Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Day piccurate podcast, available every morning on Apple, Spotify or wherever you listen. It's Wednesday, the twenty sixth of June. Here in London.
I'm Caroline Hepkit.
And I'm Stephen Carroll. Coming up today, France's leading parties clash on the economy and immigration as Day look to win over undecided voters.
The ECB's Ollie Wren tells us it's reasonable to expect two more interest rate cuts this.
Year, plus hitting turbulence. Air travels set to hit a new record this year, but the world's two biggest planemakers are struggling to take advantage.
Let's start with the round up of our top stories.
Representative from France's three main political groupings clashed in their first TV debate ahead of the first round of parliamentary elections there this weekend. The Prime Minister Gabriella tale National rally leaders Jon Dane Bardella and Manuel Bompa from the New Popular Front Alliance frequently at and interrupted each other as they laid out their plans for the country.
Every time, Jordan Bardella explains that he's going to lower v eight by magic. He never says how he will finance it, because the reality is what he'll give you with one hand he will take back with the other.
It's extremely interesting because we have here a prime minister who is preparing to leave power in less than two weeks, who has just told us, in fact, that the state that he is responsible for is incapable of applying the law. I will tell you VAT cuts have been put in place in many European countries.
That was the National rallyader Jean d'in Baldella and Francis Prime Minister Gabriella Tale there during the TV debate a TFI yesterday. The three candidates taking part also exchange views on immigration and on the retirement age. Polls suggest President Emmanuel Macron's party is set to lose its majority in Parliament, with most polls putting the far right National Rally in front.
Macron decision to call a snap vote initially sent markets into turmoil, though recent moves suggests investors are getting used to the idea of potential disruption.
Now to the UK, where Labor leader Kis Starmer says that he would target annual GDP growth of two and a half percent if he wins the general election. The British economy has lagged behind peers, with stagnant productivity gains and a shrinking labor force. Starma was asked by ITV's Paul Brand where he sees GDP growth under labor.
To be the top of the G seven.
You have to appreciate that is slightly meaningless because it could just be zero point one percent. We could even be in recession and still have to be better off than the rest of this.
We want significant growth.
You don't know.
I don't accept this defeated. I understand the challenge you're putting to me.
It'll be nice to have a ballpark figure of how large you want the economy to be in five years time.
Under the last labor government, we grew by about two and a half percent.
So you're looking for that kind of growth two and a half per certainly.
Yes, kis Starma there on ITV's Tonight program. Meanwhile, the Bank of England's forecasts predict only one point two five percent growth by twenty twenty six.
Italy is said to be offered the chance to fill a senior role in the next European Commission he will be up to Prime Minister Georgia Maloney to decide who will be put forward for the job, which Bloomberg has learned is likely to be an executive vice president role. Those familiar with talks say the deal with Italy includes nominating Ursula Vonderline for a second term as Commission President,
and in that capacity she will negotiate with Maloney. Centrist parties are looking to wrap up a deal on the block's top jobs before a summit later this week.
European Central Bank policymaker Ollie Wren says that it's reasonable to expect the ECB to cut interest rates another two times this year. The Finish central banker has told Bloomberg that while officials must ensure inflation returns to two percent, they shouldn't overly dampen economic activity. Ren says this, if inflation continues to slow, investors expectationations for cuts are fair.
Me this, for example, to assume that we stay with this direction and continual grade cuts. Having said that, I don't take any stand on when and how much, so we are not pre committing ourselves to any particular red bath.
The ECB's Olie Wren, speaking there to Bloomberg in Helsinki. Investers currently expect around forty five basis points of right cuts from the ECB in twenty twenty four, which would imply a second quarter point move and about a seventy five percent chance of a third this year. Market see the next move potentially coming as soon as September, and they have fully priced one in by October.
Federal Reserve Governor Lisa Cook says it will be appropriate to cut rates at some point, however when that is remains unclear. Delivering prepared remarks at the Economic Club of New York, Cook says she expects inflation to improve gradually this year before more rapid progress in twenty twenty five.
With significant progress on inflation and the labor market cooling gradually, at some point, it will be appropriate to reduce the level of policy restriction to maintain a healthy balance in the economy. The timing of any such adjustment will depend on how economic data evolve and what they imply for the economic outlook and balance of risks.
Lisa Cook is the latest FED rate setter to share her thoughts on inflation after the US Central bankers opted to hold borrowing costs at are multi decade high earlier this month. The Fed's preferred measure of inflation, the PCE deflator, comes out on Friday.
Now to some corporate news, Rivian's shares jumped to more than fifty percent after the bell in New York, as Volkswagen announced plans to invest five billion dollars in a joint venture with the ev maker. The tie up will give VW access to Rivian's technology for its cause. Bloomberg's David Welch says that it's also a much needed source of fresh cab for Rivian.
We do that much of a hint that it was coming, but Rivine was clearly out there raising money and they needed cash. They've been burning cash and given the world production numbers that they had, really didn't seem like they were going to get the cash for a positive anytime soon, so they needed money. There were maybe financial partners out there they could have gone with, but this helps them a lot.
Bloomberg's David Well She adds that Volkswagen's business strust she often involves joint ventures or tie ups. Bloomberg Intelligence says that the deal highlights VW's need to bridge the gap with the likes of Tesla. Now in a moment we'll discuss more about that election debate in France and also bring you more on how Europe's aerospace sector has seen
its shares pummeled over supplied difficulties at air bars. But before that, this story really caught my eye this morning banner Alnor Elegance and Exclusivity, the story of how he created LVMH. It's a totally absorbing piece with beautiful photographs and all the history around the creation of this European giant really and it's in Bloomberg Business.
Week this ye.
And the construction of an empire that really spans the globe now, of course, bringing together all of these brands that symbolized Europe's post war influence and bringing them to the rest of the world as well. It's a conglomerate now that's you know, a major international brand and of course their products known everywhere. But that's something that's really been put together by Abo.
Yeah, and it has a lovely story about really the inception of why he came up with this idea. It was actually a New York taxi driver, that's the story that he got into a New York taxi driver and he asked the driver whether he knew who the president of France was is back in the nineteen seventies, and the man said, the only name I know is Christian Dio. The only French name I know is Christo and that
gave him the inspiration for building this forty year business. Anyway, it was one of the little factoids that was just lovely in that Bloomberg.
Well, let's think about the name who might be the next Prime Minister of France. Representatives of the three leading groups in the election took part in a televised debate last night, clashing over tax, pensions and immigration. This as Bloomberg has been looking at President Emmanuel Macron's role in this election campaign. Our Paris Burea chief Alan Katz is with us for more this morning. Alan. Last night's debate was at times fractious, but also revealing about some of
the policy differences between the groupings. What will voters have taken away from it, hig.
Morning, I don't know that it really will have changed many people's minds. The three candidates Jordan Bardella for their national rally. Gabriel Attal, who's the current Prime Minister, is the representive for the majority of the presidential majority. In many of both pacos representing the leftist alliance of the New Popular Front, it sort of stuck mainly to their positions. One of the things that I think people might take away is that Gabriel Attel doesn't actually come off as
being particularly nice. He was actually the one who interrupted the others the most, to tried to speak over others the most. And in Bardella and Manuel Bompa both came off as sort of more in many ways more reasonable people. They were at least willing to be quiet and let their opponent speak in a way that got ahead at town didn't seem to and so excluding any of the policy issues and policy differences and arguments that they had,
sort of just from a behavioral standpoint. One of my thoughts was that that might be some people's takeaway.
Okay, that's really interesting. I mean, it was also quite a significant test, wasn't it. For Jordan Bardella from the National Rally he is leading in the polls. Did we get more details about his party's economic plans?
Now much a little bit. I mean, he discussed a little bit more about how retirement reform would work under the Under the National Rally, if he were to become prime minister. He did point out that you know, while some people would end up with their retirement age reduced slightly, others would end up with the retirement age actually potentially
extended slightly. Again, one of the things that he has repeatedly done is that that he can't really make too many promises because he keeps claiming there needs to be an audit of public finances before he releases a lot of financial details. That is largely it's not really true. There are plenty of audits of Puble French public finances that are done annually that you can consult. But it allows him to maintain a bit of haziness around the
numbers around his his financial programs. I mean. One of the things that though, that he came out with was he discussed one of the main policies that would put in place, at least initially as a reduction in the VAT tax on energy products, particularly gasoline and energy to heat your home. He said it would cost about twelve billion euros a year. Tel jumped on him and claimed like, no, no, this is going to cost seventeen billion dollars a year.
But then he made a really I thought revealing point. He said that five billion dollar difference is the same as the budget of the Culture Ministry every year, which, as I was watching that, I was like, that's in many ways absurd to most people watching this program. If you live in Paris, perhaps you care about the Culture Ministry. If feel ab outside of Paris, I don't think you
really do. And that is your example struck me as a very urban and somewhat out of touch example to use for most viewers.
Meanwhile, Alan, we have some new reporting today on the role that President Macron is playing in this campaign, quite prominent, not pleasing many of those running under his banner. Is he a benefit or a liability to those who are running from his party and their allies?
So there's not I guess that depends on perceptions a bit. There's no sort of studies particularly to show whether not maccall's interventions are benefiting or hurting his The people running under his group, they certainly view it as a negative. As we point out in the story today, many of them don't want maconto appear on their posters, They don't want to appear with him in campaign rallies. People have
asked him to not intervene so much. He said he would not intervene very much, and that it was up to the parties to campaign in this election. But yet he can't seem to help himself, and he pops up in editorials, he pops up, you know, on TV, he pops up in a podcast for entrepreneurs. He really can't seem to help himself, and I don't think it's helping his group.
Alan. I have a last question about the debate, which is that we've talked a lot about the far right and the far left in France being at the heart of this election, parliamentary election. How extreme did those two candidates ultimately portray themselves as versus centrist That's.
A good question. So the answer is they portrayed themselves as being extremely reasonable people. No one was calling for revolution. So at one point Jordan Bardella did accuse Manuel bompass or, the far right candidate, accused the far left candidate of trying to impose a Cuban style economy on France, but that was sort of as far as it went for their own policies. They kept being portraying themselves as extremely reasonable, as people who would be competent stewards of the French economy.
They portrayed themselves as perhaps a little bit less reasonable when they attack each other on immigration, but certainly on the economic side, they really all tried to present themselves as being not necessarily the same, but they would all do things that would actually in the long term boost the French economy either either essentially either from the supply side or from the demand side, and that all three of them claimed that they would be positive for you know,
French consumer purchasing power and for French economic growth overall.
But what is the outlook then for Emmanuel Macron's party in this as we do see more voters attracted by those two ends of the political spectrum.
So it's relatively poor. I mean, one of the issues for McCain is that he sort of occupies the broad center of French politics right there. Previously before him there had been sort of test the two biggest parties were sort of a center left and a center right party. And if in terms of democratic governance you think generally there's going to be all you know, you're going to go back and forth among administrations. That that was sort of the back and forth attended to happen in France.
But with macall start taking over that broad center, what he's created is a three body system with sort of him in the center and then these two extremes at the ends. And what the polls are showing is that
people are want a change in government right now. The polls are showing roughly for the first round voting intentions roughly thirty three to thirty five percent for the far right, roughly twenty eight to twenty nine percent for the far left, and more like nineteen to twenty percent for Matt CON's group, So really pretty far behind. And so it looks like what people are potentially interested in is a change in administration.
And that means either for right or for left. There is no sort of alternate, alternative centrist group that they can pick from.
Okay, Alan, thank you so much for your time this morning. That is Blimberg's Paris bureau chief, Alan katz Well.
Now, the International Air Transport Association says it expects a record number of passengers to take to the skies this year, while industry data compiled by Bloomberg and EF shows that ten and a half million flights are scheduled to take place in the third quarter. That should mean those making the planes are set for bigger takeoff and profits, but problems ranging from safety issues to supply chain bottlenecks. That meant the world's two biggest plane makers, Boeing and Airbus,
are struggling for altitude. Joining us how to discuss what's going wrong. As our Globe Aviation editor Bandix Camel beny Bet, good morning to you. Airlines are desperate for new planes, but the world suppliers are struggling to deliver.
Why.
Yes, you're absolutely right, there is that huge need for new planes. They want the fuel efficient planes. Remember, fuel is the single biggest cost for airlines and therefore they're desperate to lower that cost and that's the easiest way to do that is with new planes. Now, both Boeing and Abbus have very distinct problems. On the Boeing side well documented. Since that January fifth blowout, they've really been
in crisis mode. They've had to cut back significantly in terms of output to sort of get their factories in order. Airbus hasn't had a similar issue, but they are still struggling with the supply chain. So for them, it's not a demand question, it's really a supply issue. Their supply chain remains stretched, they don't they're not getting the parts they need. And we had a profit warning from Airbus just two days ago, or the stock drop quite significantly
yesterday as a result. And what we heard from the Abbas CEO is it's really across the board in terms of parts that they're missing. They're missing engines, they're missing aero structures for the planes. They're missing interior, so things like seats and tables and other parts of the galleys and so on. And the moment you miss a part of a plane to build it, you can't complete the project and your plane is stuck on the tarmac. In the factory, they're building what's called gliders, so you know,
completed planes that don't have engines. So all these kinds of issues are rippling through the production line and are leading to a lower than expected number of planes that they can deliver.
Yeah, and as you mentioned, Airbus shares led the declines in Europe yesterday. In some senses, it's quite surprising though that airlines are seeing such problems with supply constraints. I mean, most other industries have moved beyond the sort of pandemic era concerns. Is it still to do with the pandemic or is it other issues.
Well, the pandemic obviously was sort of the big It really amplified the issues that existed previously. Supply chains have always been quite stretched in the aviation industry. You've got to remember, these are incredibly complex products to put together, so the supply chain has to work perfectly, and the moment there was a glitch somewhere there, At the moment there's a supplier that might be smaller, might not be as financially sound as the bigger ones, that's where the
problems start. And Airbus and Boeing have taken a very close look at these suppliers over the years and making sure that that supply chain does not tear in some kind of way or show even strain. They've sometimes put people in, they've sometimes even put resources in. And the most extreme example might be Spirit Aerospace, which is a big supplier to Boeing and to some degree also to airb Us that's being reintegrated by Boeing just to get
a better grip onto that on that supplier. So those are some of the measures that they're taking, but it's a valid question that we have put to Airbus in particular. So why can't you get your supply chain sorted out? Even when everyone else the car industry, are the manufacturing industries have emerged from the pandemic. And the answer is always it's the complexity of our products. It's the complexity of the supply chain. It's the sort of high skill of our workers. A lot of people have left that
workforce don elsewhere and have not returned. So you have to replenish the factories, both with kit and with people, and that seems to take longer than everybody thought. The outlook isn't that great. Abbus did say it's going to take two to three years to get this sorted out.
Just this give a chance for any other companies to step in and try to muscle in on this geoopoly that's been held so closely by our Bos and Boeing.
I mean, you'd think, and if you look at it from the outside, that this is a strange arrangement that you have essentially two companies sort of globally dominating you know, what, is a very sizable industry. I can't really think of very many other industries where only two players play a role. You might have it to a degree and sort of the you know, iOS versus Android game, But other than that, you know, it's not like you only have two car makers or you only have two plane sort of airlines
out there. But that's the world we live in in aviation. And again it's the complexity of the product, it's the it's the sort of the hurdle eventry is so high that getting into that market is incredibly complicated. The Chinese are probably in the best position to get there eventually. They have a product of the Comac nine to one nine that is certified in China and it's picking up orders in China, but is not certified outside of China. So the FAA and the US or YASA over here,
those are the regulators. They have not signed off on this plane. So that might happen eventually. And if you look at the plane, it looks a lot like an A three twenty or seven three seven. It's sort of in that bracket. But again it'll take time. That plane is picking up orders in China, which isn't great new for Aurboston's bone because that's a really important market, and every plane that is sold to Comac means one less order for Ourboston Boeing. So nothing that's going to happen
in the short term. We're talking years, possibly even decades for this to really change, but eventually that popoly will be broken up.
This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond.
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