July 16, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) French Prime Minister Francois Bayrou proposed scrapping two national holidays, part of a drastic effort to repair public finances that’s set to unleash a parliamentary backlash in the fall.
(2) Chancellor of the Exchequer Rachel Reeves pledged to shake up post-crisis rules that are meant to shield consumers’ money from the vagaries of investment banking as the UK government looks to the finance sector to help spur economic growth.
(3) The UK tax authority cannot identify how much tax the nation’s billionaires pay on their wealth, hampering its ability to properly impose levies on the ultra-wealthy, according to lawmakers.
(4) The UK’s previous government set up a secret immigration route for Afghans affected by a data breach three years ago and then kept it secret from the British public, Defence Secretary John Healey said.
(5) Kevin Hassett, one of President Donald Trump’s longest-serving economic aides, is the early frontrunner to replace Jerome Powell as Federal Reserve chief next year, according to people familiar with the process.
(6) As Donald Trump’s tariff policies roiled markets almost everywhere, on Wall Street they were helping the biggest banks set records. JPMorgan’s stock traders scored their best second quarter ever, while Citigroup Inc.’s, trading division saw its best result for that period in five years. Analyst predictions were easily surpassed by the banks’ respective hauls, and even investment banking businesses did better than expected despite fears the same volatility might stymie deals.
Podcast Conversation: Hot Jewelry Companies Find Major Success With Art Deco Designs
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Day ba Q podcast. Good Morning's Wednesday, the sixteenth of
July in London. I'm Caroline Hepka and.
Speaker 2 (00:16):
I'm Stephen Caroline Brussels. Coming up today, Francis Prime Minister
warns of mortal danger as he sets out plans to
cut almost forty four billion euros in public spending.
Speaker 1 (00:26):
The UK Chance Levow's to overhaul bank ring fencing rules
in a meaningful way as part of her Mansion House
speech to the City.
Speaker 2 (00:35):
Plus the prime membership every bank wants. Wall Street's one
trillion dollar prime brokerage boom lures in European rivals including
BNP UBS and Barclay's.
Speaker 1 (00:47):
Let's start with the roundup of our top stories.
Speaker 2 (00:50):
Francis Prime Minister Fransberu has proposed scrapping two public holidays
in a bid to repair the public finances. The plans
are part of an array of measures totally almost forty
four billion euros designed to pare back France's deficit, which
is the largest in the euro area. Announcing his proposals,
the Prime Minister set out the scale of the problem.
Speaker 1 (01:12):
Du Vois.
Speaker 3 (01:12):
We now have a duty to take responsibility. I believe
that this is the last stop before the cliff edge
and being crushed by debt. It's important to say it clearly.
It is a mortal danger for a country.
Speaker 2 (01:27):
Fassobaeru added that France's debt increases by five thousand euros
every second. The government is aiming to narrow the budget
deaficit to four point six percent of economic output next
year from a forecast of five point four percent this year,
before bringing it within the European Union's limit of three
percent by twenty twenty nine. But with no majority in Parliament,
(01:47):
Prime Minister Biru may not be able to push through
his plans and runs the risk of being forced out
through a no confidence vote.
Speaker 1 (01:55):
In the UK, the chance of Rachel Reeve says that
she will reform ring fencing rules for bang So as
the government looks to encourage informed risk taking and boost
economic growth. Reeves announced a range of measures to cut
red tape and scale back post two thousand and eight rules.
In her annual address to the financial sector. She urged
(02:15):
regulators across the economy to be less cautious.
Speaker 4 (02:19):
In too many areas, regulation still acts as a boot
on the neck of businesses, choking off the enterprise and
innovation that is the lifeblood of economic growth. Regulators in
other sectors must take up the call that I make
this evening not to bend to the temptation of excessive caution,
but to boldly regulate for growth in the service of
(02:42):
prosperity for our whole country.
Speaker 1 (02:46):
Among Reeves's changes are cut to bank capital and reporting requirements,
pairing back rules on the conduct of senior bankers, and
a rethink of the UK's financial Ombardsman Service. The chance
that also use her speech to acknowledge the recent turbulence
in government after a U turn on welfare reforms and
her tearful appearance in Parliament that triggered a brief sell
(03:09):
off in guilts. In a separate decision, the UK government
also dropped plans to set up a classification for what
it terms a green investment after months of lobbying from
hedge funds.
Speaker 2 (03:22):
The UK Tax Authority cannot identify how much tax the
country's billionaires pay on their wealth, according to a cross
party group of MPs. The Public Accounts Committee expressed disappointment
that HMRC lacked the data to properly assess the country's wealthiest,
though the body says it does not have a mandate
to collect data on individual's overall wealth. The committee's report
(03:43):
further underscore is the lack of timely and available data
on some of the UK's wealthiest residents and the impact
of recent tax changes on departures from the country.
Speaker 1 (03:52):
Thousands of Afghans and their families are being relocated to
the UK after their personal information was revealed twenty twenty
two data breach. More than four thousand have already been
relocated under the scheme, with a further three thousand people
expected to come to the UK at a cost of
eight hundred and fifty million pounds. Defense Secretary John Healey
(04:15):
explained why the secret program was set up.
Speaker 5 (04:20):
Six months after the fall of Kabul, a Defense official
emailed an ARAP caseworking file outside of authorized government systems. ARAP,
as the House knows, is the resettlement scheme that this
country established for Afghan citizens who worked who worked for
(04:43):
or with our UK armed forces over the combat years
of Afghanistan.
Speaker 1 (04:51):
John Healey spoke to Parliament after a court super injunction
blocking the publication both of the scheme and of the
data breach was lifted on Tuesday.
Speaker 2 (05:02):
US President Donald Trump says he's likely to announce tariff's
on pharmaceuticals as soon as the end of the month,
but he didn't specify a rate. Any levy would likely
impact the likes of Eli, Lilly, Mark, and Pfizer, who
will produce drugs overseas. Trump spoke to reporters at Joint
Base Andrews.
Speaker 6 (05:19):
Farmer tunicles will be tariff probably at the end of the.
Speaker 4 (05:22):
Month, and we're going to start off with the low
tarraff and give the pharmaceutical companies a year or so
to bill.
Speaker 6 (05:30):
And then we're going to make it a very high
terraff because.
Speaker 2 (05:34):
We got a move of the Trump also predicted that
he could strike two or three trade deals before his
self imposed August first deadline. Representatives from the European Union,
which faces a thirty percent tariff, our meeting with US
negotiators this week.
Speaker 1 (05:49):
Wall Street banks are setting records by trading on Trump
tariff volatility. JP Morgan's stock traders scored their second best
quarter ever, delivering five point six nine billion dollars in revenue,
while City Groups saw its best result in five years.
Jared Cassidy, head of US bank equity strategy and large
(06:10):
bank analyst at RBC Capital Markets says that the period
has produced opportunities for the sector.
Speaker 7 (06:17):
It's not only the results that are driving these stocks
hire It's really about the deregulation opportunities for the banks,
and that's a big support for the bank valuations and
these prices.
Speaker 1 (06:30):
RBC's Jared Cassidy speaking there elsewhere, volatility didn't translate into
the same gains, though. At Wells Fargo, investment banking fees
and trading revenue fell short of forecasts. The firm CFO
said that volatility made clients cautious on boring and making investments.
Speaker 2 (06:48):
Kevin Hasset, director of the white House National Economic Council,
is the early frontronno to replace Jerome Powell as Federal
Reserve chief next year. The reporting comes as Treasury Secretary
Scott Bessant told Bloburg that the former process to find
a successor to Powell has already begun. Speaking earlier, Besant
suggested that Powell should also not remain on the Fed's
(07:09):
Board of Governors after his term as chair ends.
Speaker 8 (07:13):
We're not going to rush just because of some market deadline. Now,
I think what the market's seeing is market's willing to
look forward three, six, twelve months, and this is going
to be good for the US, is going to be
good for the global economy.
Speaker 2 (07:28):
Scott Besson says he's part of the decision making process,
but the decision will come from President Trump at his speed.
Speaker 1 (07:36):
So those are some of our top stories this morning.
Looking at the markets, Asian equities are lower. Looking at
stock futures for the US also down. USOX fifty futures
lower by about a quarter of one percent. The inflation
data out of the US has started to show tariff
passed through that wall was what emerge from the data yesterday.
So you had treasuries thirty year yields topping five percent
(08:00):
yesterday and we stand there still looks like bond vigilantes
are really stirring. Also in Japan on the long end
of the JGB curve, a big warning it would seem
to other markets like the US the UK. We get
UK inflation data out at seven am London time this morning.
Bloomberg Dollar spot indexes down a tenth of one percent,
(08:21):
Gold is up so to is Bitcoin gaining more than
one percent this morning. One hundred and seventeen thousand dollars.
You've also got oil on the rise and the eurotraining
at one sixteen seventeen this morning. Those are the markets.
Speaker 2 (08:34):
In a moment, we'll look at why France is proposing
acting two public holidays to tackle the country's deaficeits plus
why everyone from Berkleys to BMP Pariba wants a slice
of the prime brokerage pie. But another story that we've
been reading this morning, it's been one hundred years since
art Deco was formally introduced to the world. It was
at the International Expo in Paris in nineteen twenty five.
(08:56):
But it's a style that's living on and showing up
most recently in judery.
Speaker 9 (09:01):
Yeah.
Speaker 1 (09:01):
Absolutely, and Kristin Shirley has two beautiful a pair of
beautiful stories on Art Deco jewelry in Bloomberg Business Week,
basically why collectors are spending astronomic sums to own original
Art Deco jewelry. And then also she's looking at the
new designers who are being inspired by this start. Obviously
it's not just jewelry. The kind of geometric shapes, the colors,
(09:24):
that industrial inspiration. It's seen in buildings and in other
forms of design. I mean the period only lasted about
twenty years, and yet it has enduring kind of beauty
and appeal to so many people.
Speaker 2 (09:39):
Yeah, and I mean look at some of the kind
of iconic buildings that we know, the Chrysler building in
New York as well, the Palid Tokyo and Paris and more,
and that legacy lives on, which you know, might help
to see sort of resurgences of the trend over the years.
Speaker 8 (09:51):
Yeah.
Speaker 1 (09:52):
There's a wonderful Art deco building really close to where
I live, the Carrera cigarette factory, and it's got these
amazing egyptianate cat two black cats. They're enormous, probably twice
the size of a person outside, which is kind of
another style influence of that period. Absolutely starting, I just.
Speaker 2 (10:11):
What your walk home is like. Now there's the cats.
I'm nearly home.
Speaker 1 (10:16):
It's really a great building. But I just love Kristen's
piece as well. And there are lots of exhibitions coming
because of that anniversary. One at the VNA, I know
there's one in Paris. So yeah, maybe you'll you'll hear
and learn more about our deco this year.
Speaker 2 (10:29):
Yeah, we'll put a link to that piece in our
show notes for you. Well, let's bring you more now
and the budget plans laid out by French Prime minister yesterday,
including the forty four billion euros and spending cuts and
plans to act two public holidays, this as he attempts
to bring France's public finances under control. Our reporter Julian
Pontous joins us from Paris now for more. Julian, good morning.
What were then the key measures that France Boiberro announced.
Speaker 9 (10:51):
One of the key measures is a freeze on central
central state spending. It will also be a mandatory for
local authorities to to curb spending. But it's it's a
very comprehensive plan.
Speaker 10 (11:03):
So of course this is the two public holidays you
were talking about, because it's also quite a lot of
measures to curb healthcare spending, social benefits.
Speaker 9 (11:13):
There's really merge a lot of state agencies to reduce
their head counts. There are a lot of things, you know,
lower that are being set in plan. It's it's a
very comprehensive plan. As you said, it's about worth about
forty four billion euros, so it's it's it's substantial, but.
Speaker 1 (11:35):
I mean mortal danger. That's a stark warning, isn't it.
The problem is Baby doesn't have a georgy in parliament.
So big, big cuts, big plans, but how realistic is
it that they're going to pass.
Speaker 9 (11:47):
Well, some critics will say, actually that the plan isn't
really like a big structural plan with structural measures like
really acting into spending. It's like freezing the spend. It's
a soft version some set of IMF plan. It is
really not like what Greece went through. It's not you
(12:08):
know what Milae has done in Argentina. When you think
about it, it is something that can be done. And
what Baillo said also is like, you know, if we
France does nothing, it will have to pay one hundred
billion euros by twenty twenty nine in interests to the creditors.
So maybe mortal danger is too much. But you know,
(12:31):
you could say it's getting so to a slow death
of the French economy if nothing is done. But you're right,
there's no majority in parliament to do it, so there's
going to be a lot of negotiations going through. When doctor,
for instance, of the two public holidays, a lot of
people are saying, well, already, well two days in France,
(12:51):
that's fourteen hours. Why not spread fourteen hours through the
year and say, you know, work ten minutes more per
week or things like that. There's a lot of negotiations
that you can do, so you know, the jury so
as whether he can really pull it through.
Speaker 2 (13:09):
Of course, this is the dilema that shared by many
European countries. High public spending, high debt, high deficits. How
worried are the markets about France.
Speaker 9 (13:19):
At the moment? Not that much like that that spread,
the difference between German bonds and French bonds was went
down just with one beep. So I think they will
succeed succeeded in a way by reassuring markets like you say, like, Okay,
the deficit is not we're serious about tackling it. We're
(13:40):
we're seriously going to do something about it. But you know,
I think the real worry will come this fall, when
you know it will be there will probably there will
be no confinance vote for sure, and you know that
will be a high stake moment for France because you
know where we would get new elections, there's always the
(14:04):
chance of having a far right government, which the markets
won't like. It's I think, really it's going to become
a key moment for France after the summer holidays.
Speaker 1 (14:18):
Okay, interesting, Julian, thank you so much for being with
us this morning. That is Juliane Porthos the Live from Paris.
Speaker 2 (14:26):
The European banks have been pouring money into prime brokerage
in an effort to capture the record revenue that Wall
Street lenders have been earning. In this area, the business
of lending hedge funds, cash and securities to help execute
their trades has seen explosive growth in recent years. I
Finance reporter Will Shaw joins us now for more. Will,
Good morning. Why has prime brokerage been growing so fast
(14:47):
and what's the backdrop to all of this?
Speaker 6 (14:50):
Yes, so basically, just to explain the growth, First of all,
revenue from prime has grown faster than any other product
within actually's trading in the past five years. Last year
income hit a record twenty seven point seven billion, according
to data from Chryslor Coalition Greenwich, and they're expecting it
even higher in twenty twenty five, potentially breaching thirty billion dollars.
(15:13):
And so that essentially comes amid a rapid growth in
multi strat hedge funds the like of Millennium and Citadel
around the world which need more resources in order to trade,
and banks like it because it's a gateway to selling
a broader range of services to hedge funds. If you
can get them with prime, it's possible you'll get like
be able to sell them a much wider product suite
(15:34):
as well on top of that.
Speaker 1 (15:37):
Okay, so then who are the biggest players and you've
talked about some and what are the individual banks doing
to try to make the most of all of this.
Speaker 6 (15:46):
So the really big ones like you'd expect Morgan, Stanley,
Golden Sacks and JP Morgan, which have all got prime
balances of over a trillion dollars to give you a
size of the scale of the industry, But smaller banks
are working hard to catch up. So the French film
BMP Parabath, for example, brought in more than one point
five billion in revenue last year from its prime business.
(16:08):
That was up forty percent from the year before, and
that was it gained a bigger market share than any
of its rivals. So they, for example, have got about
five hundred coders all working to try and make the
business as efficient as possible. Bank of America is trying
to break into the top three by expanding its offering
and JP Morgan one of the big ones. They made
(16:28):
more than four billion last year. They're now pushing into
Asia Pacific, looking at opportunities in Vietnam and Saudi for example,
building out infrastructure in India and China.
Speaker 2 (16:40):
So what do regulators make about all of this then,
particularly given the collapse of our key gas that only
happened a few years ago.
Speaker 6 (16:46):
Yeah, so nearly four years ago our Chagos capital management collapse,
inflicting devastating damage on its prime brokers, ultimately paving the
way for the collapse of credits suite. So regulators, as
you would expect, to looking at the quite closely. In Europe,
the European Securities and Markets Authority is warned that hedge
funds active there are running bets with eighteen times leverage
(17:09):
and saying there's a risk of disproportionate reaction to unexpected events.
I should say though, that the regulators are vigilant and
keeping an eye on this situation. There's no suggestion that
they're panicking or that they expect any kind of catastrophe
in the immediate term.
Speaker 1 (17:30):
So then who are the ideal prime customers?
Speaker 8 (17:33):
Then?
Speaker 1 (17:33):
From the banks point of view. Who are they focusing on.
Speaker 6 (17:37):
So the banks, I think because of the risks that
emerged around Archagos, they want to narrow down the hedge
funds to a small pool that a have a lot
of money and b are obviously quite stable. So they
really like the big hedge funds like the ones I
mentioned earlier, and they're focusing a lot of resources on them.
(17:58):
That's made it harder for smaller hedge funds to establish
relationships with prime brokers. There's also a risk that you
can you can get a prime broker as a hedge fund.
Within two years, they're not, You're not making enough money
for your bank, and you find yourself unceremoniously ditched. So
there's a series of smaller prime brokers like clear Street,
(18:20):
Jones trading firms like that that are that are popping
up to take advantage of this and start servicing smaller firms.
So there's a sort of secondary industry booming around prime.
Speaker 2 (18:32):
This is Bloomberg Daybreak Europe. You're a morning brief on
the stories making news from London to Wall Street and beyond.
Speaker 1 (18:38):
Look for us on your podcast feed every morning, on Apple,
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Speaker 2 (18:44):
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Speaker 1 (18:50):
Our flagship New York station, is also available on your
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I'm Caroline Hepka, and.
Speaker 2 (18:59):
I'm Steve and Carol. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak Europe
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Day ba Q podcast. Good Morning's Wednesday, the sixteenth of
July in London. I'm Caroline Hepka and.
Speaker 2 (00:16):
I'm Stephen Caroline Brussels. Coming up today, Francis Prime Minister
warns of mortal danger as he sets out plans to
cut almost forty four billion euros in public spending.
Speaker 1 (00:26):
The UK Chance Levow's to overhaul bank ring fencing rules
in a meaningful way as part of her Mansion House
speech to the City.
Speaker 2 (00:35):
Plus the prime membership every bank wants. Wall Street's one
trillion dollar prime brokerage boom lures in European rivals including
BNP UBS and Barclay's.
Speaker 1 (00:47):
Let's start with the roundup of our top stories.
Speaker 2 (00:50):
Francis Prime Minister Fransberu has proposed scrapping two public holidays
in a bid to repair the public finances. The plans
are part of an array of measures totally almost forty
four billion euros designed to pare back France's deficit, which
is the largest in the euro area. Announcing his proposals,
the Prime Minister set out the scale of the problem.
Speaker 1 (01:12):
Du Vois.
Speaker 3 (01:12):
We now have a duty to take responsibility. I believe
that this is the last stop before the cliff edge
and being crushed by debt. It's important to say it clearly.
It is a mortal danger for a country.
Speaker 2 (01:27):
Fassobaeru added that France's debt increases by five thousand euros
every second. The government is aiming to narrow the budget
deaficit to four point six percent of economic output next
year from a forecast of five point four percent this year,
before bringing it within the European Union's limit of three
percent by twenty twenty nine. But with no majority in Parliament,
(01:47):
Prime Minister Biru may not be able to push through
his plans and runs the risk of being forced out
through a no confidence vote.
Speaker 1 (01:55):
In the UK, the chance of Rachel Reeve says that
she will reform ring fencing rules for bang So as
the government looks to encourage informed risk taking and boost
economic growth. Reeves announced a range of measures to cut
red tape and scale back post two thousand and eight rules.
In her annual address to the financial sector. She urged
(02:15):
regulators across the economy to be less cautious.
Speaker 4 (02:19):
In too many areas, regulation still acts as a boot
on the neck of businesses, choking off the enterprise and
innovation that is the lifeblood of economic growth. Regulators in
other sectors must take up the call that I make
this evening not to bend to the temptation of excessive caution,
but to boldly regulate for growth in the service of
(02:42):
prosperity for our whole country.
Speaker 1 (02:46):
Among Reeves's changes are cut to bank capital and reporting requirements,
pairing back rules on the conduct of senior bankers, and
a rethink of the UK's financial Ombardsman Service. The chance
that also use her speech to acknowledge the recent turbulence
in government after a U turn on welfare reforms and
her tearful appearance in Parliament that triggered a brief sell
(03:09):
off in guilts. In a separate decision, the UK government
also dropped plans to set up a classification for what
it terms a green investment after months of lobbying from
hedge funds.
Speaker 2 (03:22):
The UK Tax Authority cannot identify how much tax the
country's billionaires pay on their wealth, according to a cross
party group of MPs. The Public Accounts Committee expressed disappointment
that HMRC lacked the data to properly assess the country's wealthiest,
though the body says it does not have a mandate
to collect data on individual's overall wealth. The committee's report
(03:43):
further underscore is the lack of timely and available data
on some of the UK's wealthiest residents and the impact
of recent tax changes on departures from the country.
Speaker 1 (03:52):
Thousands of Afghans and their families are being relocated to
the UK after their personal information was revealed twenty twenty
two data breach. More than four thousand have already been
relocated under the scheme, with a further three thousand people
expected to come to the UK at a cost of
eight hundred and fifty million pounds. Defense Secretary John Healey
(04:15):
explained why the secret program was set up.
Speaker 5 (04:20):
Six months after the fall of Kabul, a Defense official
emailed an ARAP caseworking file outside of authorized government systems. ARAP,
as the House knows, is the resettlement scheme that this
country established for Afghan citizens who worked who worked for
(04:43):
or with our UK armed forces over the combat years
of Afghanistan.
Speaker 1 (04:51):
John Healey spoke to Parliament after a court super injunction
blocking the publication both of the scheme and of the
data breach was lifted on Tuesday.
Speaker 2 (05:02):
US President Donald Trump says he's likely to announce tariff's
on pharmaceuticals as soon as the end of the month,
but he didn't specify a rate. Any levy would likely
impact the likes of Eli, Lilly, Mark, and Pfizer, who
will produce drugs overseas. Trump spoke to reporters at Joint
Base Andrews.
Speaker 6 (05:19):
Farmer tunicles will be tariff probably at the end of the.
Speaker 4 (05:22):
Month, and we're going to start off with the low
tarraff and give the pharmaceutical companies a year or so
to bill.
Speaker 6 (05:30):
And then we're going to make it a very high
terraff because.
Speaker 2 (05:34):
We got a move of the Trump also predicted that
he could strike two or three trade deals before his
self imposed August first deadline. Representatives from the European Union,
which faces a thirty percent tariff, our meeting with US
negotiators this week.
Speaker 1 (05:49):
Wall Street banks are setting records by trading on Trump
tariff volatility. JP Morgan's stock traders scored their second best
quarter ever, delivering five point six nine billion dollars in revenue,
while City Groups saw its best result in five years.
Jared Cassidy, head of US bank equity strategy and large
(06:10):
bank analyst at RBC Capital Markets says that the period
has produced opportunities for the sector.
Speaker 7 (06:17):
It's not only the results that are driving these stocks
hire It's really about the deregulation opportunities for the banks,
and that's a big support for the bank valuations and
these prices.
Speaker 1 (06:30):
RBC's Jared Cassidy speaking there elsewhere, volatility didn't translate into
the same gains, though. At Wells Fargo, investment banking fees
and trading revenue fell short of forecasts. The firm CFO
said that volatility made clients cautious on boring and making investments.
Speaker 2 (06:48):
Kevin Hasset, director of the white House National Economic Council,
is the early frontronno to replace Jerome Powell as Federal
Reserve chief next year. The reporting comes as Treasury Secretary
Scott Bessant told Bloburg that the former process to find
a successor to Powell has already begun. Speaking earlier, Besant
suggested that Powell should also not remain on the Fed's
(07:09):
Board of Governors after his term as chair ends.
Speaker 8 (07:13):
We're not going to rush just because of some market deadline. Now,
I think what the market's seeing is market's willing to
look forward three, six, twelve months, and this is going
to be good for the US, is going to be
good for the global economy.
Speaker 2 (07:28):
Scott Besson says he's part of the decision making process,
but the decision will come from President Trump at his speed.
Speaker 1 (07:36):
So those are some of our top stories this morning.
Looking at the markets, Asian equities are lower. Looking at
stock futures for the US also down. USOX fifty futures
lower by about a quarter of one percent. The inflation
data out of the US has started to show tariff
passed through that wall was what emerge from the data yesterday.
So you had treasuries thirty year yields topping five percent
(08:00):
yesterday and we stand there still looks like bond vigilantes
are really stirring. Also in Japan on the long end
of the JGB curve, a big warning it would seem
to other markets like the US the UK. We get
UK inflation data out at seven am London time this morning.
Bloomberg Dollar spot indexes down a tenth of one percent,
(08:21):
Gold is up so to is Bitcoin gaining more than
one percent this morning. One hundred and seventeen thousand dollars.
You've also got oil on the rise and the eurotraining
at one sixteen seventeen this morning. Those are the markets.
Speaker 2 (08:34):
In a moment, we'll look at why France is proposing
acting two public holidays to tackle the country's deaficeits plus
why everyone from Berkleys to BMP Pariba wants a slice
of the prime brokerage pie. But another story that we've
been reading this morning, it's been one hundred years since
art Deco was formally introduced to the world. It was
at the International Expo in Paris in nineteen twenty five.
(08:56):
But it's a style that's living on and showing up
most recently in judery.
Speaker 9 (09:01):
Yeah.
Speaker 1 (09:01):
Absolutely, and Kristin Shirley has two beautiful a pair of
beautiful stories on Art Deco jewelry in Bloomberg Business Week,
basically why collectors are spending astronomic sums to own original
Art Deco jewelry. And then also she's looking at the
new designers who are being inspired by this start. Obviously
it's not just jewelry. The kind of geometric shapes, the colors,
(09:24):
that industrial inspiration. It's seen in buildings and in other
forms of design. I mean the period only lasted about
twenty years, and yet it has enduring kind of beauty
and appeal to so many people.
Speaker 2 (09:39):
Yeah, and I mean look at some of the kind
of iconic buildings that we know, the Chrysler building in
New York as well, the Palid Tokyo and Paris and more,
and that legacy lives on, which you know, might help
to see sort of resurgences of the trend over the years.
Speaker 8 (09:51):
Yeah.
Speaker 1 (09:52):
There's a wonderful Art deco building really close to where
I live, the Carrera cigarette factory, and it's got these
amazing egyptianate cat two black cats. They're enormous, probably twice
the size of a person outside, which is kind of
another style influence of that period. Absolutely starting, I just.
Speaker 2 (10:11):
What your walk home is like. Now there's the cats.
I'm nearly home.
Speaker 1 (10:16):
It's really a great building. But I just love Kristen's
piece as well. And there are lots of exhibitions coming
because of that anniversary. One at the VNA, I know
there's one in Paris. So yeah, maybe you'll you'll hear
and learn more about our deco this year.
Speaker 2 (10:29):
Yeah, we'll put a link to that piece in our
show notes for you. Well, let's bring you more now
and the budget plans laid out by French Prime minister yesterday,
including the forty four billion euros and spending cuts and
plans to act two public holidays, this as he attempts
to bring France's public finances under control. Our reporter Julian
Pontous joins us from Paris now for more. Julian, good morning.
What were then the key measures that France Boiberro announced.
Speaker 9 (10:51):
One of the key measures is a freeze on central
central state spending. It will also be a mandatory for
local authorities to to curb spending. But it's it's a
very comprehensive plan.
Speaker 10 (11:03):
So of course this is the two public holidays you
were talking about, because it's also quite a lot of
measures to curb healthcare spending, social benefits.
Speaker 9 (11:13):
There's really merge a lot of state agencies to reduce
their head counts. There are a lot of things, you know,
lower that are being set in plan. It's it's a
very comprehensive plan. As you said, it's about worth about
forty four billion euros, so it's it's it's substantial, but.
Speaker 1 (11:35):
I mean mortal danger. That's a stark warning, isn't it.
The problem is Baby doesn't have a georgy in parliament.
So big, big cuts, big plans, but how realistic is
it that they're going to pass.
Speaker 9 (11:47):
Well, some critics will say, actually that the plan isn't
really like a big structural plan with structural measures like
really acting into spending. It's like freezing the spend. It's
a soft version some set of IMF plan. It is
really not like what Greece went through. It's not you
(12:08):
know what Milae has done in Argentina. When you think
about it, it is something that can be done. And
what Baillo said also is like, you know, if we
France does nothing, it will have to pay one hundred
billion euros by twenty twenty nine in interests to the creditors.
So maybe mortal danger is too much. But you know,
(12:31):
you could say it's getting so to a slow death
of the French economy if nothing is done. But you're right,
there's no majority in parliament to do it, so there's
going to be a lot of negotiations going through. When doctor,
for instance, of the two public holidays, a lot of
people are saying, well, already, well two days in France,
(12:51):
that's fourteen hours. Why not spread fourteen hours through the
year and say, you know, work ten minutes more per
week or things like that. There's a lot of negotiations
that you can do, so you know, the jury so
as whether he can really pull it through.
Speaker 2 (13:09):
Of course, this is the dilema that shared by many
European countries. High public spending, high debt, high deficits. How
worried are the markets about France.
Speaker 9 (13:19):
At the moment? Not that much like that that spread,
the difference between German bonds and French bonds was went
down just with one beep. So I think they will
succeed succeeded in a way by reassuring markets like you say, like, Okay,
the deficit is not we're serious about tackling it. We're
(13:40):
we're seriously going to do something about it. But you know,
I think the real worry will come this fall, when
you know it will be there will probably there will
be no confinance vote for sure, and you know that
will be a high stake moment for France because you
know where we would get new elections, there's always the
(14:04):
chance of having a far right government, which the markets
won't like. It's I think, really it's going to become
a key moment for France after the summer holidays.
Speaker 1 (14:18):
Okay, interesting, Julian, thank you so much for being with
us this morning. That is Juliane Porthos the Live from Paris.
Speaker 2 (14:26):
The European banks have been pouring money into prime brokerage
in an effort to capture the record revenue that Wall
Street lenders have been earning. In this area, the business
of lending hedge funds, cash and securities to help execute
their trades has seen explosive growth in recent years. I
Finance reporter Will Shaw joins us now for more. Will,
Good morning. Why has prime brokerage been growing so fast
(14:47):
and what's the backdrop to all of this?
Speaker 6 (14:50):
Yes, so basically, just to explain the growth, First of all,
revenue from prime has grown faster than any other product
within actually's trading in the past five years. Last year
income hit a record twenty seven point seven billion, according
to data from Chryslor Coalition Greenwich, and they're expecting it
even higher in twenty twenty five, potentially breaching thirty billion dollars.
(15:13):
And so that essentially comes amid a rapid growth in
multi strat hedge funds the like of Millennium and Citadel
around the world which need more resources in order to trade,
and banks like it because it's a gateway to selling
a broader range of services to hedge funds. If you
can get them with prime, it's possible you'll get like
be able to sell them a much wider product suite
(15:34):
as well on top of that.
Speaker 1 (15:37):
Okay, so then who are the biggest players and you've
talked about some and what are the individual banks doing
to try to make the most of all of this.
Speaker 6 (15:46):
So the really big ones like you'd expect Morgan, Stanley,
Golden Sacks and JP Morgan, which have all got prime
balances of over a trillion dollars to give you a
size of the scale of the industry, But smaller banks
are working hard to catch up. So the French film
BMP Parabath, for example, brought in more than one point
five billion in revenue last year from its prime business.
(16:08):
That was up forty percent from the year before, and
that was it gained a bigger market share than any
of its rivals. So they, for example, have got about
five hundred coders all working to try and make the
business as efficient as possible. Bank of America is trying
to break into the top three by expanding its offering
and JP Morgan one of the big ones. They made
(16:28):
more than four billion last year. They're now pushing into
Asia Pacific, looking at opportunities in Vietnam and Saudi for example,
building out infrastructure in India and China.
Speaker 2 (16:40):
So what do regulators make about all of this then,
particularly given the collapse of our key gas that only
happened a few years ago.
Speaker 6 (16:46):
Yeah, so nearly four years ago our Chagos capital management collapse,
inflicting devastating damage on its prime brokers, ultimately paving the
way for the collapse of credits suite. So regulators, as
you would expect, to looking at the quite closely. In Europe,
the European Securities and Markets Authority is warned that hedge
funds active there are running bets with eighteen times leverage
(17:09):
and saying there's a risk of disproportionate reaction to unexpected events.
I should say though, that the regulators are vigilant and
keeping an eye on this situation. There's no suggestion that
they're panicking or that they expect any kind of catastrophe
in the immediate term.
Speaker 1 (17:30):
So then who are the ideal prime customers?
Speaker 8 (17:33):
Then?
Speaker 1 (17:33):
From the banks point of view. Who are they focusing on.
Speaker 6 (17:37):
So the banks, I think because of the risks that
emerged around Archagos, they want to narrow down the hedge
funds to a small pool that a have a lot
of money and b are obviously quite stable. So they
really like the big hedge funds like the ones I
mentioned earlier, and they're focusing a lot of resources on them.
(17:58):
That's made it harder for smaller hedge funds to establish
relationships with prime brokers. There's also a risk that you
can you can get a prime broker as a hedge fund.
Within two years, they're not, You're not making enough money
for your bank, and you find yourself unceremoniously ditched. So
there's a series of smaller prime brokers like clear Street,
(18:20):
Jones trading firms like that that are that are popping
up to take advantage of this and start servicing smaller firms.
So there's a sort of secondary industry booming around prime.
Speaker 2 (18:32):
This is Bloomberg Daybreak Europe. You're a morning brief on
the stories making news from London to Wall Street and beyond.
Speaker 1 (18:38):
Look for us on your podcast feed every morning, on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (18:44):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (18:50):
Our flagship New York station, is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
I'm Caroline Hepka, and.
Speaker 2 (18:59):
I'm Steve and Carol. Join us again tomorrow morning for
all the news you need to start your day right
here on Bloomberg Daybreak Europe
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