BOE Faces End of Easing Cycle, Ukraine & US to Resume Peace-Plan Talks | The Opening Trade 12/15

A widely anticipated interest-rate cut by the Bank of England this week will force policymakers to confront whether their easing cycle is nearing its end almost 1 1/2 years after it began.

Ukraine and the US are due to hold a second day of talks in Berlin on a plan aimed at ending Russia’s war, with allied security guarantees for Kyiv a central focus of the negotiations.

The Opening Trade has everything you need to know as markets open across Europe. With analysis you won’t find anywhere else, we break down the biggest stories of the day and speak to top guests who have skin in the game. Hosted by Anna Edwards and Lizzy Burden.

Chapters:
00:00:00 – The Opening Trade
00:02:20 – Market Check
00:03:07 – BOE, ECB, BOJ Rate Decisions This Week
00:04:58 – China Economy Softens
00:06:46 – Ukraine & US to Resume Peace-Plan Talks
00:09:22 – France, EU Vote on Mercosur
00:09:50 – Jimmy Lai Found Guilty
00:10:02 – Bondi Beach Shooting
00:12:22 – Fed Chair Frontrunner
00:24:43 – China’s Weakest Retail Sales Since Pandemic
00:39:52 – Central Bank Rate Decision Week
00:47:05 – Stocks to Watch: Miners, Autos, Defense
01:05:16 – EU Emissions-Free Cars Transition
01:09:14 – Ukraine 20-Point Peace Plan Discussion
01:13:27 – Australia Eyes Tougher Gun Laws After Deadly Sydney Attack
01:26:44 – BOE Inflation Battle
01:33:14 – Bank of Japan, Yen
——–
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ANNA: GOOD MORNING FROM LONDON.
WE ARE ONE HOUR AWAY FROM THE OPENING TRADE. U.S.
AND EUROPEAN FUTURES ARE HIGHER HEAD OF BUSY WEEK FOR CENTRAL
BANKS WITH RATE DECISION IS EXPECTED FROM THE BOE, ECB AND
BOJ. DATA WATCHERS WILL GET A PRELIMINARY LOOK AT KEY GLOBAL
PMI’S, LABOR DATA AND INFLATION PRINTS.
PRESIDENT ZELENSKYY SUGGESTS UKRAINE COULD DROP ITS BID FOR
NATO MEMBERSHIP IN RETURN FOR WESTERN SECURITY GUARANTEES.
HE IS SET TO MEET EUROPEAN LEADERS TODAY. LIZZY:
CHECKING IN ON THESE MARKETS AND IT IS THE LAST FULL TRADING
WEEK OF THE YEAR FOR 2025. LAST WEEK ENDED WITH THE
SELLOFF ON WALL STREET PROMPTED ABOUT ALL THE WORRIES ABOUT AI.
FUTURES POINTING HIGHER ON BOTH SIDES OF THE ATLANTIC.
A BIG WEEK FOR CENTRAL BANKS. BOJ, ECB AND BOE IN FOCUS.
EURO-DOLLAR PRETTY STEADY RIGHT NOW AT 1.17.
THE COUNTDOWN TO THE OPENING TRADE STARTS RIGHT NOW. ♪ ANNA: WELCOME TO THE PROGRAM.
THIS IS MONDAY, DECEMBER 15. LIZZY, WE SAID IN THE HEADLINES
THIS WOULD BE A REALLY BUSY WEEK AND IT IS.
IT IS NOT THE END OF 2025 YET. WE STILL HAVE IMPACTFUL DATA
AND CENTRAL BANK DECISIONS TO COME.
WHY DON’T YOU START BY TAKING US THROUGH THE AGENDA AND HAVE
US? ANNA: TOMORROW, WE WILL GET U.S.
NONFARM PAYROLLS. WE HAVE BEEN STARVED OF
ECO-DATA BECAUSE OF THE GOVERNMENT SHUTDOWN.
WE GET CPI FROM THE U.K. ON WEDNESDAY.
THE ECB AND THE BOE DECIDING. AND WE GET U.S. CPI.
PARTIAL NUMBERS FOR OCTOBER, FULL NUMBERS FOR NOVEMBER AND
FRIDAY WE END THE WEEK WITH THE BOJ.
WE START WITH A CENTRAL BANKS. ANNA:
IT IS INTERESTING BECAUSE FROM A WESTERN ECONOMY, CENTRAL
BANKING DECISION, THE CONVERSATION OVER THE LAST WEEK
HAS TURNED MORE HAWKISH. EVEN IF THIS WEEK WE WILL GET
FROM THE BANK OF ENGLAND, THE EXPECTATION IS A RATE CUT AND
THAT MIGHT SOUND DEVILISH — DO VISH.
MOST OF THE MARGIN OF MOVEMENT OF THINKING HAS BEEN WHERE IS
THE HAWKISHNESS COMING FROM? THE ECB.
WE MIGHT SEE SOME OF THAT EXPRESSED IN THE COMMENTARY.AND
THERE’S THE BOJ . LIZZY: WE ALREADY KNEW THE HAWK.
WHEN IT COMES TO THE BANK OF ENGLAND, THE EXPECTATION IS IT
IS A CUT. WE’VE GOT THE BUDGET TO FACTOR
IN. IT COULD BE A TIGHT SPLIT, 5-4
IS THE SPLIT EXPECTED. IT COULD BE THAT ANDREW BAILEY
WHO IS DECIDING. WE HAVE THE DATA COMING.
CPI COMING. I WONDER IF THERE IS A CPI
PRINT THAT CAN STOP THE BLB FROM CUTTING. ANNA:
THAT IS INTERESTING, THE FACT WE GET DATA, DATA AND THEN
DECISION. THE BOJ IN FOCUS AT THE END OF
THE WEEK, EXPECTING TO GET A HIKE.
THE SURVEY WHICH IS CONFIDENCE AMONG BIG BUSINESSES IN JAPAN.
THAT CAME IN AT A FULL YEAR HIGH. IF YOU ARE LOOKING FOR THE
REASONS FOR BOJ NOT TO HIKE, YOU DID NOT FIND IT. LIZZY:
WE’VE GOT JAPANESE CPI ON THURSDAY SO THAT IS EXPECTED TO
SHOW INFLATION STICKY. LET’S TALK ABOUT THE OTHER DATA
WE HAVE ON THE DOCKET BECAUSE WE ALREADY HAVE THE FED
DECISION AND NOW THE FOCUS TURNS TO THE U.S.
DATA THAT IS COMING. YOU HAVE TO MASK — ASK HOW
MUCH CLARITY WITH THE FED. OUR COLLEAGUE AT BLOOMBERG
ECONOMICS SAYS THERE WILL NOT BE MUCH CLARITY.
JAY POWELL MAKING EXCUSES FOR THE DATA, SAYING TECHNICALLY IT
COULD BE PRETTY HAIRY. ANNA: MANY REASONS WHY THE DATA MIGHT
BE SIDELINED OR IGNORED OR PEOPLE WILL TELL WHATEVER STORY
THEY WANT TO TELL. WE WILL GET THAT NOVEMBER DATA,
THE JOBS DATA. WE WILL ALSO GET AN ESTIMATE OF
OCTOBER DATA, SO MANY BITS OF THE DATA MISSING.
ON THE NOVEMBER CPI, THAT COULD BE UNDERMINED BECAUSE A LACK OF
THE DATA COLLECTION THAT GOES ON. WILL IT REALLY GIVE US ANY
CLUES AS TO WHETHER THE MARKET IS RIGHT AND WE GET TO CUTS
FROM THE FED IN 2026 OR WE GET ONE DOT?
WE WILL NOT HAVE THE ANSWER UNTIL THIS TIME NEXT YEAR.
THAT IS THE MARKETS THINKING EVEN OF THE MOST RECENT
DIRECTION HAS BEEN A LITTLE MORE HAWKISH.
THINKING ABOUT WHEN DO WE GET THAT TURN.
EVEN THOUGH WE ARE WAITING FOR A NEW FED CHAIR. LIZZY:
THAT IS CRUCIAL FOR THE BOND MARKET.
WE HAD THE CHINESE RETAIL SALES DATA DROPPING ABOUT 2:00 P.M.
LONDON TIME. RETAIL SALES THE WORST EVER
OUTSIDE OF COVID. IT IS A LOPSIDED ECONOMY IN
CHINA NOW. THE QUESTION TURNS HOW MUCH IS
THE GOVERNMENT GOING TO STIMULATE?
YOU HAVE HAD XI TALK ABOUT HE ONLY WANTS REAL GROWTH.
DON’T SEE ANY SUPERFICIAL. IF THE 5% GROWTH TARGET IS SAFE
FOR 2025, HOW CHALLENGING WILL IT BE IN 2026 UNLESS THEY PUT
UP ENOUGH STIMULUS? ANNA: ESPECIALLY WHEN YOU GET THOSE
KIND OF COMMENTS FROM XI TALK ABOUT HOW IT IS NOT JUST ABOUT
HITTING A NUMBER, WE SHOULD NOT BE EVALUATING EVERYTHING ON
WHETHER THEY DELIVER GROWTH. IT SHOULD BE A MORE HOLISTIC
LOOK AT THE ECONOMY. IN TERMS OF U.S.
AND WESTERN EXPECTATIONS ABOUT REBALANCING THE CHINESE
ECONOMY, THIS TELLS A DIRE STORY ABOUT RETAIL SALES.
IT TELLS A STORY OF AN ECONOMY BUILT FOR EXPORTS STILL AND WE
HAVE SEEN THAT HAPPENING OVER THE CHINESE EXPORT STORY.
SURE, THEY ARE NOT GOING AS MUCH TO THE STATES AS THEY WERE
BUT THEY ARE FINDING HOMES IN ASIA AND EUROPE.
THAT IS AN ONGOING POLITICAL PATH OF THIS CHINA ECONOMY
STORY. LIZZY: WE HAVE SEEN THE MARKET IMPACT
THIS MORNING. THE GOVERNMENT SAYING IT HAS
PLANNING MORE FINANCIAL SUPPORT FOR CONSUMPTION.
THAT IS BOOSTING THE CHINESE RETAILERS.
IRON ORE SLIDING TOWARDS $100 A TON. ANNA:
LET’S TALK ABOUT UKRAINE BECAUSE THE MEETINGS CONTINUED
OVER THE WEEKEND AND FURTHER MEETINGS EXPECTED TODAY.
PRESIDENT ZELENSKYY SEEMS TO BE SUGGESTING UKRAINE COULD BE
WILLING TO ABANDON AN AMBITION TO JOIN NATO IF THE EU AND U.S.
SECURITY GUARANTEES THAT COME WITH ANY PEACE DEAL ARE
SUFFICIENT. WHAT DO THE RUSSIANS MAKE OF
THE LATEST PLANS? FIVE HOURS SPENT BEHIND CLOSED
DOORS FOR THE U.S. AND EUROPE AND UKRAINE TO TALK
ABOUT THIS YESTERDAY. RUSSIA IS NOT IN THE MIX.
THIS STILL DOES NOT HAVE FULL APPROVAL OF ANYBODY.
THIS IS NOT ALL OF THE PARTIES IN THE ROOM TOGETHER.
A LITTLE MORE INFORMATION FROM ITALY ON WHERE THEY ARE SITTING
IN THEIR COMMITMENT TO UKRAINE REMAINS INTACT.
WE DO HAVE THIS BIG MEETING TAKING PLACE TODAY, BRINGING IN
MORE EUROPEAN VOICES. 10 EUROPEAN LEADERS MEETING
WITH PRESIDENT ZELENSKYY. LIZZY: KEIR STARMER NOTABLY HAS
ANOTHER THING IN THE DIARY. HE’S GOT THE LIAISON COMMITTEE
SO I WONDER HOW HE WILL FIT THE TWO TOGETHER.
IT REFLECTS — THE U.K. POLITICAL WRITER OVER THE
WEEKEND, THIS PULL BETWEEN DOMESTIC AND INTERNATIONAL
FORCES FOR KEIR STARMER. HE SEEMS TO BE DOING WELL ON
THE INTERNATIONAL STAGE BUT DOMESTICALLY, DIFFICULT ISSUES.
IT IS A KEY WEEK FOR EUROPE GIVEN THAT TRUMP HAS SAID THAT
EUROPE IS SO WEAK. IT HAS TO SHOW HOW IT WILL MOVE
FORWARD WITH FUNDING THE FIGHT AGAINST RUSSIA.
ALSO, THE QUESTION OF TRADE AND THE SOUTH AMERICAN TRADE DEAL.
A HUGE THING TO GET DONE THIS WEEK.
CAN THEY DIVERSIFY TRADE AWAY FROM THE U.S.?
IF THEY CAN, BIG DEAL AND A CLEAR SIGNAL TO TRUMP. ANNA:
MORE DETAILS ON THAT AND WE WILL FOCUS ON THE FROZEN
RUSSIAN ASSET STORY AS WE GO THROUGH THE WEEK.
LET’S TELL YOU WHAT ELSE WAS COMING UP, IN TERMS OF THE
GUEST CONVERSATIONS. THE SENIOR RESEARCH ECONOMIST
AT ABERDEEN HELPING US TO SET UP THE DATA AND CENTRAL BANK
DECISIONS THAT LIE AHEAD. PHOENIX CAITLIN WILL BE WITH US.
TO SOME EXTENT, THE STORY OF 2025 HAS BEEN WITH THE DOLLAR
HAS LOST. WE WILL TALK ABOUT THAT. JOHN BILTON, WHAT ARE HIS
LATEST THOUGHTS ON OPPORTUNITIES IN EUROPE?
BEN BARRINGER WILL BE WITH US. WE ARE GOING TO BE SPECIFIC
LIKE TALKING ABOUT THE MEDIA LANDSCAPE IN THE UNITED STATES.
THE BIDS FOR WARNER BROS. LIZZY: HERE’S WHAT ELSE YOU NEED TO
KNOW THIS MORNING. AUSTRALIA IS CONSIDERING
TOUGHER GUN LAWS AFTER 15 PEOPLE WERE KILLED IN A TERROR
ATTACK ON BONDI BEACH. ONE OF THE GUNMAN WAS ALSO
KILLED. A FATHER AND SON HAS BEEN
IDENTIFIED AS THE ATTACKERS WHO TARGETED MEMBERS OF THE JEWISH
COMMUNITY AS THEY CELEBRATED THE START OF HANUKKAH ON SUNDAY
EVENING. IT IS THE WORST TERRORIST
ATTACK IN AUSTRALIA’S HISTORY. A BYSTANDER WHO TACKLED ONE OF
THE GUNMEN HAS BEEN PRAISED BY LEADERS INCLUDING PRESIDENT
TRUMP. HE’S BEEN NAMED BY LOCAL MEDIA
AS AHMEH AL-AHMED. FRANCE IS TO DELAY THIS WEEK’S
VOTE ON A FREE-TRADE AGREEMENT WITH SOUTH AMERICA.
THE PROPOSED ACCORD HAS BEEN 25 YEARS IN THE MAKING. THE FRENCH PRIME MINISTER SAYS
MATCHES PROTECTS FARMERS AND CONSUMERS INSUFFICIENT.
THE DEAL COULD COLLAPSE IF IT IS NOT SIGNED BY THE END OF THE
YEAR. FORMER HONG KONG MEDIA MOGUL
JIMMY LAI HAS BEEN FOUND GUILTY OF ENDANGERING NATIONAL
SECURITY IN A LANDMARK TRIAL. THE CITY’S HIGH COURT CONVICTED
ON HIM ON HIS FARM TO COLLUDE WITH FOREIGN FORCES, A CRIME
PUNISHABLE BY LIFE IN PRISON UNDER THE CHINA IMPOSE NATIONAL
SECURITY LAW. LAI ALSO FOUND GUILTY OF
CONSPIRING TO PUBLISH TO DISMISS MATERIALS.
THE HEARING IS SCHEDULED FOR JANUARY 12.
LAI HAS YET TO DECIDE AND WHETHER TO APPEAL THE VERDICT.
ANNA: COMING UP, THE EU IS DISCUSSING
WAYS TO SOFTEN RULES THAT WOULD ABANDON NEW COMBUSTION ENGINE
VEHICLES BY 2035. WE WILLSEE HOW AUTOMAKERS
STOCKS REACT TO THAT NEWS. A BARRAGE OF DATA FOR THE U.K.
AND ALL IMPORTANT BANK OF ENGLAND RATE DECISION.
WE WILL GET A PREVIEW OF THE DATA AND THE DECISION.
ECB AND BOJ ALSO IN FOCUS WITH POLICY DECISIONS.
WE WILL PREVIEW THE MARKET ACTION THIS WEEK.
IF YOU WANT TO GET INVOLVED IN ANY OF THE CONVERSATIONS AROUND
THIS DESK, THE FUNCTION TO USE ON YOUR BLOOMBERG TERMINAL.
THIS IS BLOOMBERG. ANNA:
WELCOME BACK TO THE OPENING TRADE.
EUROPEAN EQUITY MARKET FUTURES AFTER THE WOBBLES IN GLOBAL
EQUITIES ON FRIDAY, WE ARE LOOKING FOR A LITTLE BIT OF
AGAIN THIS MORNING. TRYING TO RECOVER A LITTLE BIT,
NOT ALL OF THE LOST GROUND FROM FRIDAY. LIZZY:
THE TREASURY PICTURE IS PRETTY STEADY AS WELL.
THE FRONT RUNNER TO BECOME THE NEXT CHED FAIR?
NEXT FED CHAIR SAID HE WOULD CONSIDER PRESIDENT TRUMP’S
POLICY OPINIONS IF HE WERE PICKED BY THE FED’S INTEREST
RATE DECISION STILL REMAINS INDEPENDENT.
THAT IS KEVIN HASSETT AND HE WAS SPEAKING AFTER THE U.S.
PRESIDENT SAID HE SHOULD BE ABLE TO MAKE RECOMMENDATIONS ON
RATES SET BY THE FED. >> I THINK HE HAS STRONG AND
WELL-FOUNDED VIEWS ABOUT WHAT WE OUGHT TO DO.
THE JOB OF THE FED IS TO BE INDEPENDENT AND TO WORK WITH A
GROUP OF PEOPLE THAT ARE ON THE BOARD OF GOVERNORS, THE FOMC,
TO DRIVE THE GROUP CONSENSUS ON WHERE INTEREST RATES SHOULD BE.
TO DO SO BASICALLY WITH THE GUIDANCE OF THE FED CHAIR.
IT IS A COMMITTEE THAT VOTES IN THE END. LIZZY:
KEVIN HASSETT SPEAKING THERE. LET’S BRING IN VALERIE TYTEL.
I WENT ON HOLIDAY A FEW WEEKS AGO AND IT SEEMS PRETTY OBVIOUS
WITH A FRONT RUNNER WAS BUT NOW THERE’S ANOTHER HORSE IN THE
RACE. VALERIE: THE WALL STREET JOURNAL
REPORTING IT IS KEVIN HASSETT AND KEVIN WORSCH WHO MADE THE
FINAL ROUND OF INTERVIEWS. TRUMP STILL TEASING THAT HE’S
GOING TO MAKE THIS PICK IN THE NEAR FUTURE.
THE MARKETS THINK IT WILL BE SOMETIME NEXT YEAR.
IT IS INTERESTING THAT WE HAVE KEVIN WARSH BACK ON THE AGENDA.
WE HAVE SEEN THIS REFLECTED IN THE BETTING MARKETS.
POLYMARKET ODDS FOR KEVIN HASSETT TWO WEEKS AGO WERE AT
85%. IT HAS DROPPED DOWN TO 50-50
AND WARSH HAS RISEN IN THE ODDS FOR SPECULATION ON WHY THIS
SHIFT HAPPENED. MAYBE THERE WAS SOME PUSHBACK
FROM REPUBLICAN LEADERS IN THE SENATE, FOR MARKET PARTICIPANTS
ON HOW CLOSE KEVIN HASSETT IS TO THE TRUMP ADMINISTRATION.
HE’S ESSENTIALLY THE NUMBER ONE ECONOMIC ADVISOR.
WROTE A LOT OF THE ECONOMIC PLANS FOR THE TRUMP
ADMINISTRATION. PERHAPS THAT LINK TO THE WHITE
HOUSE IS TOO CLOSE FOR COMFORT AND ANOTHER REASON WHY THEY ARE
CONSIDERING KEVIN HASSETT AS A CONTENDER.
NOTE, THE DIFFERENCES BETWEEN THESE TWO, IT STANDS OUT ON
WHAT THEY’VE GUIDED AS THEIR OPINION OF QUANTITATIVE EASING.
KEVIN WARSH IS SOMEONE WHO IS VERY CRITICAL OF QUANTITATIVE
EASING AND THE FED’S USE OF THEIR BALANCE SHEET WHICH IS
KIND OF A HAWKISH THING BUT DOES AGREE WITH WHAT TREASURY
SECRETARY SCOTT BESSENT HAS BEEN’S CRITICIZING THE FED OF.
ANNA: AT LEAST WE ARE SURE THE PERSON
WILL BE CALLED KEVIN. LET’S GO INTO THE DETAILS THAT
LIE AHEAD FOR THE WEEK AHEAD. WHERE DO YOU WANT TO START?
VALERIE: I THINK NONFARM PAYROLLS WILL
BE THE MOST INTERESTING THING BECAUSE THERE ARE ELEMENTS OF
THIS PAYROLL REPORT, WE GET SOME FLAVOR OF OCTOBER.
WE DON’T GET THE UNEMPLOYMENT RATE FOR OCTOBER BUT IT IS
ESSENTIALLY A DOUBLE DATA PRINT. WE KNOW THE LABOR MARKET IS
STILL UNDER KEEN FOCUS FOR THE FED.
IF THEY WERE REALLY GOING TO SHIFT FRAME AND GUIDE FOR A CUT
EARLY NEXT YEAR, IT WOULD BE BECAUSE WE GOT MORE SUBSTANTIAL
WEAKENING WITHIN THE LABOR MARKET. IT WILL BE A VERY BUSY SESSION
ON TUESDAY HEADING INTO A VERY BUSY CENTRAL BANK WEEK.
WE’VE GOTTEN EVEN MORE HAWKISH HINTS FROM THE BANK OF JAPAN.
OVERNIGHT, THEY’VE BEEN TEASING THEY MIGHT START THEIR ETF,
SELLING OF THEIR ETF PORTFOLIO AS EARLY AS JANUARY.
THIS COMES AFTER THEY HAVE GUIDED THEY MIGHT NOT JUST HIKE
ON FRIDAY, THEY MAY ALSO GUIDE FOR MORE HIKES NEXT YEAR.
THE SAME FOR THE ECB. SOME HAWKISH HINTS AT THE END
OF THE WEEK TO BRACE YOURSELVES FOR. ANNA:
WE WILL LOOK AHEAD TO THAT. THANK YOU.
VALERIE TYTEL WITH THE LATEST WE ARE EXPECTING TO GET FROM
U.S. DATA AND THE CENTRAL BANKS THAT
ARE MEETING THIS WEEK. JOINING US TO DISCUSS IS THE
SENIOR RESEARCH ECONOMIST AT ABERDEEN INVESTMENTS.
THE PERFECT VOICE TO HAVE BE WITH US.
THANK YOU FOR YOUR TIME THIS MORNING.
VALERIE TOOK US THROUGH SOME OF THE DATA.
LET’S START WITH THE U.S. WHAT IS AT STAKE FOR YOU?
DO YOU THINK THE DATA WE ARE GOING TO GET IS GOING TO REALLY
SHAKE PEOPLE’S EXPECTATIONS ABOUT 2026 OR DO YOU THINK WITH
THE PERSONNEL CHANGES, THE IMPERFECTIONS IN THE DATA, THAT
IS TOO HIGH A BAR? >> I THINK THERE’S A LOT OF
UNCERTAINTIES THAT WE GET SOME OF THE DATA, NOT ALL OF IT IN
TERMS OF NFP. THERE IS DATA THAT’S GOING TO
BE MISSING NOT ONLY IN THE LABOR MARKET BUT ALSO INFLATION.
IT IS HARD TO INTERPOLATE THE DAYS YOU CAN GET THE DATA.
THAT IS PRETTY MUCH EXPECTED IN THE MARKET.
THERE IS UNLIKELY TO BE BIG SURPRISES THAT WILL BE
PERSISTENT. IT IS A CASE OF LOOKING TO NEXT
YEAR. IT IS VERY MUCH A GIVEN THAT
WHAT WE SAW LAST WEEK WAS THE LAST HIKE, CUT FROM FED CHAIR
POWELL. NOW WE ARE EXPECTED A LOT OF
DIFFERENT ECONOMISTS ARE, THAT THE NEXT CUT WILL BE IN THE
SECOND HALF OF NEXT YEAR UNDER THE GUIDANCE OF THE NEW CHAIR.
SO, YES, THERE WILL BE SOME QUESTION MARKS ABOUT FED
INDEPENDENCE BUT I THINK OVERALL, IT IS VERY DIFFICULT
TO SHIFT AWAY FROM THE FRAMEWORK THAT WE HAVE.
WE ARE QUITE CONFIDENT IN THE INDEPENDENT STORY BUT I THINK
THERE MIGHT BE TIMES WHERE THE MARKET WILL BE VOLATILE IN
RESPONSE TO SOME OF THE COMMENTARY AND WHO IS ACTUALLY
CHOSEN. ANNA: IT IS IMPORTANT TO POINT — I
WONDER IF IT TELLS US, THE FED CHAIR MIGHT NOT TELL US EXACTLY
WHERE RATES WILL GO EACH TIME BUT MAYBE THE FED CHAIR TELLS
US SOMETHING ABOUT THE WILLINGNESS OF A FEDERAL
RESERVE TO USE UNCONVENTIONAL MONETARY POLICY IF WE STILL
THINK OF QE AS UNCONVENTIONAL. IS THAT WHERE THE RELEVANCE OF
THIS DECISION LIES? SREE: I THINK THAT IS PART OF THE
STORY BUT I THINK THE MORE INTERESTING CUES WE WILL BE
LOOKING FOR IS DO THEY MEANINGFULLY DEVIATE FROM THE
DATA AND THE FRAMEWORK? AND WHAT WE HEARD FROM KEVIN
HASSETT, IT WAS A REASSURANCE THAT WE WILL BE MONITORING THE
DATA. WE WILL NOT BE MOVING AWAY FROM
THAT SORT OF PATH OF THEIR MANDATE.
I THINK ANYTHING THAT DEVIATES FROM THAT, WHICH I THINK IS
UNLIKELY. I THINK THAT WILL BE A WORRY
FOR THE MARKETS. ANYTHING THAT CAN BE
MISINTERPRETED, WORDING WILL BE VERY IMPORTANT. LIZZY:
FROM THE FED TO THE BOE. EXPECTED TO BE A CLOSE CALL,
EXPECTED TO BE A CUT. WILL IT BE A HAWKISH CUT? SREE:
I THINK SO. THE GDP DATA, ACTIVITY DATA WAS
WEAKER BUT IF YOU LOOK UNDER THE HOOD, THERE WAS SOME
NUANCES THERE. THE VOLATILE COMPONENTS, THE
CYBERATTACK ON JAGUAR/LAND ROVER.
IF YOU TAKE SOME OF THAT OUT, MAYBE IT IS NOT AS A WEEK AS
YOU EXPECT BUT YOU ARE EXPECT TO GET WEAKER Q4.
NOT A CONTRACTION PUT A FLAT IN THE QUARTER.
IT IS HARD TO COME BACK FROM THIS CONTRACTION AND MAKEUP
THAT LOVES TO MAKE A MEANINGFUL POSITIVE GDP NUMBER.
THEN, YOU ALSO HAVE THE STICKINESS OF INFLATION.
IT IS MOVING IN THE RIGHT DIRECTION, IT IS STILL QUITE
STICKY. IT AFFECTS THE PACE FROM WHICH
YOU CAN EASE. LIZZY: IS THERE A CPI PRINT THAT CAN
STOP THE BOE FROM CUTTING? SREE: IF IT WAS MEANINGFUL A
STRONGER, BUT I THINK IT IS UNLIKELY.
WHAT THEY WILL BE LOOKING AT IS THE OVERALL TREND.
WAGES HAVE BEEN WEAKENING. I THINK THEY STILL HAVE THE
STICKY CORE SERVICES, BUT THEY EXPECT THAT TO MOVE AT A SLOWER
PACE. I THINK IT WILL BE VERY DIFFICULT.
IT IS A VERY CLOSE CALL. BUT I THINK THERE ARE LOTS OF
MOVING PARTS THAT WOULD SUPPORT A BANK OF ENGLAND CUT AND I
THINK LAST WEEK’S GDP PRINT IS ONE OF THEM.
NONE OF THIS THING WE HAVE TO SPEED UP THE PACE OF EASING.
IT IS A CLOSE CALL BUT WE THINK GOVERNOR BAILEY IS LIKELY TO
SWITCH. ANNA: TO 5-4 AND GO FOR THE CUT.
LET’S MOVE ON TO THE ECB. YOU WERE MAKING THE VALID
POINT, LIZZY. IT DID NOT SEEM TO HAVE MUCH OF
AN IMPACT ON EXPECTATIONS IN THE MARKET.
ISABEL MAKING HAWKISH COMMENTS ABOUT WHETHER THE NEXT MOVE
WOULD BE A HIKE FROM THE ECB AND IMMEDIATELY COME EVERYONE
SAYS SHE’S REALLY HAWKISH SO SHOULD WE BE SURPRISED?
THE MARKET DID REPRICE A LITTLE BIT ON THE BACK OF IT.
WHY PAY ATTENTION TO THOSE COMMENTS? SREE:
CLIENTS THE WEEK BEFORE WERE VERY SKEPTICAL WHEN IT TALKED
ABOUT THE POTENTIAL FOR EIGHT RATE HIKE IN 27 WHICH IS OUR
VIEW. THE RATIONALE BEHIND THAT VIEW
IS EVENTUALLY YOU DO GET SOME SUPPORT OF ACTIVITY FROM FISCAL
STIMULUS, MAINLY GERMANY. THAT FILTERS THROUGH OVERTIME.
IT IS NOT AN IMMINENT HIKE. IT WAS INTERESTING THERE WAS A
LOT OF SKEPTICISM AND THEN SUDDENLY A REPRICING.
THAT SHIFT IN SENTIMENT WILL BE IMPORTANT ACROSS THESE
DIFFERENT MARKETS. A SLIGHT WORDING CHANGE WOULD
APPLY TO THE OTHER CENTRAL BANKS AND THAT IS WHAT WE HAVE
SEEN. I THINK — I DON’T THINK SHE
GAVE A CLEAR SIGNAL IN TERMS OF TIMING SO I AM SURPRISED. ANNA:
VERY FAR OUT. SREE: I THINK THAT WOULD POSSIBLY BE
A BIT TOO SOON. YES, AN EVENTUAL HIKE BUT ON
HOLD FOR NOW. I THINK WE WILL HEAR THAT
REITERATED FROM MATT OF LAGARDE ON THURSDAY — MADAM LAGARDE ON
THURSDAY. LIZZY: MORE DATA FROM THE BOJ.
OUR INVESTORS MORE CONCERNED ABOUT FISCAL POLICY? SREE:
YES, I THINK BOND MARKETS WILL BE FOCUSING ON THE NEWS FLOW
BEYOND THE BANK OF JAPAN. I DON’T THINK WE WILL SEE ANY
BIG SURPRISES ON FRIDAY WHEN THEY HIKE.
YES, IT IS A 30 YEAR HIGH BUT I THINK THE REAL FOCUS IS
IMMEDIATELY GOING TO SHIFT IN TERMS OF THE FOLLOWING WEEK.
I THINK IT IS AROUND CHRISTMAS THAT WE GET MORE ANNOUNCEMENTS
IN TERMS OF FISCAL YEAR 2026. WE HAVE THE SUPPLEMENTARY
BUDGET. IT WAS BIGGER THAN EXPECTED BUT
THE ISSUANCE PLANS AROUND THAT FROM THE MINISTRY OF FINANCE
WERE NOT TOO DRASTIC. I THINK THAT IS WHAT EVERYONE
WILL BE WATCHING. HOW IS THIS ALL GOING TO BE
FUNDED? YOU NEED MORE MILITARY SPENDING.
GIVEN ALL THE TENSIONS WITH CHINA, WHICH WE EXPECT TO EASE
OFF NEXT YEAR. AT THE MOMENT, IT IS STILL A
BIG RED FLAG AND WARNING IN TERMS OF BOTH JAPAN AND KOREA
HAVE TO STEP UP THEIR MILITARY SPENDING.
ALSO, TAKAICHI HAS FLAGGED STRATEGIC INVESTMENT IN AI,
QUANTUM COMPUTING AND LOOKING AT THE LONG-TERM PLAN.
I THINK IT WOULD BE THE TIMING OF THESE POLICIES AND THE
ISSUANCES GOING TO MOVE THE MARKET.
THE BANK OF JAPAN IS VERY MUCH PRICED IN BUT INTO A YEAR AND
NEXT, IT WILL BE THE FISCAL STORY.
YOU COULD SEE SOME VOLATILITY. MARKET LIQUIDITY IS VERY THIN
SO I THINK YOU COULD SEE SOME VOLATILITY INTO YEAR END. ANNA:
I SEEM TO REMEMBER THE BOJ KEEPING ME BUSY INTO DECEMBER.
WHY DOES IT GET SO BUSY? LET ME ASK YOU MORE ON THE BOJ.
THE PHYSICAL SIDE OF THINGS IS VERY IMPORTANT.
HOW MANY HIKES DO YOU THINK THE BOJ HAS IN THEM? SREE:
TO BE HONEST, I DON’T THINK IT WILL BE A VERY RAPID PACE OF
HIKES FROM HERE. A COUPLE OF THINGS IN TERMS OF,
THEY’VE HAD THIS FOCUS ON WAGE GROWTH.
EVEN IN THE RECENT SPEECHES, THEY WERE TALKING ABOUT THE
NEXT WAGE NEGOTIATIONS AND I THINK THAT IS GOING TO BE
WEAKER THAN LAST YEAR. THAT IS PARTLY BECAUSE OF THE
TARIFF STORY AND THE CHINA TRADE STORY. CORPORATES, AUTO MAKERS FOR
EXAMPLE, THEY SLASHED THEIR PRICES IN ORDER TO MAINTAIN
MARKET SHARE WITH THE U.S. THAT IS NOT SUSTAINABLE AND I
THINK THAT SQUEEZES MARGINS AND MAKES IT HIGHER — HARDER TO
PASS ON THAT WAGE GROWTH. LIZZY: SREE, ALWAYS A PLEASURE.
WE WILL CONTINUE THIS CONVERSATION ON CHINA NEXT.
CHINA REPORTING THE SLOWEST OF RETAIL SALES GROWTH OUTSIDE THE
PANDEMIC. WE GET THE LATEST ON THE DATA
NEXT. THIS IS BLOOMBERG. ANNA:
WILL COME BACK TO THE PROGRAM. 7:30 HERE IN LONDON.
30 MINUTES BEFORE GET EQUITY CASH TRADING.
LET’S HAVE A LOOK AT THE FUTURES PICTURE. UP BY 0.4%, 0.3%. WE WERE DOWN AROUND 0.5% IN
EUROPE ON FRIDAY. WORST LOSSES IN THE STATES AS
THE EPICENTER OF THE WORRIES SEEM TO BE AROUND AI.
THE NASDAQ BY THE END OF THE DAY WAS DOWN BY 1.7% AND THE
S&P DOWN BY 1%. WE WILL BEAR ALL THAT IN MIND,
THE U.S. FUTURES LOOKING MORE BUOYANT
BUT NOT CLAWING BACK ALL THE LOSSES OF FRIDAY, JUST SOME OF
THEM. LET’S HAVE A LOOK AT BOND MARKETS.
MANY CENTRAL BANK DECISIONS FROM THE ECB TO BANK OF ENGLAND
TO BOJ. ALL OF THAT FINDING ITS WAY
INTO THE GLOBAL NARRATIVE. WE SEE LITTLE OF HAWKISHNESS
INTO THAT CENTRAL BANKING NARRATIVE AND THAT WAS PUSHING
YIELDS UP IN SOME PLACES. THIS WEEK, WE WILL WAIT TO SEE
WHAT WE HEAR FROM LIZZY: CENTRAL BANKING.
WE HAVE SEEN WEAKNESS IN THE ASIA SESSION.
CHINA’S RETAIL SALES SLUMPED, UNDERLYING THE FOR THE RISK TO
THE ECONOMY AFTER SEVERAL MONTHS OF DETERIORATION.
PRESIDENT XI RESPONDED BY BOWING TO CRACK DOWN RECKLESS
PROJECTS THAT HAVE NO PURPOSE — VOWING TO CRACKDOWN ON WHAT
HE CALLED RECKLESS PROJECTS THAT HAVE NO PURPOSE.
WHAT DO THESE NUMBERS TELL US ABOUT THE CHINESE ECONOMY.
ALLEN: THE CHINESE ECONOMY IS FACING A
LOT OF HEADWINDS. THERE’S NOTHING ELSE TO SAY.
EXCEPT THAT IT WAS VERY DISAPPOINTING.
RETAIL SALES GROWING AT THE WORST PACE EVER OUTSIDE OF THE
PANDEMIC. FIXED INVESTMENTS SHRINKING. YOU HAD INDUSTRIAL OUTPUT
MISSING ESTIMATES. HOME PRICES EXTENDING THEIR
SLUMP. YOU CAN EXPLAIN A LITTLE BIT OF
THE SLOWDOWN IN CONSUMER SPENDING BY SAYING WE HAD THE
END OF THE TRADE SUBSIDIES. FINANCES ARE TIGHT RIGHT NOW. WHAT IS MOST TROUBLING IS THE
KEY PILLAR OF THE ECONOMY. RETAIL SALES SLOWING AT THE
SLOWEST PACE. WE SEE HOME SALES CONTINUING TO
FALL. THE GOVERNMENT HAS A LOT OF
WORK TO DO AHEAD OF IT. THE ONLY UPSHOT IS MAYBE IT
WILL FORCE THE GOVERNMENT TO BOOST FISCAL AND MONETARY
SPENDING, INCLUDING FOR THE PROPERTY MARKET IN PARTICULAR
MORTGAGE SUBSIDIES AND TAX BREAKS. ANNA:
THAT IS INTERESTING BECAUSE THERE HAS BEEN THE EXPECTATION
ON AND OFF ABOUT MORE STIMULUS TO COME FROM THE CHINESE
GOVERNMENT. BUT I WONDER HOW WE FACTOR INTO
THAT THE COMMENTS WE GOT FROM PRESIDENT XI, WHO HAS BEEN
TALKING DOWN ON WHAT HE CALLS RECKLESS PROJECTS.
MAYBE A SENSE THAT IT IS NOT ONLY GDP THAT MATTERS TO HIM.
SO, WHAT DOES THAT TELL US ABOUT THE WILLINGNESS TO DO AND
PROVIDE FURTHER STIMULUS? ALLEN: I WAS KIND OF SURPRISED JUST
BECAUSE XI JINPING IN THE PAST HAS TALKED ABOUT IMPROVING THE
QUALITY OF GDP GROWTH. TODAY, WE GOT A BETTER IDEA OF
WHAT HE MEANS. IN THE PAST, GOVERNMENT
OFFICIALS HAVE BEEN PROMOTED BASED ON THE ABILITY TO BOOST
GDP GROWTH BY BUILDING, EXHIBITION CENTERS THEY DON’T
NEED, FAKING STATS, FAKING CONSTRUCTION LAUNCHES, AND ALL
THAT. INSTEAD, XI JINPING SAID INSTEAD OF DOING THAT HE WANTS
MORE POSITIVE EXAMPLES LIKE IMPROVING THE QUALITY OF AIR
AND OTHER THINGS THAT WILL IMPROVE THE LIVELIHOOD OF
ORDINARY CITIZENS. SO, HE IS CHANGING THE WAY
GOVERNMENT OFFICIALS ARE BEING EVALUATED.
THESE METRICS ARE CHANGING QUITE RAPIDLY, WHICH IS QUITE
UNIQUE GIVEN THE FACT THAT IN THE PAST, IT HAS ALWAYS BEEN
ABOUT GROWTH AT ALL COSTS. ANNA: REALLY INTERESTING.
ALLEN WAN IN SHANGHAI. LET’S DISCUSS THIS FURTHER.
OUR GUEST JOINS US. SO NICE TO SPEAK WITH YOU.
THANK YOU FOR COMING IN. AS WE GET TO THE END OF 2025, I
WANT TO START BY TALKING ABOUT CHINA. SUCH A BIG PART OF ALL
EMERGING-MARKET BASKETS. WHAT DO YOU MAKE OF THESE
COMMENTS ABOUT QUALITY GROWTH? IT IS A THING HE HAS TALKED
ABOUT BEFORE. BUT IN THE CONTEXT OF PEOPLE
WANTING MORE TO BE DONE TO REBALANCE THE CHINESE ECONOMY.
RETAIL SALES LOOKING WEAK TODAY. WHAT DO WE LEARN ABOUT WHERE
THE CHINESE GROWTH NARRATIVE GOES NEXT? >> I THINK IT IS ABOUT REPRICE
OR — REPRIORITIZING WHERE GOALS ARE. IT IS SHIFTING FROM SHORT-TERM
GROWTH TO LONG-TERM PERSPECTIVES, TRYING TO SMOOTH
OUT IMBALANCES IN THE ECONOMY, TRYING TO GROW GROWTH
SUSTAINABLY, IMPROVING AIR QUALITY, RENEWABLE ENERGY, ALL
THESE PRIORITIES THAT ARE STRUCTURAL AND LONG-TERM IN
NATURE. HE IS TALKING ABOUT THE CROSS
CYCLE IN TERMS OF LOOKING THROUGH SHORT-TERM GROWTH
DYNAMICS AIMED AT MORE LONG-TERM IMPLICATIONS ABOUT
WHAT CAN HELP STABILITY IN CHINA IN TERMS OF GROWTH. THAT IS ONE AREA I DREW FROM
HIM. BECAUSE THERE IS A LIMITED IMPACT ON CONSUMPTION AND
CAUSING THAT TO BE A KEY ENGINE AND DRIVER OF CHINA’S ECONOMY,
WE REALIZED HOW IMPORTANT THE EXPORT CHANNEL IS.
THAT IS STILL THE PRIMARY ENGINE OF GROWTH FOR CHINA.
IN THAT SENSE, IT HAS SO MANY IMPLICATIONS ON THE CURRENCY.
WE HAVE SEEN IT STRONGER ACROSS THE PAST COUPLE WEEKS BUT THAT
IS NOT SUSTAINABLE. THEY CANNOT HAVE A
STRENGTHENING CURRENCY THAT IS GOING INTO THE THIS
DECELERATION THAT THEY ARE NOT ABLE TO GET A HOLD OF.
WE EXPECT FOR CHINA’S CURRENCY TO STAY QUITE STABLE, NOT TO
STRENGTHEN MUCH FROM HERE. BUT FOR MOST OF NEXT YEAR, FOR
DOLLAR-C AND Y TO TRADE AT 0.7 AND 7.1.
WE ARE RELYING ON THAT ENGINE AS A KEY SOURCE OF STRENGTH.
ANNA: EVEN IF THE EXPORTS TO THE U.S.
HAS BEEN CHALLENGED, CHINA HAS BEEN ABLE TO FIND EXPORT
MARKETS IN ASIA AND PARTS OF EUROPE. BUT NOW THE U.S.
AND EUROPE CALLING ON CHINA TO PIVOT ITS ECONOMY TO TRY TO
DIVERSIFY THE ECONOMY A LITTLE LESS AROUND EXPORTS AND A
LITTLE MORE AROUND DOMESTIC CONSUMPTION.
WHAT WILL BE THE BIG THEME IN CHINA IN 2026? PHOENIX:
I THINK IT IS VERY DIFFICULT FOR THEM TO SHIFT AWAY FROM THE
CURRENT STRATEGY, WHICH IS STILL VERY SLOW AROUND TARGETED
STIMULUS MEASURES. IT IS A PARSING OUT OF THE
ECONOMY. DOING A BIT OF MONETARY ACCOMMODATION AS WELL. THERE WILL STILL BE AN
INCREMENTAL APPROACH AND NOT THE BIG BAZOOKAS THE MARKET
MIGHT WANT TO JUICE GROWTH. LIZZY: YOU TAKE US TO THE MARKET
IMPACT, AND IT HAS BEEN A GREAT YEAR MORE BROADLY FOR EM.
WE HAVE BIG INVESTORS SAYING 2026 COULD CONTINUE TO BE A
GOOD YEAR FOR TRADES. DO THEY HAVE FURTHER TO RUN?
PHOENIX: TO SOME EXTENT, YES. WE HAVE HAD ABOUT AN 8% GAIN
AGAINST THE DOLLAR FOR THE MEDIAN CURRENCY PERFORMANCE IN
EMERGING MARKETS THIS YEAR. THAT IS VERY ROBUST. WE HAVE
HAD OVER A DECADE OF REALLY POOR RETURNS ON AVERAGE ACROSS
EM CURRENCIES. NEXT YEAR, WE EXPECT FOR THAT
ONLY TO BE 3% VERSUS THE DOLLAR. SUBSTANTIALLY SLOWER
PERFORMANCE BECAUSE VALUATIONS ARE MUCH MORE EXPENSIVE NOW.
THE BUFFERS HAVE COMPRESSED IN TERMS OF POLICY RATES COMING
DOWN, IT INFLATION EXPECTATIONS COMING DOWN AS WELL.
THAT COMPRESSES THE AMOUNT OF EARNING YOU CAN GET FROM THOSE
RATE DIFFERENTIALS. ON THE OTHER SIDE, WE THINK
VOLATILITY IS GOING TO RISE. THAT HAS BEEN QUITE LOW.
THAT HAS BEEN COLLAPSED THROUGH THE SECOND HALF OF THIS YEAR
ACROSS MULTIPLE ASSET CLASSES, NOT JUST CURRENCIES.
FOR NEXT YEAR, WE WOULD EXPECT THERE TO BE CATALYSTS THAT
CAUSE VOLATILITY TO PICK UP. THE CARRY TRADES WOULD BE LESS
APPEALING INCREMENTALLY. WE STILL LIKE SOME OF THEM IN
THE HIGH-YIELDING SPACE, IN LATAM AMN FRONTIERSD.
FOR A LOT OF THEM, WE HAVE SWITCHED OUT OF USING THE
DOLLAR AS THE FUNDING LEG AND THE EURO FOR BEING THE FUNDING
LEG. ANNA: IT IS INTERESTING YOU SAID THE
VOLATILITY HAS COLLAPSED BECAUSE THE WHOLE YEAR HAS FELT
VOLATILE. LIZZY: SURELY YOU COULD SEE VOLATILITY
COMING IN FOR EM FROM THE OTHER SIDE, FROM THE P.M. SIDE.
WE HAVE BEEN TALKING ABOUT THE MIDTERMS OVER THE WEEKS.
SURELY THAT COULD REINJECT SOME VOLATILITY. PHOENIX:
YES, THAT IS WHAT I HAVE BEEN SAYING AS WELL.
I THINK THE MIDTERM ELECTIONS AND IN TERMS OF THE FED CHAIR
VOLATILITY, THE HEADLINES I COULD GENERATE, WHAT POLICIES
MIGHT BE EXPECTED IN TERMS OF THE GUIDANCE THE NEW FED CHAIR
MIGHT HAVE ON THE REST OF THE COMMITTEE, THAT COULD GENERATE
SOME VOLATILITY. BUT WHAT WE ARE TALKING ABOUT
ESSENTIALLY IS WHETHER THE FED CUTS 25 BASIS POINTS OR 50
BASIS.POINTS NEXT YEAR IT IS STILL A RELATIVELY SMALL RANGE.
THAT IS WHAT MARKETS ARE FOCUSED ON, DESPITE THE NUANCE.
IT IS STILL A RELATIVELY SMALL RANGE.
EQUITIES, THAT IS A DIFFERENT PICTURE AND MUCH MORE VOLATILE.
ANNA: STICKING WITH FX, YOU SAY IN
YOUR NOTES, THE DOLLAR IS GOING TO MOVE TOWARDS A STRONGER
DOLLAR IN 2026. HOW MUCH STRONGER?
BECAUSE THAT WILL HAVE A BIG EFFECT ON EM.
ARE WE TALKING ABOUT A SMALL BOUNCE OR ARE WE UNWINDING ALL
THE WEAKNESS WE SAW THIS YEAR? LIZZY: AND WHEN? PHOENIX:
WE THINK OVER THE COURSE OF THE NEXT COUPLE MONTHS, WE WILL SEE
A LAST DIP IN THE DOLLAR, COMING OUT OF THE WEAKNESS WE
ARE SEEING IN THE U.S. ECONOMIC DATA, LABOR MARKETS,
SENTIMENT INDICES, AND SO ON. THAT WILL CAUSE THE DOLLAR TO
COME DOWN TO MAYBE 96.5 TYPE LEVELS BY FIRST QUARTER NEXT
YEAR. THEN WE EXPECT FOR IT TO REBOUND BACK TOWARD 100 OR
SLIGHTLY ABOVE. SO WE ARE TALKING ABOUT A RANGE
OF MAYBE 3% TO 4%. IT IS NOT HUGE IN THE CONTEXT
OF THINGS, BUT FOR THE DOLLAR IT IS QUITE A LOT. LIZZY:
THE DOLLAR BOUNCING BACK A BIT NEXT YEAR. WE ALSO HAVE A THEME THAT COMES
ACROSS ALL OF OUR CONVERSATIONS, BUT THAT IS THE
AI BUBBLE AND WHEN IT IS GOING TO BURST. EVERYONE LOOKING FOR
VALUE ELSEWHERE. OR IS IT GOING TO DEFLATE.
IF WE DO LOOK TO EM, WHERE ARE THE OPPORTUNITIES?
SO, TALKING ABOUT INDIA. PHOENIX:
SO MANY INVESTMENTS POURING INTO INDIA, ESPECIALLY FROM
MICROSOFT AND AMAZON. THAT HAS BEEN A HUGE PLACE THAT
HAS BENEFITED FROM THE BUILDING OF VARIOUS AI TYPE DATA CENTERS
AND INNOVATIONS. SO, YES, INDIA. KENYA IS ANOTHER PLACE WHERE
THEY HAVE REALLY STRONG PROGRAMS TARGETED AT TRYING TO
CAPITALIZE ON DEVELOPING AI FOR THE NATIONAL STRATEGIES.
BUT, YES, EVERY OR MOST EMERGING MARKETS HAVE BEEN
FORMING THESE TYPES OF STRATEGIES ABOUT HOW TO TAKE
ADVANTAGE OF AI, AND ESPECIALLY TO FOCUS ON THE LOCAL
ECONOMIES, PRIORITIZE LOCAL LANGUAGES, MOVE AWAY FROM THE
DOMINANCE THAT THE DM’S HAVE WITH RESPECT TO CONTROLLING ALL
OF THOSE INFRASTRUCTURE AND SYSTEMS. SO, IT IS SO MUCH
ABOUT THE STRATEGIC DIVERSIFICATION INTO AI THAT IS
GOING TO ENABLE CERTAIN RESILIENCE IN EMERGING MARKET
ECONOMIES IN THE FUTURE. ANNA: THAT IS ONE THING WE ARE
WATCHING. SOMETHING ELSE, REFORM DRIVEN
DEVELOPMENTS. WHERE ARE YOU SEEING REFORMS
THAT MAY BE GO UNDER THE RADAR, NOT GETTING ENOUGH ATTENTION
FROM GLOBAL INVESTORS? PHOENIX: I THINK INVESTORS HAVE BEEN
GIVING THEM A LOT OF ATTENTION, ESPECIALLY THE FRONTIER MARKETS.
WE HAVE SEEN SO MANY FLOWS COMING INTO EGYPT, INTO NIGERIA
AS WELL. THOSE HAVE BEEN THE MOST
POPULAR MARKETS THIS YEAR AND HENCE THE STRONG OUTPERFORMANCE.
WE EXPECT FOR THAT TO CONTINUE. ALONGSIDE OTHER PLACES LIKE
KENYA. THOSE ARE STILL PLACES THAT ARE
SEEING FISCAL CONSOLIDATION, IMPROVED CONSOLIDATION AROUND
GOVERNANCE AND REGULATORY FRAMEWORKS, MORE MARKET
ORIENTED EXCHANGE RATE DYNAMICS, MORE FREE-FLOATING
REGIMES. SO, INCREMENTAL GAINS TOWARDS
MORE MARKET ORIENTED ECONOMY. I THINK THOSE THINGS ARE STILL
HAPPENING AND INVESTORS ARE QUITE ON TOP OF IT IN TERMS OF
MONITORING. NOW THE CHALLENGES AROUND
EVALUATIONS. DO THEY WARRANT FURTHER
INVESTMENT? IN OUR CASE, WE BELIEVE A LOT
OF THOSE MARKETS, EGYPT, GHANA, KENYA, THOSE ARE STRONG PLACES
FOR FURTHER GAINS, ESPECIALLY FOR FIXED INCOME AND ON THE
CURRENCY SIDE AS WELL. ANNA: ONE OF OUR TOP STORIES THIS
MORNING AND FOR SEVERAL DAYS IS ONGOING CONVERSATIONS, TRYING
TO BRING PEACE TO UKRAINE. CLEARLY THIS WILL HAVE AN
IMPACT ON OTHER NEIGHBORING COUNTRIES IN EASTERN EUROPE.
WHAT KIND OF PEACE DIVIDEND DO YOU EXPECT TO SEE FOR THOSE
ECONOMIES? WHERE SHOULD WE BE WATCHING?
WILL IT BE SHORT-LIVED DEPENDING ON WHAT THE NATURE OF
THE DEAL IS? PHOENIX: IT IS QUITE DIFFICULT TO SEE
HOW SUSTAINABLE THE FRAMEWORK CAN BE BECAUSE THE SECURITY
GUARANTEES HAVE NOT REALLY BEEN STRONG ENOUGH FOR UKRAINE TO BE
SATISFIED WITH PROCEEDING FORWARD.
IT IS QUITE TRICKY, ESPECIALLY IF THERE IS NO STRONG U.S.
SUPPORT. IN TERMS OF ON THE GROUND
BOOTS, ARE THERE GOING TO BE ELEMENTS OF NATO?
ARE THERE GOING TO BE ELEMENTS OF U.K. AND FRENCH TROOPS?
THERE ARE SO MANY QUESTIONS THAT IT IS LIKELY ONE IN WHICH
THE PEACE DIVIDEND WILL BE QUITE SHORT-LIVED BECAUSE THERE
ARE SO MANY QUESTION MARKS ABOUT THE SUSTAINABILITY OF
UKRAINE AS SOVEREIGNTY. WILL THERE BE A MIGRATION
CRISIS AND TO EUROPE FROM THE UKRAINIANS ONCE THE BORDERS ARE
OPEN? THAT MIGHT UNDERMINE THE EURO
AND CONFIDENCE IN THE SUSTAINABILITY OF THE SECURITY
FRAMEWORK IN EUROPE. LIZZY: HOPEFULLY WE WILL GET MORE
CLARITY THIS WEEK FROM THE MEETINGS HAPPENING IN EUROPE.
GREAT TO SEE YOU. PHOENIX KALEN, GLOBAL HEAD OF
EMERGING MARKETS RESEARCH AT SOCGEN. LOOKING TO SOFT AND ROLES ON
COMBUSTION ENGINE VEHICLES. THAT END OF THE STOCKS TO WATCH
NEXT. THIS IS BLOOMBERG. ♪ >> I WILL BE PICKING A NEW HEAD
OF THE FED SOON. OR FED PERSON IS ABSOLUTELY —
DESPITE HIM, WE HAVE NUMBERS THAT REALLY NOBODY IS EVER SEEN.
DESPITE HIM, WE HAVE NUMBERS THAT NOBODY HAS EVER SEEN
BEFORE. WE ARE FIGHTING THROUGH HIM AND
WE WILL SOON HAVE A GOOD HEAD OF THE FED WHO WILL WANT TO SEE
INTEREST RATES GO DOWN. BUT WE ARE FIGHTING THROUGH
HIGHER INTEREST RATES. BUT THE INTEREST RATES ARE
COMING DOWN DESPITE HIM. ANNA: PRESIDENT DONALD TRUMP ON THE
APPOINTMENT OF A NEW FED CHAIR. SOME MESSAGES WE HAVE HEARD A
FEW TIMES. LET’S WIDEN THE CONVERSATION.
WE HAVE CENTRAL BANKS IN FOCUS, NOT THE FED, BUT OTHERS AROUND
THE WORLD. JOINING US IS OUR EXECUTIVE
EDITOR PAUL DOBSON. LET’S TALK ABOUT THE MARKETS IN
THREE MINUTES. GOOD MORNING FROM LONDON.
LET’S FOCUS IN ON THIS BUSY ROSTER OF CENTRAL BANKS, DATA.
WHAT DO YOU THINK HAS THE POWER TO SURPRISE? WHERE WILL WE SEE VOLATILITY
BEING CREATED? PAUL: LOTS OF POTENTIAL VOLATILITY IN
THE FX AND RATES SPACE. THE FED CUTTING BUT ALSO
SIGNALING IT MIGHT GO ON HOLD. THAT GIVES MARKET TIME TO
CALIBRATE WHERE THE BANKS ARE GOING.
THE BANK OF ENGLAND ALONG. WHAT WE GET IN TERMS OF THE
READ OUT WILL GIVE US INDICATION OF WHERE TO TRADE
STERLING AND GILTS AS WELL. WE HAVE THE ECB THE SAME DAY
LIKELY TO RAISE ITS FORECAST AND STAY ON HOLD.
MAYBE POINTING TOWARDS A HIKE AT SOME POINT IN THE FUTURE, SO
EURO-STERLING COULD LOOK INTERESTING.
FOR ASIA, THE BIG ONE ON FRIDAY, THE BANK OF JAPAN.
EVERYONE EXPECTS THEM TO HIKE AND TO SIGNAL THAT MORE HIKES
WILL BE COMING AS WELL. THAT HAS NOT BEEN HELPING THE
YEN. MAYBE WE WILL FINALLY GET MORE
SUPPORT IF THE BOJ COULD SOUND HAWKISH ENOUGH.
THAT I THINK IS WHERE WE WILL BE FOCUSED AND LOOKING FORWARD
TO AT THE END OF THE WEEK. LIZZY:
A BUSY WEEK FOR CENTRAL BANKS AHEAD.
BUT LAST WEEK AT THE END OF IT SEEMED TO BE MORE DOMINATED BY
THE AI JITTERS THAN THE FED CUT. I WONDER WHAT YOU SEE FOR
STOCKS TO WATCH TOWARD THE END OF THE YEAR.
LOTS HOPING FOR A SANTA RALLY. WILL WE SEE A ROTATION? PAUL:
I THINK THAT IS A REALLY INTERESTING ONE AS WELL.
FRIDAY, YOU GOT THE SENSE OF THAT, THIS IDEA THAT PEOPLE ARE
PARING THEIR TECH BETS THAT HAVE BEEN DOING SO WELL.
THE WORRIES ABOUT THE BUILD OUT, THE PACE, AND WHETHER IT
IS SUSTAINABLE, THE COST AND WHETHER THEY CAN FUND IT AS
WELL, PEOPLE ARE THINKING WHY NOT SPREAD THE CHIPS WIDER
ACROSS THE SURFACE? BANKS HAVE BEEN FARING WELL,
AND OTHER STOCKS THAT ARE OFFERING MORE VALUE AT THESE
RATES. AT LEAST INTO YEAR END, THE
MARKET WILL CONTINUE TO TOY WITH THAT THEME.
BUT I DON’T THINK THE TECH STORY IS DEAD BY ANY MEANS.
THE AI BOOM HAS A LOT OF ATTENTION AND PEOPLE WILL FIND
MORE REASONS TO GET EXCITED ABOUT THAT INTO THE NEW YEAR.
ANNA: THAT IS THE BUSYNESS OF THE
WEEK AHEAD. WE HAVE ALREADY HAD SOME DATA,
CHINA DATA. WE WERE TALKING TO A GUEST
ABOUT THAT. WHAT IS YOUR TAKE AWAY? PAUL:
PRETTY GLOOMY, AND THE MARKET IS TAKING A LITTLE BIT OF A
KNOCK. WE ALSO HAVE NEGATIVE SENTIMENT
IN THE PROPERTY SPACE COMING FROM VANKO, THE LATEST UNDER
FISCAL DE-RISK. THERE IS — THE MARKET DOES NOT
SEEM TO MIND IT. ON CHINA’S TECH STORY IN THE AI
SPACE AS WELL. PEOPLE ARE LOOKING MORE
OPTIMISTICALLY IN FAVOR OF THE CHINESE MARKET DESPITE THESE
CLOUDS AND HOPING IN THE NEW YEAR WE WILL GET MORE SPACE. LIZZY: PAUL DOBSON, THANK YOU.
NOW LET’S TAKE A LOOK AT WHICH STOCKS TO WATCH WITH CHLOE
MELEY. CHLOE: LET’S START WITH THE EU
EXPECTED TO RELAX SOME RULES AROUND COMBUSTION ENGINE
VEHICLES. THIS WOULD ESSENTIALLY ALLOW
SOME OF THOSE CARMAKERS THAT WE’VE GOT ON THE SCREEN TO
TRANSITION. THAT COULD BE A BIG RELIEF FOR
THOSE COMPANIES. THIS IS THE RESULT OF MAJOR
LOBBYING FROM SOME OF THOSE CARMAKERS AS WELL AS SOME
COUNTRIES WHERE THE CAR MAKING INDUSTRY IS REALLY IMPORTANT.
IN GERMANY, THE CHANCELLOR HAS SAID THIS IS ABOUT STRIKING A
BALANCE BETWEEN STAYING COMPETITIVE WITHIN THE CAR
MAKING INDUSTRY AND PROTECTING THE ENVIRONMENT AS WELL. MOVING ON TO ANOTHER INDUSTRY
THAT IS REALLY IMPORTANT, TO GERMANY, AND THAT HIS DEFENSE.
ZELENSKYY HAS HINTED UKRAINE CAN GET SECURITY GUARANTEES
FROM THE U.S. AND EUROPE AND THAT COULD
REPLACE POTENTIALLY THE LONG-TERM GOAL OF JOINING NATO.
SO, THAT COULD POTENTIALLY LEAD TO WEAKNESS IN THOSE DEFENSE
NAMES TODAY. USUALLY WHETHER THIS CAUTIOUS
OPTIMISM AROUND THOSE PEACE TALKS, THAT LEADS TO WEAKNESS
IN THE DEFENSE NAMES. WE WILL KEEP AN EYE ON THAT.
FINALLY, GOING OVER TO VAPES AND CIGARETTES, THE SALES HAVE
FALLEN MORE THAN ANY OTHER CATEGORY IN THE U.K.
AND THAT IS BECAUSE OF TIGHTER REGULATIONS AND GROWING HEALTH
CONCERNS AS WELL. THAT IS ACCORDING TO DATA FROM
NELSON I Q. WE COULD SEE THAT REFLECTED IN
IMPERIAL BRANDS AND B.A.T. THOSE ARE TWO COMPANIES WE HAVE
IN THE U.K. THAT HAVE BEEN DOING PRETTY
WELL BUT THIS NEW DATA COULD POTENTIALLY FEED THROUGH INTO A
BIT OF WEAKNESS THIS MORNING. ANNA:
CHLOE MELEY GETTING US STARTED FOR THE WEEK WITH OUR STOCKS TO
WATCH. JUST A FEW MINUTES UNTIL WE
START EQUITY TRADING IN EUROPE. ANOTHER STOCK THAT JUST CAUGHT
MY EYE, THE BIOTECH BUSINESS BASED IN THE NETHERLANDS, THEY
HAVE STOPPED A PARTICULAR TRIAL UNDER A TREATMENT.
THAT COULD BE AN AREA OF WEAKNESS. A SUBSTANTIALLY MARKET CAP TO
BUSINESS. MORE BROADLY, THE WEEK AHEAD IS
ABOUT CENTRAL BANKS AND DATA. AND WHETHER WE CAN TAKE
ANYTHING MATERIAL AWAY FROM THE U.S. DATA. LIZZY:
THE JOB STATE OF THE FOCUS, MORE SO THAN THE INFLATION DATA.
BUT FUTURES STATESIDE DOWN. EURO STOXX 50 FUTURES UP ZERO.
FTSE FUTURES UP. THE OPENING TRADE COMING UP
NEXT. THIS IS BLOOMBERG. ♪ ANNA: WELCOME BACK.
A FEW MINUTES TO GO UNTIL WE GET THE FIRST RAYS OF THE WEEK.
BUT WE ARE NOT DONE. PLENTY OF DATA, AND CENTRAL
BANKS DECISIONS DO THIS WEEK. LET’S REMIND US OF FRIDAY’S
SESSION, USEFUL IN TERMS OF HOW WE OPEN UP IN EUROPE.
THIS PART OF THE FRIDAY U.S. SESSION WE EXPERIENCED IN
EUROPE, AND WE CLOSED OUT JUST AS THE U.S. WAS IN THIS DOWNWARD
TRAJECTORY. THAT IS SOME WAY TO EXPLAIN WHY
WE HAVE A BIT OF A BOUNCE ON THIS MORNING.
EUROPE CLOSED WHERE THE YELLOW LINE IS DURING THE U.S. SESSION.
THE U.S. MADE SOME MODEST GAINS THROUGH
THOSE MODERATE LOWS, EVEN IF THEY CLOSED IN
MODERATE TERRITORY. WE ARE UP BY 0.4%. MAKING A FEW GAINS, BUT WE DO —
LIZZY: RETAIL SALES THE WORST OUTSIDE
OF COVID. A LOPSIDED ECONOMY IN CHINA AND
THAT ALREADY AFFECTING IRON ORE AND OTHER COMMODITIES THIS
MORNING. WE KEEP AN EYE ON THE MINRS,
ESPECIALLY IN LONDON. WE ALSO HAVE AN EYE ON THE
AUTOS. THE EU PREPARING TO SOFTEN
RULES THAT WOULD EFFECTIVELY BAN NEW COMBUSTION ENGINE
VEHICLES FROM 2035, SO WATCH THOSE. FINALLY, DEFENSE.
WE HAVE GOT UKRAINE AND THE U.S. DUE TO THE SECOND DAY OF TALKS,
SO DO WATCH THE LIKES OF RHEINMETALL AND LEONARDO. ANNA:
WE WILL KEEP THOSE IN FOCUS WITH GEOPOLITICS AND GRADUAL
MOVEMENTS TOWARD SOME KIND OF PEACE DEAL IN
FOR THIS MONDAY MORNING NEARLY UPON US.
SOME MODEST GAINS COMING THROUGH. WILL WE SEE SOME NEGATIVITY
AROUND THE BASIC RESOURCES. IS THAT ALL ABOUT RETAIL?
AND NOT SO MUCH ABOUT CHINA. LET’S TAKE A LOOK. UP BY A 10TH OF A PERCENT.
WE ARE SEEING THESE MODEST GAINS.
IN THE EUROPEAN EQUITY MARKETS. THAT IS THE BIG OVERALL MOVE.
A LITTLE BIT OF POSITIVITY. LIZZY:
ONLY A COUPLE OF SECTORS AND NEGATIVE TERRITORY. BASIC RESOURCES ARE UP.
WE WERE FLAGGING THE CHINA STORY. THEY TOLD US TO WATCH DEFENSE.
WE ARE MONITORING THE GEOPOLITICAL SITUATION WITH
UKRAINE. OTHER NAMES IN THIS SECTOR
EKING OUT GAINS. AIRBUS IS ANNA: IN THE GREEN.
THAT IS THE DEFENSE STORY. NOT AS SIMPLE AS A PEACE DEAL.
NO NEEDS TO SPEND ON THE FENCE. WE KNOW NATIONAL SECURITY CAME
AS QUITE A SHOCK. EVEN THOUGH THE MESSAGING HAS
BEEN SOMEWHAT CONSISTENT OVER RECENT MONTHS.
THERE WILL STILL BE A NEED FOR A LOT OF DEFENSE SPENDING IN
EUROPE. MOST SECTORS ARE IN POSITIVE
TERRITORY. WE ARE HIGHER. HEALTH CARE IS QUITE NEGATIVE. ON THE BACK OF ONE OF THE
RESULTS. LIZZY:
NOT PERHAPS AS MUCH RELIEF FOR AUTOMAKERS AS WE HAD EXPECTED.
WE WERE TALKING ABOUT THE SOFTENING OF RULES. WE ARE LOOKING AT MERCEDES
SHARES UP. SHOULD WE DIVE INTO THE BROADER
THEMES OF THIS MARKET? OUR GUEST JOINS US AROUND THE
DESK. WELCOME. LET’S START WITH AI.
WE HAVE HAD SOME GLOOMY NARRATIVE FOR THE END OF LAST
WEEK. YOU DON’T THINK WE NEED TO BE
THAT JITTERY. WHY? >> I DON’T, REALLY. AT THE END OF THE DAY WE ARE
TRYING TO COUNT OUT THE FOURTH MAJOR TECHNOLOGY REVOLUTION WE
HAVE SEEN IN OUR LIFETIMES. WE HAVE THE MAINFRAME ERA BACK
IN THE 80’S. THE.COM ERA. MOBILE TELECINE.
THIS IS THE NEXT BIG DEAL. HUGE AMOUNTS OF INVESTMENTS
GOING. IF YOU LOOK AT RATIOS, THIS IS
WELL BELOW WHERE WE WERE. A LOT OF INVESTMENT GOING IN.
WE ARE STARTING TO SEE SOME OF HIS POSITIVITY. LIZZY:
YOU ARE NOT WORRIED ABOUT THE BUBBLE BURSTING. >> I THINK THERE ARE COUPLE OF
THINGS GOING ON. WE ARE RIGHT IN THE MIDDLE OF
DECEMBER. PEOPLE ARE PROBABLY LOOKING AT
TAKING SOME MONEY OFF THE TABLE. NO ONE GOT FIRED. 17%.
SQUARING BOOKS A LITTLE BIT. THAT MAKES SENSE.
WE ARE NOT EXPECTING A MAJOR DIP DOWN INTACT.
THE EARNINGS CONTINUE TO ACCRUE. BECAUSE OF THE INVESTMENT GOING
IN. WE THINK THERE WOULD BE A PAUSE.
THERE IS A LOT OF INVESTMENT. A TALK OF A BUBBLE MIGHT BE
PREMATURE. ANNA: LET ME ASK ABOUT EUROPE.
EITHER YOU LIKE TECH OR YOU LIKE THAT. OR SOME OTHER THINGS.
I WONDER WHAT IS GOING INTO THIS. IT IS A FISCAL STIMULUS OR
SOMEONE ELSE. >> EVERYBODY IS CLEAR ON THAT.
GERMANY HAS BEEN TALKING ABOUT IT SINCE FEBRUARY. LOOK AT THE SAVINGS RATE.
HOUSEHOLD SAVINGS. THAT IS THE HIGHEST IT HAS BEEN
OUTSIDE OF COVID. I THINK WE HAVE COME OFF THE
BACK OF A LOT OF NEGATIVE NEWS. WE HAVE HAD A LOT OF
GEOPOLITICAL NEWS AS WELL. WE ONLY NEED THE CONSUMER TO
MOVE SIDEWAYS. STOP ADDING TO THAT.
BEGIN TO GET AN UPLIFT. LOOK AT WHERE PMI IS POINTING. ROUGHLY IN LINE WITH ONE POINT
SIX GDP GROWTH RATE. WE ARE POSITIVE FOR THE ABILITY
TO RECOVER NATURALLY. ANNA: WHERE IS THAT CHINA LIGHT. IT IS ABOUT A WIDER SUITE OF
PRODUCTS? >> OUR BIG EMPHASIS IS ON
EUROPE. WE HAVE THE ECB LIKELY ON HOLD. IN TERMS OF THE STOCK MARKET,
THE BANKING SECTOR HAS HAD A GREAT YEAR.
WE ARE SEEING THAT ACTIVITY. IN THE CREDIT IMPULSE.
IN DECENT SHAPE. WE HAVE THAT IN CHINA. GENERALLY WE ARE OPTIMISTIC. WE HAVE NOT HAD THE GREATEST OF
TIMES. WHEN WE LOOK AT THE EUROPEAN
INDEX, WE LOOK AT THE WAY FOR ALL THOSE DEFENSE MOVES.
WE ARE THINKING ABOUT THE ECONOMY IS SPUTTERING INTO GEAR.
LIZZY: DOES THAT MEAN THAT THE ECB’S
NEXT MOVE IS A HIKE? >> THAT IS INTERESTING. THE ECB HAS PRETTY MUCH DONE
WITH THEY NEED TO DO. WE HAVE HAD THAT FOR SOME TIME
NOW. DO WE SEE A MASSIVE CELEBRATION?
THIS IS NOT THE WORLD WHERE YOU SEE IT YOU WILL GET EUROPE
READY OFF TO THE RACES. THIS IS JUST A PERCENTAGE POINT
ABOVE. WE HAVE FISCAL ISSUES IN FRANCE.
GERMANY IS ONLY STARTING TO SEE SOME OF THE IMPACT OF THIS.
CONSUMER SENTIMENT REMAINS WEAK. WE ARE PROBABLY FACING IN ECB
FIRMLY ON HOLD FOR THE NEXT 6-12 MONTHS IN OUR VIEW. LIZZY:
WE NEED TO TALK CHINA. THAT PUTS ME IN MIND OF THE
CHINA LAKE. IN MANY PLACES OUTSIDE OF THE
U.S. FOR ALL THOSE CHINESE EXPORTS.
REALLY GOING TO THE U.S. GOING ELSEWHERE. >> I THINK IT INFORMS CHINESE
POLICYMAKING. THAT IS THE ISSUE HERE.
YOU HAVE A COUNTRY THAT IS USED TO EXPORTING.
THE EXPORT DATA WAS NOT THAT BAD. GERMANY HOLDING UP.
IT IS DOMESTIC ISSUES THAT ARE THE PROBLEM.
THIS COUNTRY HAS POTENTIALLY A DISINFLATIONARY IMPULSE.
AND SOME OF HER TERM HE HANGS FOR CAPACITY. WHAT DO YOU DO? DO YOU BUILD INFRASTRUCTURE?
PROBABLY NOT? DO YOU THINK MORE ABOUT THE
REGULATORY STIMULUS? SOME OF THE WORK THEY ARE DOING?
AND THEN OF COURSE THE PEOPLE’S BANK OF CHINA.
WHETHER THEY DO WITH RATES? WE THINK THERE WILL BE A TARGET
AROUND 5% OF GROWTH FOR NEXT YEAR. I WILL LIKELY REQUIRE MORE
EASING OF POLICY. A RELATIVELY EASY OUTLOOK.
LIZZY: SO SAME TARGET BUT MAYBE MORE
POLICY NEEDED TO GET THERE. LET’S GO BACK TO THE U.S.
YOU STARTED BY SAYING HOW OPTIMISTIC YOU ARE ABOUT AI. IF WE TAKE IT TO THE OUTPUT
LEVEL, WHAT JUSTIFIES MORE CUTS OTHER THAN THE POLITICS?
SHOULD WE TALKING ABOUT FED HIKES? >> MONETARY POLICY IS NOT A
SPRING THAT GOES BACKWARDS AND FORWARDS.
POLICYMAKERS LOVE NOTHING MORE THAN NOT HAVING AN OPINION.
TO BE FAIRLY BORING. THAT IS WHAT KEEPS ECONOMIES
GOING. IF THEY HAVE STABILITY AND
CERTAINTY. THE IDEA THAT THE FED.
THAT IT’S REALLY NOT SO LOOK LOOKS THEY WANT TO HAVE.
WE THINK THERE IS ONE MORE CUT TO GO. WE THINK THEY WERE NOT
RESPONDING. THEY HAVE BROUGHT THEM FORWARD.
EFFECTIVELY WE DID NOT SEE THE MASSIVE SPIKE IN INFLATION SOME
WERE CONCERNED ABOUT. INFLATION IS ABOVE TARGET.
THE LABOR MARKET HAS BEEN A BIT SOGGY.
THAT HAS GIVEN THE FED THE ABILITY TO DO THINGS SOONER.
WE THINK ONE MORE CUT AS WE COME INTO THE FIRST SEVEN NEXT
YEAR AND THEN THERE WILL BE DATA DEPENDENCY. WE SEE A REAL TERM GROWTH.
WE HAVE A PICKUP IN PRODUCTIVITY.
THAT WE ARE BEGINNING TO SEE. WE ARE SEEING POLICYMAKERS LIKE
TO HAVE THAT ON THE BOOKS. ANNA: YOU THINK YOU ALREADY SEE
JEROME POWELL NODDING TO THIS IN THE PRESS CONFERENCE.
WE ARE SEEING PRODUCTIVITY GAINS FROM AI.
ARE WE AT THE FOOTHILLS OF THAT OR DO WE NEED TO SEE YOU WHAT
THIS WILL DELIVER? >> THIS IS A MULTIYEAR
PHENOMENON. MAKING NO THE STATE. WE HAVE BIG TECH FIRMS.
HYPERSCALERS WHO ARE REALLY CAPTIONING THE REWARDS OF THIS.
THE INVESTMENT BEING MADE. PERHAPS THIS WILL ACCRUE TO THE
MAJOR ECONOMY. GOODBYE TO THE MAINFRAME ERA.
WHAT POWER THE ECONOMY DURING THE 1980’S WAS REALLY READING
THAT IT — RETURN ON INVESTMENT. STARTING TO USE MAINFRAMES AS
PART OF BUSINESS PRACTICES. WHAT IS SUPER INTERESTING IS
THAT IN FAR OF AI WE HAVE 40% OF THE WORLD POPULATION USING
AI DAY-TO-DAY. THAT HAS TAKEN A COUPLE OF
YEARS. IN THE MAINFRAME ERA IT TOOK 13
YEARS TO DO THAT. IN THE.COM ERA TOOK ABOUT SIX
YEARS TO DO THAT. YOU SEE WHERE WE ARE GOING.
THIS IS ACCELERATING. IT’S A BIG DEAL FOR THE WIDER
ECONOMY. THAT IS WHY THE PRODUCTIVITY OF
SIDE IS TO THE UPSIDE. LIZZY: CAN I FINALLY ASK YOU WHY YOU
CHOOSE THAT? IT IS A RARE SPECIMEN.
I’VE BEEN LOOKING AT THE BOOKIES.
THEY THINK KEIR STARMER WILL BE OUT OF OFFICE NEXT YEAR.
WHAT IS MAKING YOU SO CONFIDENT THAT THIS GOVERNMENT CAN
FULFILL THAT FISCAL CONSOLIDATION. >> THERE ARE A COUPLE OF THINGS
GOING ON. YOU LOOK AT FAIR VALUE TO WHAT
WE ARE AT A POINT OF VIEW. ACTUALLY WE ARE A LITTLE BIT,
TRADING A LITTLE BIT CHEAP RELATIVE TO WHERE WE SHOULD BE.
TURN AROUND TO GERMANY. WE KNOW THERE IS MORE ISSUANCE
COMING. A LOT OF SPENDING ABOUT THAT
TAKE PLACE. A LITTLE BIT SLUGGISH.
A LITTLE BIT SOGGY. IT IS A MEASURE OF RIGHTSIZING
IT. ANNA: THANK YOU VERY MUCH. THANK YOU FOR BEING HERE.
THE HEAD OF GLOBAL MULTI-STRATEGY AT J.P.
MORGAN ASSET MANAGEMENT. A QUICK CLOSE LOOK AT THE CORE
SIX. WE GET A LOOK INTO NOVO NORDISK. DOWN BY 2%.
WE HAVE HAD SOME DRUGMAKERS IN FOCUS TODAY.
THAT IS IN KEEPING WITH THE REST OF THE SECTOR. TODAY IT WILL BE EUROPEAN
LEADERS. MOVING HIGHER. LET’S GET A DEEPER DIVE INTO
SOME OF THE INDIVIDUAL NAMES AND FOCUS. YOU HAVE THAT FOR US.
>> WE ARE SEEING SOME MODEST GAINS FOR CARMAKERS IN EUROPE
THIS MORNING AFTER THE EU IS EXPECTED TO RELAX SOME OF THE
RULES AROUND COMBUSTION ENGINE VEHICLES.
THAT WOULD ALLOW THIS ON THE SCREEN TO TRANSITION MORE TIME
INTO VEHICLES PAIR THAT IS A BIG RELIEF.
SOME COMPANIES ARE MOVING HIGHER. QUITE MODEST GAINS.
NOTHING MAJOR. THERE IS A LITTLE BIT OF RELIEF
GOING ON BASED ON THIS. MOVING ONTO THE FENCE.
WE ARE SEEING SOME WEAKNESS HERE.
AS WE MONITOR THE PROGRESS OF THOSE PEACE TALKS THAT ARE NOW
ENTERING A SECOND DAY. THE U.K. PRESIDENT HAS — YOU CAN’T
PRESIDENT HAS SAID UKRAINE CAN GET SOME SECURITY GUARANTEES
FROM THE U.S. THIS IS SIGNALING THAT THERE
ARE PROGRESS ON THIS PEACE TALKS.
WE ARE SEEING SOME DOWNWARD MOVEMENTS. DOWN AROUND 8%.
THIS IS A BIOTECH COMPANY. THEY HAVE DISCONTINUED THIS
DRUG FOR THYROID EYE DISEASE. THEY ARE DOWN MAJORLY THIS
MORNING. DOWN BY 8%. NEARLY 9%. ON THE BACK OF A SETBACK THAT
IS NOW INTERRUPTING A ROUTE IMPRESSIVE RALLY FOR THE
BIOTECH COMPANY. AND FINALLYMINERS ARE UP THIS
MORNING AS COPPER IS RISING. INVESTORS ARE INVESTING A —
EXPECTING A TIGHTER MARKET. MOVING TO HER THAT SAFE HAVEN. WE ARE SEEING IN PARTICULARLY
THIS COMPANY UP 2.5% THIS MORNING. AS WELL AS OTHERS. GETTING SOME GAINS AS WELL ON
THE BACK OF THOSE PRICES RISING. ANNA:
FROM OUR EQUITIES TEAM, THANK YOU SO MUCH.
WE WILL DIVE INTO THOSE THEMES. DISCUSSING UKRAINE AND AUTOS
NEXT. THIS IS BLOOMBERG. ♪ ANNA:
WELCOME BACK TO THE OPENING TRADE.
WE HAVE THE EUROPEAN MARKETS ON THE FRONT FOOT.
A LITTLE BIT OF A REBOUND FROM THE LOSSES WE SAW.
A LOT OF THAT WAS FOCUSED ON THE AI RELATED SELLOFF. U.S. FUTURES A BUNCH HIGHER.
NOT GETTING A SENSE THAT WE ARE REBOUNDING.
A LITTLE BIT OF A MOVE HIGHER. LET’S TALK ABOUT THE AUTO
SECTOR IN THIS. STRUGGLING TO GET A BREATHER.
CRITICAL MOVEMENT. LET’S BRING IN OUR GUESTS.
WHO HAS BEEN FOLLOWING THE STORY.
WE HAVE HAD A DEADLINE FOR THE END OF SALES.
WHAT ARE WE EXPECTING TO HEAR THIS WEEK. >> WE UNDERSTAND THAT PEOPLE
ARE TALKING ABOUT TAKING THIS EFFECTIVE BAN OFF THE TABLE.
WE ARE SET TO HEAR MORE ABOUT THOSE DECISIONS. THE INDUSTRY IS PROBABLY
WAITING WITH BATED BREATH. THE EXACT DETAILS.
WE SEE THE SHARES OF THAT. THE PRICE REACTION IS FAIRLY
CAUTIOUS. WHICH WOULD INDICATE THAT
EVERYBODY IS RESIDING IN THE DETAILS.
WE CAN SEE THIS IS AN EFFECTIVE BAN OF COMBUSTION ENGINE SALES
WILL BE OFF THE TABLE FOR THE DEADLINE BY 2035. LIZZY:
DOING MUCH BETTER THAN MERCEDES. JUST TALK US ABOUT WHAT IS AT
STAKE HERE? >> SOME POLITICIANS HAVE BEEN ON
THE FRONT FOOT. EUROPE IS HOME TO LARGE AND
VERY IMPORTANT AND A MASSIVE JOB CENTER. THE BAD NEWS FOR THE INDUSTRY
HAS BEEN PILING UP IN THE LAST FEW MONTHS. THE BIGGEST SUPPLIER OF AUTO
COMPONENTS. SHEDDING SO MANY JOBS.
IN THE AUTOMOTIVE UNIT. THAT IS EXPECTED.
THAT IS REPEATED ELSEWHERE ACROSS THE SECTOR. THE MOST PAIN FOR NOW IS IN
GERMANY. WE HAVE HEADMOUNTED STATISTICS
OF CLOSING PLANTS. THAT IS A BIG WORRY.
ON THE OTHER SIDE OF THE SPECTRUM WE HAVE SEEN THAT. THIS IS REMAINING IN A HOLDING
PATTERN. OTHER COMPANY’S ART — COUNTRIES ARE OVERTAKING US.
ONE THING IS CLEAR. WE WILL MOVE AWAY FROM THE
COMBUSTION ENGINE. LOSING TOO MUCH TIME IN THAT
RACE WILL POSTPONE THE PAIN. LIZZY: WE THANK YOU SO MUCH.
FOR THAT LOOK AT THE AUTO SECTOR THIS MORNING.
WE ARE SEEING MANY PEOPLE IN THE MIDDLE OF THE BASKET.
THE DEFENSE NAMES. THIS COMES AFTER SECURITY
GUARANTEES FROM THE U.S. AND EUROPE. THEY ARE DOWN ABOUT 2%. WALK US THROUGH THE LATEST
COMMENTS FROM ZELENSKYY. >> HE ATTENDED A MEETING IN
PARLIN. — BERLIN. WITH JARED KUSHNER AND STEVE
WITKOFF. IT WAS AN ENCOURAGING SIGN THAT
THE U.S. DELEGATION SHOWED UP AT ALL
BECAUSE DONALD TRUMP HIMSELF SAID HE WAS NOT SURE HE WOULD
SEND ANY ENVOYS TO THOSE MEETINGS.
HE WOULD ONLY SEND THEM IF HE THOUGHT MEANINGFUL PROGRESS
COULD BE MADE IN THE NEGOTIATIONS AND TRY TO ACHIEVE
A PEACE PLAN. HE DID IN FACT SEND HIS
DELEGATION. A LOT OF PROGRESS WAS MADE.
ONE THING ZELENSKYY HAS PUT ON THE TABLE IS WITHDRAWING IN
SOME SENSES AMBITION FOR UKRAINE TO JOIN NATO.
THAT IS SEEN AS SOMETHING GIVEN UP FROM UKRAINE.
YOU ARE ASSERTING SOME KIND OF SOVEREIGNTY WHEN YOU AGREE NOT
TO FREELY ASSOCIATE YOURSELF WITH ANY KIND OF PARTICULAR
ASSOCIATION. FROM THE RUSSIAN SIDE DO
UKRAINIANS WANTED IN ARTICLE FIVE LIGHT GUARANTEE.
THE PROBLEM IS WITHIN THIS PARADOXICALLY FOR YOU GET TO
THAT, THE MORE LIKELY THE UKRAINIANS ARE TO SIGN ONTO
THAT NONETHELESS LIKE TO THE RUSSIANS ARE DESIGN ONTO IT.
WE HAVE HEARD A GREAT DEAL FROM THE RUSSIANS IN TERMS OF
REACTING TO THAT PLAN AS IT CURRENTLY STANDS. WE KNOW NOT HOW MUCH TRACTION
THIS HAS. THIS WILL CONTINUE TODAY.
WITH OTHER EUROPEAN LEADERS. ANNA:
WE HAVE OTHER EUROPEAN LEADERS JOINING THE CONVERSATION. WHAT ARE WE EXPECTED THEM TO
MAKE PROGRESS ON? >> THERE WILL BE 10 EUROPEAN
LEADERS IN ATTENDANCE INCLUDING THE SECRETARY OF NATO. AS WELL AS URSULA VON DER LEYEN
ATTENDING. THE USUAL CAST OF SUSPECTS.
WHETHER IT IS THE PRESIDENT OF FINLAND, KEIR STARMER. ALL TO BE DISCUSSING THAT.
I THINK WHERE THE IMPORTANT SCONCES AT THE END OF THE WEEK. THE ITALIANS HAVE JOINED THEM.
THEY SHOULD LOOK AT ALTERNATIVE WAYS OF THAT. THE OTHER OPTION THEY HAVE COME
UP WITH IS JOINT THAT. THAT IS FAIRLY IN DOUBT. ANNA: HE WILL HAVE A REALLY BUSY WEEK.
WE WILL BE SPEAKING TO THE EUROPEAN COMMISSIONER FOR
ECONOMIC TRADE AND SECURITY. LIZZY:
COMING UP ON THE PROGRAM, A PERSONAL APPEAL TO WARNER BROS.
AS PARAMOUNT TRIES TO GET A EDGE IN THE DEAL.
THIS IS BLOOMBERG. ♪ ♪WELCOME BACK EVERYBODY.
THIS IS 30 MINUTES ANNA: MORNING. A BIT OF OPTIMISM. EVERYBODY WAS IN A GLOOMY
MINDSET AROUND AI. THERE WAS A BIT OF A REBOUND.
WE CATCH UP WITH THAT THIS MORNING. ENERGY STOCKS IS ONE OF THE
BEST-PERFORMING THIS MORNING. NEARLY ALL SECTORS IN POSITIVE
TERRITORY. LIZZY:
REFLECTING THE GREEN ACROSS THE SCREEN.
ACROSS THE GEOGRAPHIES OF EUROPE.
MORE STOCKS HIGHER THAN LOWER. 411 IN THE GREEN THIS MORNING.
WHEN WE HAVE VOLUME. YOU HAVE VOLUME LOWER THIS
MORNING. THAN USUAL. YOU HAVE THIS ELECTRIC COMPANY
UP. SAP UP. FLIP OVER. WE CAN LOOK A LOT OF THE BLACK
ARTS. WE ARE LOOKING AT THEM. ARGEMX DOWN A .2% AS THINGS
STAND. BAD NEWS WHEN IT COMES TO THAT
CLINICAL STUDY. DOWN 5.2% ON THAT.
NOVO ALSO IN THE RED. ANNA: LET’S TAKE A LOOK AT SOME OF
THE STORIES WE ARE KEEPING AN EYE ON THIS MORNING.
AUSTRALIA IS CONSIDERING TOUGHER GUN LAWS AFTER 15
PEOPLE WERE KILLED IN A TERROR ATTACK.
A FATHER AND SON HAVE BEEN IDENTIFIED AS THE ATTACKERS. THEY TARGETED MEMBERS OF THE
JEWISH COMMUNITY AS THEY CELEBRATED THE START OF
HANUKKAH ON SUNDAY EVENING. IT IS THE WORST TERROR ATTACK
IN AUSTRALIA’S HISTORY. FRANCE IS LOOKING TO STALL A
VOTE. IT HAS BEEN 25 YEARS IN THE
MAKING. CONSUMERS ARE SO FAR
INSUFFICIENT. PEOPLE SAY THAT THE OVERCOAT
COLLAPSE IF IT IS NOT SIGNED BY THE END OF THIS YEAR.
CHINA INVESTMENT SLUMPED FURTHER AND RETAIL SALES
INCLUDED THE BEST. AFTER MONTHS OF LOPSIDED GROWTH FOR THE
COUNTRY. THE COUNTRY’S INABILITY TO DO
THAT IS EXPOSING THE ECONOMY TO RISKS ABROAD.
RELYING ON FOREIGN DEMAND TO PROPEL GROWTH FOR MUCH OF THIS
YEAR. DESPITE THE TERROR — TARIFFS
WAR UNLEASHED BY PRESIDENT TRUMP.
SOME OF THE CRITICISMS OF THE U.S. AND CHINA MADE.
THE IMBALANCE NATURE OF THE ECONOMY.
IT LOOKS LIKE THE ECONOMY IS MOVING VERY QUICKLY TO TRY TO
REBALANCE THE CHINESE ECONOMY. LIZZY:
FACTORY OUTPUT NOT THAT WEEK SO RETAIL SALES ARE THE WORST EVER.
THIS SET OF THE PANDEMIC. THE GROWTH TARGET ACTUALLY
LOOKING TO BE OK FOR THIS YEAR. THAT IS WHAT WE’RE HEARING FROM
ECONOMISTS. NEXT YEAR IS THE ISSUE.
HOW WAS FISCAL AND MONETARY STIMULUS ARE YOU GOING TO NEED
IN ORDER TO REACH THE 5% TARGET ATTENDEE THAT IS GOING TO BE
THE TARGET. IF YOU HAVE THAT STRESS
CONTINUING. THE GOVERNMENT IS SENDING MORE
FINANCIAL FOR CONSUMPTION. XI TALKING ABOUT NEEDING IT
CANNOT BE SUPERFICIAL. ANNA: WE EXPECT THAT EARLIER ON PIER
WITH THE EMERGING MARKET BEAT IN MIND.
CHINA IS SUCH A BIG PART OF THAT. WHETHER THERE SHOULD BE A
SUBSTANTIAL SHIFT. A DIFFERENT COMPLEXION.
ON THE GDP TARGETS. OR FURTHER STIMULUS FOR THE
RETAIL SIDE OF THINGS. TO TRY TO GET A MORE STIMULUS. THERE COULD BE A MAJOR POLICY
RETHINK IN CHINA. MORE THE SAME COMING THROUGH.
SOME OF THE WEAKNESS IN THE DATA. THE FIRST OF FOUR YEAR DROP.
SINCE 1998. THAT IS WHERE WE ARE SEEING
THOSE AREAS OF WEAKNESS. THAT STILL RAISES WORRYING
QUESTIONS. ABOUT DEFLATION. LIZZY:
WE ALREADY SAW LOSSES IN THE CHINESE SESSION. LIDS TALK ABOUT CORPORATE NEWS.
THE BATTLE TO BUY WARNER BROTHERS. DAVID ALLISON IS FORCING THE
FIRM’S BOARD TO RECONSIDER HIS OFFER. REALLY GOOD TO HAVE YOU WITH US.
WE ARE BOTH DYING TO TALK TO YOU.
ABOUT THIS EXCITING CORPORATE DRAMA. LET’S START BY ASKING YOU, WHAT
DOES NETFLIX WANT TO WARNER BROS. DISCOVERY?
DO YOU SEE IT IS THE DIVERSIFICATION AND WOULD BE
THE INTO SIN WHILE — CINEMA? >> IT IS AN OPPORTUNISTIC BID.
THEY HAVE A REALLY UNIQUE OPPORTUNITY. AND TIMING.
TO BUY A HIGH QUALITY ASSET. IN TERMS OF THE CONTENT LIBRARY
WOULD ALSO IN TERMS OF THE PRODUCTION. THE KEY HAS SET HBO.
AND WARNER STUDIOS. THAT IS VERY MUCH OPPORTUNISTIC.
IT IS ALL ABOUT DRIVING ENGAGEMENT.
HBO AND WARNER ARE FUELING MORE ENGAGEMENT.
THAT TURNS INTO PRESSING POWER. INCREASING PRICING.
ALONG WITH SUBSCRIBERS. I SEE THIS ON NETFLIXES SIDE.
LIZZY: WHO IS FIGHTING WHOM? PARAMOUNT WANTS TO FIGHT
NETFLIX. NETFLIX IS A WANTS TO FIGHT YOU
TO. DO YOU THINK THE JUSTICE DEPARTMENT WILL BUY THAT
ARGUMENT? >> THIS IS ALL ABOUT REGULATORS
DEFINITIONS OF THE MARKET. THEY WERE IS SAYING THIS WOULD
TAKE THE MARKET SHARE FROM 8% TO 9.2%.
THAT IS STILL WELL BELOW YOU TO GET PERCENT. SAYING THAT WARNER BROS.
PARAMOUNT WOULD TAKE THAT SHARE TO 13.8%. I THINK THAT IS HOW THE
REGULATORS ARE TRYING TO BREAK IT DOWN.
IN TERMS OF MARKET DEFINITION. AS THE TV MARKET SHARES. ANNA:
IT IS REALLY INTERESTING. HOW DO YOU DEFINE THE MARKET? ?
? IS IT JUST TELEVISION IS A FILM
AS WELL? COMPETITION FOR EYEBALLS.
I WANT TO ASK YOU ABOUT SOMETHING I FOUND VERY
INTERESTING. THE SHARE PLACE REALLY JUMPED
ON THE DAY. SOMETIMES THAT HAPPENS.
OFTEN IT DOESN’T. WHEN YOU SEE COMPANIES WILLING
TO SPEND LARGE AMOUNTS OF MONEY THERE IS RISK INVOLVED.
IT DOESN’T ALWAYS CREATE SHAREHOLDER VALUE.
AS TELL US SOMETHING IMPORTANT ABOUT WHAT THE MARKET THINKS
THEY WILL BE CREATING OF IT PARAMOUNT GETS ITS HANDS ON
WARNER BROS.? >> WARNER BROS.
AND PARAMOUNT TOGETHER CREATE A CREDIBLE NUMBER TWO OR
POTENTIALLY A BIGGER NETFLIX OR DISNEY.
THERE IS A HUGE AMOUNT OF VALUE. THE OTHER SIDE OF THIS IS
PARAMOUNT NEEDS TO STEAL A LOT MORE THAN NETFLIX NEEDS IT. YOU NEED TO MERGE THESE
BUSINESSES TOGETHER. IN TERMS OF CREATING SCALE. THERE IS A LOT OF OVERLAP IN
THE PARAMOUNT AND WARNER BROS. BUSINESSES.
THAT MUCH MORE SYNERGY. IT IS MUCH MORE IMPERATIVE.
AT THAT DEAL GOES THROUGH. COMPARED TO THE NETFLIX ONE.
ANNA: THERE WERE MANY DIFFERENT STAKEHOLDERS HERE.
IN TERMS OF THE WIDER COMMUNITY IN HOLLYWOOD, ARE THEY PUSHING
BACK? ARE THEY MUCH MORE NERVOUS ABOUT PARAMOUNT-WARNER BROS.
TIEUPS BECAUSE OF THE SYNERGIES THAT EVERYBODY KNOWS.
COST CUTTING. ARE MUCH MORE NERVOUS ABOUT
THAT? >> I THINK IT IS RIGHT. EXACTLY.
WHEN YOU LOOK THE TWO PLANS THERE IS A LOT OF COST CUTTING
FROM THE PARAMOUNT OFFER. NETFLIX HAS EXPOSURE IN
HOLLYWOOD. IT IS A LOT MORE DIVERSIFIED
GEOGRAPHICALLY. THEIR OFFER IS STILL THERE.
THEY’RE GOING TO CREATE MORE JOBS THAN THEY ARE GOING TO CUT
IN TERMS OF THAT. LET SEE IN TERMS OF THE OFFERS
WHICH ONE PLAYS THROUGH. THIS PERSONALLY WILL BE A BIT
MORE OF A DISTRACTION FOR NETFLIX.
THEY’VE POSSIBLY BEEN BUILT AS NOT BUYERS.
THE PARAMOUNT DEAL IS STRUCTURED SO THEY REALLY DO
NEED TO WIN THIS ONE. LIZZY: WHAT ABOUT THE STAPLER THE
WHITE HOUSE? I WOULD HOW MUCH PRESIDENT
TRUMP’S BOAT WILL BE A DECIDING FACTOR OR OF HIS ROLE IS BEING
OVERBLOWN HERE? WE KNOW THE ELLISON’S APPROVE
OF TRUMP. >>’S ISSUE IS REALLY AROUND CNN.
IT’S A LITTLE COMPLICATED. UNDER THE PARAMOUNT DEAL, CNN
WILL BECOME OWNED BY THAT ENTITY.
UNDER THE NETFLIX DEAL THERE WILL BE A SPIN OUT OF CNN AND
THE LEGACY TV ASSETS. IT IS NOT CERTAIN THAT THERE
WILL BE A NEW OWNER FOR CNN. UNDER THE NETFLIX DEAL.
AND SO WHAT TRUMP WANTS IS A NEW OWNER FOR CNN.
HE TENDS TO FAVOR THE PARAMOUNT DEAL IN SOME OF HIS COMMENTARY
BUT LET’S SEE IF NETFLIX CAN WORK OUT A DEAL OF GETTING A
NEW OWNER FOR CNN WHICH IS ULTIMATELY WHAT TRUMP IS
INTERESTED IN. HE HAS NOT APPLIED TOO MUCH ON
THE REGULATORY AND MARKET DEFINITION OF THE PIECE WE ARE
TALKING ABOUT EARLIER. LIZZY: WHEN IT COMES TO CNN, IF
PARAMOUNT’S OFFICE IS BACKED BY GULF MONEY, HOW MUCH OF AN
ISSUE WOULD BE THE CNN AND CBS WILL BE OWNED BY GULF
MONARCHIES AND THE PRESIDENT’S SON-IN-LAW?
HOW SQUEAMISH WOULD THAT MAKE WARNER? >> THIS NEWS MEDIA IS VERY
DIFFICULT FOR ME TO OPINE ON. IT IS NOT A GOOD LOOK. THERE IS PLENTY OF INTEREST. IN
NEWS NETWORKS AROUND THE WORLD. ANNA: WILL THIS TAKE MONTHS AND
MONTHS? IT SEEMED TO HAPPEN ALL VERY
QUICKLY KNOW WE ARE WAITING FOR IT TAKE MONTHS AND MONTHS?
WILL WE HAVE FURTHER OFFERS COMING THROUGH? >> I THINK THERE WILL BE
FURTHER OFFERS. THERE IS A REPORT IN NEW YORK
POST THAT PARAMOUNT POTENTIALLY WILL RAISE THEIR AUTHORS TO 33
BILLION. IN THE TIMELINES, THE NETFLIX
DEAL WOULD TAKE LONGER. POTENTIALLY. UP TO A YEAR.
MAYBE LONGER. SIMPLY BECAUSE YOU HAVE TO
SPEND OUT SOME OF THE OLD LEGACY TELEVISION ASSETS.
EVEN WITH THE PARAMOUNT DEAL IT WILL TAKE CERTAINLY QUARTERS
RATHER THAN WEEKS. FOR THIS TO BE CONCLUDED.
I THINK WE ARE VERY MUCH AT THE EARLY INNINGS THAN LATE INNINGS.
OF THIS GAME. OK. THANK YOU. FOR TRYING US.
THE HEAD OF TECHNOLOGY RESOURCES .
WITH A VERY INTERESTING STORY. IT DOES SEEM SOME WILL HAVE TO
MAKE A FILM ABOUT THIS ONE DAY. A MOVIE. IT HAS BEEN POTENTIAL.
LIZZY: IT HAS TV DRAMA POTENTIAL.
MULTIPLE SEASONS WRITING THEMSELVES. ANNA: WHERE WE NOW?
LIZZY: I THINK ARE IN SEASON TWO.
LET’S SEE WHO WINS OUT. SO MUCH POLITICAL CONSEQUENCE
OF THIS. IF AS HE WAS SAYING. IT ENDS UP BEING A PARAMOUNT
DEAL. WE WILL HAVE TO SEE WHAT HAPPENS IN THE NEAR’S WORLD AS
WELL. ANNA: ABSOLUTELY. IT IS INTERESTING HOW LEGACY
MEDIA IS NOT VERY HIGHLY VALUED AND OF LEAST INTEREST TO THE
BIDDERS BUT IS HAVING A OUTSIZE IMPACT ON THE CONVERSATION
AROUND WHAT IT IS WORTH AND WHAT ENDS UP SETTING THIS ASSET.
COMING UP ON THE PROGRAM IT WILL GET ON THE MACRO GENDER
THIS WAY. THE UNITED KINGDOM SET FOR
ABOUT — BEARISH OF INFORMATION. THIS IS BLOOMBERG. ♪ ♪ ANNA: WELCOME BACK TO THE OPENING
TRADE. 46 MINUTES IN THE MONDAY SESSION AND WE HAVE GREEN ON
THE SCREEN ACROSS EUROPEAN EQUITY MARKETS.
A LITTLE MORE THAN WE ANTICIPATED. IN PARTICULAR THE MORE
PERIPHERAL MARKETS. U.S.
FUTURES IMPROVING OVER THE LAST 15 MINUTES OR SO.
IT IS GOING TO BE A BUSY WEEK. WE HAVE U.S. PAYROLLS.
TWO PRINTS ON U.S. PAYROLLS COMING TOMORROW.
WILL YOU KNOW THEM SHED ANY LIGHT ON THE JOB SITUATION IN
THE STATES SUFFICIENT TO CHANGE THE DECISION AROUND THE FED
NEXT WEEK? MORE DATA COMING OUT FROM THE
UNITED KINGDOM. AS WE GO THROUGH THE WEEK. THE BOJ KEEPING US BUSY IN THE
FRIDAY. LIZZY: LET’S FOCUS ON THE U.K..
A WIDELY ANTICIPATED RATE CUT COULD FORCE POLICYMAKERS TO
CONFIRM WHETHER THE EASING CYCLE IS NEARING ITS END ALMOST
1.5 YEARS AFTER IT STARTED. LET’S BRING IN OUR CHIEF U.K.
ACADEMIES FOR A PREVIEW. IT LOOKS LIKE IT IS ALL RESTING
ON THE GOVERNOR. PERHAPS THINGS ARE MOVING
CAREFULLY. WHAT DOES THAT MEAN? [LAUGHTER]
WHEN TO THE CUTS AND IN YOUR VIEW? >> WE THINK THEY WILL IN THE
LAST HALF OF NEXT YEAR. WE THINK WE WILL CUT THIS WEEK.
DATA IS MISSING. YOU NEED TO SEE SOME PRETTY BIG
SURPRISES FOR THE NOT TO CUT THIS WEEK. LIZZY:
YOU HAVE A NUMBER IN MIND? >> I KNEW YOU WOULD SAY THAT.
[LAUGHTER] WE THANK CPI WOULD HAVE TO BE A
BLOW OUT BASICALLY. THAT IS SOMEONE THAT IF YOU
LOOK AT THAT JOB STAYED AT IT IS THE WAY THE DATA IS MEASURED
AND THE LIKE IT IS DIFFICULT FOR NOT TO BE A 5% HANDLE ON
THE UNEMPLOYMENT RATE. IT IS PRETTY HARD FOR PAY
GROWTH TO NOT FALL. THAT IS WHAT WOULD NEED
SURPRISE. WHAT THE BANK LOOK SET.
INFLATION. I WOULD SAY THE SURPRISE WOULD
HAVE TO BE PRETTY BIG. SPECIFICALLY WHAT HAS BEEN
GIVEN IN THE BUDGET. GIVEN THE ECONOMY.
WE HAD A NICE SURPRISE ON FRIDAY.
A BIG SURPRISE IN GDP NUMBERS THE ECONOMY COULD CONTRACT IN
THE FINAL QUARTER. THE BANK WAS SUSPECTING .3%
GROWTH. THAT IS A MASSIVE DIFFERENCE.
EVEN IF THE INFLATION DATA IS SURPRISING TO THE UPSIDE, YOU
COULD DRESS SET UP AS AN INSURANCE CUT.
WE ARE NOT IN ANY RUSH TO CUT AGAIN. ON THE OTHER SIDE ABOUT
INFLATION. ANNA:
THAT IS THE NEW THING WE DO. INSURANCE CUTS.
IF THIS IS STAGFLATION LIGHT NARRATIVE OUT THERE.
WE CALL IT AN INSURANCE CUT AND THEN PEOPLE DO NOT FREAK OUT.
TELL US MORE ABOUT THAT GROWTH STORY?
USUALLY THIS IS ONE MONTH GDP THAT DOES NOT MOVE THE NEEDLE
TOO MUCH BUT IT WAS PRETTY WEAK. THERE WERE SPECIFIC SAVANT ONE A WRECK — SPECIFICS AROUND ONE
PARTICULAR CAR COMPANY. >> EVERY MONTH WE HAVE A
EXPLANATION FOR WHY IT WAS WEAK. THIS IS WHAT WE WERE TALKING
ABOUT. THERE WERE ISSUES ON THE RUN UP
TO THAT. THINGS LIKE BUDGET AND UNCERTAINTY AROUND THE BUDGET.
CAR PRODUCTION. IF THE BIG STORY IS THAT STORY
OVER THE WEEKEND ABOUT CONSUMERS AND WHETHER CONSUMERS
WILL BE WILLING TO SPEND A LITTLE BIT MORE. THE STORY SO FAR IS ONE OF
SIGNIFICANT CAUTION. IF YOU HAVE 60% OF THE ECONOMY,
YOU DON’T HAVE ECONOMIC GROWTH. IF YOU’RE THINKING ABOUT THE
RISKS, MAYBE WE ARE TALKING ABOUT UPSET INFLATION SURPRISE.
ON THE OTHER SIDE YOU HAVE IT MOVING INTO 2026 THIS RISK THAT
THE GOVERNOR SAID HE IS WORRIED ABOUT.
WHICH IS WEAK AND GROWTH DRIVEN BY WEEK CONSUMPTION. LIZZY:
THE SPLIT SEEMS TO BE DO YOU CARE MORE ABOUT THE LABOR
MARKET OR INFLATION? WHERE IS NEUTRAL?
NOBODY WANTS TO SAY EXCEPT FOR ALAN TAYLOR PAIR BUT HOW WEEK
IS THE LABOR MARKET? WE HAVE SOME PRIVATE DATA OUT
THIS MORNING. IN YOUR VIEW WHEN YOU LOOK AT
IT, HOW WEEK IS IT? >> THERE WAS A POINT OVER THE
SUMMER WHERE WE THOUGHT IT MIGHT BE BOTTOMING OUT.
IN TERMS OF THE SPEED OF WHICH THE MARKET WAS LOOSENING.
THE LABOR MARKET IS FUNCTIONING BENEATH FULL EMPLOYMENT.
THERE IS SLACK IN THE LABOR MARKET.
THE LATEST SET OF DATA, WE HAVE HAD SOME CONTINUING OF THE
LOOSENING AND LABOR MARKET. THE QUESTION IS WAS THAT
SIMILAR TO THE GDP DATA? WAS IT A SIMILAR DRIVER.
THE UNCERTAINTY ABOUT THAT? WAS IT AROUND THAT?
AND NOW FUNDS WILL BE WHAT WE KNOW IS IN THE BUDGET.
THAT IS WHAT IT WAS ABOUT PAIR WHAT WAS COMING.
WILL THE LABOR MARKET BEGAN TO STABILIZE SOMEWHAT?
THERE IS ALWAYS A RISK. THAT IT MOVES IN A NONLINEAR
FASHION. THAT IS WHY THAT IS A THING IN
THE U.S. HE MOVED TO A CERTAIN LEVEL IN
ALL THE SUDDENLY THE UNEMPLOYMENT RATE GOES VERY
QUICKLY IN THE WRONG DIRECTION FOR A CENTRAL BANK.
THAT IS WHY THE REASON THEY WENT TO GUARD AGAINST THE NEXT
RISK. THE BANK OF ENGLAND WANTS TO BE
RESTRICTED BECAUSE OF INFLATION. THEY DON’T WANT TO BE TOO
RESTRICTIVE WHEN IT COMES TO LABOR MARKET. ANNA:
THANK YOU VERY MUCH FOR GOOD TO GET YOUR PERSPECTIVE.
PROBABLY MUCH MORE FROM YOU THIS WEEK AS WE HAVE PLENTY OF
U.K. DATA COMING OUT. NOW FOR THE OTHER MAJOR
DECISIONS IN TERMS OF CENTRAL BANKS AND THE DATA POINTS.
HE IS WITH US. WE ALSO HAVE THE ECB TO LOOK
INTO. THE BOJ ON FRIDAY. A LOT OF U.S. DATA.
WHERE DO WE THINK THE BIG SURPRISE COMES FROM? >> THE WEAKENING OF THE LABOR
MARKET IS A KEY FOCUS. ESPECIALLY IN THE U.S..
ESPECIALLY THE PRESS CONFERENCE. I SAID OUT LOUD THEY EXPECT
UNEMPLOYMENT TO PICK UP A LITTLE BIT IN THE CYCLE.
UP IT’S A LOT OF FOCUS ON THE UNEMPLOYMENT RATE. IF YOU GET AN UNEXPECTED RISE,
IT HAS BEEN TAKING HIGHER. THREE STRAIGHT MONTHS UNTIL THE
SHUTDOWN. OBVIOUSLY WHEN I CAN UNEMPLOYMENT RATE FOR THE MONTH
OF THE SHUTDOWN BUT IF WE DO SEE A DECENT TICK HIGHER THEY
MIGHT START TO DO THAT WITH THE FED’S CONFIDENCE.
IT IS NOT ACCELERATING ITS WEAKNESS IN THE U.S.
THAT IS A KEY FOCUS FOR ALSO THE CENTRAL BANK DECISIONS.
UNLIKELY TO THROW A MONKEY WRENCH INTO THE MARKET THIS
WEEK. LIZZY: UNLESS WE PAINT THE ECB AS THE
BORING ONE. >> I THINK THE ECB COULD REALLY
BE THE INTERESTING ONE. IT COULD BE REALLY AWKWARD FOR
CHRISTINE LAGARDE TO ANSWER QUESTIONS ON WHY WE HAD ALL
THIS HAWKISH LANGUAGE AND MEANWHILE IN YOUR FORECAST HE
WAS STILL UNDERSHOOTING ON INFLATION NEXT YEAR.
IN THE YEAR BEYOND. THE MARKET THINK SHE DID
DOWNGRADE 2027 CORE INFLATION FARTHER THAN WHAT IT IS RIGHT
NOW. UNDERSHOOTING ON INFLATION TALKING ABOUT RATE HIKES IS NOT
NECESSARILY OUT OF TO THE MARKETS MINDS.
WE HAVE A MORE HAWKISH SIDE OF THE GOVERNMENT COUNSEL TALK
ABOUT HOW SHE IS COMFORTABLE WITH THE MARKET PRICING IN A
RATE HIKE. THAT REALLY DID UPSET THE BOND
MARKET. GLOBALLY WE HAVE HAD A SELLOFF.
WE HAVE HAD A FIVE YEAR YIELD PAIR THE MARKET REALLY SETTING
THE DOUBT IN A RATE HIKE SPIRIT OR ANY RATE CUTS.
FOR MOST CENTRAL BANKS OUT THERE. ANNA:
IT SEEMS LIKE THE MARKET WAS SUBMITTED FOR A NEW HIKING
NARRATIVE. >> EXCEPT FOR THE FED,
THANKFULLY. ANNA: ALTHOUGH THERE WERE QUESTIONS
ABOUT THAT. THE MEDIAN WAS ATTEMPTING TO
MAKE THAT PIVOT. JEROME POWELL PUSHING BACK ON
THAT. I GUESS THAT TAKES US TO THE
BOJ WERE WE DO HAVE EXPECTATIONS THAT WE GET A HIKE.
I CAN’T WORK OUT IF IT IS BEHIND OR AHEAD OF THE CURB
WITH THEY ARE CERTAINLY GOING THEIR OWN WAY. >> THERE IS A LOT OF MESSAGING
FROM BANK OF JAPAN OFFICIALS OF LATE TO SET A MARKET FOR
HAWKISH GUIDING OF LATE. WE ARE EXPECTING A HIKE FROM
THE BANK OF JAPAN. WHAT WE HAVE BEEN LED TO
BELIEVE IS THEY MIGHT LEAVE THE TABLE OPEN NEXT YEAR. ARE WE LOOKING FOR THAT OR FROM
THE BANK OF JAPAN? WE HAVE REPORTING OVERNIGHT
THAT THEY ARE BEGINNING TO SELL THEIR ETF HOLDINGS IN JANUARY.
THIS IS SOMETHING THEY SIGNAL BACK IN SEPTEMBER.
THEY GAVE US THE PACE AT WHICH THEY WANTED TO DO THAT.
THEY DID NOT NECESSARILY DECLARE THERE WERE AND THEY
WOULD START SELLING THEM INTO THE MARKET.
ANOTHER HAWKISH ANGLE FROM THE BANK OF JAPAN THAT THERE WOULD
BE SELLING THESE ETF HOLDINGS FAIR WINDING DOWN THE BALANCE
SHEET ESSENTIALLY. THAT IS ANOTHER THING THEY
WOULD BE TRYING TO DO PEER WE DON’T KNOW WHAT WHERE THEY
WOULD BE DOING WITH THEIR BOND PURCHASES.
THEY HAVE A ALONGSIDE THE HUGE ADJUSTMENTS WE HAVE SEEN THIS
YEAR. LIZZY: IT WAS INTERESTING BECAUSE WE
ARE SPEAKING TO OUR GUEST EARLIER AND IT WAS A FISCAL
STORY SHE NEEDED TO MIND MORE THAN THE FISCAL STORY. >> IT IS VERY INTERESTING.
WE HAVE NEW LEADERSHIP IN JAPAN WITH LIZZY:
WE KNOW THE LEADER OF JAPAN IS THAT IS INDEPENDENT. WE HAVE SEEN THE NEW PRIME
MINISTER ALMOST GIVE PERMISSION FOR THE BANK OF JAPAN TO BE
HIKING AT THE MOMENT. SHE HAS TONED DOWN HER LANGUAGE.
EVER SINCE SHE BECAME PRIME MINISTER A FEW MONTHS AGO.
BIG QUESTIONS ON HER FISCAL SPEND.
WHAT KIND OF BOND ISSUANCE THAT ENTAILS? YOU CAN BLAME HER FOR A LOT OF
STEEPENING OF THE CURVE THIS YEAR.
IT HAS HAD A HUGE READJUSTMENT. THE FACT IS IT MIGHT NOT BE
OVER. ANNA: OK, THANK YOU VERY MUCH.
WITH THE LATEST ON WHAT WE ARE WATCHING AHEAD OF THIS WEEK.
I CANNOT WORK OUT WHETHER THE U.S.
DATA IS GOING TO BE REALLY GOOD AS A HUGE MARKET EVENT.
THE THINGS THAT ARE NOT THERE. WE WILL NOT END UP WITH A
SITUATION WHERE PEOPLE WILL TELL ARKANSAS STORIES ABOUT THE
U.S. DATA. LIZZY: I THINK WE ARE HAPPY TO HAVE A
BIT OF DATA. EVEN IF IT IS NOT PERFECT.
EXACTLY. COMING OUT TO THAT QUESTION OF
WHETHER THE STORY DOES THAT. WE HAVE FUTURES AHEAD.
PUSHING HIGHER. S&P UP 4/10 OF A PERCENT.
THAT DOES IT FOR THE OPENING TRADE. THIS IS BLOOMBERG.