEIR SPREADS VERSUS GOVERNMENT
BONDS. ANNA: CAN I ASK YOU MORE ABOUT YOUR
GILTS VIEW? HOW LIKELY DO YOU THINK IT IS
WE GET TO THAT 6.5%? I SUPPOSE YOU DON'T THINK SO,
FROM WHAT YOU SAID ABOUT THE APPETITE FOR GILTS. MYLES:
I THINK THAT REALLY DEPENDS ON THE BANK OF ENGLAND'S REACTION
FUNCTION. THIS IS WHERE IT IS DIFFICULT
WITH A NINE PERSON COMMITTEE TO GIVE A CLEAR MESSAGE.
THEY CAN EITHER KEEP RATES AT 5.5, 6% FOR A LONGER TIME AND
THAT CAN BE A SIGNAL THAT YOU ARE GOING TO SQUEEZE THE
INFLATION OUT SLOWLY BUT SURELY. THEY COULD JACK RATES UP MORE
AGGRESSIVELY AND SQUEEZE A SMALLER SECTION OF POPULATION
LONGER. I AM NOT REALLY SO FOCUSED
ABOUT EXACTLY WHAT WILL BE THE PEAK LEVEL OF BANKRATE IN THE
U.K. I AM LOOKING AT THE LONG-TERM
GUILT AND LOOKING AT ITS GLOBAL VALUATIONS.
WHAT I THINK IS CLEAR IS THE BANK OF ENGLAND ARGUMENT TO
BRING INFLATION UNDER CONTROL AND THAT GIVES THEM CONFIDENCE
THAT THE INFLATION ANCHOR WILL BE MET AND A RECESSION BECOMES
MORE LIKELY IN THE U.K., AND THAT'S WHAT I THINK MAKES
LONG-TERM GILTS MORE ATTRACTIVE WHEN I LOOK AT THE GLOBAL STACK
OF OPPORTUNITIES OUT THERE. ANNA: WHEN YOU LOOK AT U.K.
YIELDS, YIELDING MORE THAN PERIPHERAL EUROZONE COUNTRY IT
TYPICALLY HAS NOT YIELDED MORE THAN. DOES THAT CORRECT AT SOME
POINT? MYLES: I THINK SO. I THINK WE ALL KNOW THAT, YOU
KNOW, THERE'S BEEN LOTS OF POSITIVE SURPRISES IN THE U.K.
THE ECONOMY HAD BEEN STRONGER, INFLATION HAS BEEN THE MAIN
OUTLIER BUT IT'S BEEN HIGHER THAN EXPECTED.
WHAT THE MARKET IS STRUGGLING WITH IS POSITIONING.
PEOPLE HAVE BEEN OVERWEIGHT U.K. GILTS.
INFLATION IS COMING HIGHER, INTEREST RATE EXPECTATIONS HAVE
GONE MORE. AS AN ACTIVE, LONG-TERM
INVESTOR, THAT'S THE OPPORTUNITY, YOU WANT TO BE
BUYING CHEAP ASSETS. IT'S NOT CLEAR WHAT THE
CATALYST WILL BE AT THIS STAGE AND HOW QUICKLY GILT YIELDS
WILL TURN. REALLY, IT'S ABOUT SIZING YOUR
POSITIONS ACCORDINGLY, BUT YOU SHOULD BE INCREASING YOUR
POSITIONS INTO A SECTOR, A MARKET THAT IS CHEAPENING, AND
IS CHEAP, WHEN YOU LOOK AT LONG-TERM VALUATIONS. ANNA:
BACK TO THE U.S. CONVERSATION. HOW MUCH IS YOUR THINKING
EVOLVING AROUND RECESSION RISK? HOW CONVINCED ARE YOU NOW
VERSUS MONTHS AGO THAT WE GO INTO RECESSION IN THE U.S.?
MYLES: AT THE HOUSE, WE'VE HAD A VIEW
OF RECESSION FOR A NUMBER OF QUARTERS AND WE'VE RECENTLY
REVISITED THAT AND REAFFIRMED THAT WE THINK A RECESSION IS
THE ULTIMATE OUTCOME. WHAT IS CLEAR IS THAT THE LAGS
IN MONETARY POLICY IS LONGER. AS I SEE IT, IT'S QUITE CLEAR
THAT CENTRAL BANKS ARE COMMITTED TO BRINGING INFLATION
DOWN. OUR ANALYSIS WOULD SUGGEST THAT
INFLATION IS COMING DOWN IN THE U.S., BUT NOT TO THE 2% RUN
RATE THAT THE FED CAN DECLARE VICTORY AND PIVOT. RECENT PAPERS FROM BERNANKE,
RECENT SPEECHES FROM THE ECB QUITE CLEARLY ILLUSTRATE THE
ECB HAS WANTED TO EASE THE LABOR MARKET.
MORE THAN LIKELY, CENTRAL BANKERS WILL CREATE AN ECONOMIC
POLICY CONSTELLATION THAT WILL DELIVER RECESSION, AND THAT
RECESSION HAS IMPLICATIONS NOT JUST FOR INTEREST RATES, WHERE
THEY GO, BUT ALSO FOR CREDIT SPREADS, WHERE THEY START TO
PERFORM. ANNA: WOULDN'T THAT BE -- MYLES: THE
ISSUE IS -- ANNA: I WAS JUST GOING TO SAY
DELIVERY -- OK, IT'S THE TIME. IF WE SEE RECESSIONS DELIVERED
BY GLOBAL CENTRAL BANKS, WILL THAT BE DEFINED AS A MISTAKE? I MEAN, OBVIOUSLY, IT WILL HAVE
SPECIFIC IMPACTS AROUND THE LABOR MARKETS AND AROUND
AGGREGATE DEMAND, AND THAT MIGHT ALL BE INTENTIONED.
BUT IF THEY GO SO FAR AS TO DELIVER RECESSION, IS THAT A
MISTAKE? MYLES: SO, IT'S A REALLY GOOD QUESTION
THERE. I THINK POLITICALLY, THERE WILL
BE LOTS OF POINTED QUESTIONS AND CENTRAL BANKERS WILL BE
TARGETED FOR SUPPOSEDLY GENERATING A RECESSION.
BUT IN FACT WHAT HAS HAPPENED IS DEMAND IS TOO STRONG FOR
LEVEL OF SUPPLY IN THE COMING. WE NEED TO LOWER DEMAND IN A
WAY THAT IS GRADUAL. AND IT'S VERY DIFFICULT TO DO
THAT WHEN YOU HAVE GOT A PERIOD WHERE YOU HAD 15 YEARS OF VERY
EASY MONETARY POLICY. I THINK IT IS PART OF, A
NECESSARY PART OF CONTROLLING INFLATION IS TO LOWER DEMAND. .
I WOULD NOT SAY IT IS A MISTAKE IT'S NOT A GOOD THING TO CREATE
A RECESSION, SO IN THAT SENSE, IT'S A MISTAKE.
BUT CENTRAL BANKS HAVE FEW GOOD ALTERNATIVE PATHS AT THE MOMENT.
ANNA: THANKS. MYLES: YOU ARE GOING TO GET THE
RECESSION. ANNA: THANKS FOR YOUR TIME.
MYLES BRADSHAW, GLOBAL HEAD OF AGGREGATE STRATEGIES AT J.P.
MORGAN ASSET MANAGEMENT. WE LOOK AHEAD TO THE NATO
SUMMIT. IS THERE A PATH TO MEMBERSHIP
FOR UKRAINE. -- UKRAINE? WE DISCUSS THAT NEXT.
THIS IS BLOOMBERG. ♪ >> 86% OF UKRAINE CITIZENS
ARE EAGER TO BE PART OF NATO. IT IS OUR CHOICE.
PRESIDENT ZELENSKYY MENTIONED THAT WE EXPECT OUR ALLIANCE
WILL INVITE UKRAINE TO JOIN, SO THIS IS MY RESPONSE TO YOU, SO
WE EXPECT SOME GOOD SIGNALS FROM NATO. ANNA:
THAT WAS UKRAINE'S FINANCE MINISTER IN AN EXCLUSIVE
CONVERSATION WITH BLOOMBERG, WITH MARIA TADEO.
SHE IS OUR EUROPEAN CORRESPONDENT, OF COURSE, AND
SHE JOINS US NOW. WHAT WERE YOUR KEY TAKEAWAYS
FROM YOUR DISCUSSION WITH UKRAINE'S FINANCE MINISTER? >> OF COURSE, SIR GIVE MARCH
ENKO, HE REPRESENTS -- SURROGATE MARCH ENKO, HE
REPRESENTS A NEW AND MODERN GENERATION OF DIPLOMATS THAT
WORK IN THE UKRAINIAN GOVERNMENT.
THE MORE YOU GET TO KNOW THE UKRAINIAN GOVERNMENT, YOU
REALIZE THERE IS A LOT OF VERY, VERY YOUNG DIPLOMATS THAT
OPERATE HERE THAT ARE IMPORTANT -- IN IMPORTANT JOBS AND
POSITIONS OF POWER FROM 35 TO 45. IF WE ARE CONVINCED ON TWO
IDEAS, ONE IS THAT THEY HAVE TO REFORM THE COUNTRY OR ELSE
THERE IS NO OTHER WAY TO ENTER THE EUROPEAN UNION.
THAT IS THERE POLITICAL ASPIRATION. .
THIS IDEA OF CORRUPTION AND THE OLIGARCHS THAT CONTINUES TO
HINDER THE UKRAINE ECONOMY. . A LOT OF THE MESSAGE HE TOLD US
AS WE HAVE NO CHOICE BUT TO REFORM AND CRACKDOWN ON
CORRUPTION WHEN IT COMES TO UKRAINE. THEY NEED, OBVIOUSLY, THE
PRIVATE MONEY, BUT THEY ALSO NEED TO
PROVE TO THE ALLIES THAT THE EUROPEAN UNION AND THE UNITED
STATES THAT THERE IS VALUE FOR MONEY.
THE OTHER POINT TO NOTE IS THAT FOR THIS YOU WHEN IT COMES TO
THE BUDGET, THEY ARE DOING WELL BUT NEXT YEAR, IT'S GOING TO BE
CHALLENGING AGAIN. ANNA: VERY QUICKLY, WHERE -- YOU ARE
AT THE NATO HEADQUARTERS YESTERDAY.
WHAT'S THE LATEST ON SWEDEN? >> A COMP CASE SITUATION. IN AN IDEAL WORLD, THEY WOULD
HAVE BEEN RATIFIED ALREADY AND BECOME A MEMBER AND GET THAT IN
THE NATO SUMMIT. WE WILL HAVE A MEETING BETWEEN
THE SWEDISH PRIME MINISTER AND PRESIDENT ERDOGAN ON MONDAY.
MAYBE THERE IS A BREAKTHROUGH. IF NOT, MAYBE A COLD SHOWER FOR
SWEDEN. THE TALKS CONTINUE. THERE IS NO CLEAR GUIDANCE ON
THE RATIFICATION. ANNA: THANK YOU VERY MUCH.
MARIA TADEO, OUR EUROPEAN CORRESPONDENT.
SOMETHING DIFFERENT WHEN WE COME BACK.
WE WILL BE TALKING COFFEE. WE WILL BE SPEAKING TO THE
CHAIRMAN OF LAVAZZA GROUP. THIS IS BLOOMBERG. ANNA:
WELCOME BACK TO "THE PULSE ." THE GLOBAL SELLOFF CONTINUES
AFTER PRIVATE HIRING DATA IN THE U.S.
COMES IN AT TWICE ESTIMATES, DRIVING UP TREASURY YIELDS.
TREASURY SECRETARY JANET YELLEN VOICES CONCERNS OVER CHINA, BUT
SAYS THE U.S. NEEDS TO DIVERSIFY, NOT
DECOUPLE, FROM THE COUNTRY. ALIBABA SURGES AFTER REPORTS
THAT CHINA WILL PAY A FINE ON ITS FINTECH AFFILIATES, DRAWING
A LINE UNDER THE TECH PROBE. GOOD MORNING AND WELCOME TO
"THE PULSE." LET'S GET TO AN IMPORTANT
MORNING CONVERSATION AROUND COFFEE. ARABICA COFFEE BOOSTED UP. LAVAZZA GROUP SAYS THE PREMIUM
BETWEEN ARABICA AND OTHER ROASTERS MEAN THAT THEY COULD
SHIFT MORE TOWARDS THE LATTER WHEN THE PRICE OF HIGH END
BEANS FALLS. LET'S SPEAK WITH GIUSEPPE
LAVAZZA, VICE-CHAIRMAN OF LAVAZZA GROUP.
PEOPLE WHO GET UP EARLY IN THE MORNING TO WORK IN
INTERNATIONAL TELEVISION ARE OBSESSED WITH COFFEE, DRINKING
COFFEE, AND THE PRICE OF IT. WHAT ARE YOU SEEING IN THESE
COFFEE MARKETS IN TERMS OF THE PRICING FOR YOUR EXPECTATIONS
FOR THE REST OF THE YEAR? GIUSEPPE:
FOR THE REST OF THE YEAR, WE HAVE ALREADY REACHED THE TOP
PRICE RECORD AFTER 15 YEARS, AND NOW THERE IS A SORT OF
DIFFERENT MOVEMENTS DOWN WITH THE PRICE OF RUBBER HAS TO --
ROBASTA FOR THE COFFEE PRICE THAN IT WAS FOUR WEEKS AGO.
THIS IS GOOD. THERE ARE BEARISH ELEMENTS ENTERING INTO THE MARKET FOR R
OBASTA AS WELL AS ARABICA. AS YOU KNOW, THE COFFEE MARKET
WAS PUT UNDER PRESSURE FOR THE FROST THAT AFFECTED BRAZIL IN
JULY, 2021, AND AFTER THAT STARTING FROM OCTOBER 2022, A BIG RALLY ON ROBASTA COFFEE DUE
TO SPECULATION ON ONE SIDE BETWEEN SUPPLY AND DEMAND, ALSO
DUE TO THE FACT THAT MANY DECIDED TO SHIFT FROM HIGH AND
EXPENSIVE ARABICA COFFEE TOWARDS THE CHEAPER ROBUSTA.
ANNA: LET ME ASK YOU ABOUT THE PRICES
YOU ARE PAYING OR YOUR COSTS IN FOCUS IN THAT CONVERSATION, BUT
I WANT TO ASK YOU ABOUT YOUR MARGINS BECAUSE YOU PUT UP
INTERESTING STATEMENTS THE LAST COUPLE OF DAYS SAYING YOU ARE
FORECASTING A DOUBLE-DIGIT DECREASE IN EARNINGS BEFORE
INTEREST. THIS IT SEEMS TO SOME DEGREE BECAUSE YOU ARE PLANNING
TO ABSORB HIGHER COST YOURSELF AND NOT PASS THOSE ON TO
CUSTOMERS. WHY HAVE YOU MADE THAT DECISION?
GIUSEPPE: THIS IS PART OF OUR STRATEGY TO
PROTECT THE CONSUMER ON ONE SIDE FROM THE OTHER SIDE.
WE KNOW IN THE COFFEE MARKET THAT THESE SPIKES AND HIKES IN
COFFEE ARE COMMON. IT IS A CYCLE, IT IS A
COMMODITY. IT ALREADY HAPPENED IN THE
PAST, BUT IT LASTED A COUPLE OF YEARS AND THE NORMAL PRICE IS
AGAIN AVAILABLE FOR THE TRADERS AND THE ROASTERS. IT IS A QUESTION OF TIME AND
TRYING TO RESIST AND BE RESILIENT TOWARDS A SITUATION
THAT IS NOT DIFFICULT, BUT IT HAS BEEN STARTING AND FROM TOY 24, IT WILL BE BETTER -- FROM
2024, IT WILL BE BETTER. THE COST OF COFFEE IS NOT THE
ONLY COST WE HAVE TO DEAL WITH. THERE ARE MANY OTHER INDUSTRY
TROUBLES WITH INFLATION STRIKING VERY HIGHLY, OUR
BALANCE SHEET ELECTRIC COSTS, THE GAS COSTS OR FREIGHT COSTS,
PACKAGING, SO WE HAVE TO DEAL WITH A HUGE AMOUNT OF COST
INCREASES, ABOUT 550 MILLION EUROS IN TWO YEARS, SO WE
DECIDED NOT TO PASS ALL THIS COST TO THE CONSUMER BECAUSE WE
ARE CONCERNED ABOUT THE GENERAL SITUATION ON THE COST OF LIVING
CRISIS. IT IS EVERYWHERE, NOT JUST THE
U.K. HOUSEHOLDS ARE STRUGGLING WITH
THE PRICE OF MANY GOODS AND WE ARE AT THE END OF A RECESSION
AND INTEREST RATES, SO FOR THIS REASON WE DECIDED TO PASS A FEW
PERCENTAGE OF THE COST TO CONSUMERS. ANNA:
JUST A FEW PERCENT PASSED ON, BROADLY PROTECTING CONSUMERS IN
TAKING THIS ON YOUR OWN MARGIN. FROM WHAT YOU SAY, I AM NOT
SURE IF THAT IS BECAUSE YOU ARE KIND PEOPLE, OR YOU DO NOT HAVE
THE PRICING POWERS SO YOU DO NOT THINK CONSUMERS WILL PAY
THE HIGHER PRICES. GIUSEPPE: THE COMPANY IS NOT LISTED SO WE
ARE NOT UNDER PRESSURE TO SHOW EVERY DAY A STRONG BOTTOM LINE,
SO WE ARE HERE FOR THE LONG TERM, IT IS A FAMILY COMPANY
PRIVATELY HELD, SO WE CAN REDUCE OUR MARGIN FOR EVEN A
COUPLE OF YEARS TO BE READY TO RESTART IN A BETTER POSITION IN
TERMS OF SALES AND MARKET SHARES WHEN WE KNOW THAT THE
COST WILL DECLINE. AND IT WILL HAPPEN PROBABLY
LIKELY AT THE END OF THE YEAR. 2024 WILL BE A DIFFERENT YEAR,
SO WE HAVE DECIDED TO TRY TO PUT ON THIS KIND OF STRATEGY
THAT IS AT LEAST PROTECTING OUR MARKET SHARE AND THE CONSUMERS.
ANNA: YOU MIGHT INCREASE MARKET SHARE
OUT OF THIS AS A RESULT. DO YOU SEE OTHERS IN THE COFFEE
SPACE OR THE PACKAGED CONSUMER GOODS SPACE, DO YOU SEE OTHERS
BEHAVING IN A SIMILAR WAY OR DO YOU THINK THEY ARE TAKING A
DIFFERENT APPROACH? GIUSEPPE: ANY COMPANIES IN THE COFFEE
LISTED COMPANIES ARE PROTECTING THE MARGINS AND SHOW GOOD
FINANCIAL RESULTS. FOR US, IT WAS DIFFERENT, AND
OUR STRATEGY WAS WELL REWARDED BECAUSE DURING 2022, WE SAW A
LOT OF GOOD INCREASE IN VOLUMES IN ALL HER GEOGRAPHIES -- ALL
ARE GEOGRAPHIES, THE U.K. AS WELL, SO IT WAS A GOOD
CHOICE AND ALLOWED US TO GROW THE COMPANY FOR THE NEXT FUTURE.
ANNA: HOW HAVE WE SEEN AN EVOLUTION
IN THE WAY PEOPLE ENJOY COFFEE IN RECENT YEARS?
DURING LOCKDOWNS WHEN WE SAW LOCKDOWNS ACROSS MANY
GEOGRAPHIES, PEOPLE HAD TO SUDDENLY BECOME EXPERTS AND
BARISTAS THEMSELVES AT HOME. THEN THERE HAS BEEN THIS
REVENGE SOCIALIZING THAT HAS TAKEN PLACE SINCE LOCKDOWN.
HOW DO YOU SEE CONSUMPTION NOW? WHERE DO WE WANT TO CONSUME
COFFEE? GIUSEPPE: WE SAW A SHIFT OF BEHAVIOR
ISN'T IN CONSUMING COFFEE, ESPECIALLY IN THE U.K.
WHERE THE BEANS MARKET DURING LOCKDOWN, PEOPLE WERE FORCED TO
STAY HOME, AND EVERYONE WANTED TO ENJOY AGAIN THE COFFEE
SOCIETY EXPERIENCE. SO MANY OF THEM BECAME
SELF-TAUGHT BARISTAS, BUYING ESPRESSO MACHINES, STARTED
BUYING BEANS, SO THEY PREPARE IT AT HOME AND THE COFFEE.
THIS KIND OF TREND IS STILL THERE AND THE MARKET IS MOVING
MORE OR LESS EVIDENT. IT IS IN THE U.K., ITALY,
GERMANY, SO IT IS A RESULT OF HOW CONSUMER BEHAVIOR HAS
CHANGED IN THE PERIOD OF TIME OF THE PANDEMIC. ANNA:
IS IT A FIGHT AGAINST TEA IN THE U.K. AS WELL?
YOU ARE NOT IN THAT BATTLE? GIUSEPPE: NO, IT IS IN THE COFFEE
INDUSTRY, INSTANT COFFEE, THE WAY THAT BRITISH PEOPLE ENJOYED
COFFEE MANY YEARS AGO, SO THE BIG REVOLUTION FOR THE COFFEE
CONSUMPTION IN THIS COUNTRY SINCE 1990. ANNA:
THANK YOU FOR JOINING US. GIUSEPPE LAVAZZA, CHAIRMAN OF
LAVAZZA GROUP. COMING UP, SAMSUNG SEES ITS
WORST QUARTERLY SALES IN MORE THAN A DECADE.
MORE ON THAT NEXT. THIS IS BLOOMBERG. ANNA:
THE CONVERSATIONS THAT MATTER AND INSIGHTS YOU NEED.
THIS IS "THE PULSE." JANET YELLEN IS IN CHINA MAKING
VISITS, SPEAKING TO BUSINESS LEADERS THERE AND ALSO VARIOUS
SENIOR POLITICIANS. SOME NEWS LINES COMING FROM HER
SAYING THAT SHE HOPES THE VISITS CAN CREATE MORE REGULAR
COMMUNICATION. SHE ALSO SAYS THAT A FAIR SET
OF RULES CAN BENEFIT BOTH THE U.S. AND CHINA OVER TIME, AND WE
SHOULD NOT LET ANY U.S.-CHINA DISAGREEMENTS WORSEN. SOME
STRONG LANGUAGE COMING THROUGH FROM THE U.S.
TREASURY SECRETARY. WE WILL SEE WHETHER THE
GEOPOLITICS SETTLES AFTER HER VISIT.
OIL IS HEADED FOR A SECOND WEEKLY GAIN AFTER OPEC LEADERS
TIGHTEN SUPPLIES AND U.S. CRUDE STOCKPILES FELL.
CRUDE HAS DROPPED MORE THAN 10% THIS YEAR AS THE GLOBAL ECONOMY
SLOWS, BUT OMAN'S TRANSPORT MINISTER SAYS HE IS NOT
CONCERNED. >> $80 IS NOT A PROBLEM FOR
OMAN GOING FORWARD, BUT ALSO THE PAST TWO TO THREE YEARS
HAVE WITNESSED A LOT OF IMPROVEMENTS IN THE
DECISION-MAKING OF THOSE SECTORS AND ALSO POSITIONING
THE COUNTRY FOR THE DIVERSIFICATION PURPOSE WHEN IT
COMES TO THE LOGISTICS, MINING, THE DEVELOPMENT YOU HAVE SEEN
RECENTLY WHEN IT COMES TO GREEN HYDROGEN. RECENTLY THE LAST
CONTRACT OR THE LAST PROMISE WAS A SIGNATURE FOR A $6.7
BILLION WORTH OF INVESTMENT IN GREEN HYDROGEN BY JV LED BY
COSCO, $20 BILLION PLUS WHEN IT COMES TO GREEN HYDROGEN, AND
OTHER SECTORS AND LOGISTICS. LOGISTICS HAVE REBOUND LAST
YEAR BY 19%. 5% OF LOGISTICS THIS YEAR
CONTRIBUTES TO THE ECONOMY, MUCH HIGHER THAN WHAT WE HAVE SEEN IN THE PAST. ALSO, THE
SECTORS COME TO IMPROVEMENTS IN TERMS OF MINING AND IT IS ALSO
NOTICEABLE. TOM: LET'S UNPACK SOME OF THAT AND
ON GREEN HYDROGEN, YOUR TARGETS ARE AMBITIOUS.
HOW MUCH PROGRESS HAVE YOU MADE IN ATTRACTING THAT INVESTMENT
IN GREEN HYDROGEN? >> FIRST, IT WAS A COMMITMENT
ANNOUNCED BY THE COUNTRY WHEN IT COMES TO THE CONTRIBUTION TO
CURB EMISSIONS GLOBALLY. 2050 IS THE TARGET FOR CARBON
NEUTRALITY, BUT A LOT OF ACTIVITY BY THE MINISTRIES, ALL
OF THEM LED BY THE MINISTRY OF ENERGY, WILL ATTRACT
INVESTMENT, ROUGHLY $20 BILLION WORTH OF DEALS HAVE BEEN
SIGNED, AND THIS IS BECAUSE OF THE NATURE OF THE COUNTRY.
A LARGE PART OF THE COUNTRY ENJOYS A HIGH INTENSITY OF SUN
AND WIND AT THE SAME TIME, THUS THERE ARE A LOT OF SIGNATURES
WHEN IT COMES TO THE PRODUCTION AND USE OF GREEN HYDROGEN AND
IN TERMS OF PRODUCING GREEN METALS. AT LEAST FOUR DIFFERENT
SIGNATURES, IT HAS HAPPENED ONLY THIS YEAR ALONE. ANNA: THAT WAS OMAN'S TRANSPORT
MINISTER SPEAKING EXCLUSIVELY TO BLOOMBERG'S TOM MACKENZIE
ABOUT THEIR EXPECTATIONS FOR OIL PRICES AND WHAT IT MEANS
FOR THEIR ECONOMY. ALIBABA HAS CLOSED OUT THE WEEK
AS THE BIGGEST GAINER ON THE HANG SENG INDEX TODAY, AFTER A
REUTERS REPORT SAID THE CHINESE AUTHORITIES ARE LIKELY TO
ANNOUNCE A $1.1 BILLION FINE ON ANT GROUP, WHICH ALIBABA OWNS
30% OF. INVESTORS ARE HOPING IT COULD
MARK A POSSIBLE END OF CHINESE GOVERNMENT SCRUTINY ON TECH. JOINING US NOW IS OUR REPORTER
ON TECH. WHAT DO WE KNOW ABOUT WHAT THIS
FINE ON AUNT MEANS? >> THERE ARE A FEW KEY POINTS.
THE REUTERS REPORT SAID THAT CHINESE AUTHORITIES ARE LIKELY TO ANNOUNCE A $1.1 BILLION
PENALTY, AND TO SOME, IT MIGHT LOOK BIG AND STAGGERING, BUT
INVESTORS TOLD US IT IS ACTUALLY MANAGING FOR ANT GROUP
IF YOU PUT IT INTO CONTEXT, WHICH THE ESTIMATED EARNINGS
FOR THE DECEMBER QUARTER CAME HIGHER THAN THAT.
AND THE MORE SIGNIFICANT PART OF THIS PENALTY IS IF THIS IS
CONFIRMED BY THE CHINESE AUTHORITIES, IT COULD MARK THE
END OF A REGULATORY OVERHAUL FOUR YEARS OF THIS EVENT.
THAT COULD BE SEEN AS A POSITIVE FOR THE SECTOR AS WELL.
ANNA: CHARLOTTE, THANK YOU VERY MUCH,
AND IT COULD BE A POSITIVE FOR THE SECTOR TOWARDS THE END TOO
-- END OF THE DAY. STICKING WITH TECH THEMES,
SAMSUNG HAS REPORTED ITS WORST PLANNING CORLEY REVENUE SINCE
2009. IT COMES OFF THE BACK OF WEAKENING DEMAND IN THE MEMORY
CHIPS MARKET, DESPITE RECENT PRODUCTION CUTS.
THE LARGER THAN EXPECTED 22% DROP IN SALES SENT THE STOCK
SLIDING IN SEOUL. WE ARE JOINED BY ALEX WEBB.
WHAT STOOD OUT TO YOU FROM THE STORY? ALEX: IT IS THE SHARE PRICE REACTION,
WHICH WAS 2.4% INCLINE -- DECLINE IN SEOUL, NOT AS BAD AS
SOME OF THE OTHER NUMBERS HE WOULD HAVE EXPECTED.
THE MEMORY MARKET IS STILL NOT BRILLIANT.
HAVE SEEN A FEW SIGNS OF POSITIVITY FROM MICRON AND SK
HYNIX. MEMORY CHIPS ARE HIGHLY COMMODITIZED AND THIS IS
DIFFERENT FROM THE LEADING EDGE NVIDIA STUFF WERE ONLY A
HANDFUL OF COMPANIES CAN DO IT. BUT SAMSUNG, UNLIKE ITS PEERS,
HAVE BEEN SLOW TO SAY WE WILL CUT PRODUCTION MUST HAVE A HUGE
BUILDUP OF INVENTORY, AND LOADS OF THEIR CUSTOMERS HAVE THESE
MEMORY CHIPS, SAM SOME ONLY NOW STARTING TO CUT BACK ON
MANUFACTURING, SO THERE IS EXPECTATION FOR THE MARKET THAT
THE SITUATION WILL IMPROVE. ANNA:
THERE ARE CHIPS AND CHIPS, AND THAT IS IMPORTANT WHEN YOU
THINK ABOUT HOW THESE STORIES READ ACROSS INTO OTHER
BUSINESSES. IS THERE GLOBAL MESSAGING FROM
THE STORY? ALEX: THE LESSON IS ALMOST THAT WHEN
YOU SEE THE MARKET START TO BECOME OVERFLOW, YOU SHOULD BE
CUTTING YOUR CAPACITY. ANNA: ALL THE WAY THROUGH THE
PANDEMIC, WE KEPT TALKING TO THE CHIP COMPANIES ABOUT HOW
QUICKLY YOU CAN WRAP UP PRODUCTION AND WHEN WE CAN GET
MORE PRODUCTION ONLINE BECAUSE EVERYONE WAS SCRAMBLING FOR
TECHNOLOGY. ALEX: IT IS ALWAYS THE SORT OF
EFFECTS BECAUSE IT TAKES 18 MONTHS TO RAMP UP PRODUCTION,
SO WHEN YOU SEE A TROUGH OF THEIR NOT BEING ENOUGH SUPPLY,
THEY START SEEING WE WILL BUILD A PROTECTION -- BUILD UP
PRODUCTION, AND BY THE TIME THEY BUILD IT UP, THERE MIGHT
BE AN OVERSUPPLY. IT IS SOMETHING THAT CHIPMAKERS
HAVE BEEN TRYING TO SAY AND REPENT THEM IT, IT IS NO LONGER
THE CASE. WE HAVE OVERCOME THE BOOM AND
BUST. ANNA: THANK YOU. ALEX WEBB JOINING US FROM
BLOOMBERG QUICKTAKE WITH THE LATEST ON THAT DROPPING THE
SHARE PRICES FOR SAMSUNG. LET'S GET TO BREAKING NEWS
COMING THROUGH FROM THE NETHERLANDS.
THE DUTCH GOVERNMENT CAN LIMIT SCHIPHOL AIRPORT'S CAPACITY.
THIS COMING FROM THE DUTCH NEWS AGENCY.
THE GOVERNMENT WON ITS APPEAL AND HAS NOW BEEN DEEMED ABLE TO
LIMIT FLIGHTS AT THE AIRPORT FROM NOVEMBER OF THIS YEAR TO
OCTOBER OF NEXT. THIS WILL IMPOSE FURTHER
RESTRICTIONS ON AIRLINES TO OPERATE THERE, AND THE CASE HAD
BEEN BROUGHT BY AIRLINES INCLUDING DELTEK, EASYJET, AND
A TRANSPORTATION LOBBYING GROUP, BUT THEY HAVE CLEARLY
NOT WON AND THE DUTCH GOVERNMENT HAS WON THIS.
WE SEE AIR FRANCE KLM SHARE PRICE HAD BEEN CLIMBING SINCE
WE GOT THIS NEWS, UP 1.9% THIS MORNING.
COMING UP ON THE PROGRAM, SOMETHING ENTIRELY DIFFERENT.
MATTEL COULD BE LEFT TICKLED PINK IF THE BIG BETS ON THE
BARBIE MOVIE PAYS OFF. WE LOOK AHEAD ON WHAT COULD BE
NEXT FOR THE U.S. TOYMAKER AND WHAT WE TAKE AWAY
FROM THIS DOUBLING DOWN ON LEGACY BRANDS.
THIS IS BLOOMBERG. ANNA:
THE CONVERSATIONS THAT MATTER, THE INSIGHTS YOU NEED.
THIS IS "THE PULSE." LIFE IN PLASTIC COULD BE
FANTASTIC IF MATTEL'S BET ON $100 MILLION FEMINIST BARBIE
MOVIE PAYS OFF. TODAY'S BLOOMBERG BIG TAKE
STORY IS ALL ABOUT THE TOYMAKER'S GAMBLE ON THIS
YEAR'S MOST ANTICIPATED FILM. >> IT IS THE BEST DAY EVER.
SO IS TOMORROW, AND EVERY DAY FROM NOW UNTIL FOREVER. >> BARBIE IS FINALLY GETTING
HER OWN MOVIE. THE FILM DIRECTED BY GRETA
GERWIG AND STARS MARKY ROBERT -- MARGOT
ROBBIE DISCUSSES THINGS THAT THE BRAND HAS BEEN CRITICIZED
FOR. THE IDEALIZED FANTASY THAT
BARBIE ENCAPSULATES HAS BEEN DEALT WITH BEFORE. IN 2016, BARBIES WITH DIFFERENT
BODY TYPES HAVE BEEN INTRODUCED, BUT HER LEGACY HAS
BEEN HARD TO OVERCOME. GERMAN MEN PASSED HER AROUND
BACHELOR PARTIES AS A JOKE GIFT. SHE HAD SEEN HER OWN DAUGHTER
TOSS ASIDE BARBIE DOLLS IN FAVOR OF BARBIE DOLLS, DRESSING
THEM UP, SO HAND OR CREATED A 3D MODEL WHEREIN CHILDREN COULD
PLAY OUT THEIR DREAMS OF ADULTHOOD, AND SHORTLY AFTER
BARBIE CAME ONTO SHELVES, MATTEL BECAME KEY TO THE TOY
MAKING WORLD. FOR DECADES, BARBIE WAS A HUGE
SUCCESS, ACCOUNTING FOR A THIRD TO HALF OF MATTEL'S REVENUE.
DESPITE BEING ANATOMICALLY PROSPER -- PREPOSTEROUS, BARBIE
AS THE PRESIDENT OR CORPORATE EXECUTIVE BECAME A ROLE MODEL.
WITH THE RISE OF VIDEOGAMES AND MARKETING MISSTEPS, GREATER
AWARENESS OF EATING DISORDERS AND BODY POLITICS, BARBIE CAME
TO BE VIEWED AS OUT OF STEP. SALES FELL EVERY YEAR BETWEEN
2011 AND 2015. THIS SUMMER'S POTENTIAL
BLOCKBUSTER IS SET TO SHOWCASE CHANGES BARBIE AND SOCIETY HAVE
UNDERGONE. IT IS ALSO PART OF A BUSINESS
MODEL THAT THE CURRENT CEO HAS BEEN TRYING TO ESTABLISH SINCE
2017. HE WANTS MATTEL TO OPERATE LIKE
DISNEY, WHICH HAS CREATED A MULTI-VERSE OF PRODUCTS, SHOWS,
AND THEME PARKS. THERE ARE MORE THAN A DOZEN
OTHER MOVIES NOW IN PRODUCTION BASED ON MATTEL TOYS, INCLUDING
HOT WHEELS AND EVEN MAGIC EIGHT BALLS.
MAKING THE TRANSITION WILL BE TOUGH.
MATTEL HAS TRIED AND FAILED MANY TIMES TO MOVE AWAY FROM
THE CYCLICAL TOY MANUFACTURING BUSINESS AND HAS NEVER PULLED
OFF THE PIVOT, BUT MAYBE THIS TIME IS DIFFERENT.
ALL OF THE TRADE PRESS FROM VARIETY TO ROTTEN TOMATOES HAS
PAINTED BARBIE IS ONE OF THE MOST ANTICIPATED MOVIES OF 2023.
ANNA: I AM SURE THAT SOME WILL LOVE
THE MOVIE AND SOME WILL ABSOLUTELY HATE IT.
LOOKING AT THE BARBIES AVAILABLE THESE DAYS FOR THOSE
INTERESTED IN THAT MARKET, THEY HAVE FLAT FEET AND YOGA MATS,
BUT THERE ARE PLENTY OF THE ANATOMICALLY PREPOSTEROUS
VARIETY THAT WAS DESCRIBED IN THAT PIECE.
YOU CAN READ MORE ABOUT MATTEL'S BETS IN THE BARBIE
MOVIE ON TODAY'S BIG TAKE. AN INTERESTING TAKE ON HOW YOU
CAN EXTEND BRANDS THAT ARE DECADES AGO -- DECADES OLD.
COMING UP TODAY, WE WILL GET MEXICO CPI AT 1:00 P.M. U.K.
TIME. WE WILL ALSO GET U.S. NONFARM PAYROLLS.
THE FIGURE FOR JUNE IS SOMEWHERE NEAR 30,000, SO WE
WILL WATCH HOW HOT THAT COMES IN. THE ADP REPORT IS IN PERFECT
LINK WITH THE NONFARM PAYROLLS. AT THE SAME TIME, WE WILL GET
CANADIAN UNEMPLOYMENT FIGURES. LAST OFF, THE AIX-EN-PROVENCE
ECONOMIC FORUM WILL KICK OFF TODAY IN FRANCE.
WE WILL HAVE PLENTY OF SOUND COMING THROUGH FROM THE EVENT
AT THE EARLY PART OF NEXT WEEK WE WILL BE TALKING TO ONE OF
THE MINISTERS IN ATTENDANCE. LATER TODAY AND OVER THE WEEKEND, WE WILL BE TALKING TO
SANOFI'S CEO AS WELL AS MARIO CENTENO, AND ECB GOVERNING
COUNCIL MEMBER.
