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This is the Bloomberg DAYBAQ podcast, available every morning on Apple, Spotify or wherever you listen. It's Friday, the twenty first of February in London. I'm Caroline Hepka.
And I'm Stephen Carroll. Coming up today. The United States signals sanctions on Russia are a bargaining chip in talks over ending the Ukraine War.
The US Treasury secretary tells Bloomberg any move to boost longer term debt isn't imminent as investors start to consider Trump's ideas for the treasury market.
Plus, it's been thirty years since Nick Leeson caused the collapse of Barings Bank. The former rogue trader tells us why he's worried about the UK's post to deregulate.
Let's start with a roundup of our top stories.
The United States says sanctions on Russia are on the negotiating table and the talks to end the war in Ukraine. Treasury Secretary Scott bess End told Bloomberg the White House is prepared to either ram boop or ease penalties on Moscow as negotiations progress. He also continued the administration's criticism of Ukraine's President Vlasimir Zelenski.
I think President Zolensky unfortunately escalated and has put some daylight between them. Escalated that a lot of his remarks in Munich. I thought we're inappropriate. President Zelenski, when I met with him, assured me that he'd be the signing the minerals deal in Munich.
He has not.
Scott Bessant there speaking to Boomberg's Anrie Hordern, America's change in tone on Ukraine has affected talks among the Group of Seven nations. Countries are struggling to agree on a draft communicate to mark three years since Russia's invasion after the US objected to references to Russia's war of aggression.
The US Treasury Secretary also told Bloomberg that plans to boost the amount of long term debt the US issues are a long way off. Bessant has repeatedly criticize his predecessor, Janet Yellen for favoring short term debt to fund the US economy, but the Treasury Secretary says that rebalancing will take time.
That's a long way off, and we're going to see what the market wants. The FED said that they may stop their balance sheet runoff, so you know, easier for me to exten duration when I'm not competing with another big seller. It's going to be past dependent.
Best, and also dismiss recent market speculation that the government might revalue its holdings of gold to reduce US borrowing needs. The Treasury Secretary also added that cost savings from Elon Musk's Doze efficiency drive should help bring down spending.
Wall Street is starting to look seriously at plans to overhaul the treasuries market drawn up by President Trump's advisors. One concept, dubbed the Mari Lago Accord, would involve forcing foreign creditors to swap their treasuries into one hundred year non trade will zero coupon bonds, and this would ease the US as debt burden. Market veter and Jim Bianco made it the focus of his client call this week.
The founder of Bianco Research said, if Trump is bold enough to put NATO in jeopardy, he's bold enough to do the same with the foundations of the financial system. Bond investors are so far showing little sign of concern with trading in the treasury market. Particularly cam in recent days.
Federal Reserve policymaker Alberto Mussulam sees a growing risk of inflation stalling above the fed's two percent target or moving higher. Speaking at the Economic Club of New York, the Saint Lewis FED president argued policy should remain moderately restrictive until it's clear the Central Bank's goals are in sight. His comments come as a florry of officials shared their outlooks amidst uncertainty. They included the Chicago FED president or singles.
B fiscal policy, in geopolitics, all of those things. If it affects prices or it effects employment, then the law says we have to think about it. Well, I don't tell you what to order at the restaurant. I just say, look, what are the prices and what is the menu? And if tariffs drive up prices, then we have to think about them.
Fed policymaker Usin coilsby speaking there. The Bank of Atlanta President Raphael Bostik also offered his opinion in an essay release on Thursday, for costing two rate cuts in twenty twenty five, but noting that uncertainty around that projection has now risen.
Israel says Hamas has violated the Gaza ceasefire deal by handing over an anonymous body instead of one of the hostages. The IDF says the remains they were given were not those of Shari Bibas, who was captured alongside her two sons in the October seventh, twenty twenty three attacks. A spokesman for the US Secretary General, stef Andrew Jarek, called for both parties to abide by the terms of the ceasefire.
The Secretary jeral reiterates his appeal to the party's by by their commitments to continue the full implementation of the ceasefire and hostage release deal. He urges the parties to the conflict to respect the remains of the dead and return them to their relatives.
Stefan der Jarek speaking there, if the two sides can't agree, the war could soon start up again, risking more debts and Gaza and the lives of the remaining Israeli hostages. Bloomberg has learned. This fute comes as Saudi Arabia convenes a private summer to discuss a post war Gaza plan to counter the US proposal to relocate Palestinians.
City Group is ending its workplace representation goals and removing requirements to interview candidates from diverse backgrounds. The lender cited pressure from the Trump administration as a reason for the changes set out in an internal memo from CEO Jane Fraser seen by Bloomberg. As well as abandoning aspirational representation goals, the Diversity, Equity and Inclusion and Talent Management team will be renamed to Talent Management and Engagement.
There's another sign that UK consumers are feeling downbeat about the country's economic prospects. That's according to the latest research by market research company GfK. Bloomberg's Tea at a Bio has more.
When it comes to the economy, pessimism is higher now than it was in the wake of recession a year ago. GfK's gauge of expectations over the next year came in at minus thirty one this month, seven percentage points weaker than February twenty twenty four. That's close to a two year low. The lack of confidence could be due to warnings of job cuts from firms bracing for increased payroll cuts in April, keeping households wary about spending real wage gains.
It's a blow for the Chancellor of Rachel Reeves as she pursues the growth that has eluded labor in its first months in power. In London, Tea added Bayo Bloomberg Radio.
Those are your tops to or is this morning? In the markets right now? Chinese tech stock surging to the most in three years after the earnings from Ali Barba. You have MSCI China Index and now by three point
two percent overall. A lot of speculation about the Bank of Japan that it would hike interest rates sooner rather than later after the consumer inflation accelerated in January in Japan that saw benchmark Japanese yields touching a fifteen year high earlier this morning dampened down though after comments from Bank of Japan Governor Caswa a wader and so you have the Japanese yen also week of this morning down
half of one percent. So moving back to one hundred and fifty spot four one Bloue McDonald Spot index is stronger tenth of one percent. Treasuries edging high in Asia, oil heading for its biggest weekly gain since early January, and gold holding steady near a record high. Those are the markets and the moment.
We'll bring you more on the US plans for talks over Ukraine. Plus, it's been thirty years since the collapse of Bearings Bank and Karlyn. You've been speaking to the former tregger, nick Leeson, who sparked its collapse.
Yeah, absolutely fascinating. So nick Leeson caused the collapse of the bank as a young man who was twenty eight years old. He made so many headlines the two hundred and thirty three year old Bearings Bank. That was, you know, a banker to the Queen, for example. Nick Leson speaking to us looking back at that period in his life but also thinking a bit about deregulation and what the rollback of regulation here in the UK and elsewhere might mean. He had some very interesting comments for us.
To more in that conversation in just a couple of minutes. But first let's turn to our top story this morning, Donald Trump upending US policies on Ukraine and on Gaza. On Ukraine, the US has signal the sanctions relief for Russia could be on the table and talks over ending the conflict. Meanwhile, negotiations for the second stage of the ceasefire between Hamas and ISRAELO do you to start today
as well with the details. Here's Bloomberg's EMEA News director Raslind Mathison raz Good morning with this talk of sanctions relief is a sign that Washington and Moscow are actually going to negotiate an end to the invasion of Ukraine.
Well, it certainly does seem that way. It's interesting to see to some extent the US lay out a bit of its cards even before proper negotiations begin, or there's a meeting directly between the leaders of US and Russia. But as you say, the Treasury Secretary has got best at indicating in an interview on Bloomberg Television that definitely sanctions would be on the table, And that's certainly something we've seen Russia indicate it wants to be part of
the conversation. They keep alluding to it with talk of economic measures, the status of their economy with the US, so certainly seems to be something that they're very keen to happen. The question is, in the meantime, does the US perhaps slow down simply the enforcement of sanctions on Russia to try and ensure that Russia does indeed get to the table in negotiating a war end of the
war in Ukraine. But obviously, in all of this, the thing that stands out is we're talking a lot about US and Russia, but there's very little that we know about where Ukraine sits in all of this. And again the question is do the US and Russia strike a whole lot of understandings about how to end this war and then only then bring in Ukraine to the conversation.
Yeah, it's quite a change, isn't it. Russia has been a parah. Vlad Laputa has been a perah for so many years, so a real kind of change. The US and voy kid Klog though, did meet Zelensky, the Ukrainian president, who said that his team is ready to work with the US. Is there a sign that the Ukraine will be listened to? There's been such animosity. Are these talks as they progress? Will Ukraine be spoken to? Will they be involved?
Well, they did meet yesterday, as you say, but that some of the parameters around the meeting were interesting, or the US said that they didn't want to have any joint briefing afterward or statement to the media, and Zelensky said afterward post on social media that Ukraine is ready for what he called a strong, effective, investment and security agreement.
So that shows again that Ukraine is of course willing to talk to the US and wants to be part of the conversation, but also wants to sign up to an agreement that it sees is strong and effective involving the US. And there are reports overnight that the US has come back to Ukraine with a further proposal which would see the US getting access to some of Ukraine's critical minerals, and that's the US has to compensate it for its military support for Ukraine and for further support
in the future. So perhaps there has been some movement there. But underlying all of this, given the comments we've seen this week, both from the US President and in response from Voladimir's Zelenski, you know that relationship remains exceptionally brought.
Meanwhile, Francis Manuel Macroz's used me Donald Trump on Monday in Washington that we want peace in Ukraine, but not a capitulation. Can European leaders, and he's only one of them that's going to be going to Washington get a hearing in the White House on this issue.
Well, it probably depends on what they're bringing to the table. As you said, there's other leaders going there next week, including the UK Prime Minister Kiir Starmer, and we know from our own reporting that he's being advised to increase defense spending in the UK to two point five percent
of output. That's only it from two point three percent, but it's a bit and so you might see, you know, both Starma and the French President Emmanual Macron talking up their plans to increase their own defense spending for Europe to become much more self reliant when it comes to defense, so assuring Donald Trump, they're taking him seriously on that. But then there's a separate question and the more immediate one, which is how can they again get into the conversation
around the future of Ukraine. And we know it's possible that both Macron and Starma will go to propose what they call a reassurance force, where will provide some troops largely surrounding Ukraine, not in Ukraine itself, but to help, for example, in the question of how do you create safety in the skies in the event of any kind of CEASPI.
Okay, away from Ukraine. Let's think about the Middle East. We've had the news out of Israel that it says that one of the bodies handed over by her Mass was not the hostage that the group claimed that it was. What's that going to mean for the negotiations over prolonging the ceasefire.
Well, it's coming at a delicate time, as you say, because we are going into potentially the next stage conversation around the ceasfire, which is to a extend it, but be also to come into the conversations around more fundamentally what does the future of Gaza look like? And those
are going to be very very delicate conversation. So we've seen already several times throughout this ceasepire that it's been at risk almost of breaking down disputes over these exchanges that have gone on, and there's another one due to come tomorrow. So the question is whether this becomes an issue to the point that the Israeli government says we'll hang on the ceasfar is not working and we're going
to walk away. We do think at this point that they're likely to try and hold these talks, but again, at that point you're coming at it from very very different perspectives. Israel insists that Hamas be both demilitarized and removed from power, whereas Hamas says, yes, it's okay to talk about seeding control of Gaza, but it doesn't want to have to lay down its weapons, and then you end up with the situation a bit like Hesbalah in Lebanon,
for example. So there are fundamental sticking points to any next stage conversation, and these latest developments just to add a further element of tension into those.
Okay, Rosla Masora, Ema news director, thank you very much.
Now it's been thirty years since Beering's Bank, Britain's oldest merchant bank, collapsed after twenty eight year old star trader Nick Leeson racked up one point four billion dollars in trading losses in bearing Singapore office. Lisa became the face of financial misconduct. He served more than four years in prison, then he wrote a book that became a Hollywood movie.
For the past few decades, Lison's been on the speaker circuit talking about what he calls the most embarrassing time in his life, and more recently he's been working to investigate financial misconduct. I spoke to Nick Leeson alongside our finance reporter Will Shaw, and I began by asking him for his perspective now thirty years on, as he continues to talk about what he did.
The piece of vice is really easy and it's you know, I delivered the same piece of advice to my children as well. You know, if you find yourself in a difficult situation, always ask for help and advice. You know, I was surrounded by people that could have helped me, but I didn't do that really simple thing. And you know back in it's a very different way, well today
than it was in nineteen nineties banking. You know, asking for help was seen as a sign of weakness and you probably would have been just you know, not dismissed from the firm, but dismissed with it quite quite easily. But you should have seen it, or at the time, I should have seen it as a sign of trying to do things correctly. And it's such a simple thing. And you you know, as I explained it to my children, if they find themselves in a difficult situation, just come
to me and tell me what's going on. You know that there might be a difficult period, but I'll help you through it and that's what I needed at the time. And I think, you know, just more communication is such an important tool.
Nick.
Can I say, You've had such a colorful life, You've written a couple of books, You've been, as I said to Jail, you've been, you know, widely understood as a kind of road road trader, sort of posted person for that. If there is another Nick Lison out there now, would you say to him or her her.
Stop, you know it's it's not worth it. I am. You know. I remember doing a treasury management conference in the Barbicane, you know, a good few years ago now, and one treasurer came over to me and he said, look, I've got I'd like to ask a piece of advice. And you know, I started off by saying that, you know, I'm not sure I'm the right person for that, but you know, I'll do my best to respond as honestly as I can. And he said, there's a bit of an issue and it was for one of the biggest
UK banks at the time. He said, I've got a bit of an issue. I'm not happy with something that's going on within the organization. I've got an email in my outbox that I want to send, but I just don't have the courage to send it at this time. What do you think I should do? And I said, look, you know, I don't know the specific instance, but the one piece of advice I can give you is it's it's far easier to get another job, it's not so
easy to get another reputation. And you know, you've got to make the right decision on that basis.
You know.
Unfortunately, you know, my reputation might be slightly different than it was back in nineteen ninety five when the story came to everybody's attention, but it's still a bad reputation.
Okay, Yeah, that's interesting that you feel that you're still very much stuck with even though you did the present time and it's a long time ago, you still feel that you're really saddled with it.
Yeah, it's I think you You know, people have asked me if I'm you know, comfortable or content with that particular period in my life. I never will be. I never will be because it's the complete opposite of what I wanted to achieve. Am I content with myself? Yes, you know what I represent, you know, my family values and everything else. But the focus is very different. It's not on being successful and succeeding within the world of finance,
which is what I wanted to do. So, you know, you have to change your focus a little bit and that enables you to move forward. Whereas you know, speaking about it so openly, honestly and regularly means that it's not this, you know, it's not this big ogre that
follows me around all the time. It's part of my life, it's part of who I am today, but it's not you know, it doesn't quite have the level of shame, guilt and embarrassment as it did years ago, but it still has a certain amount of embarrassment.
This is Bloomberg Daybreak Europe. You're morning brief on the stories making news from London to Wall Street and beyond.
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And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.
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