May 20, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) After two hours talking with Putin, Trump said on social media that Ukraine and Russia would “immediately start negotiations” toward a ceasefire — but possibly without the US. There was no sanctions threat, no demand for a time-line, and no pressure on the Russian leader.
(2) Prime Minister Keir Starmer heralded a “landmark deal” between the UK and the European Union on Monday that he billed as a reset moment for relations under his government. Still, with many details unresolved, Brexit never quite seems to be over.
(3) Israel will take over the entire Gaza Strip, Prime Minister Benjamin Netanyahu said on Monday, as the military announced it would carry out an “unprecedented attack” on Hamas.
(4) The Bank of England is considering ways to loosen post-crisis rules that forced banks to separate their retail and investment banking arms after a number of UK lenders called for the regime’s removal.
(5) Washington lawmakers are risking a “fiscal disaster” if a recession hits as they plow on with their package of sweeping tax cuts, according to Guggenheim Securities Co-Chair Jim Millstein.
(6) JPMorgan Chase Chief Executive Officer Jamie Dimon warned against complacency in the face of a slew of risks, citing everything from inflation and credit spreads to geopolitics.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg Day Baku podcast, available every morning
on Apple, Spotify or wherever you listen. It's Tuesday, the
twentieth of May in London. I'm Caroline Hepke.
Speaker 1 (00:18):
And I'm Stephen Carroll. Coming up today.
Speaker 3 (00:20):
Donald Trump's two hour call with Vladimir Putin hands Russia
a win as the US President steps back from Ukraine peace.
Speaker 2 (00:28):
Talks a landmark deal that leaves many details unresolved. Britain's
big EU reset turns out to be just the start
of negotiations.
Speaker 1 (00:37):
Plus betting on Europe why a growing number of Wall
Street banks expect European stocks to see their best performance
versus the US in at least two decades.
Speaker 2 (00:46):
Let's start with a roundup of our top stories.
Speaker 3 (00:49):
US President Donald Trump says Russia and Ukraine will start
talks immediately on ending the war after a two hour
call with Vladimir Putin, But there was no threat of
US sanctions, no demand for a timeline, and no pressure
on the Russian leader from his US counterpart. Trump later
told reporters that the United States wasn't withdrawing from the conflict,
(01:09):
but that he was considering it.
Speaker 4 (01:11):
This is not my war, This is not the war.
I mean, we got ourselves entangled in something that we
shouldn't have been involved in, and we would have been
a lot better off, and maybe the whole thing would
have been better off, because it can't be much worse.
It's a real message, a death trap. So I think that, Yeah,
I wish I do have a certain line, but I
(01:32):
don't want to say what that line is because I
think it makes the negotiation even more difficult than it is.
Speaker 3 (01:38):
Reacting to the comments in the US president, one European
official told Bloomberg that leaders fear Trump is disengaging from
the diplomatic efforts. An others said the US President had
made it clear he didn't want to impose more sanctions
and was retreating from his own proposal for a ceasefire.
Speaker 2 (01:54):
The UK and the European Union signed an agreement to
ease border checks on food. Prime Minister Kirstarmer called a
landmark deal, but the bigger reset moment that was built
up by the Starmer government turns out to be only
the start of talks in many key areas, with no
concrete result on a defense and security pact. The UK
(02:16):
government says that the deal on agri food products will
add nine billion pounds or zero point two percent of
GDP to the UK economy every year by twenty forty.
The two sides agreed, though only to work towards a
youth visa program, and while the UK claims a victory
on the use of eGates for British passport holders, the
(02:36):
actual agreement talks about their potential use where appropriate. Meanwhile,
Brussels secured twelve years of ongoing access to British fishing waters.
Kiirs Starmer says the deal is a win win.
Speaker 5 (02:50):
Britain is back on the world stage, working with our partners,
doing deals that will grow our economy and putting more
money in pockets of working people.
Speaker 2 (03:02):
The UK Prime Minister has signed a series of trade
deals in recent weeks. His charts that told the BBC
that a pact with the six member Golf Cooperation Council,
including Saudi Arabia, the United Arab Emirates and Cutter was
the next goal.
Speaker 3 (03:18):
Israel says it will take over all of Gaza. As
some democracies warned the country is breaking international law and
could be sanctioned. The Israeli military told Gazans to evacuate
their second biggest city, can Unice ahead of what it
called an unprecedented attack on Hamas. British Prime Minister Kiir
Starmer says, Israel's conduct is unacceptable.
Speaker 5 (03:37):
This is a really serious, intolerable situation and that's why
we are working intensely to coordinate with other leaders how
we respond to this.
Speaker 3 (03:47):
Starmar was joined by the leaders of France and Canada,
who said they will take action if AID isn't allowed
into Gaza. Food security experts say all Gazans are now malnourished,
with one in five facing extreme starvation.
Speaker 2 (04:00):
Now let's turn our attention back to the UK, because
Bloomberg has learned that the Bank of England is considering
loosening post financial crisis rules that force lenders to separate
their retail and investment banking arms. Bloomberg's un pots has more.
Speaker 6 (04:16):
Staff at the Potential Regulation Authority is said to be
looking at relaxing the ring fencing requirements for UK banks,
but without scrapping them entirely. Some of the country's biggest banks,
including HSBC, Newest and Lloyd's Road to the Chancellor in
April calling for ring fencing to be abolished, saying it
makes British banking less competitive. But scrapping the rules, which
(04:36):
finally came into force in twenty nineteen, is not with
our controversy. John Vickers, a former BOE chief economist who
led work on the rules, warns that the loosening could
end up reducing the capital invested in the UK, harming
economic growth in London.
Speaker 2 (04:50):
I'm youw in pots of Bloomberg Radio.
Speaker 3 (04:52):
The United States risks a fiscal disaster if a recession hit,
as Republicans push ahead with their sweeping package of tax cuts.
That's according to Jim Milstein, the co chair of Guggenheim Securities,
who spoke to Bloomberg after a key US House committee
advanced President Donald Trump's massive tax and spending package. Meanwhile,
the Joint Committee on Taxation has estimated the bill's total
(05:15):
cost at three point eight trillion dollars over the next decade.
But Milstein told Bloomberg the figure assumes the US avoids
a recession.
Speaker 7 (05:23):
These projections are all made on a ten year basis. Yeah,
and they assume, you know, consistent economic growth. So just
imagine the Trump pariffs. Because of the uncertainty and the variability.
Imagine we have a recession in a you know, in
the last five or six recessions, the budget deficit actually
blows out.
Speaker 3 (05:44):
Guggenheim's Jim Milstein spoke to Bloomberg as President Trump plans
to go to the capital today to urge fractious Republicans
to overcome divisions and unite behind his signature tax cut legislation.
Speaker 2 (05:56):
So that was the Guggenheim warning. There's been another. JP
Morgan CEO Jmie Diamond has warned that inflation and stagflation
are more likely than many people think, and that today's
markets aren't pricing in the impact of a potential downturn
in the US. Speaking of the Bank's invested day, Diamond
emphasized the uncertainty at play.
Speaker 8 (06:16):
You haven't seen in effective tariffs. The market came down
ten percent, it's back comes ten percent. I think that's
an extraordinary amount of complacency. That's my own view that
when I've seen all these things adding up that are
on the fringes of extreme kind of thing, I don't
think we could predict the outcome. And I think there's
a chance of inflation going up and stagflation is a
(06:37):
little higher than other people think.
Speaker 2 (06:38):
Jamie diamond says that he believes the bank, though, will
be fine hemid the turbulence. Wall Street's biggest bank say
that it is sticking with its forecast for full year
net interest income of ninety four point five billion dollars
at JP Morgan.
Speaker 1 (06:53):
Those are your top stories on the markets.
Speaker 3 (06:55):
We saw the S and P five hundred rives for
eight sixth straight session yesterday. It's on the customer bullmarkt
now nineteen point seven percent from lows on the eighth
of April. Stocks six hundred Stox fifty futures are up
by half of one percent this morning. They finished the
stoxice hundred fish yesterday up a tenth of one percent.
European stocks are up eight point three percent so far
(07:16):
this year, out performing the SMP five hundred. We did
see also the thirty year yield you're watching closely yesterday
for reaction to.
Speaker 1 (07:23):
The Moody's downgrade as well.
Speaker 3 (07:25):
It did come down later the yield at the end
of the session, so four point nine one percent is
where that is trading at the moment. The Bloomberg Dollar
Spot Index so holding steady after yesterday's losses as well.
It fell by point six percent yesterday as well, and
an ipo of note in Asia as well. At COTL,
the Chinese battery maker, shares up seventeen percent in Hong Kong.
(07:45):
It's the world's biggest listing this year.
Speaker 2 (07:48):
Wow. Interesting. Okay, so those are the markets. Well, in
a moment, we're going to bring you more about the
repercussions of that Trump putin two hour call yesterday. And
also while an increasing number of Wall Street banks actually
expect Europeans stocks to outperform their American equivalence this year.
Speaker 1 (08:04):
That is.
Speaker 2 (08:04):
But there's another story that we've been reading about this morning.
This is the latest list of must have travel items
for this summer. Yes, I think we're clearly highly anticipating.
Are some holidays. The team over at Bloomberg BusinessWeek have
compiled this. How many have you got, Stephen caroll On.
Speaker 3 (08:21):
I have none, And to be frank, I had a
few difficulties understanding some of them. I mean I was
confused by For example, there was a candle called hotel lobby,
and I was like, oh, candle sounds like smells like
a hotel lobby. That's an interesting idea, but no, actually
that's the name of the company, and the scent that
has been recommended by our colleagues is the Capri scent,
which is citrus, jasmine and amorollicure, which unds like a
good holiday.
Speaker 2 (08:40):
But hang on that. So if you don't go on
holiday shortly, that's the candle that you say.
Speaker 1 (08:44):
Your holiday at home.
Speaker 2 (08:45):
Okay, fine, that's your staycation. Yeah, they had instant coffee
pods and yeah, lots of other things that you can
put into your recycled luggage if you want to buy
recycled luggage as well.
Speaker 3 (08:58):
Yeah, plenty tips will give the travel expert. It's a
chance to check out that letter of time Bloomberg dot com.
We'll put a link to it on our show notes
as well.
Speaker 2 (09:05):
Now, let's bring you more and what emerged from Donald
Trump's phone call with Vladimir Putin. The leader spoke for
a couple of hours. Trump says that cees far talks
between Russia and Ukraine will start immediately, but apparently without
any pressure on Putin. Our EMEA news director was in Matheson,
joins us now for more. Good morning. Was was there
any progress towards ending the war? There seems to be
(09:26):
some consternation in Europe about what the call actually means.
Speaker 9 (09:30):
Well, that's right, it's very unclear where where we're left
with all of this, because it was a lengthy phone call.
There were a lot of comments from everybody afterwards. But
also Donald Trump did speak with the Ukrainian president and
he spoke, as you say, with European leaders afterwards.
Speaker 1 (09:45):
An awful lot.
Speaker 9 (09:46):
Of telephone calls going on. And the upshot is that
we don't seem to be any further along the road
to understanding what the pathway is to end this war.
As you say, the US President says that talks will
start immediately, but we don't know exactly what that means. Where,
what are the parameters are these working level talks, ministerial
(10:07):
talks at some point do we get towards leadership talks?
Under what parameters would those talks be happening? And above all,
the message that comes from this is that Donald Trump
is now saying it's up to Russia and Ukraine to
talk directly and to sort this out, in the sense
that even though he says the US is not walking away,
that he really is disengaging from being the direct conduit
(10:30):
in that process. And he's saying, you know, Russia and
Ukraine need to sit down somewhere, possibly the Vatican, under
what terms we don't know, with what teams we don't know,
and find a way to end this. And he's really
saying if there's at some point he feels it's not progressing,
the US will indeed walk away. So he doesn't seem
to want to be directly involved at this point in
(10:53):
negotiating the end of this war.
Speaker 3 (10:54):
Now, he spoke to several European leaders after this phone
call with thlasmry Putin as well, what do we know
about how those conversasations Wand well.
Speaker 9 (11:01):
It's interesting again because Donald Trump afterward was saying this
is a European situation. He started to use that language,
this is Europe's issue, not the US's, and again clearly
pumpting it over to the Europeans. But arguably he's been
trying to cut them out of the process until now
and exclude them from some of the negotiations. Now he's saying,
this is yours to deal with. And we know from
(11:22):
the European side, the officials that we talk to afterward,
that high level of concern that it seems to be
that Donald Trump is saying he's washing his hands of
this in terms of directly negotiating the end to the war.
And does that mean that Donald Trump doesn't want to
keep imposing sanctions on Russia, He doesn't want to keep
the pressure up on Vladimir Putin and dangle the prospect
(11:43):
of economic sanctions and tightening those because the US still
does have some leverage on the sanctions front. And again
the concern that the ball has been put back into
a different court.
Speaker 1 (11:55):
And where do we go from here?
Speaker 2 (11:56):
Yeah, and I suppose many people are reading this surely
highly supportive of Vladimir Putin and Russia. And what does
the Ukrainian president say about the prospects of talks between
two countries that have been at war for three years?
Speaker 9 (12:11):
Well, he says he's keen for talks, but he obviously
wants to understand what the plan is. He said he's
willing for there to be talks in the Vatican in
Istanbul again, and of course we had recently those working
level talks in Turkey between Russia and Ukraine that seemingly
went nowhere. What he's saying is he expects Russia to
now lay out every single demand to end this war
(12:33):
in a memorandum, so it's on the table. This is
exactly what you want. I mean, you kin't of already
know what Vladimir Putin wants. He's got quite his maximus
demands going, including on territory, but at least have a
very clear sense from Russia, these are the things we
want to end this war and then to have those negotiations.
But he also wants promises in a way from the
(12:55):
US that they will keep open the door to further
sanctions on Russia and further pressure on Russia Europe as well,
though Europe is actually keeping some of those sanctions going
as we know, But he says he just wants to
now have a plan to sit down and have that conversation.
Speaker 3 (13:11):
This was all playing out as the UK and the
EU were unveiling their new partnership agreement, but looking at
the detail of it, it seems like progress on key
issues like UK access to the EU's defense funds appeared
more aspirational than immediate.
Speaker 9 (13:27):
Yeah, it's interesting that meeting yesterday between the leaders of
the UK and some of the European leaders is a
sense that they want to have a pathway and all
these things, but they're putting it all down the road.
I mean, there was a lot of we'll do this,
but we don't quite know when or how in the
whole outlines of the EU and UK agreement on the
defense side, you know, we know that the EU has
(13:49):
given initial approval to this fund and formal approval will
probably come next week. And this is about, you know,
distributing funds to member states and others possibly to support
them as they build things like ammunition and drone. So
you raise the money in the capital market, so you
disperse it to member states.
Speaker 2 (14:08):
But they've left the door open to.
Speaker 9 (14:10):
The UK being part of that, but we just don't
know how. Again, they're talking about you have to pay
a fee maybe if you're outside the EU to be
a participant. There might be other conditions that we don't
know about. They were asked about that yesterday and they
both said they were very unclear from the EU and
the UK side, and it could be weeks, if not months,
(14:30):
if some of that is laid out. So the pathway
for the UK and for British companies particularly to take
part in this and have access potentially to some of
this investment money that also remains very unclear.
Speaker 2 (14:42):
Yeah, of course, you know, the UK and some census
has led the way in the defense of Ukraine along
with all of those European partners. So yes, there's a
big question mark about how much Britain will be involved.
Speaker 1 (14:54):
I think as well.
Speaker 3 (14:54):
One of the more concrete elements of what was talked
about was the use of the passport gates, which is
something that people have seen as an actual, you know,
an actual change that's happened since breadgits that affect individuals
who are traveling, And it's very unclear because that's something
that has to be implemented at a national level. So
there's no timeline as to when that could be done
(15:15):
because each individual country would have to change their own
systems for it to be available to do so. Although
announcement in principle very well and good, the practicalities again
do seem quite unclear from here on in because the
change that would have to be made will take time.
Speaker 2 (15:29):
Yeah, I would say, you know, one can weigh the
speed of you getting through passport control in Europe for
your holiday versus a defense and Security Pact for the
strength of the European continent as being really quite different
political propositions. Thank you, so much wils for being with
us this morning and talking about all of these major
issues for Europe. That is our EMEA News director was
(15:50):
in Matheson.
Speaker 3 (15:51):
A number of top Wall Street strategists are betting that
European stocks will continue their recent strength and outperform the
US by the best margin in at least two decades.
Are Equity strategy reporter Sagarika Jackson Ghani joins US now
for more. Sagurika, Good morning. Who is making these bets
and how well do they see European markets performing?
Speaker 10 (16:10):
Good morning, Stephen. We pulled about twenty strategists in top
US as well as European banks, and the two projections
that stand out are from JP Morgan and City Group. Now.
Both banks expect European stocks to rally further this year,
while they see the S and P five hundred dropping
from current levels. So all in all, we tallied up
(16:32):
the two forecasts and what we found was that JP
Morgan's forecasts show that it would be the best year
for the stock six hundred on record relative to the
S and P five hundred, and City's estimates are for
the best relative performance since two thousand and five.
Speaker 2 (16:48):
Okay, huge Chip from the European side then surely, But
is it about European strength or is it about us?
On the performance and an uncertainty, I mean, what is
driving this trend?
Speaker 10 (17:00):
You know, it's a factor of both. It's been a
very unusual setup for European markets this year, I have
to say.
Speaker 2 (17:06):
Now, in the past.
Speaker 10 (17:07):
Few years, the region has mostly been seen as a
diversified trade so when investors wanted to swap out of
the US, Europe was stouted is cheap and you would
see a brief rotation back into European markets. Some of
that is at play again as investors question the resilience
of US assets in the trade war. Importantly, Europe's had
(17:29):
some factors that have independently drawn investors as well, mainly
the historic fiscal reform in Germany that's boosted economic growth
estimates over the coming years, and so the outlook has
brightened for beyond just twenty twenty five. Strategists say it
is a sustainable improvement in the Union outlook. Independently, that's
what the market is betting on that Europe will win.
Speaker 3 (17:51):
Zach Gregor what which sectors rather distract to see is
likely to perform well in Europe or is this a
broad performance they're looking at.
Speaker 2 (17:59):
It's it's both.
Speaker 10 (18:01):
Europe's benchmark carries quite a few sectors that are particularly
exposed to global growth and global trade. So you know,
some of these sectors are miners, automakers, luxury goods makers.
They have a big market in China, in the US
as well, so in market jargon, these are known as
cyclical sectors. They tend to do well when the global
(18:23):
economy is on an upswing, and they do poorly when
growth is weakening. Now, as the trade uncertainty with the
US clears up, we have the big temporary trade truth
between the US and China. These are some of the
sectors that's religious are particularly recommending.
Speaker 3 (18:41):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (18:47):
Look for us on your podcast feed every morning on Apples, Spotify,
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Speaker 3 (18:54):
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Speaker 2 (18:59):
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Speaker 1 (19:07):
I'm Caroline Hepka and I'm Stephen. Carol.
Speaker 3 (19:09):
Join us again tomorrow morning for all the news you
need to start your day right here on Bloomberg Daybreak.
Speaker 1 (19:15):
Europe
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:10):
This is the Bloomberg Day Baku podcast, available every morning
on Apple, Spotify or wherever you listen. It's Tuesday, the
twentieth of May in London. I'm Caroline Hepke.
Speaker 1 (00:18):
And I'm Stephen Carroll. Coming up today.
Speaker 3 (00:20):
Donald Trump's two hour call with Vladimir Putin hands Russia
a win as the US President steps back from Ukraine peace.
Speaker 2 (00:28):
Talks a landmark deal that leaves many details unresolved. Britain's
big EU reset turns out to be just the start
of negotiations.
Speaker 1 (00:37):
Plus betting on Europe why a growing number of Wall
Street banks expect European stocks to see their best performance
versus the US in at least two decades.
Speaker 2 (00:46):
Let's start with a roundup of our top stories.
Speaker 3 (00:49):
US President Donald Trump says Russia and Ukraine will start
talks immediately on ending the war after a two hour
call with Vladimir Putin, But there was no threat of
US sanctions, no demand for a timeline, and no pressure
on the Russian leader from his US counterpart. Trump later
told reporters that the United States wasn't withdrawing from the conflict,
(01:09):
but that he was considering it.
Speaker 4 (01:11):
This is not my war, This is not the war.
I mean, we got ourselves entangled in something that we
shouldn't have been involved in, and we would have been
a lot better off, and maybe the whole thing would
have been better off, because it can't be much worse.
It's a real message, a death trap. So I think that, Yeah,
I wish I do have a certain line, but I
(01:32):
don't want to say what that line is because I
think it makes the negotiation even more difficult than it is.
Speaker 3 (01:38):
Reacting to the comments in the US president, one European
official told Bloomberg that leaders fear Trump is disengaging from
the diplomatic efforts. An others said the US President had
made it clear he didn't want to impose more sanctions
and was retreating from his own proposal for a ceasefire.
Speaker 2 (01:54):
The UK and the European Union signed an agreement to
ease border checks on food. Prime Minister Kirstarmer called a
landmark deal, but the bigger reset moment that was built
up by the Starmer government turns out to be only
the start of talks in many key areas, with no
concrete result on a defense and security pact. The UK
(02:16):
government says that the deal on agri food products will
add nine billion pounds or zero point two percent of
GDP to the UK economy every year by twenty forty.
The two sides agreed, though only to work towards a
youth visa program, and while the UK claims a victory
on the use of eGates for British passport holders, the
(02:36):
actual agreement talks about their potential use where appropriate. Meanwhile,
Brussels secured twelve years of ongoing access to British fishing waters.
Kiirs Starmer says the deal is a win win.
Speaker 5 (02:50):
Britain is back on the world stage, working with our partners,
doing deals that will grow our economy and putting more
money in pockets of working people.
Speaker 2 (03:02):
The UK Prime Minister has signed a series of trade
deals in recent weeks. His charts that told the BBC
that a pact with the six member Golf Cooperation Council,
including Saudi Arabia, the United Arab Emirates and Cutter was
the next goal.
Speaker 3 (03:18):
Israel says it will take over all of Gaza. As
some democracies warned the country is breaking international law and
could be sanctioned. The Israeli military told Gazans to evacuate
their second biggest city, can Unice ahead of what it
called an unprecedented attack on Hamas. British Prime Minister Kiir
Starmer says, Israel's conduct is unacceptable.
Speaker 5 (03:37):
This is a really serious, intolerable situation and that's why
we are working intensely to coordinate with other leaders how
we respond to this.
Speaker 3 (03:47):
Starmar was joined by the leaders of France and Canada,
who said they will take action if AID isn't allowed
into Gaza. Food security experts say all Gazans are now malnourished,
with one in five facing extreme starvation.
Speaker 2 (04:00):
Now let's turn our attention back to the UK, because
Bloomberg has learned that the Bank of England is considering
loosening post financial crisis rules that force lenders to separate
their retail and investment banking arms. Bloomberg's un pots has more.
Speaker 6 (04:16):
Staff at the Potential Regulation Authority is said to be
looking at relaxing the ring fencing requirements for UK banks,
but without scrapping them entirely. Some of the country's biggest banks,
including HSBC, Newest and Lloyd's Road to the Chancellor in
April calling for ring fencing to be abolished, saying it
makes British banking less competitive. But scrapping the rules, which
(04:36):
finally came into force in twenty nineteen, is not with
our controversy. John Vickers, a former BOE chief economist who
led work on the rules, warns that the loosening could
end up reducing the capital invested in the UK, harming
economic growth in London.
Speaker 2 (04:50):
I'm youw in pots of Bloomberg Radio.
Speaker 3 (04:52):
The United States risks a fiscal disaster if a recession hit,
as Republicans push ahead with their sweeping package of tax cuts.
That's according to Jim Milstein, the co chair of Guggenheim Securities,
who spoke to Bloomberg after a key US House committee
advanced President Donald Trump's massive tax and spending package. Meanwhile,
the Joint Committee on Taxation has estimated the bill's total
(05:15):
cost at three point eight trillion dollars over the next decade.
But Milstein told Bloomberg the figure assumes the US avoids
a recession.
Speaker 7 (05:23):
These projections are all made on a ten year basis. Yeah,
and they assume, you know, consistent economic growth. So just
imagine the Trump pariffs. Because of the uncertainty and the variability.
Imagine we have a recession in a you know, in
the last five or six recessions, the budget deficit actually
blows out.
Speaker 3 (05:44):
Guggenheim's Jim Milstein spoke to Bloomberg as President Trump plans
to go to the capital today to urge fractious Republicans
to overcome divisions and unite behind his signature tax cut legislation.
Speaker 2 (05:56):
So that was the Guggenheim warning. There's been another. JP
Morgan CEO Jmie Diamond has warned that inflation and stagflation
are more likely than many people think, and that today's
markets aren't pricing in the impact of a potential downturn
in the US. Speaking of the Bank's invested day, Diamond
emphasized the uncertainty at play.
Speaker 8 (06:16):
You haven't seen in effective tariffs. The market came down
ten percent, it's back comes ten percent. I think that's
an extraordinary amount of complacency. That's my own view that
when I've seen all these things adding up that are
on the fringes of extreme kind of thing, I don't
think we could predict the outcome. And I think there's
a chance of inflation going up and stagflation is a
(06:37):
little higher than other people think.
Speaker 2 (06:38):
Jamie diamond says that he believes the bank, though, will
be fine hemid the turbulence. Wall Street's biggest bank say
that it is sticking with its forecast for full year
net interest income of ninety four point five billion dollars
at JP Morgan.
Speaker 1 (06:53):
Those are your top stories on the markets.
Speaker 3 (06:55):
We saw the S and P five hundred rives for
eight sixth straight session yesterday. It's on the customer bullmarkt
now nineteen point seven percent from lows on the eighth
of April. Stocks six hundred Stox fifty futures are up
by half of one percent this morning. They finished the
stoxice hundred fish yesterday up a tenth of one percent.
European stocks are up eight point three percent so far
(07:16):
this year, out performing the SMP five hundred. We did
see also the thirty year yield you're watching closely yesterday
for reaction to.
Speaker 1 (07:23):
The Moody's downgrade as well.
Speaker 3 (07:25):
It did come down later the yield at the end
of the session, so four point nine one percent is
where that is trading at the moment. The Bloomberg Dollar
Spot Index so holding steady after yesterday's losses as well.
It fell by point six percent yesterday as well, and
an ipo of note in Asia as well. At COTL,
the Chinese battery maker, shares up seventeen percent in Hong Kong.
(07:45):
It's the world's biggest listing this year.
Speaker 2 (07:48):
Wow. Interesting. Okay, so those are the markets. Well, in
a moment, we're going to bring you more about the
repercussions of that Trump putin two hour call yesterday. And
also while an increasing number of Wall Street banks actually
expect Europeans stocks to outperform their American equivalence this year.
Speaker 1 (08:04):
That is.
Speaker 2 (08:04):
But there's another story that we've been reading about this morning.
This is the latest list of must have travel items
for this summer. Yes, I think we're clearly highly anticipating.
Are some holidays. The team over at Bloomberg BusinessWeek have
compiled this. How many have you got, Stephen caroll On.
Speaker 3 (08:21):
I have none, And to be frank, I had a
few difficulties understanding some of them. I mean I was
confused by For example, there was a candle called hotel lobby,
and I was like, oh, candle sounds like smells like
a hotel lobby. That's an interesting idea, but no, actually
that's the name of the company, and the scent that
has been recommended by our colleagues is the Capri scent,
which is citrus, jasmine and amorollicure, which unds like a
good holiday.
Speaker 2 (08:40):
But hang on that. So if you don't go on
holiday shortly, that's the candle that you say.
Speaker 1 (08:44):
Your holiday at home.
Speaker 2 (08:45):
Okay, fine, that's your staycation. Yeah, they had instant coffee
pods and yeah, lots of other things that you can
put into your recycled luggage if you want to buy
recycled luggage as well.
Speaker 3 (08:58):
Yeah, plenty tips will give the travel expert. It's a
chance to check out that letter of time Bloomberg dot com.
We'll put a link to it on our show notes
as well.
Speaker 2 (09:05):
Now, let's bring you more and what emerged from Donald
Trump's phone call with Vladimir Putin. The leader spoke for
a couple of hours. Trump says that cees far talks
between Russia and Ukraine will start immediately, but apparently without
any pressure on Putin. Our EMEA news director was in Matheson,
joins us now for more. Good morning. Was was there
any progress towards ending the war? There seems to be
(09:26):
some consternation in Europe about what the call actually means.
Speaker 9 (09:30):
Well, that's right, it's very unclear where where we're left
with all of this, because it was a lengthy phone call.
There were a lot of comments from everybody afterwards. But
also Donald Trump did speak with the Ukrainian president and
he spoke, as you say, with European leaders afterwards.
Speaker 1 (09:45):
An awful lot.
Speaker 9 (09:46):
Of telephone calls going on. And the upshot is that
we don't seem to be any further along the road
to understanding what the pathway is to end this war.
As you say, the US President says that talks will
start immediately, but we don't know exactly what that means. Where,
what are the parameters are these working level talks, ministerial
(10:07):
talks at some point do we get towards leadership talks?
Under what parameters would those talks be happening? And above all,
the message that comes from this is that Donald Trump
is now saying it's up to Russia and Ukraine to
talk directly and to sort this out, in the sense
that even though he says the US is not walking away,
that he really is disengaging from being the direct conduit
(10:30):
in that process. And he's saying, you know, Russia and
Ukraine need to sit down somewhere, possibly the Vatican, under
what terms we don't know, with what teams we don't know,
and find a way to end this. And he's really
saying if there's at some point he feels it's not progressing,
the US will indeed walk away. So he doesn't seem
to want to be directly involved at this point in
(10:53):
negotiating the end of this war.
Speaker 3 (10:54):
Now, he spoke to several European leaders after this phone
call with thlasmry Putin as well, what do we know
about how those conversasations Wand well.
Speaker 9 (11:01):
It's interesting again because Donald Trump afterward was saying this
is a European situation. He started to use that language,
this is Europe's issue, not the US's, and again clearly
pumpting it over to the Europeans. But arguably he's been
trying to cut them out of the process until now
and exclude them from some of the negotiations. Now he's saying,
this is yours to deal with. And we know from
(11:22):
the European side, the officials that we talk to afterward,
that high level of concern that it seems to be
that Donald Trump is saying he's washing his hands of
this in terms of directly negotiating the end to the war.
And does that mean that Donald Trump doesn't want to
keep imposing sanctions on Russia, He doesn't want to keep
the pressure up on Vladimir Putin and dangle the prospect
(11:43):
of economic sanctions and tightening those because the US still
does have some leverage on the sanctions front. And again
the concern that the ball has been put back into
a different court.
Speaker 1 (11:55):
And where do we go from here?
Speaker 2 (11:56):
Yeah, and I suppose many people are reading this surely
highly supportive of Vladimir Putin and Russia. And what does
the Ukrainian president say about the prospects of talks between
two countries that have been at war for three years?
Speaker 9 (12:11):
Well, he says he's keen for talks, but he obviously
wants to understand what the plan is. He said he's
willing for there to be talks in the Vatican in
Istanbul again, and of course we had recently those working
level talks in Turkey between Russia and Ukraine that seemingly
went nowhere. What he's saying is he expects Russia to
now lay out every single demand to end this war
(12:33):
in a memorandum, so it's on the table. This is
exactly what you want. I mean, you kin't of already
know what Vladimir Putin wants. He's got quite his maximus
demands going, including on territory, but at least have a
very clear sense from Russia, these are the things we
want to end this war and then to have those negotiations.
But he also wants promises in a way from the
(12:55):
US that they will keep open the door to further
sanctions on Russia and further pressure on Russia Europe as well,
though Europe is actually keeping some of those sanctions going
as we know, But he says he just wants to
now have a plan to sit down and have that conversation.
Speaker 3 (13:11):
This was all playing out as the UK and the
EU were unveiling their new partnership agreement, but looking at
the detail of it, it seems like progress on key
issues like UK access to the EU's defense funds appeared
more aspirational than immediate.
Speaker 9 (13:27):
Yeah, it's interesting that meeting yesterday between the leaders of
the UK and some of the European leaders is a
sense that they want to have a pathway and all
these things, but they're putting it all down the road.
I mean, there was a lot of we'll do this,
but we don't quite know when or how in the
whole outlines of the EU and UK agreement on the
defense side, you know, we know that the EU has
(13:49):
given initial approval to this fund and formal approval will
probably come next week. And this is about, you know,
distributing funds to member states and others possibly to support
them as they build things like ammunition and drone. So
you raise the money in the capital market, so you
disperse it to member states.
Speaker 2 (14:08):
But they've left the door open to.
Speaker 9 (14:10):
The UK being part of that, but we just don't
know how. Again, they're talking about you have to pay
a fee maybe if you're outside the EU to be
a participant. There might be other conditions that we don't
know about. They were asked about that yesterday and they
both said they were very unclear from the EU and
the UK side, and it could be weeks, if not months,
(14:30):
if some of that is laid out. So the pathway
for the UK and for British companies particularly to take
part in this and have access potentially to some of
this investment money that also remains very unclear.
Speaker 2 (14:42):
Yeah, of course, you know, the UK and some census
has led the way in the defense of Ukraine along
with all of those European partners. So yes, there's a
big question mark about how much Britain will be involved.
Speaker 1 (14:54):
I think as well.
Speaker 3 (14:54):
One of the more concrete elements of what was talked
about was the use of the passport gates, which is
something that people have seen as an actual, you know,
an actual change that's happened since breadgits that affect individuals
who are traveling, And it's very unclear because that's something
that has to be implemented at a national level. So
there's no timeline as to when that could be done
(15:15):
because each individual country would have to change their own
systems for it to be available to do so. Although
announcement in principle very well and good, the practicalities again
do seem quite unclear from here on in because the
change that would have to be made will take time.
Speaker 2 (15:29):
Yeah, I would say, you know, one can weigh the
speed of you getting through passport control in Europe for
your holiday versus a defense and Security Pact for the
strength of the European continent as being really quite different
political propositions. Thank you, so much wils for being with
us this morning and talking about all of these major
issues for Europe. That is our EMEA News director was
(15:50):
in Matheson.
Speaker 3 (15:51):
A number of top Wall Street strategists are betting that
European stocks will continue their recent strength and outperform the
US by the best margin in at least two decades.
Are Equity strategy reporter Sagarika Jackson Ghani joins US now
for more. Sagurika, Good morning. Who is making these bets
and how well do they see European markets performing?
Speaker 10 (16:10):
Good morning, Stephen. We pulled about twenty strategists in top
US as well as European banks, and the two projections
that stand out are from JP Morgan and City Group. Now.
Both banks expect European stocks to rally further this year,
while they see the S and P five hundred dropping
from current levels. So all in all, we tallied up
(16:32):
the two forecasts and what we found was that JP
Morgan's forecasts show that it would be the best year
for the stock six hundred on record relative to the
S and P five hundred, and City's estimates are for
the best relative performance since two thousand and five.
Speaker 2 (16:48):
Okay, huge Chip from the European side then surely, But
is it about European strength or is it about us?
On the performance and an uncertainty, I mean, what is
driving this trend?
Speaker 10 (17:00):
You know, it's a factor of both. It's been a
very unusual setup for European markets this year, I have
to say.
Speaker 2 (17:06):
Now, in the past.
Speaker 10 (17:07):
Few years, the region has mostly been seen as a
diversified trade so when investors wanted to swap out of
the US, Europe was stouted is cheap and you would
see a brief rotation back into European markets. Some of
that is at play again as investors question the resilience
of US assets in the trade war. Importantly, Europe's had
(17:29):
some factors that have independently drawn investors as well, mainly
the historic fiscal reform in Germany that's boosted economic growth
estimates over the coming years, and so the outlook has
brightened for beyond just twenty twenty five. Strategists say it
is a sustainable improvement in the Union outlook. Independently, that's
what the market is betting on that Europe will win.
Speaker 3 (17:51):
Zach Gregor what which sectors rather distract to see is
likely to perform well in Europe or is this a
broad performance they're looking at.
Speaker 2 (17:59):
It's it's both.
Speaker 10 (18:01):
Europe's benchmark carries quite a few sectors that are particularly
exposed to global growth and global trade. So you know,
some of these sectors are miners, automakers, luxury goods makers.
They have a big market in China, in the US
as well, so in market jargon, these are known as
cyclical sectors. They tend to do well when the global
(18:23):
economy is on an upswing, and they do poorly when
growth is weakening. Now, as the trade uncertainty with the
US clears up, we have the big temporary trade truth
between the US and China. These are some of the
sectors that's religious are particularly recommending.
Speaker 3 (18:41):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 2 (18:47):
Look for us on your podcast feed every morning on Apples, Spotify,
and anywhere else you get your podcasts.
Speaker 3 (18:54):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg.
Speaker 2 (18:59):
Dot Com Flagship New York station is also available on
your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
Speaker 1 (19:07):
I'm Caroline Hepka and I'm Stephen. Carol.
Speaker 3 (19:09):
Join us again tomorrow morning for all the news you
need to start your day right here on Bloomberg Daybreak.
Speaker 1 (19:15):
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