March 13, 2025 • 16 mins
In this week’s episode of In the City, we explore whether more European businesses will decouple from American companies and Wall Street. Bloomberg deals correspondent Dinesh Nair describes the Trump-induced separation as yet another “unprecedented” rupture initiated by the Republican president. But it could be good news for Europe in the long run, being the spark needed the unify and galvanize European leaders into securing their own defense industries and economies.
“I’m not sure if he’s making America great again,” Nair says of Trump. “But he’s definitely trying to make Europe great again.”
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio News. Welcome to in the City.
Each week we unpack a story that's crucial to the
world's financial capitals. I'm Allegra Stratton.
Speaker 2 (00:15):
And I'm David Merritt.
Speaker 1 (00:16):
So dave a big story in the deal in defense
space broke this week Italian aerospace and defense company Leonardo
replaced American bank Bank of America with German lender Deutsche Bank.
Speaker 2 (00:27):
Yes, and this story really struck me, along with a
few others that we've seen this week. For example, we
heard out of Italy that the government there is rethinking
a potential deal with Elon Musk's Starlink and instead considering
a European alternative such as France's Utul SAP. And these
start to add up to a picture, don't they, Allegra
(00:49):
of European companies having another think about the custom that
they're sending over the Atlantic.
Speaker 1 (00:55):
Yeah, the unintended consequences of Trump decisions. So both stories
are examples of a change world order. So in this
week's episode, we're exploring this question. As Trump pairs back
on the U S security commitments to Europe, could we
see more European businesses pair back their use of American
companies in response.
Speaker 2 (01:15):
Welcome to the City of London, the city of the.
Speaker 1 (01:18):
City of London.
Speaker 3 (01:22):
Mind the gap between the.
Speaker 2 (01:26):
Financial hearts of the country, the city, the city.
Speaker 1 (01:34):
Welcome to in the city, then clear of the door.
Speaker 2 (01:41):
And with us in the London studio is Denesh Naire.
Dinesh is the chief deals correspondent for Bloomberg and of
course had a byline on that Leonardo story that we
were talking about, Welcome to in the city, Dansh, thank
you for having me this particular deal. I think what
seems like a bit of a first. I can't remember
another example of this, or maybe I'm wrong. A European
company is a client of one of the giant American
(02:03):
investment banks, and after witnessing the events in Washington and
the language coming out of Washington and the European response
the last couple of weeks, appears to have made a
decision to ditch that relationship in favor of one of
the old European chants, in this case strch Bag. Is
that the Is that a new thing?
Speaker 3 (02:20):
Yeah, it kind of feel is. I have seen several
examples over the last few years of my deal reporting
of European banks getting replaced by American banks.
Speaker 2 (02:28):
That's what it's supposed happen, right who bring up the
business exactly.
Speaker 3 (02:32):
So this is a pretty big change, you know, even
though it is I mean, it's it's just a mandate.
But again, like what it says is that there is
an increasing feeling among European companies, given what is happening
with the Trump prio trick from the US, that they
need to have some not to say complete independence from
American banks, but a little bit more dependency on European lenders.
(02:55):
And this is probably the first concrete example we've seen
of that. But and totally when we speak to a
lot of European companies and the dealmakers, we do hear
this coming up quite often.
Speaker 2 (03:05):
Now you've written in the piece and I've got in
front of me you say you've speaken to people off
the record. You know, they don't want to be identified
because of competentiality. But several European bankers are saying they've
noticed growing interest from local companies seeking to do deals
and to raise funds, so all of that lucrative business,
which again it's like the likes of Bank of America
JPMorgan in the last years. We all thought they were
(03:26):
unassailable in terms of offering the scale and these services,
and yet this is a big pivot. Has this happened
literally in the last week or so since we saw
the blow up with Zelenski in the Oval office with Trump,
the JD. Van's speech at Munich, which everyone says really
was them telling you very loud and clear that the
transatlantic relationship is not going to continue as it was
(03:48):
before everyone saw that. Is this now the reaction?
Speaker 3 (03:50):
Yeah, I would say yes. I think the recent events
in the past three or four weeks has really kind
of assasperated the logic behind this. But this is not
a new talking point. Over the last few years, the
dominance of American banks in Europe has been a talking point.
The problem we've always had in Europe is that European
banks were getting weaker and weaker, whereas American banks were
getting stronger. Actually so Rocha Bank had its moment, credit suicide,
(04:12):
its moment a few years back. But now they've come
to a point where some of these banks are I
wouldn't say at their peak, but they're much better than
what they were how they were performing two to three
years back.
Speaker 1 (04:23):
Before we look at the impact for Europe. Can we
just try and paint the scene in America, perhaps in
the Bank for America board room whenever they process is
do you think that they'll just be shrugging or do
you think they'll be getting on the phone to the
White House and saying, guys, this is this is becoming
a problem far European.
Speaker 3 (04:39):
Yeah. I think they're mostly shrugging it off at the moment.
If you look at the US banks also, there is
a bit of a body that you know, this expected
deal boomds, you know, we're hoping to see this year
hasn't actually resonated, and in fact, it looks like it's
going to be a difficult year for MENA. When you
get into a difficult year, you want to get in
every piece of business. So this is not helping their costs.
(05:01):
But I think they would be more worried if they
see more examples of big European corporations like thinking about
their core banking relationships and saying, listen, we have three
American banks, we don't need that anymore. We'll replace one
of them with the European Bank.
Speaker 1 (05:16):
So is there evidence that others will be looking at
Leonardo's decision and thinking, right, they've done it, will do.
Speaker 3 (05:20):
It And totally yes, these things always happened behind the scenes,
so we've not caught everything probably which is out there,
but we do hear more and more that this is happening.
Speaker 2 (05:29):
So fascinating, and I think so what you're described is
a bit of a double whammy for the American banks.
You've got European customers who are giving them the cult shoulder.
You've also got all this nervousness. And I know we've
seen this in the markets, haven't we. In ther last
few weeks, everyone's starting to talk about the Trump bump
turning into a potential Trump slump and everyone sitting on
their hands. But it's so much uncertainty like that, so
(05:51):
much that I didn't I didn't actually find that one.
So much uncertainty because of all this tariffs on, they're off,
they're on there off, No one knows what's going to
go on, and so companies are obviously holding back on
a so you're seeing a pullback on that activity, and
also these customers. Suddenly the brand of American banks and
America in general becomes a little bit toxic in Europe,
(06:12):
and they're going to get w hit. Just a few
months ago we were talking about how boyant everything was.
Has everything changed in the last few weeks.
Speaker 3 (06:18):
It is changing massively. Actually, it's changed in the last
three four weeks quite dramatically. I think we went into
January with the hope and there were some big deals
to show for that. We had a big energy deal
in the US, We had a big healthcare deal in
the US to begin the year with them. It's a
very strong January. February was one of the worst months
in the last ten years or so for a minute,
so the shift is so rapid now. The thing here
(06:40):
is we also have to understand that there's a lot
of volatility in the reotric which comes out from the US.
So if they changed the tone, it could make a
big difference. But at the moment there's a lot of
nervousness and there's a lot of companies pulling back or
we're hearing increasingly number of deals which are in the
works have been passed out, like completely stalled actually, so
(07:01):
which is not a good sign.
Speaker 1 (07:02):
And of course there's a particular defense angle to this.
Obviously it is a defense company, but more broadly, if
you and again are just wondering the extent to which
the defense sector is going to start to be on
the phone to the Trump administration, as well as the
banking sector in that if you're a big US prime
and you're hearing Europe going to pour huge amounts of
money into defense companies, but necessarily they're going to have
(07:25):
to be European defense companies. And obviously there's some kit
that only the Americans supply. But over the years, the
Europeans are now saying, we've got a pivot and we've
got to make this stuff ourselves.
Speaker 2 (07:33):
Lenardo estimates a revenue increase of as much as three
billion euros for each extra percentage point of GDP Italy,
just Italy alone spends to ramp up it's defense sector.
In Germany, we saw, and I know, I mean we were.
We had an event here in Bloomberg last night for
our subscribers talking about Trump and Europe, and John Author's
one of our great columnists, used the word epocal for
(07:54):
the for the shift in Germany. He was in Frankfurt
last week. Nine hundred billion euros of extra spending, nearly
a trillion pouring into defense and Tilacro's point, these are
kind of coming to European companies now, are they Yeah.
Speaker 3 (08:06):
I mean what we're seeing is unprecedented. Like the decoupling
of Europe from the US is kind of happening. Someone
who's mentioned to me is Trump not sure if he's
making America great again, but it's definitely trying to make
Europe great again with what And this is a huge moment.
Speaker 1 (08:20):
You know, he said even the first term that he
wanted us to start to take our own defense needs seriously.
But of course the sort of extent of it, and
the extent of the kind of the great big sucking
sound of people saying, right, we're going to do this
in Europe for Europeans, there will be financial consequences for him.
Speaker 3 (08:38):
It will have massive financial consequences for the American defense
companies if they managed to do that in Europe. Now
the big brother is not just taking the support away,
but the big brother is also getting close to the
bully actually, so which is a very tricky situation to
be in and it can have reprefex on other industries.
Europe should have done all these things, but they needed
a trigger point to kind of like, you know, get
(09:00):
them going. And I think what happened in the last
few weeks. Is the trigger for that was having a
conversation with that's seen a German banker, Davers, and he
was saying that what people don't understand about Germany. Yes,
corporate Germany is kind of broken, as the new chancellor
rightly said so, but what people don't understand is that
Germany had the bandwidth to really inject a very serious
amount of capital given how their physical deficity is so low,
(09:22):
but they had their own impediment of the debt break
which they've now released. Actually it's a huge moment in Germany.
I don't think people kind of understand.
Speaker 2 (09:29):
The industry blast night, as I mean John North has
said again he said it was as big as the
fall of the valid.
Speaker 3 (09:34):
More probably for me, like economically it's even bigger. I
don't think people understood the magnitude of what is coming
out actually of Germany, and I think Europe needs that
kind of leadership from a big economy like Germany. But
it's also impressive what's happening in other parts of Europe
as well. I think this feeling of that they need
to stand together now because the support what has been
promised for over the years is probably not going to
(09:55):
be there.
Speaker 2 (09:55):
Can I ask about Elo Musk as well, because I
was mentioned about it, you know, getting cold feet about
using starlink. I was looking the other day at the
Tesla earnings and the numbers out of Germany. I think
Tesla orders are down like seventy five percent or something
in Germany. His own personal fortune Musk. He's lost one
hundred billion of that wealth in the last few weeks.
(10:17):
Tesla share price is down a lot, and it's because
the sales are cratering in other bits of the world
and in Germany particularly. He came out in support of
the far right AfD in the election. So do you
think that could be one of the biggest casualties the
collection of Musk companies most prominently, I suppose Tesla across Europe.
Speaker 3 (10:34):
I haven't heard of a lot of instances where not
using American goods is taking prelevents. I mean it's maybe
in Canada.
Speaker 2 (10:40):
I mean.
Speaker 3 (10:43):
Yeah that. I think the wadying thing when I think
about US and American politics today is if Trump sits
back and asks himself who's his friend today in the world?
Who is it? Actually like he's kind of alienated his
closest allies whether it's Canada, Europe, China has never been
a friend. Maybe it just Russia now actually, Like I mean,
(11:04):
who is it actually? And I think this is the
big problem they have, Like when it comes to the companies.
American economy has sustained over the years because of its
ability to sell products to the world. And if people
start saying that, listen, we are going to go local
and not buy some of these goods like Tesla as
a classic example. But I don't think we've seen that yet,
(11:25):
but I think there will be a big impact on
the company. So and I also feel like they will
get logical at some point that this rheotric cannot continue.
Speaker 1 (11:33):
When the metrics start to come into the Trump White
House of either inflation in the US or a kind
of depression in the number of American goods bought or whatever.
When those numbers come in, do they respond to numbers
or do they continue with the path that they seem
to be on at the moment, which is, you know,
like the hockey stick, we've got to go down to
go up, and trust us eventually.
Speaker 2 (11:52):
Seem to say that certainly we're going through transition. Yeah,
and we've all heard that before. Recession.
Speaker 1 (11:58):
I think the question is this a White House that
blinks and they are showing all the signs of not
believing in blinking, of saying, you guys don't get it.
We are unique. This is leadership. This is going to hurt,
and we're going to carry on and eventually it's going
to come good. Or whether there's too many inputs that
start to come to them, be it Musk starts to
(12:19):
find his boards or all his numerous companies, or or
his family members often.
Speaker 2 (12:25):
You know, because they lose so much European business, Bank
of America, or he gets the White House, and who
woul Trump listened to, you know, would it? Would the
bankers be the ones that actually or Wall Street gets
on his case.
Speaker 3 (12:36):
I mean, here's I think fourteen billionaires on Cambinet or whatever.
So I'm sure they're kind of giving advice whenever you
lose money. The one statement from Trump I couldn't believe
at all is that when he said he's not looking
at the stock market, and we know that's not true. Yeah,
I think history tells us that.
Speaker 2 (12:51):
At Treasury, you know you have how as the Commerce secretary.
These are Wall Street names.
Speaker 3 (12:57):
He's a big Wall street names, and the mean business,
and every thought Trump means business. Like everyone thought Trump
was going to ease regulation, bring inflation down. There's going
to be a huge stock market boom, there's going to
be less taxes. Yeah, but nothing is happening now, and
he's not blinking, which is true. He's still adamant at
what he wants to. But I think at some point
(13:17):
sense will prevail, and especially as you mentioned Aligre, like
in stock market, in the equity prices a huge factor
for a common man in the US, unlike maybe in
Europe or elsewhere in the world.
Speaker 1 (13:28):
I think for the Europeans it will be the unpredictability,
as you say, even if there was a kind of
diplomatic charm offensive, which I don't think any of US
can can foresee or imagine. Even if it were to
be the case, I think it fails from the European
perspective that this is a settled view now, and especially
for Germany. Now they've made this decision and they've crossed
the proverbial rubicon and so on, given all the cultural
trepidation around defense spending, they've done it now. And as
(13:51):
you say, and as John said at our event, it's
been seen to be leadership and the right thing to
do for Germany. They're not going to unwind that.
Speaker 2 (13:57):
I just want to ask to find a question about
London because and the city of London, because we have
seen again in the last few weeks a kind of
partnership between Britain and Europe on this question that we
haven't seen since Brexit and all the years of Rancor
hosting a summit in London. Right after that blow up
in the Oval Office, Macron and Starlus seemingly new besties
(14:19):
here in the city. How people playing this? You know,
a lot of people employed by the big American banks there,
but also we have the European headquarters still but effectively
for a lot of the big European banks. Do they
just flip over to the other side? I mean, what
does it mean for the bankers around around the city
of London.
Speaker 3 (14:36):
I would use the term bankers used to us more
often cautiously optimistic. Still, I think, you know it's still.
Speaker 2 (14:42):
Not have that can eat it there.
Speaker 3 (14:46):
Yeah, I think a lot of the good talented European
bankers still work for American banks and unlikely to change
quite soon. But I think what we're seeing is probably
good for the city, Like more European business. I think
what happens with the GDP growth in the continent, a
lot of the work will come into the city because
as you mentioned, David, like you know, you take any
(15:06):
big European bank, you know, the core of the investient
bankers who actually produce the revenues as still sit in
London mostly, so it should be good for the city.
I think city has other challenges it needs to get into.
We need to revive our stock markets and there's a
lot of things. Get companies to list here again and
not move the listening to us, which is another thing
(15:27):
which I wonder, like you know that whole domicile issue,
is that now going to stop or at least take
a past because we've seen a lot of companies move
to the US. But again, like if European stock valuations
are going up and a simpiece going down, that trade
is not looking that great.
Speaker 2 (15:41):
Any investors don't want maybe as much of their portfolio
is put into the capital markets in America exactly. I
could be a whole new dimensions what the London Stock
Exchange has been best for and the Chancellor right.
Speaker 3 (15:54):
Yeah, but it's one thing to stop companies from moving,
and it's another thing to get companies to come to London. Actually,
I think and we are still a little bit away
on that.
Speaker 2 (16:02):
That is fascinating and Denes, I know you will be
breaking those stories as they as they come out. Thank
you so much for joining us, Thanks for having me, Thank.
Speaker 1 (16:10):
You, thanks for listening to this week's In the City
from Bloomberg. This episode was hosted by me Alecri Stratton
and David Merritt. It was produced by Sumersadi and Moses
and Am, with sound design by Blake Maples. Brendan Francis
Newnham is our executive producer. Special thanks to Dinneshnaire. Please subscribe, rate,
(16:36):
and review wherever you listen to podcasts.
Bloomberg Audio Studios, podcasts, radio News. Welcome to in the City.
Each week we unpack a story that's crucial to the
world's financial capitals. I'm Allegra Stratton.
Speaker 2 (00:15):
And I'm David Merritt.
Speaker 1 (00:16):
So dave a big story in the deal in defense
space broke this week Italian aerospace and defense company Leonardo
replaced American bank Bank of America with German lender Deutsche Bank.
Speaker 2 (00:27):
Yes, and this story really struck me, along with a
few others that we've seen this week. For example, we
heard out of Italy that the government there is rethinking
a potential deal with Elon Musk's Starlink and instead considering
a European alternative such as France's Utul SAP. And these
start to add up to a picture, don't they, Allegra
(00:49):
of European companies having another think about the custom that
they're sending over the Atlantic.
Speaker 1 (00:55):
Yeah, the unintended consequences of Trump decisions. So both stories
are examples of a change world order. So in this
week's episode, we're exploring this question. As Trump pairs back
on the U S security commitments to Europe, could we
see more European businesses pair back their use of American
companies in response.
Speaker 2 (01:15):
Welcome to the City of London, the city of the.
Speaker 1 (01:18):
City of London.
Speaker 3 (01:22):
Mind the gap between the.
Speaker 2 (01:26):
Financial hearts of the country, the city, the city.
Speaker 1 (01:34):
Welcome to in the city, then clear of the door.
Speaker 2 (01:41):
And with us in the London studio is Denesh Naire.
Dinesh is the chief deals correspondent for Bloomberg and of
course had a byline on that Leonardo story that we
were talking about, Welcome to in the city, Dansh, thank
you for having me this particular deal. I think what
seems like a bit of a first. I can't remember
another example of this, or maybe I'm wrong. A European
company is a client of one of the giant American
(02:03):
investment banks, and after witnessing the events in Washington and
the language coming out of Washington and the European response
the last couple of weeks, appears to have made a
decision to ditch that relationship in favor of one of
the old European chants, in this case strch Bag. Is
that the Is that a new thing?
Speaker 3 (02:20):
Yeah, it kind of feel is. I have seen several
examples over the last few years of my deal reporting
of European banks getting replaced by American banks.
Speaker 2 (02:28):
That's what it's supposed happen, right who bring up the
business exactly.
Speaker 3 (02:32):
So this is a pretty big change, you know, even
though it is I mean, it's it's just a mandate.
But again, like what it says is that there is
an increasing feeling among European companies, given what is happening
with the Trump prio trick from the US, that they
need to have some not to say complete independence from
American banks, but a little bit more dependency on European lenders.
(02:55):
And this is probably the first concrete example we've seen
of that. But and totally when we speak to a
lot of European companies and the dealmakers, we do hear
this coming up quite often.
Speaker 2 (03:05):
Now you've written in the piece and I've got in
front of me you say you've speaken to people off
the record. You know, they don't want to be identified
because of competentiality. But several European bankers are saying they've
noticed growing interest from local companies seeking to do deals
and to raise funds, so all of that lucrative business,
which again it's like the likes of Bank of America
JPMorgan in the last years. We all thought they were
(03:26):
unassailable in terms of offering the scale and these services,
and yet this is a big pivot. Has this happened
literally in the last week or so since we saw
the blow up with Zelenski in the Oval office with Trump,
the JD. Van's speech at Munich, which everyone says really
was them telling you very loud and clear that the
transatlantic relationship is not going to continue as it was
(03:48):
before everyone saw that. Is this now the reaction?
Speaker 3 (03:50):
Yeah, I would say yes. I think the recent events
in the past three or four weeks has really kind
of assasperated the logic behind this. But this is not
a new talking point. Over the last few years, the
dominance of American banks in Europe has been a talking point.
The problem we've always had in Europe is that European
banks were getting weaker and weaker, whereas American banks were
getting stronger. Actually so Rocha Bank had its moment, credit suicide,
(04:12):
its moment a few years back. But now they've come
to a point where some of these banks are I
wouldn't say at their peak, but they're much better than
what they were how they were performing two to three
years back.
Speaker 1 (04:23):
Before we look at the impact for Europe. Can we
just try and paint the scene in America, perhaps in
the Bank for America board room whenever they process is
do you think that they'll just be shrugging or do
you think they'll be getting on the phone to the
White House and saying, guys, this is this is becoming
a problem far European.
Speaker 3 (04:39):
Yeah. I think they're mostly shrugging it off at the moment.
If you look at the US banks also, there is
a bit of a body that you know, this expected
deal boomds, you know, we're hoping to see this year
hasn't actually resonated, and in fact, it looks like it's
going to be a difficult year for MENA. When you
get into a difficult year, you want to get in
every piece of business. So this is not helping their costs.
(05:01):
But I think they would be more worried if they
see more examples of big European corporations like thinking about
their core banking relationships and saying, listen, we have three
American banks, we don't need that anymore. We'll replace one
of them with the European Bank.
Speaker 1 (05:16):
So is there evidence that others will be looking at
Leonardo's decision and thinking, right, they've done it, will do.
Speaker 3 (05:20):
It And totally yes, these things always happened behind the scenes,
so we've not caught everything probably which is out there,
but we do hear more and more that this is happening.
Speaker 2 (05:29):
So fascinating, and I think so what you're described is
a bit of a double whammy for the American banks.
You've got European customers who are giving them the cult shoulder.
You've also got all this nervousness. And I know we've
seen this in the markets, haven't we. In ther last
few weeks, everyone's starting to talk about the Trump bump
turning into a potential Trump slump and everyone sitting on
their hands. But it's so much uncertainty like that, so
(05:51):
much that I didn't I didn't actually find that one.
So much uncertainty because of all this tariffs on, they're off,
they're on there off, No one knows what's going to
go on, and so companies are obviously holding back on
a so you're seeing a pullback on that activity, and
also these customers. Suddenly the brand of American banks and
America in general becomes a little bit toxic in Europe,
(06:12):
and they're going to get w hit. Just a few
months ago we were talking about how boyant everything was.
Has everything changed in the last few weeks.
Speaker 3 (06:18):
It is changing massively. Actually, it's changed in the last
three four weeks quite dramatically. I think we went into
January with the hope and there were some big deals
to show for that. We had a big energy deal
in the US, We had a big healthcare deal in
the US to begin the year with them. It's a
very strong January. February was one of the worst months
in the last ten years or so for a minute,
so the shift is so rapid now. The thing here
(06:40):
is we also have to understand that there's a lot
of volatility in the reotric which comes out from the US.
So if they changed the tone, it could make a
big difference. But at the moment there's a lot of
nervousness and there's a lot of companies pulling back or
we're hearing increasingly number of deals which are in the
works have been passed out, like completely stalled actually, so
(07:01):
which is not a good sign.
Speaker 1 (07:02):
And of course there's a particular defense angle to this.
Obviously it is a defense company, but more broadly, if
you and again are just wondering the extent to which
the defense sector is going to start to be on
the phone to the Trump administration, as well as the
banking sector in that if you're a big US prime
and you're hearing Europe going to pour huge amounts of
money into defense companies, but necessarily they're going to have
(07:25):
to be European defense companies. And obviously there's some kit
that only the Americans supply. But over the years, the
Europeans are now saying, we've got a pivot and we've
got to make this stuff ourselves.
Speaker 2 (07:33):
Lenardo estimates a revenue increase of as much as three
billion euros for each extra percentage point of GDP Italy,
just Italy alone spends to ramp up it's defense sector.
In Germany, we saw, and I know, I mean we were.
We had an event here in Bloomberg last night for
our subscribers talking about Trump and Europe, and John Author's
one of our great columnists, used the word epocal for
(07:54):
the for the shift in Germany. He was in Frankfurt
last week. Nine hundred billion euros of extra spending, nearly
a trillion pouring into defense and Tilacro's point, these are
kind of coming to European companies now, are they Yeah.
Speaker 3 (08:06):
I mean what we're seeing is unprecedented. Like the decoupling
of Europe from the US is kind of happening. Someone
who's mentioned to me is Trump not sure if he's
making America great again, but it's definitely trying to make
Europe great again with what And this is a huge moment.
Speaker 1 (08:20):
You know, he said even the first term that he
wanted us to start to take our own defense needs seriously.
But of course the sort of extent of it, and
the extent of the kind of the great big sucking
sound of people saying, right, we're going to do this
in Europe for Europeans, there will be financial consequences for him.
Speaker 3 (08:38):
It will have massive financial consequences for the American defense
companies if they managed to do that in Europe. Now
the big brother is not just taking the support away,
but the big brother is also getting close to the
bully actually, so which is a very tricky situation to
be in and it can have reprefex on other industries.
Europe should have done all these things, but they needed
a trigger point to kind of like, you know, get
(09:00):
them going. And I think what happened in the last
few weeks. Is the trigger for that was having a
conversation with that's seen a German banker, Davers, and he
was saying that what people don't understand about Germany. Yes,
corporate Germany is kind of broken, as the new chancellor
rightly said so, but what people don't understand is that
Germany had the bandwidth to really inject a very serious
amount of capital given how their physical deficity is so low,
(09:22):
but they had their own impediment of the debt break
which they've now released. Actually it's a huge moment in Germany.
I don't think people kind of understand.
Speaker 2 (09:29):
The industry blast night, as I mean John North has
said again he said it was as big as the
fall of the valid.
Speaker 3 (09:34):
More probably for me, like economically it's even bigger. I
don't think people understood the magnitude of what is coming
out actually of Germany, and I think Europe needs that
kind of leadership from a big economy like Germany. But
it's also impressive what's happening in other parts of Europe
as well. I think this feeling of that they need
to stand together now because the support what has been
promised for over the years is probably not going to
(09:55):
be there.
Speaker 2 (09:55):
Can I ask about Elo Musk as well, because I
was mentioned about it, you know, getting cold feet about
using starlink. I was looking the other day at the
Tesla earnings and the numbers out of Germany. I think
Tesla orders are down like seventy five percent or something
in Germany. His own personal fortune Musk. He's lost one
hundred billion of that wealth in the last few weeks.
(10:17):
Tesla share price is down a lot, and it's because
the sales are cratering in other bits of the world
and in Germany particularly. He came out in support of
the far right AfD in the election. So do you
think that could be one of the biggest casualties the
collection of Musk companies most prominently, I suppose Tesla across Europe.
Speaker 3 (10:34):
I haven't heard of a lot of instances where not
using American goods is taking prelevents. I mean it's maybe
in Canada.
Speaker 2 (10:40):
I mean.
Speaker 3 (10:43):
Yeah that. I think the wadying thing when I think
about US and American politics today is if Trump sits
back and asks himself who's his friend today in the world?
Who is it? Actually like he's kind of alienated his
closest allies whether it's Canada, Europe, China has never been
a friend. Maybe it just Russia now actually, Like I mean,
(11:04):
who is it actually? And I think this is the
big problem they have, Like when it comes to the companies.
American economy has sustained over the years because of its
ability to sell products to the world. And if people
start saying that, listen, we are going to go local
and not buy some of these goods like Tesla as
a classic example. But I don't think we've seen that yet,
(11:25):
but I think there will be a big impact on
the company. So and I also feel like they will
get logical at some point that this rheotric cannot continue.
Speaker 1 (11:33):
When the metrics start to come into the Trump White
House of either inflation in the US or a kind
of depression in the number of American goods bought or whatever.
When those numbers come in, do they respond to numbers
or do they continue with the path that they seem
to be on at the moment, which is, you know,
like the hockey stick, we've got to go down to
go up, and trust us eventually.
Speaker 2 (11:52):
Seem to say that certainly we're going through transition. Yeah,
and we've all heard that before. Recession.
Speaker 1 (11:58):
I think the question is this a White House that
blinks and they are showing all the signs of not
believing in blinking, of saying, you guys don't get it.
We are unique. This is leadership. This is going to hurt,
and we're going to carry on and eventually it's going
to come good. Or whether there's too many inputs that
start to come to them, be it Musk starts to
(12:19):
find his boards or all his numerous companies, or or
his family members often.
Speaker 2 (12:25):
You know, because they lose so much European business, Bank
of America, or he gets the White House, and who
woul Trump listened to, you know, would it? Would the
bankers be the ones that actually or Wall Street gets
on his case.
Speaker 3 (12:36):
I mean, here's I think fourteen billionaires on Cambinet or whatever.
So I'm sure they're kind of giving advice whenever you
lose money. The one statement from Trump I couldn't believe
at all is that when he said he's not looking
at the stock market, and we know that's not true. Yeah,
I think history tells us that.
Speaker 2 (12:51):
At Treasury, you know you have how as the Commerce secretary.
These are Wall Street names.
Speaker 3 (12:57):
He's a big Wall street names, and the mean business,
and every thought Trump means business. Like everyone thought Trump
was going to ease regulation, bring inflation down. There's going
to be a huge stock market boom, there's going to
be less taxes. Yeah, but nothing is happening now, and
he's not blinking, which is true. He's still adamant at
what he wants to. But I think at some point
(13:17):
sense will prevail, and especially as you mentioned Aligre, like
in stock market, in the equity prices a huge factor
for a common man in the US, unlike maybe in
Europe or elsewhere in the world.
Speaker 1 (13:28):
I think for the Europeans it will be the unpredictability,
as you say, even if there was a kind of
diplomatic charm offensive, which I don't think any of US
can can foresee or imagine. Even if it were to
be the case, I think it fails from the European
perspective that this is a settled view now, and especially
for Germany. Now they've made this decision and they've crossed
the proverbial rubicon and so on, given all the cultural
trepidation around defense spending, they've done it now. And as
(13:51):
you say, and as John said at our event, it's
been seen to be leadership and the right thing to
do for Germany. They're not going to unwind that.
Speaker 2 (13:57):
I just want to ask to find a question about
London because and the city of London, because we have
seen again in the last few weeks a kind of
partnership between Britain and Europe on this question that we
haven't seen since Brexit and all the years of Rancor
hosting a summit in London. Right after that blow up
in the Oval Office, Macron and Starlus seemingly new besties
(14:19):
here in the city. How people playing this? You know,
a lot of people employed by the big American banks there,
but also we have the European headquarters still but effectively
for a lot of the big European banks. Do they
just flip over to the other side? I mean, what
does it mean for the bankers around around the city
of London.
Speaker 3 (14:36):
I would use the term bankers used to us more
often cautiously optimistic. Still, I think, you know it's still.
Speaker 2 (14:42):
Not have that can eat it there.
Speaker 3 (14:46):
Yeah, I think a lot of the good talented European
bankers still work for American banks and unlikely to change
quite soon. But I think what we're seeing is probably
good for the city, Like more European business. I think
what happens with the GDP growth in the continent, a
lot of the work will come into the city because
as you mentioned, David, like you know, you take any
(15:06):
big European bank, you know, the core of the investient
bankers who actually produce the revenues as still sit in
London mostly, so it should be good for the city.
I think city has other challenges it needs to get into.
We need to revive our stock markets and there's a
lot of things. Get companies to list here again and
not move the listening to us, which is another thing
(15:27):
which I wonder, like you know that whole domicile issue,
is that now going to stop or at least take
a past because we've seen a lot of companies move
to the US. But again, like if European stock valuations
are going up and a simpiece going down, that trade
is not looking that great.
Speaker 2 (15:41):
Any investors don't want maybe as much of their portfolio
is put into the capital markets in America exactly. I
could be a whole new dimensions what the London Stock
Exchange has been best for and the Chancellor right.
Speaker 3 (15:54):
Yeah, but it's one thing to stop companies from moving,
and it's another thing to get companies to come to London. Actually,
I think and we are still a little bit away
on that.
Speaker 2 (16:02):
That is fascinating and Denes, I know you will be
breaking those stories as they as they come out. Thank
you so much for joining us, Thanks for having me, Thank.
Speaker 1 (16:10):
You, thanks for listening to this week's In the City
from Bloomberg. This episode was hosted by me Alecri Stratton
and David Merritt. It was produced by Sumersadi and Moses
and Am, with sound design by Blake Maples. Brendan Francis
Newnham is our executive producer. Special thanks to Dinneshnaire. Please subscribe, rate,
(16:36):
and review wherever you listen to podcasts.
Host
Francine Lacqua
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