Global Rally | Paris Riots | The Pulse With Francine Lacqua 07/03/2023
>> NEWSMAKERS AND MARKET MOVERS, THIS IS "THE PULSE" WITH FRANCINE LACQUA. MANUS: ON THE STORIES THAT SET THE AGENDA. THE GLOBAL RALLY EXTENDS AMID OPTIMISM U.S. INFLATION IS MODERATING. PIMCO WARNS ABOUT THE DISCONNECT BETWEEN VALUATIONS AND WORSENING ECONOMIC BACKDROP. AUTHORITY TESTED, PRESIDENT
MACRON PUSHES TO RESTORE ORDER ACROSS FRANCE THROUGH ALMOST A WEEK OF RIOTS SPARKED BY A POLICE OFFICERS FATAL SHOOTING OF THE TEENAGER IS THE COST AMOUNTS. QUARTERLY SALES RECORD SET ON SURGING DEMAND FOR ELECTRIC VEHICLES. VERY GOOD MORNING. FRANCINE IS OUT FOR TODAY, YOU HAVE THE PLEASURE OF MY COMPANY FOR THE NEXT HOUR. WE HAD THE RED LINE AND
MANUFACTURING. WE ARE FIRMLY IN CONTRACTION. THE PRELIMINARY ESTIMATE WAS FOR 43.2. YOU ARE JUST SEEING ACROSS THE ASSETS HERE EQUITIES, NASDAQ PUTTING ON 2% LAST WEEK. THE QUESTION IS YOU START THE SECOND HALF OF THE YEAR. YOU'VE TRADED EQUITIES PRETTY
MUCH WITH IMMUNITY. WILL YOU BE ABLE TO CONTINUE TO DO SO WITH IMPUNITY IN THE SECOND HALF OF THE YEAR. OIL IS STEADY. A RECORD LOSING STREAK FOR FOUR QUARTERS. THE HEDGE FUNDS A MOST BEARISH ON WTI SINCE 2017. A BATTLE ROYALE BETWEEN THE SUSPECTS IN THE MARKET AND A MEETING OF THE OIL MINISTERS IN VIENNA.
RATES YOU ARE SEEING YIELDS RISE, THERE WAS A MASSIVE DISLOCATION LAST THURSDAY ON THE BETTER DATA. RATE CUTS ARE GONE. HOW MANY MORE RATE HIKES WILL COME. THE DAUGHTER -- THE DOLLAR IS UP. DOLLAR LONGS FAULTS OF THE LOWEST SINCE MARCH.
YOU ARE SEEING A STRUCTURAL REPOSITIONING IN THE DOLLAR. FIRMLY IN THE MANUFACTURING RETRENCHMENT. THERE ARE RIOTS IN FRANCE. LET'S HAVE A QUICK LOOK AT THAT FOR YOU. YOU'VE GOT SMALL GAINS ACROSS
THE BOARD IN TERMS OF THE EQUITY MARKETS. WE WILL BRING THAT TO YOU IN JUST A SECOND. YOU HAD A BREAKING RED HEADLINE ON MANUFACTURING SIDE OF THE EUROPEAN COMPLEX. LET'S HAVE A LOOK AT THE EUROPEAN EQUITY MAP. THE OTHER DYNAMIC IS THIS, THIS IS WHAT YOU NEED TO FOCUS ON WHICH IS THE TWOS, TENDS, OF THE INVERSION. IT IS DEEP, MALEVOLENT AND IS IT PRESCIENT? ONE OF THE DEEPEST AND DARKEST MOMENTS IN THE BOND INVERSION IN DECADES.
IS THIS DISCONNECT BETWEEN THE EQUITY MARKET AND THE BOND MARKET SOMETHING WHICH WILL COME TO PASS MORE AGGRESSIVELY AS WE GO INTO THE SECOND HALF. THAT'S THE STATE OF PLAY ON THE MARKETS. LET'S BEGIN WITH OUR MAIN STORY THIS MORNING ON FRANCE WHICH IS THE PROTESTS IN FRANCE HAVE CONTINUED FOR A FIFTH NIGHT AS THE POLICE KILLING OF A TEENAGER GRIPPED THE COUNTRY. 45,000 POLICE WERE DEPLOYED IN AN EFFORT TO CONTAIN CLASHES. OUR CORRESPONDENT JOINS US FROM PARIS. TALK ME THROUGH A FIFTH NIGHT OF PROTESTS AND THE ESTIMATED COST TO THE ECONOMY AT THIS STAGE? >> THE PEAK OF THE RIOTS MAY HAVE PASSED BECAUSE WE ONLY SAW 150 ARRESTS LAST NIGHT COMPARED TO MORE THAN 700 ON SATURDAY AND 1300 ON FRIDAY NIGHT BUT STILL OF COURSE DOZENS OF BANKS, SUPERMARKETS, 700 SUPERMARKETS, SCHOOLS, PUBLIC BUILDINGS, HAVE BEEN DAMAGED. THERE HAS BEEN SOME LOOTING.
SOME BUILDINGS HAVE BEEN VANDALIZED OVER THE PAST FEW DAYS. OF COURSE THIS WILL COST A LOT OF THE FRENCH ECONOMY. THE FIRST ESTIMATE IS AT LEAST 100 MILLION EUROS IN DAMAGES BUT THIS IS IF THE RIOTS STOP TODAY. IT'S NOT CLEAR WHETHER THE
RIOTS WILL CONTINUE OVER THE NEXT FEW NIGHTS. ABOUT 45,000 POLICE OFFICERS ARE DEPLOYED EVERY NIGHT ACROSS THE COUNTRY AND THE RIOTERS ARE USUALLY VERY YOUNG BETWEEN 14 AND 18 YEARS OLD AND THEY COME FROM THOSE POOR SUBURBS FROM LOW INCOME NEIGHBORHOODS WHERE THE POPULATION IS UNDEREDUCATED, UNDEREMPLOYED AND VERY OFTEN FROM IMMIGRANT DESCENDANTS. THIS MEANS THE GOVERNMENT WILL ALSO HAVE TO ADDRESS THE DEEP ISSUES IN THOSE NEIGHBORHOODS AND THE DISCRIMINATION THAT THE POLICE MAY HAVE FACED IN THE CASE OF THE KILLING OF A TEENAGER LAST TUESDAY AND CLEARLY ON ALL THE FRENCH NEWSPAPERS TODAY, FRANCIS STILL SHOCKED WE WILL SEE HOW THE SITUATION EVOLVES TONIGHT AND OVER THE NEXT FEW NIGHTS. MANUS: CERTAINLY EMMANUEL MACRON BLAMING SOCIAL MEDIA FOR A GREAT DEAL OF WHAT'S HAPPENED AND ESCALATED OVER THE PAST COUPLE OF MONTHS. WE WILL RETURN TO THE STORY LATER ON WITH YOU.
I'M JOINED NOW BY THE HEAD OF GLOBAL MULTI-ASSET STRATEGY JP MORGAN ASSET MANAGEMENT. MANY ASSET MANAGERS OFTEN JOIN US ON GEOPOLITICS. I'M NOT ASKING YOU TO TRADE GEOPOLITICS. HOW SERIOUS A MOMENT IS THIS
FOR FRANCE AND EUROPE AND JUST IN TERMS OF RISKS AS YOU LOOK AT IT THIS MORNING? >> I THINK YOU ARE RIGHT TO HONE IN ON GEOPOLITICS BEING SOMETHING WHICH DOESN'T NECESSARILY DRIVE ECONOMICS. WE'VE SEEN THIS TIME AFTER TIME. OBVIOUSLY SHOCKING SCENES IN FRANCE. I THINK AT THE MOMENT THE REALITY IS SHOULD WE BE FOCUSING ON WHAT THE CONSUMER IS DOING, WE HAVE A SEASON COMING UP SOON AND WHERE THE ECB ARE GOING AFTER CENTRAL LAST WEEK. I THINK THAT'S WHAT WILL DRIVE THE ECONOMIC OUTLOOK. MANUS: WHERE DOES THE ECB GO POST SINTRA? >> WE HAVE A HEIGHT NAILED ON FOR JULY.
WE THINK WE PROBABLY SEE 4% IS THE ECB'S TERMINAL RATE. THERE SLOWING IN MANUFACTURING DESPITE THE FACT A STRONG CONSUMER AND YOU'RE PROBABLY TELLS US THE ECB ARE CLOSE TO MORE TO THE END OF A FAIRLY HAWKISH RUN FOR THEM. MANUS: THE CONSEQUENCE OF THAT IS OF COURSE WE HAVE THIS -- WE'VE BEEN ABLE TO GORGE ON EQUITIES WITH IMMUNITY BUT CAN WE TRADE, CAN WE GORGE THE SECOND HALF WITH IMPUNITY? THAT'S WHAT I WANT TO KNOW FROM A RISK PERSPECTIVE FOR THE EQUITY MARKET FIRST OF ALL. JOHN: IT PUT ME IMMEDIATELY IN MIND OF THAT WARREN BUFFETT PHRASE. BEING GREEDY WHEN EVERYONE IS FEARFUL. IF YOU GO BACK OVER TO 1950 AND LOOK AT YEARS WE'VE HAD A POSITIVE FIRST HALF OF THE S&P 500, 78% OF THE TIME YOU GET A POSITIVE SECOND HALF. MOMENTUM TENDS TO BUILD SLOWLY
AND STABLY THROUGH TIME. WE HAVE TO BE CAREFUL NOT TO CONTINUE TO LOOK FOR THIS RECESSION WHICH IS APPARENTLY STILL SIX MONTHS AROUND THE CORNER SOME 18 MONTHS AFTER IT WAS FIRST CALLED. THE EARNINGS DATA, LOOKING AT VALUATIONS, AND THE REALITY IS I THINK EQUITY MARKETS STILL ARE SENDING A BIT OF WORRY. IT'S BEEN A STRONG COUPLE OF WEEKS TECHNICALLY.
I'VE CERTAINLY GOT SYMPATHY FOR THOSE WHO LOOK FOR A SLIGHTLY BETTER ENTRY POINT BUT TO BE HONEST WITH YOU I WOULD SAY DON'T BE TOO GREEDY BECAUSE THOSE CORRECTIONS THERE COULD BE SHORT-LIVED. MANUS: I SHOULD PERHAPS TEMPER MY ENTHUSIASM. I'VE BEEN THREE WEEKS AWAY TRAVELING DIFFERENT COUNTRIES. TALKING ABOUT GORGING IT'S THIS VORACIOUS APPETITE FOR JAPAN WHICH HAS BEEN EVIDENT. 30 YEAR HIGH ON THE TOPICS. WHEN YOU LOOK AT THE 5 TRILLION ADDED TO THE NASDAQ THE JAPAN MARKET, THE MEGA CAPS IS PUTTING ON 74%.
ARE THEY JUST NOT BOTHERED? JOHN: I THINK THERE'S MORE TO IT THAN THAT. I THINK FRONT AND CENTER ANYBODY WHO IS ON THE MORE CONSTRUCTIVE END OF THIS, LOOKS AT THE YIELD CURVE WITH SOME LEVEL OF CONCERN. THERE ARE THREE THINGS I WOULD FLAG. WE HAVE TO ACCOUNT FOR INFLATION WHICH HAS BEEN PUSHING UP FRONT-END RATES AND IS GRADUALLY COMING DOWN. SECONDLY WE ALL KNOW THE YIELD CURVE IS THE BEST UNBIASED INDICATOR OF FORWARD RATE EXPECTATIONS. EVERYONE EXPECTS A RECESSION IN THE FORWARD NOT SURPRISED TO GET AN INVERTED CURVE.
THIS LOOKS LIKE A LATE CYCLE ENVIRONMENT IN MANY ECONOMIC INDICATORS NOT LEAST THE CURVE BUT THE IMBALANCES, OF THE EXCESS BORROWING IS NOTABLE BY ITS ABSENCE THIS TIME AROUND. MANUS: A FEW MORE TOPICS TO GET THROUGH. STAY THERE READY TO GO. COMING UP THE UBS BOSS IS SAID TO BE WARY OF FLOATING CREDIT SQUEEZE PLUS DOMESTIC UNIT. THE UNIVERSAL BANK FOR SALE OR NOT, WE HAVE THE DETAILS ON BLOOMBERG. MANUS: THE CONVERSATIONS THAT MATTER AND THE INSIGHTS YOU NEED. I MANUS CRANNY IN DUBAI.
UBS IS PLANNING TO CLARIFY THAT IT'S CREDIT SUISSE RESCUE WILL RELY ON FUNDING, A SWISS NEWSPAPER SAY THEY AREN'T PLANNING AN IPO FOR THE DOMESTIC UNIT OF CREDIT SUISSE. MARION JOINS ME NOW. TALK ME THROUGH THE OPTIONS. IT REALLY WAS THE JEWEL IN THIS. WHAT ARE THE REAL OPTIONS FOR THAT BUSINESS. >> THE UBS CEO HAS SAID THEY WANT TO KEEP THIS SWISS UNIVERSAL BANK, OF THIS ENTITY OF CREDIT SUISSE.
AFTER THE DEAL WAS ANNOUNCED ABOUT WHAT THAT WOULD MEAN FOR JOBS IN THE MARKET SHARE COMPONENTS. THEY PLAN TO ANNOUNCE THAT IN THE THIRD QUARTER. WE EXPECT SOME INFORMATION AT THE END OF AUGUST. REALISTICALLY THE OPTIONS HERE, THEY COULD KEEP THIS WITH THEIR OWN DOMESTIC BANK AND POTENTIALLY FLOATING IT IN IPO OR KEEPING A SHAREHOLDING. IT LOOKS LIKE WHAT WE ARE HEARING FROM OUR CONTACTS AS WELL AS THEY ARE KEEN TO KEEP IT. AND IT'S A BASE SCENARIO.
MANUS: WE HAVE THIS OTHER REPORT , HE STEPPED DOWN. YOU RECALL THAT WEEKEND. THIS IS A REPORT THAT FINRA ARE INVESTIGATING. WHAT DOES THE REPORT SAY? >> THIS DATES BACK TO WHAT THIS SWISS BANK REGULATOR OPENED UP AN INVESTIGATION RELATED TO THE GREEN CELL COLLAPSE. THEY ARE STILL INVESTIGATING INDIVIDUALS ROLES IN THIS AND SO ALLEGEDLY GOING THROUGH THIS REPORT -- REPORT, HE IS ONE OF THOSE FOUR INDIVIDUALS. MANUS: WE WILL TRACK THE STORIES AND KEEP THOUGH -- IN TERMS OF HOW MUCH. JOHN BILTON IS OUR GUEST THIS MORNING.
WE WON'T ASK YOU ABOUT BUYING JP MORGAN STOCK. ON A BROADER PERSPECTIVE THE UBS TRANSFORMATION OF CREDIT SUISSE HAS HUGE RAMIFICATIONS FOR THE DIVIDEND AND BUYBACK, A LOOK AT AMERICAN BANKS YOUR OWN HOUSE BEING ONE OF THEM. HOW IMPORTANT IS THE DIVIDEND STORY TO DISTINGUISHING THE LONG EUROPE SWISS. JOHN: WE HAVE TO TAKE A STEP BACK AND WE HAVE TO LOOK AT WHERE THIS HAS LED US.
THINK BACK TO MARCH WITH THE REGIONAL BANKING SECTOR AND SOME FAIRLY DARK MUTTERINGS ALL OF A SUDDEN THE WHOLE SYSTEM WOULD COME UNDER PRESSURE. NUMBER ONE THE FED ACTED EXTREMELY QUICKLY TO PUT IN A BACKSTOP. WE CAN SEE FROM THE LARGEST SCALE THAT THIS IS A VERY SPECIFIC BUSINESS LEVEL ISSUE WITH THE REGIONALS. CRUCIALLY EUROPE I THINK A DECADE MORE SINCE THE SOVEREIGN CRISIS IT'S BEEN POSSIBLE TO THINK ANY TIME THERE'S AN ISSUE IN THE BANKING SECTOR MADE SENSE TO BE UNDERWEIGHT THE EUROPEAN BANKS.
I THINK THE BUSINESS MODELS AND THE BUYBACKS THAT ARE GOING ON SUGGEST THAT THOSE DAYS ARE BEHIND US. THE SECTOR ACTUALLY IS ONE OF THE STABILIZING PARTS OF THE EUROPEAN INDEX. MANUS: THANKS AT ONE STAGE HAVE COME ON AND SAID WE WOULDN'T TOUCH THEM.
I'M INTERESTED TO UNDERSTAND COMPLEXITY IN THE SECOND HALF OF THE YEAR. YOU ARE GENERALLY PRO-RISK SO WHAT IS YOUR PERSPECTIVE ON CONVEXITY IN THE SECOND HALF? JOHN: IF ONE IS RUNNING A BALANCED PORTFOLIO, WHAT WERE LOOKING FOR IS TO UNDERSTAND HOW WE CAN HAVE DECENT RETURNS IN ANY STATE OF THE WORLD. THIS IS AN UNCERTAIN ENVIRONMENT. IT'S NOT LOST ON ME THE REMAINS SOME PRETTY PROFOUND RISKS.
WE WANT TO BE OVERWEIGHT DURATION. AND WE'VE BEEN CLIPPING THE COUPON IF WE RUN DOWN THE MIDDLE HERE. WHAT IT DOESN'T DO IS GIVE US MUST PROTECTION. IF SOME OF THESE MORE CONSTRUCTIVE NARRATIVE WE GET A PAUSE IN THE CYCLE AND THE ECONOMY DELIVERS THIS SOFT LANDING. NOT HAVING EXPOSURE TO THE TOPSIDE, SO FOR US IT'S HAVING BALANCE AND ROBUST. WE WHAT IT -- WE HAVE TO MAKE SURE IT'S
SOMETHING THAT ALLOWS US TO MAKE GRADUAL STUDY LONG-TERM GAINS. PARTICULARLY IF IT HAS DURATION OVERWEIGHT SPRAYED MANUS: YOU'VE UPGRADED YOUR EQUITY. YOU'VE MOVED TO NEUTRAL ON YOUR CREDIT POSITION. YOU'VE ALREADY IN PART ANSWERED
THIS. YOU'VE SAID IT WILL BE NOT NECESSARILY A HARD LANDING HENCE WHY YOU HAVE MORE PROCLIVITY. ARE WE READY FOR SHALLOWER YET LONGER SESSION.
WHAT DO YOU THINK THE REPERCUSSIONS ARE FOR REFINANCING IN 2024, 2025? A LOT OF THAT HAS YET TO BE AFFECTED ON THE BOTTOM LINE. WHERE WILL THIS BE MOST PRONOUNCED? JOHN: I THINK WE ARE ALREADY SEEING WHERE THE PAIN IS HEADING. WE HAVE SEEN SOME STRESS COMING THROUGH. ALSO WE'VE SEEN THOSE BORROWERS WHO HAVE PERHAPS BEEN MORE MARGINAL COMING INTO THE LOANS MARKET AS RATES ALREADY BEGIN TO HAVE PRESSURE. THE HIGH-YIELD MARKET TODAY IS MORE THAN 50%. THERE'S ONLY 10% OR SO IN THE
MAIN U.S. INDEX. IT'S A VERY DIFFERENT INDEX TO WHAT IT WAS 10 OR 20 YEARS AGO. MORE IMPORTANTLY OUR BELIEF IS AS WE SEE CREDIT BECOME AVAILABLE ALBEIT AT A HIGH PRICE IT WILL FORCE COMPANIES TO MAKE CHOICES AROUND THE PROJECTS AND INVESTMENTS THEY MADE. WE'VE SEEN A RISING TIDE FLOATING ALL BOATS BECAUSE A VERY LOW INTEREST RATES. THIS ENFORCES MORE BEHAVIOR THE FOCUS ON THE GROWTH AND LONG-TERM VIABILITY OF THE BUSINESSES. IT'S NOT THAT CREDIT ISN'T AVAILABLE IT JUST HAS A CERTAIN COST. COMPANIES CAN AND ARE ADAPTING TO THAT IN THEIR
FINANCIAL STRATEGY. MANUS: RELATIVE TO WHERE WE WERE OVER A YEAR AGO. THANK YOU VERY MUCH JOHN. MY GUEST THIS MORNING ON THE MARKETS. EV MAKERS ARE POSTING RECORD SALES ON THE DEMAND SIDE, OF THE DETAILS TO COME. THIS IS BLOOMBERG.
MANUS: THE CONVERSATIONS THAT MATTER, THE INSIGHTS YOU NEED. TESLA AND PYD HAVE SET -- BYD WIDENING THEIR LEADERS THE TOP ELECTRIC CAR MAKERS. TESLA DELIVERED 466,000 CARS. BYD POSTED THE BEST EVER QUARTERLY SALES RESULTS FOR ITS RENEWABLE ENERGY VEHICLES. HALF FULLY ELECTRIC AND THE OTHER WERE PLUG-IN HYBRIDS. BYD SNAPS IT TESLA HEALS. ALEX JOINS US NOW. THIS MOMENTUM IS DRIVING FASTER AND FASTER. WHO IS AHEAD?
>> BYD IS SELLING A LOT MORE UNITS. TESLA REMAINS VERY PUNCHY MARKET CAP. BYD HAS A SIMILAR -- A DIFFERENT APPROACH. IT IS A FAR BIGGER MARKET SHARE
IN CHINA. THERE'S A DIFFERENT APPROACH WHERE THERE IS INJUSTICE HUNGER FOR ENDLESS RANGE. THEY ARE SAVVIER ABOUT SAYING THE AVERAGE RANGE OF THE VEHICLE IS PROBABLY 30 OR 40 MILES TOP S SO THEY MAKE SMALLER BATTERY VEHICLES WHICH HAVE DONE WELL IN GAINING SHARE IN THAT MARKET. MANUS: WE WILL KEEP AN EYE ON THAT. WE WILL COME BACK TO THE APPLE AI, THE FUTURE. TAKE THREE WEEKS ON THE BEACH
AND SPEND A COUPLE THOUSANDS OF DOLLARS. ALEX WEBB ON THE TESLA STORY COMING UP WE RETURN TO THE PROTESTS IN FRANCE FOR THE FIFTH STRAIGHT NIGHT. MANUS: THE GLOBAL RALLY EXTENDS AMID OPTIMISM. U.S. INFLATION IS MODERATING BUT PIMCO WARNS ABOUT THE DISCONNECT BETWEEN THAT AND THE WORSENING ECONOMIC OUT DROP. PRESIDENT MACRON LOOKS TO RESTORE ORDER ACROSS FRANCE AFTER A WEEK OF VIOLENCE SPARKED BY A POLICE OFFICER SHOOTING OF A TEENAGER. TESLA AND BYD SET QUARTERLY SALES RECORDS ON SURGING DEMAND FOR ELECTRIC VEHICLES.
GOOD MORNING, WELCOME TO THE PULSE, I'M MANUS CRANNY IN DUBAI. PROTESTS IN FRANCE HAVE CONTINUED FOR A FIFTH STRAIGHT NIGHT OVER THE POLICE KILLING OF A TEENAGER. POLICE WERE DEPLOYED ACROSS FRANCE TO CONTAIN THE CLASHES THAT LEFT HUNDREDS OF PUBLIC BUILDINGS AND SHOPS DAMAGED OR RANSACKED. WE ARE JOINED BY CAROLINE IN PARIS.
ON A SERIOUS NOTE, THESE WERE THE FIFTH NIGHT OF SERIOUS PROTESTS AND THE REACTION FROM MACRON'S GOVERNMENT HAS BEEN ABOUT DEPLOYING FORCES. I'LL WE ANYWHERE CLOSER TO SOME KIND OF MEDIATION AND A OF VIOLENCE? CAROLINE: THE MAIN PROBLEM IS EVEN THOUGH THESE RIOTS MAY CALM DOWN OVER THE NEXT FEW DAYS THERE ARE STILL DEEP ISSUES IN THE FRENCH SOCIETY WITH THIS POPULATION OF IMMIGRANT THAT'S NOT INTEGRATED ENOUGH IN FRENCH SOCIETY. THIS IS WHERE CRITICS AGAINST MACRON ARE FOCUSING ON BASICALLY THERE'S BEEN NO PLAN OF ACTION FOR THOSE SUBURBS OF THE BIG TOWNS IN FRANCE WHERE YOU HAVE THE YOUNG POPULATION, UNDEREDUCATED, UNDEREMPLOYED AND NOT TOTALLY INTEGRATED WITH THE REST OF SOCIETY AND THAT HAS A FEELING OF DISCRIMINATION. CLEARLY THIS IS SOMETHING THE -- THEY WILL HAVE TO ADDRESS. PRESENT MACRON IS MEETING WITH HEADS OF THE NATIONAL ASSEMBLY, HE WILL ALSO INVITE MORE THAN 200 MAYORS OF THOSE CITIES THAT HAVE BEEN TARGETED BY THE RIOTERS OVER THE PAST FEW DAYS THAT HAVE SUFFERED ATTACKS ON PUBLIC BUILDINGS AND SCHOOLS AND SUPERMARKETS AND CLEARLY THERE IS A FEELING THAT THIS -- THESE DEEP ISSUES NEED TO BE ADDRESSED BECAUSE SINCE THE LAST RIOTS IN 2005 WHERE YOU HAD A SIMILAR INCIDENT WITH TWO BOYS DYING AFTER TRYING TO ESCAPE THE POLICE. NOT MUCH HAS BEEN DONE IN ORDER
TO INTEGRATE THOSE NEIGHBORHOODS AND YOUNG PEOPLE WHO FEEL LIKE THEY ARE ON THE SIDELINES OF FRENCH SOCIETY. MANUS: THANK YOU. LET'S CONTINUE THE CONVERSATION WITH THE CEO OF POLITICAL CONSULTANT RASMUSSEN GLOBAL.
IT'S INTERESTING WE COMPARE 2005 THE STATE OF THE FRENCH SOCIETY THEN, OF THE LAST TIME WE HAD A STATE OF EMERGENCY. DOES MACRON NEED TO DECLARE A STATE OF EMERGENCY OR WOULD THAT BE TO ADMIT HE'S LOST CONTROL? >> IT SEEMS THAT THINGS HAVE FAIRLY DE-ESCALATED COMPARED TO A FEW NIGHTS AGO SO I GUESS THERE'S LESS NEED FOR DECLARING A STATE OF EMERGENCY, BUT WHAT'S CLEAR IS THIS IS NOT A PROTEST OR RIOT AGAINST MACRON, THIS IS MORE THAT -- A PART OF SOCIETY REBELLING AGAINST THEIR REGION OF PUBLIC AUTHORITY IN LAW AND ORDER TRIGGERED BY THIS SHOOTING AT CLOSE RANGE BY A POLICE OFFICER OF A TEENAGER. SO IT'S IMPORTANT TO PUT THAT INTO THE RIGHT CONTEXT. PART OF THE FRENCH SOCIETY THAT'S REBELLING VIA VIOLENCE AGAINST WHAT THEY SEE AS PUBLIC AUTHORITY NOT NECESSARILY AGAINST MACRON AND HIS POLICIES. >> HE HAS BEEN IN CHARGE FOR
QUITE A WHILE. THE QUESTION GOES TO THE HEART OF WHAT SHOULD HE DO TO BRING THE DISENFRANCHISED IN TO MAKE NOT JUST STATEMENTS, BUT ACTIONS OF INCLUSIVITY. WHAT WOULD YOU BE ADVISING HIM TO DO RIGHT NOW. YOU ARE VERY FAMILIAR WITH THE ENVIRONMENT AROUND MACRON. WHAT SHOULD THEY BE ADVISING HIM TO DO TO DELIVER INCLUSIVITY? FABRICE: QUITE FRANKLY I THINK OF ALL THE FRENCH PRESIDENTS AND HEADS OF GOVERNMENT IN FRANCE OVER THE LAST THREE OR FOUR DECADES SINCE WE'VE HAD THESE ISSUES, I THINK MACRON HAS GONE A LONG WAY AND ACTUALLY ALLOWING THIS PART OF THE FRENCH SOCIETY TO HAVE OPPORTUNITIES TO BE ABLE TO JOIN THE ECONOMY THROUGH THIS KIND OF NEW FORM OF GIG ECONOMY'S. I THINK HE'S DONE MUCH MORE THAN THEY -- THAN MANY TO TRY TO INCLUDE THE POWER OF THAT SOCIETY INTO THE BROADER ECONOMY. CULTURAL DIFFERENCES IN REAL
BACKLASH ALSO IT'S IMPORTANT TO UNDERLINE THE POLARIZATION IS NOT JUST -- IF YOU LOOK AT THE POLICY CHORUS AND THE STATEMENT BY THE FRENCH POLICE UNION IT'S REALLY RADICAL. THEY ARE TALKING ABOUT GETTING RID OF THOSE PARTS OF THE FRENCH SOCIETY. I THINK YOU ARE SEEING A POLARIZATION OF FRENCH SOCIETY THE IN MY VIEW GOES WELL BEYOND MACRON'S MANDATE. MANUS: MANY ARE WRITING THAT THIS IS A
GEORGE FLOYD MOMENT THAT WE SAW IN AMERICA. IS THAT THE CORRECT COMPARISON OR IS IT CULTURALLY INAPPROPRIATE? FABRICE: OBVIOUSLY THE UNITED STATES AND FRANCE ARE VERY DIFFERENT, SOCIAL MIX, POLITICAL FABRIC. I WOULD BE CAREFUL ABOUT DRAWING COMPARISONS HERE.
BUT YOU DO HAVE A SORT OF POLARIZATION BETWEEN PART OF THE FRENCH SOCIETY THAT FEELS SOCIALLY AND ECONOMICALLY DISENFRANCHISED. IN ANOTHER PART THAT FEELS VERY STRONGLY ABOUT ITS MISSION, I THINK THE FRENCH POLICE UNION WAS TALKING ABOUT BEING IN RESISTANCE INCLUDING POTENTIALLY AGAINST THE FRENCH GOVERNMENT. SO I THINK YOU HAVE A PROBLEM OF POLARIZATION SIMILAR TO WHAT YOU ARE SEEING IN THE UNITED STATES. MANUS:
THERE IS THIS SOCIAL DIVIDE BETWEEN ONE COULD SAY METROPOLITAN LIBERAL ELITE WITHIN LARGE CITIES SPECIFICALLY AT THE CAPITAL AND THE REST OF THE COUNTRY. IS THIS A HUGE DIVIDE WHICH MACRON CAN TACKLE IN ANY WAY. IS THAT IN PART THESE PROTESTS ARE ABOUT? THIS DISENFRANCHISEMENT OF THOSE PARTS OF SOCIETY. IT'S VERY SIMILAR TO SOME OF THE THINGS WE SAW IN THE UNITED KINGDOM IN 2016 AND 2015 AS WE WENT UP TO THE BREXIT VOTE.
IS THAT PART OF THE ISSUE? >> THE SUBURBS WHERE MANY OF THESE FRENCH YOUTH, FROM AND LIVE ACTUALLY ALSO WERE A LOT OF PEOPLE ARE WORKING EVERY DAY SINCE THE SAME -- SUSTAIN THE FRENCH ECONOMY. A LOT OF THOSE THIRD OR FOURTH GENERATION ACTUALLY BUILDING BUSINESSES ECONOMIC LIFE. IT'S IMPORTANT NOT TO SEE THIS JUST -- CITY CENTERS OR FRENCH MORALITY, INCLUDING FROM THIS USE. THINGS HAVE CHANGED BUT NOT ENOUGH AND THOSE WHO FEEL LEFT
BEHIND BOTH POLITICALLY AND ECONOMICALLY BUT ALSO CULTURALLY. >> U.S. TREASURY SECRETARY JANET YELLIN HEADS TO BEIJING AND THAT MAKES HER THE SECOND MEMBER OF PRESIDENT BIDEN'S CABINET TO JOIN -- VISIT THE CHINESE CAPITAL. WHAT WE KNOW ABOUT THE TREASURY SECRETARY'S VISIT? JILL: THIS SEEMS TO BE A VISIT ALL ABOUT CONTINUING TO TREND MEN'S TIES BETWEEN THE U.S. AND CHINA. ALTHOUGH THE SECOND VISIT BY A
HIGH PROFILE OFFICIAL TO CHINA WE SAW THE SECRETARY OF STATE MAKE HIS VISIT TO CHINA JUST A FEW WEEKS AGO. THAT WAS A VISIT DELAYED. EARLIER THIS YEAR WE HAD THAT ALLEGED CHINESE SPY BALLOON INCIDENT WITH THIS BALLOON FLYING OVER THE UNITED STATES. SAFE TO SAY TENSIONS HAVE BEEN
HIGH BETWEEN THE U.S. AND CHINA SO ULTIMATELY WHAT JANET YELLEN IS LIKELY TO DO HERE IS TRYING TO SMOOTH THINGS OVER, I CONTINUE TO OPEN UP THESE LINES OF COMMUNICATION. I'M SURE FROM HER PERSPECTIVE THE TRIED TO MAKE CHINA MORE INVOLVED IN DEBT RELIEF AND DEVELOPING NATIONS, ON THE OTHER HAND IT'S PROBABLY GOING TO BE THAT SORT OF ISSUE WITH CONTINUING TENSIONS THAT WILL -- WE'VE SEEN OVER THE LAST YEAR OR SO INCREASING SANCTIONS. WE'VE SEEN WASHINGTON TRY TO CUT BEIJING OFF FROM CRITICAL TECHNOLOGIES INVOLVING THE U.S. AND OTHER WESTERN NATIONS.
BUT AT LEAST FROM A U.S. PERSPECTIVE IT'S REALLY JUST ABOUT HOW TO KEEP OPEN THESE LINES OF COMMUNICATIONS BETWEEN THE WORLD'S LARGEST ECONOMIES. >> AS WE HEAD TOWARDS THIS ELECTION IT'S ABOUT HAVING SOMETHING TO BRING TO THE ELECTORATE WHICH IS PROGROWTH AND DE-ESCALATION RATHER THAN ANTAGONISM. WHEN IT COMES TO POLICY RESPONSE MECHANISM, INHERENT IN THIS WILL BE THE APPOINTMENT OF A NEW CHIEF AT THE PBOC. WHAT DO WE KNOW, WHO IS HE? JILL: ULTIMATELY WHAT WE SAW THIS WEEKEND IS THE DEPUTY GOVERNOR AT THE PBOC HAS BEEN APPOINTED SECRETARY. THIS MAY PUT HIM IN LINE TO BECOME THE NEW PBOC GOVERNOR ULTIMATELY -- HE WAS NOT EVER EXPECTED TO STICK AROUND FOR VERY LONG. WE KNOW ABOUT THIS NEW PARTY
CHIEF IS HE IS A TECHNOCRAT, HE'S BEEN AT THE PBOC AS DEPUTY GOVERNOR FOR A WHILE. WORKED AT STATE BANKS BEFORE. THIS IS SOMEONE WHO SIGNALS THE IDEA OF CONTINUITY RATHER THAN RADICAL CHANGE AT THE PBOC WHICH IS VERY IMPORTANT FOR CHINA NOW. WE ARE STILL DEALING WITH SOME CONTENTIOUS ISSUES OVER THE SLOWING ECONOMIC RECOVERY. THE PBOC, A KEY POLICY RATE. THERE'S BEEN A LOT OF QUESTIONS OVER WHETHER THOSE RATE CUTS WILL HAPPEN OVER THE COURSE OF THIS YEAR.
WHAT MONETARY EASING LOOKS LIKE AS THEY TRY TO NAVIGATE THE SLOWING RECOVERY AND REBUILD MOMENTUM. THERE'S ALL EYES ON THE YUAN. WE WILL HAVE TO SEE HOW HE MEASURES WITH THE DOWNWARD PRESSURE. MANUS: IT IS AN INTERESTING MOVE. LET'S SEE WHAT INTERVENTION COMES TO BEAR.
JILL JOINING ME ON THE VERY LATEST FROM THE PBOC. COMING UP, THE MOVE TO BELARUS HAS POLAND ON HIGH ALERT. WE GET THE LATEST ON RUSSIA AND THE WAGNER LEADER. MANUS: ONE WEEK AFTER THE ABORTED MUTINY BY THE WAGONER GROUP -- WAGNER GROUP, THERE STILL QUESTIONS ABOUT THE WHEREABOUTS OF THE LEADER.
POLAND WILL DEPLOY FORCES TO ITS BORDER WITH BELARUS OVER CONCERNS. WHAT DO WE KNOW ABOUT WHERE THE LEADER OF THE WAGNER GROUP IS AT THE MOMENT. WHAT'S HE PREPARING TO DO? >> IF YOU BELIEVE ALEXANDER LUKASHENKO AND SOME SAY THAT'S A HUGE LEAP OF PAY -- FAITH, HE IS IN BELARUS AND SHOULD BE IN MINSK. WE HAVE NOT SEEN ANY FOOTAGE OR PICTURES OF PRIGOZHIN EVER SINCE HE SAID HE WOULD MOVE TO BELARUS AS PART OF A DEAL. A LOT OF THE DETAILS OF THAT
DEAL CONTINUE TO BE MURKY AND THE LAST TIME WE HEARD FROM HIM WAS A VOICE NOTE WHERE HE REPEATED I NEVER MEANT TO TOPPLE THE RUSSIAN GOVERNMENT. SEPARATELY WHICH TO ME IS PROBABLY A MORE PRESSING AND IMPORTANT QUESTION IS WHAT HAPPENS WITH WAGNER. VLADIMIR PUTIN THREE CHOICES. JOIN THE RUSSIAN ARMY, OR ESSENTIALLY GO HOME OR EXILE IN BELARUS. AT THIS POINT IT'S UNCLEAR HOW
MANY MEMBERS OF WAGNER HAVE JOINED THE RUSSIAN ARMY. THE WAR IN UKRAINE CONTINUES. MANUS: THE QUESTION WILL BE IF THEY ARE NOT PART OF THE MOVEMENT WITH THE RUSSIAN ARMY, JUST HOW WEEKEND IS THAT PUSH FORWARD. THE OTHER SIDE OF THIS CONVERSATION IS ABOUT POLAND, PERHAPS THE MOST CONTENTIOUS BORDER OF ALL. THEY ARE SAID TO BE DEPLOYING MORE FORCES TO THE BORDER.
THESE ARE ANTI-TERROR UNITS. WHAT SHOULD I DRAW FROM THAT MISSIVE? >> TWO THINGS. YESTERDAY THERE WAS CONFIRMATION FROM THE POLISH INTERIOR MINISTER THAT THEY WILL DEPLOY COUNTERTERRORISM FORCES.
THEY SAY A LOT OF THIS HAS TO DO WITH PRIGOZHIN MAYBE OR MAYBE NOT OPERATING OUT OF BELARUS. WE HAVE SEEN TENSIONS FLARE UP THE TWO IN THE PAST. POLAND ACCUSED LUKASHENKO OF SENDING THOUSANDS OF ILLEGAL IMMIGRANTS TO CREATE TENSIONS AT THE BORDER. THE OTHER ISSUE AND ONE OF OUR VIEWERS ALSO SPOTTED THIS HAS TO DO WITH THE POLITICS. POLAND WILL HOLD AN ELECTION THIS YEAR. WE DO NOT KNOW THE EXACT DAY.
FOR THE POLISH GOVERNMENT IT'S ABOUT PRESENTING THEMSELVES AS BEING TOUGH FROM RUSSIA, TOUGH ON BELARUS AND ON MIGRATION. MANUS: SOME PRETTY STRONG MESSAGES TO TAKE TO THE ELECTION AREA. MARIA IN BRUSSELS. COMING UP, FROM ADIDAS AND ALPHABETIC, THE 10 COMPANIES YOU NEED TO WATCH FOR THE THIRD QUARTER RIGHT HERE ON BLOOMBERG. MANUS: THE CONVERSATIONS THAT MATTER, OF THE INSIGHTS THAT YOU NEED. I'M MANUS CRANNY IN DUBAI.
IT'LL BE A SPECTACULAR WEEK FOR BONDS EVEN THOUGH IT'S THE FOURTH OF JULY AND A LOT OF PEOPLE HAVE LEFT TO THE HAMPTONS. YIELDS RISE SLIGHTLY. THE NEW YORK LEAD AT THE FED TALKING ABOUT 4.5% BEING A REASONABLE LEVEL. A CONSERVATIVE ESTIMATE FOR THE
BOND MARKET WILL GO. SCENE 3.3% BY THE END OF THE YEAR. YOU GET THE JOBS REPORT AT THE END OF THE WEEK AND SHUDDER AROUND THE HOURLY AVERAGE EARNINGS. AND OF COURSE YOU WILL GET THE VALIDATION FOR THE PAUSE IN THE MINUTES ON WEDNESDAY NIGHT.
THERE'S A LOT TO PLAY FOR. FROM SPECTACULAR MOVES IN THE BOND MARKET. PIMCO PREFERS A HARD LANDING. MAYBE THAT WILL GIVE YOU A REASON TO BE LONG DURATION AT THIS JUNCTION. TWO WIMBLEDON, THERE ARE MANY THINGS ONE MISSES FROM THE UNITED KINGDOM AND WIMBLEDON IS ONE OF THEM. A CENTER COURT IS WHERE WE KICK OFF TODAY.
IT'S THE BEST DAY TO GO TO WIMBLEDON BRADEN LAST YEAR'S WINNER ON CENTRAL COURT. THOSE HALCYON DAYS NSW 19. LOOKING AT THE STRAWBERRY INDEX. A BIG WEEK FOR STRAWBERRIES AND TENNIS. BUT ALSO CORPORATE TURNAROUNDS. HOW DO YOU BRIDGE THAT GAP. AI OPPORTUNITIES ON BLOOMBERG. WE'VE GOT BLOOMBERG
INTELLIGENCE. 10 YOU NEED TO WATCH OUT ON THIS QUARTER. TIM JOINS US WITH THE LATEST. WE CAN'T FIND ANY STRAWBERRY COMPANIES IN THE TOP 10 I'M SURE BUT TALK TO ME ABOUT THE CONSUMER COULD BE KING IN THE THIRD QUARTER. WHAT WILL YOU FILL YOUR BOOTS
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
CREATED VOLATILITY. MANUS: WE ARE SEEING A SMALL MOVEMENT I WOULD SAY FROM BOND TO EQUITY MARKET VOLATILITY. TELL ME SOME OF THE BIG IDEAS YOU MENTIONED IN TERMS OF AI.
WE ARE TRYING TO UNDERSTAND HOW YOU WANT TO BE LONG VICARIOUSLY ARE MORE DIRECTLY. TIM: THERE ARE A FEW THEMES I THINK YOU CAN PAUL OUT OF THIS LIST. GENERATIVE AI IS SEEN AS A RISK TO GOOGLE'S SEARCH BUSINESS. WE WOULD ARGUE IT'S A POSITIVE FOR ITS BROADER CLOUD BUSINESS AND IS ALSO POSITIVE DYNAMICS WITH YOUTUBE ALONGSIDE. WE THINK ALL OF THIS SHOULD DRIVE BETTER-THAN-EXPECTED RESULTS AS THEY RELEASE NUMBERS LATER IN JULY.
ANOTHER YOU MENTIONED ENERGY TRANSITION, ONE OF THE WORLD'S LARGEST ENGINEERING AND CONSTRUCTION COMPANIES. THE SPENDING THAT'S GOING ON FOR THIS SECULAR THEME OUT OF EUROPE AND THE U.S. PLAYED RIGHT INTO ITS BUSINESS. IT DOES OWN GATWICK WITHIN ITS AIRLINE AIRPORT CONCESSIONS AND CERTAINLY TRAVEL IS PICKING UP AND THAT'S A GOOD SIGN THERE. MANUS: I CAN VERIFY THE TRAVEL IS PICKING UP.
IN ALL CLASSES OF TRAVEL I SHOULD ADD. LOOKING FORWARD TO THE REPORT AND THE THIRD QUARTER. I'VE NEVER MET A WEALTHY PESSIMIST IS WHAT ONE FUND MANAGER SAID TO ME. WE WILL LEAVE YOU WITH THAT THOUGHT. QUICK SNAPSHOT OF RISK INTO THIS FOURTH OF JULY HOLIDAY.
DO YOU WANT TO BE LONG WITH IMPUNITY INTO THE SECOND HALF OF THE YEAR? $5 TRILLION ADDED TO THE NASDAQ INDEX. CAN YOU TRADE WITH IMPUNITY?
2023-07-11 19:35
