Transcripts For BLOOMBERG Bloomberg Best 20240714 : comparem

For the president , it was very important to get a win. Juliette the boe stays cautious as the brexit outlook remains uncertain. If you look at the details and negotiations, there is still such a long way to go. Juliette plus, a special bloomberg series highlights Climate Change with expert insight and analysis from every angle. The average global temperature is going to go up a lot. We have to fight Global Warming and have intelligent Climate Change policy. Policy shifts being made are creating new markets. Juliette it is all straight ahead on bloomberg best. Hello and welcome. I am juliette saly. This is bloomberg best, your weekly review of the most important Business News, and interviews from Bloomberg Television around the world. Lets start with a look at the headlines. The week began with a geopolitical shock that jolted Global Oil Markets while raising tensions across the middle east and beyond. Saudi Aramco Oil Facilities hit by an attack over the weekend. Strikes have cut saudi arabias output in half. It hit the Worlds Biggest Oil Production Facility in the kingdom. Rebels in yemen claimed credit for the attack. But the u. S. Is blaming iran directly. Just on a company basis, what we are hearing from saudi aramco so far is supplies are continuing. They are meeting customer commitments and are able to do that from oil in storage. No one expects saudi arabia to respond with a military strike against iran. Even if it does believe iran is behind it. President trump said they are locked and loaded based on who actually did that. If saudis come out today, they have not blamed anyone yet if they come out today and blame iran, that is basically the end of it. Saudi arabia, the press agency, speaking of iranian weapons being used to attack oil facilities. What is notable is what they did not say, direct blame on the Islamic Republic for instigating the attack. What is clear is the Trump Administration wants to put the blame squarely on iran and Marshall International support to present a unified front. To confront iran. The international immunity, even u. S. Allies, not willing to go that far. Joe oil surging the most in a decade after an attack highlighted concerns about instability in the worlds most important crude producing region. All things considered, i dont think that was a very severe reaction in the market. I think there is a sense there are a lot of stocks out there, inventory, Strategic Petroleum reserves. The administration wisely mentioned the Strategic Petroleum reserve early, which is a message to traders and so forth. It is what comes over the next few days. Two things. One, is it iran fingered by the saudis and clearly by the u. S. . The other is how long does it take to bring the supplies back in . Caroline saudi arabias plan has restarted and is processing about 2 Million Barrels a day, restoring half the output lost. The facility was damaged according to aramcos chief executive. The kingdom expects it may take until november to restore full production capacity. By the end of september, the Production Facility will be at capacity. You were able to meet shipments to International Customers . We are able to meet shipments to International Customers. The overall message is one of reassurance by saudi aramco. The goal was to get across to the market, yes, we have suffered. Yes, there is some damage. But as for customers, we will deliver what was promised. That is one of the things we took away from the ministers press conference. Which was we are going to deliver the full contracted amount. We may not get it from the fields affected, the Oil Processing facility that was affected. What we are going to get it from some of the stockpiles we have on hand, but we are going to make the customers whole. I think the market was not too freaked out but there are larger risks. Shery money markets have been ravaged by funding shortages, causing lending rates to soar and forcing policymakers to step in for the first time in a decade. The new york fed injected 53 billion into markets and said it would conduct another repo operation wednesday. What is this telling us about the fed and its control of shortterm rates . Well, if you ask a lot of people in the markets they are telling you the fed is losing control. If you look through a lot of their communications, minutes, statements, everything is about controlling shortterm Interest Rates and they are slipping. People are getting nervous. Because when the fed loses control of Interest Rates in the short term, that is the ballgame. That becomes a credibility issue. It is going to test the efficacy of their policies. Whether people believe it is going to work. Market affected, 25 basis point cut from the fed today. Investors will be focused on the potential signals of future easing. Fed very divided fet cuts its benchmark rates a quarter percentage point cut and appears to go on hold. Three voters to dissent. For the first time in three years, bullard wanted a half point cut, others want to know who wanted no cut at all. The dot plot shows no cuts, no reductions through the end of 2020. However, seven of the 17 members still think another cut is needed this year, while five think no cuts should have been made at all. And if the economy does turn down, then a more extensive sequence of rate cuts could be appropriate. I am disappointed by what the fed has come out with. Why . Well, because the market is priced for substantially more action. What a recovery we have made in the last hour of trading. The fact that we were significantly off, this offset of the press conference, now it feels as though the market is not quite so worried about what can be deemed a hawkish cut. Intensifying trade conflicts have growth momentum tumbling towards lows. Governments are not doing enough to prevent longterm damage. That is according to the latest outlook, cutting the Global Growth forecast. Are we heading slowly towards a recession . What we are seeing we are heading toward Slower Growth. Beyond that number you have quoted, it is a very low level of growth. Our message is to hold this uncertainty. Low rates remain visibly low, to invest and get us to lift the world out of this low growth danger. The fed will be injecting taxes and the money markets today, a third day in a row. Tom what is there to learn about the repo market . 1, 2, 3, is this now a permanence to the new york fed . I think the new york fed will eventually have to implement a full allotment repo facility. A daily liquidity buffer they will have instead of these oneoff operations which are of a set size, but it worked the way one would expect. We have some balance street Balance Sheet constraints. The fed is the only Balance Sheet elastic enough to fund the entire Dealer Community and this in this time of a little bit of stress, and it has worked, quite frankly. Chancellor Angela Merkel coalition polls and allnighter polls an allnighter in negotiations to secure landmark multibillion euro package to get Climate Policies back on track. She says we need to do more on climate. She also winds up talking about the about that we will be potentially looking at some green bonds. Thats a reasonable spend. Lets see how it plays out. And lets see if this the first of several physical things germany is going to do to stimulate the economy. As it stands now, the German Economy has had a rough couple of quarters. And the risk of recession is real. So lets see whether this fiscal package is something that will be able to stimulate the economy. Oil prices had a wild ride. The hunt for fuel is on. There are reports saudi arabia is looking to buy super light oil condensate. The saudis in the u. S. Are blaming iran for the latest around latest rounds of attacks. Iran is continuing to deny involvement in the attacks. We are speaking to officials on the ground, and they have made it very clear they are working around the clock to try and get these machines and the infrastructure back online. Pres. Trump we have just sanctioned the Iranian National bank. That is their central Banking System. And it is going to be at the highest level of sanctions. The president himself said he feels like he has a range of military options with iran. The actions to date suggest they are looking for a diplomatic way out of this. The new york fed will continue to conduct a series of overnight and repurchase agreements through october 10, that amid signs of investor apprehension about funding levels. Can we trust they have figured out the right level . Or are we still in a danger zone here . Today was an important today. Because not only are they going to continue going over the 75 billion they are doing daily, they are going to do some 14 day long repo, which will put more money, and it will be three overlapping allotments, so a total of 90 billion at various points of new money coming into the market. It is quite a step up from where they have been until now. Juliette still ahead as we review the week on bloomberg best, conversations from a week long focus on Climate Change including thoughts from bill gates. Plus, blackstones tony james the in weighs in on feds repo operations. And an exclusive conversation with malaysias Prime Minister and waiting. He said investors should not worry. He will take over as promised. There is clear definite decisions being made. Juliette up next, more of the weeks top business headlines. The election leaves israel more politically unsettled than before. We could see a National Unity government. There is even a chance we go to a third round of elections. Juliette this is bloomberg. Juliette this is bloomberg best. I am juliette saly. Lets continue our global tour of the weeks top business stories. While the u. S. And china prepare for their next round of negotiations, the most recent data from beijing continues to show the trade dispute is taking its toll. The data from china shows more weakness in the economy. That governments stimulus may not be enough to offset the effects of the trade war. Industrial output on the way up. 4. 4 last month from a year ago, way below estimates of 5. 2 gain. Retail sales also missing, and expansion of 7. 5 . We were looking at an increase of almost 8 according to the economists we have been talking to. It was quite a weak across the board. Industrial output, the worst single months reading since 2002. We saw softness in retail side of things. Confirming even though a lot of it is due to a slump in the car market, there is a feeling consumers are starting to crack, that is a key pillar of chinas economy. In the fixed Asset Investment side, we saw the private sector lagging government spending. A soft reading. It sets up the economy for a slow end to the year and puts pressure on the government. President trump says the u. S. And japan have reached an initial trade accord which will be finalized in the coming weeks. The president also told congress the government will be entering an executive agreement with tokyo on digital trade. Trump made no mention of the fate of the threatened duties on Japanese Cars and he is set to meet Prime Minister abe next week. The u. S. And japan have been in talks for quite a while now. It appears this is headed to the done stage. This is removing quite a fair bit of uncertainty that was hanging over the entire u. S. Japan relationship. For the president , it was important to try and get a win. It looks like he is going to sell something and say he has negotiated a trade pact. Apple told in European Union court it was unfairly painted as a tax dodger. In luxembourg, and apple lawyers said the company is the worlds top taxpayer. Apple is urging the Eu General Court to overturn a ruling a decision that it pay or team billion dollars in back taxes to ireland. Apple says they pay the most tax in the world. They actually claimed the decision lacked logic or sense. They also believe the numbers were tweaked in a way that presented apple in a bad light. Essentially the goal was to portray the company as paying no taxes. When you look at the european side to the story, they will tell you they still believe they are right. They say it is obviously that it is pretty obvious that apple has set out to pay the least amount possible. They do believe if the arguments are validated and vindicated by the court, they can continue to get tough on american tech companies. The u. K. Prime minister Boris Johnson meeting with european officials in luxembourg. The Prime Minister ended up skipping a press conference with luxembourgs leader, as you can see. Noisy protesters were nearby. The brits apparently wanted to have it inside. The luxembourg ian said no, we will do it outside. What you have is an empty podium for the united kingdom. By himself, taking questions, venting against the u. K. , saying, this is your mess. We should not be held responsible for this. The European Commission president Jeanclaude Juncker thinks a brexit deal could be reached by october 31. The Irish Foreign minister warned a brexit deal isnt close. Who do we believe . Of the two of them, i would trust the Irish Foreign minister, to be honest. If you look at what Jeanclaude Juncker said, he is not saying very much. He says that eu wants a deal and he thinks a deal is possible. When you look at the nittygritty of the negotiations and meeting the chief negotiator, if you look at the details and negotiations, there is still such a long way to go. In israel, Prime Minister Benjamin Netanyahus gamble to hold a second election this year backfired with deadlocked results. There is uncertainty about whos israels next leader will be. Netanyahu did not get the results he hoped for. He sent the country to a second election this year, hoping to strengthen his hand. The best he can hope for is return to office. Badly weakened. That means now we turn to political gamesmanship as parties work to build a coalition and secure the president s nod to lead the next government. There are a lot of possibilities here. We could see a National Unity government. There is even a chance we could go to a third round of elections. The bank of japan, the last of the big three to make a Rate Decision this month. They held, as many were anticipating. Governor kuroda saying he and his team are paying even closer attention to inflation. Not a cut is expected but could we argue the change in guidance, longawaiteda acknowledgment, their Movement Toward the inflation target, is all but a mirage . There is no doubt the impact of the trade war has been heavy on japan. Exports down nine months in a row. This is an exportdependent country. The labor market is still strong. Gdp is still growing, and yet there is still a loss of momentum. They are acknowledging it. Now they are talking about reexamining the economy and prices, what is happening, to be ready for the next policy meeting. Norways central bank moving further away from the pack. In a decision many were not expecting, they raised the benchmark rate. It is the highest level in almost five years. This is really going against the wave of what everyone else in the world is doing. Is the norwegian economy immune to the Global Economic downturn . It is not immune to a downturn. Overall, that is the background for the decision of increasing policy rates further, is that overall growth in the economy, unemployment is very low. Inflation is at the target or slightly below. So there is time to make one further step towards a more normal policy rate. The boe is on hold. But, if brexit uncertainty persists, inflation likely weaker. There were no dissenters. Michael flanders had been a dissenter in the past. That did not happen. Any surprise for you . No. They kept in that point about rates potentially going up. If you have a smooth brexit, this is an economy close to potential, if not past that point. We are seeing wage growth. We are not seeing productivity growth to back that up. Pressures are rising. We are expecting to see that coming through. At least the bank of england is expecting to see that come through. Before that, we are focused on this brexit date. They reiterated that if you had a no deal scenario, rates could could go either way in that case. Of course no one in the market thinks that. Everyone assumes in the end, they wouldnt mind the rise in the pound, every one assumes that in the end they would cut rates to support the economy. Juliette you are watching bloomberg best. I am juliette saly. Malaysias Prime Minister took office last year after forming a Political Coalition with a onetime opponent. The Peoples Justice Party leader. The 94yearold said he wo