Apple DOJ Lawsuit, Nike and Lululemon Pressure | The Pulse with Francine Lacqua 03/22

Summary

The Pulse with Francine Lacqua discusses the week's best stock performance, Apple's lawsuit by the U.S. Justice Department for antitrust violations, and Nike's premarket share fall due to product realigning. The show also covers the European markets map, the impact of central bank meetings on investor appetite, and the latest on the Ukraine conflict's global economic effects, including discussions on using frozen Russian assets to fund Ukraine and the implications of tariffs on Russian grain.

Takeaways

• 📈 Stocks are heading for their best week in a year following central bank meetings suggesting a shift towards looser policies.
• 🍎 Apple loses over $1 trillion in value after being sued by the U.S. Justice Department for antitrust violations.
• 🏃‍♂️ Nike shares fall in premarket trading as the company plans to reposition its product offerings.
• 💡 German business confidence index rises to 87.8, indicating a stabilization in the economy.
• 🌐 E.U. leaders discuss using profits from frozen Russian assets to fund support for Ukraine.
• 🛒 Retail sales in the UK are stronger than expected, suggesting the recession there might be over.
• 📉 Reddit's IPO debuts with a 48% increase, showing market belief in its AI and data potential.
• 📊 FedEx earnings beat expectations, with a share price jump of 13% in late trading.
• 🏋️‍♀️ The sportswear industry is in a state of upheaval with changing consumer preferences and market fragmentation.
• 🎩 LVMH sees a reshuffling of executive roles, hinting at a possible generational change in the luxury conglomerate.
• 🌿 India announces it will stop importing oil from certain Russian tanks due to U.S. sanctions enforcement.

Q & A

What is the current status of global stock markets according to the transcript?

Global stock markets are heading for their best week in a year, with a shift toward a looser policy indicated by recent central bank meetings.

What is the specific issue Apple is facing in the U.S. Justice Department lawsuit?

Apple is being sued by the U.S. Justice Department for alleged violations of antitrust laws, with accusations of dominating the market and squeezing out competition, particularly in areas like smartwatch compatibility and payment systems.

How is Nike addressing its product offering challenges?

Nike is looking to realign its product offering in response to a fall in premarket shares, indicating a need to better match merchandise with consumer demand.

What is the significance of the recent movements in the Euro and Yen currencies?

The Euro and Yen have experienced little change, with the Yen trading around 152 per US dollar. This stability is set against a backdrop of Japan's inflation accelerating to its quickest pace in four months.

What are the implications of the Federal Reserve's meeting for U.S. policy makers?

The Federal Reserve's meeting has fueled hope that U.S. policy makers will deliver three interest rate cuts, which could significantly impact the economy and financial markets.

What is the current situation of the German business confidence index?

The German business confidence index has come in higher than expected at 87.8, indicating a potential stabilization in the German economy.

What is the impact of the U.K.-Russia conflict on the global economic landscape?

The U.K.-Russia conflict has turned into a global economic conflict, with discussions in Brussels about using profits from frozen Russian assets to fund support for Ukraine, and the imposition of tariffs on Russian grain impacting the E.U. economy.

How is the ECB's signaling on rate cuts expected to affect the German economy?

The ECB's signaling on rate cuts starting in June is expected to be helpful for the German economy, particularly in sectors like construction, and could contribute to a stabilization without a high level of unemployment.

What are the challenges faced by the luxury retail industry, as exemplified by LVMH's recent executive reshuffling?

The luxury retail industry, including LVMH, is facing a potential generational change with senior executives retiring and new leadership stepping in, which may lead to shifts in business strategy and company focus.

What is the current state of the British economy in relation to Brexit?

The British economy is still dealing with the aftermath of Brexit, with the market consistently reminding Britain that the country has become relatively smaller in economic terms, and the public expressing a desire to rejoin the E.U.

How is the sportswear industry evolving, as indicated by Nike and Lululemon's recent challenges?

The sportswear industry is undergoing a shift from casual pandemic wear to more formal styles, with a fragmentation of the market as new competitors fill niche segments, challenging established brands like Nike and Lululemon to innovate and diversify their product offerings.

Outlines

00:00

📈 Stock Market Optimism and Central Bank Policies

The stock market is heading for its best week in a year, driven by central bank meetings suggesting a shift towards looser policies. Investor appetite has been rekindled with hopes for three interest rate cuts from the U.S. Federal Reserve. European stocks had a strong week, and the dollar has seen a 0.4% climb. Despite a busy week for central banks, there is a wait-and-see approach for many European stocks. The focus now is on economic indicators and how they will drive markets in the coming weeks and months.

05:01

🌐 Global Economic Updates and Corporate Challenges

Discussions include the impact of a stronger dollar, concerns over corporate guidance, and China's policy challenges. There's a focus on how Chinese policymakers are easing monetary policy, leading to a weaker currency, which is causing market unease. Additionally, there's an analysis of emerging markets, luxury industry performance, and the rise and fall of gold and Bitcoin prices, with insights into the forces behind their movements.

10:07

💡 Insights on Tech Stocks and Economic Growth

The conversation highlights NVIDIA's enthusiasm and growth, the momentum strategy in the stock market, and concerns about crowded trades. There's also a discussion on pre-market drops for Nike and Lululemon due to sales outlook adjustments. The segment ends with an exclusive conversation about EU leaders' negotiations on support for Ukraine using profits from frozen Russian assets.

15:10

🤝 International Cooperation and Economic Challenges

The discussion involves the President of the Euro Group, who shares insights on EU leaders' negotiations, the potential agreement on using Russian assets to support Ukraine, and the impact of the U.S. proposal on freedom bonds. There's also a focus on the European Investment Bank's role and potential rule changes, as well as Irish politics and the guest's support for Simon Harris.

23:01

📉 Apple's Legal Battle and Market Concerns

Apple is facing a legal battle as U.S. regulators sue the tech giant for alleged antitrust violations, leading to a significant loss in value. The lawsuit accuses Apple of dominating the market and squeezing out competition, particularly in areas like smartwatch interaction, messaging, and payment systems. The conversation also touches on Apple's scrutiny in Europe and the broad scope of the U.S. lawsuit.

29:14

🏭 German Business Confidence and Economic Outlook

The segment begins with an update on German business confidence, which has risen higher than expected. The President of the Ifo Institute discusses the significance of this increase, attributing it to stabilization in the German economy. The conversation delves into consumer spending, wage growth, labor market tightness, and the impact of ECB's rate cut signals on the German economy. Additionally, there's a discussion on the proposed corporate tax reduction and its potential effects.

34:17

🌾 Impact of War and Sanctions on Global Economy

The discussion focuses on the global economic conflict resulting from the U.K.-Russian situation, with insights from the author of a new book on the subject. The conversation covers the proposal to use frozen Russian assets to fund Ukraine, the debate over tariffs on Russian grain, and the impact of sanctions on oil facilities and global oil prices. The segment also touches on India's decision to stop taking oil from certain Russian tankers and the enforcement of sanctions.

39:19

🇬🇧 Brexit's Long-Term Effects on the U.K. Economy

The conversation explores the long-term consequences of Brexit on the U.K. economy, with the author arguing that it has led to a decline in the value of the pound and a 'Brexit premium penalty' on British assets. The discussion also considers public sentiment towards rejoining the E.U. and the potential for a shift towards more centrist politics in the U.K. and globally.

44:21

🚀 Reddit's IPO Success and Corporate Updates

Reddit's successful IPO is discussed, with its first day seeing a significant increase in stock price. The company's plans to leverage its data to improve large language models are highlighted. The conversation also covers FedEx's earnings beat, Nike's warning to investors about a sales hit, and the current state of the sportswear industry, with insights into the challenges faced by Nike, Adidas, and Lululemon.

Mindmap

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Keywords

💡Central Bank Meetings

Central Bank Meetings refer to gatherings of financial authorities from various countries where they discuss monetary policy and economic conditions. In the context of the video, these meetings are significant because they indicate a potential shift towards looser monetary policy, which can impact global financial markets and investor sentiment.

💡Stock Market

The Stock Market is a public marketplace where shares of companies are bought and sold. It serves as an indicator of economic health and is influenced by various factors including corporate performance, economic indicators, and investor sentiment. In the video, the performance of the stock market is discussed in relation to central bank policies and corporate actions.

💡Monetary Policy

Monetary Policy refers to the actions taken by a central bank to influence the economy by adjusting the cost and availability of money and credit. It includes strategies like setting interest rates and controlling the money supply. In the video, the expectation of a looser monetary policy is highlighted as a key factor affecting investor appetite and market performance.

💡Antitrust Laws

Antitrust Laws are legal regulations that promote fair competition by preventing the formation of monopolies andrestricting anti-competitive business practices. In the video, Apple is mentioned as being sued by the U.S. Justice Department for alleged violations of antitrust laws, which relates to the company's business practices and market dominance.

💡Corporate Earnings

Corporate Earnings refer to the profits a company generates over a specific period. These earnings are a critical indicator of a company's financial health and can significantly influence its stock price. In the transcript, the discussion of corporate earnings is linked to the performance of companies like Nike and the broader market sentiment.

💡Inflation

Inflation is the rate at which the general price level of goods and services in an economy is increasing over time. It erodes the purchasing power of money and is closely monitored by central banks and governments. In the video, inflation is discussed in the context of its impact on economic policies and market expectations.

💡Business Confidence Index

The Business Confidence Index is a measure of the degree of optimism or pessimism that businesses express about the economy's prospects. It is calculated based on surveys of companies and reflects their views on conditions such as sales, orders, and employment. In the video, the German Business Confidence Index is highlighted as a positive sign for the economy.

💡Trade Policy

Trade Policy refers to the government policies and regulations that determine the terms on which a country engages in trade with other nations. This includes tariffs, quotas, and other barriers to trade. In the video, trade policy is discussed in the context of potential tariffs on Russian grain and the impact of the Ukraine-Russia conflict on global trade.

💡Luxury Brands

Luxury Brands are companies that sell high-end, premium products and services that are not necessarily essential but are sought after for their quality, status, and exclusivity. The performance of luxury brands can be an indicator of consumer confidence and economic well-being. In the video, the performance of luxury brands like LVMH is discussed in the context of the broader retail landscape.

💡Retail Landscape

The Retail Landscape refers to the current state and trends in the retail industry, including the strategies, formats, and consumer behaviors that shape the market. It encompasses both brick-and-mortar stores and e-commerce platforms. In the video, the retail landscape is discussed in relation to the challenges faced by sportswear retailers like Nike and Lululemon.

💡Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on decentralized networks, such as blockchain technology. It is an alternative to traditional currencies and can be used for various transactions. In the video, cryptocurrency is mentioned in the context of market trends and investor sentiment.

Highlights

Stocks are heading for their best week in a year after central bank meetings indicate a pivot toward looser policy.

Apple loses more than $1 billion in value after being sued by the U.S. Justice Department for violations.

Nike shares fall further as the world's largest sportswear retailer looks to realign its product offering.

German business confidence index comes in higher than expected at 87.8.

The Fed fuels hope for three interest rate cuts, rekindling investor appetite.

European markets map shows stocks had a great week, with a pivot toward looser policy on track.

Alphabet and Apple stocks down, with markets in a wait and see situation for European stocks.

Japan's inflation accelerates to the quickest pace in four months, with Yen trading around 152 per US dollar.

Breaking news on Germany's business confidence index, which is better than expected.

Discussion on Germany's economy and the need for stimulus, with the president sharing his perspective.

Chinese policymakers in a bind, with dollar strength and concerns over corporate guidance and currency.

Gold touching $2,200 and Bitcoin trading around $66,000, with forces behind their rallies likely linked to expected rate cuts.

Luxury industry news, with Gucci's owner disappointing and hopes for semiconductors with Micron flying off the shelves.

NVIDIA fueling enthusiasm with new chip announcements, impacting stock market momentum strategy.

Premarket drops for Nike and Lululemon after both lower their sales outlook.

EU leaders continue to meet in Brussels, negotiating over billions in support for Ukraine using profits from frozen Russian assets.

Interview with the president of the Eurogroup, discussing growth and inflation expectations in Europe.

Apple's mounting problem with regulators, sued for violating antitrust laws and accused of dominating the market.

Discussion on the gold-silver ratio, with silver potentially lagging and fundamentals driving both metals.

Industry news on LVMH's reshuffling, with the number two stepping down and speculation on succession plans.

Transcripts

ANNOUNCER: THIS IS "THE PULSE" WITH FRANCINE LACQUA. FRANCINE:

WELL, GOOD MORNING, EVERYONE. WELCOME TO "THE PULSE."

I’M FRANCINE LACQUA HERE IN LONDON WITH THE CONVERSATIONS

THAT MATTER. HERE’S WHAT’S COMING UP ON

TODAY’S PROGRAM. STOCKS ARE HEADING FOR THEIR

BEST WEEK IN A YEAR AFTER A RAFT OF CENTRAL BANK MEETINGS

INDICATE A PIVOT TOWARD A LOOSER POLICY IS ON TRACK.

DOUBLE TROUBLE FOR APPLE. THEY LOSE MORE THAN 00

BILLION IN VALUE AFTER BEING SUED BY THE U.S.

JUSTICE DEPARTMENT FOR VIOLATIONS.

PLUS NIKE SHARES FALL FURTHER PREMARKET AS THE WORLD’S

LARGEST SPORTSWEAR RETAILER LOOKS TO REALIGN ITS PRODUCT

OFFERING. IT IS FRIDAY. WE HAVE MADE IT.

A VERY BUSY MARATHON-LIKE WEEK FOR CENTRAL BANKS.

LETT GET STRAIGHT TO THE EUROPEAN MARKETS MAP.

STOCKS V HAD A GREAT WEEK. LET’S NOT MINUTES OUR WORDS.

THEY HAD A GREAT WEEK SO FAR. A PIVOT TOWARD LOOSER POLICY IS

ON TRACK. INVESTOR APPETITE HAS BEEN

REKINDLED SINCE WEDNESDAY AFTER THE MEETING FROM THE FED

FUELING HOPE THAT U.S. POLICY MAKERS WILL DELIVER

THREE INTEREST RATE CUTS THIS WEEK.

ALPHABET WAS DOWN YESTERDAY. APPLE WAS ALSO DOWN.

FOR THE MOMENT, A LOTT EUROPEAN STOCKS ARE IN A WAIT AND SEE

SITUATION. I’LL LOOKING AT THE DOLLAR

CLIMBING 0.4%. U.S. FUTURES, AFTER THE PRETTY

INCREDIBLE WEEK THAT THEY HAVE HAD, MAYBE THEY PAUSE FOR A

LITTLE BIT OF REFLECTION. THIS WAS ALSO S & B WEEK AND

BOJ WEEK. LET’S GET STRAIGHT TO THOSE

FUTURES IN THE U.S. A LITTLE BIT ON THE UPSIDE BUT

REALLY NOT CHANGED BY THAT MUCH. YEN LITTLE CHANGED.

TRADING AROUND 152 PER DOLLAR AS JAPAN’S INFLATION

ACCELERATED TO THE QUICKEST PACE IN FOUR MONTHS.

PROBABLE THE MOST INTERESTING STORY GAINING SOME .6%.

BREAKING NEWS. THE DATA ALWAYS IMPORTANT.

THIS IS WHAT PROBABLY WILL DRIVE MARKETS FORWARD IN THE

NEXT COUPLE OF WEEKS AND MONTHS. GERMANY BUSINESS CONFIDENCE

INDEX COMING IN AT 87.8. THE STIMWAS 86.

A LITTLE BIT BETTER THAN EXPECTED.

WE’LL SPEAK TO THE PRESIDENT. KIND OF DISAPPOINTING.

INTERESTING TO GET HIS PERSPECTIVE ON WHAT GERMANY

NEEDS TO DO NOW TO KICK START ITS ECONOMY.

GERMANY AND ALSO THE U.S., WE’RE JOINED BY A CHIEF

INVESTMENT STRATEGIST FOR ISHARES AT BLACKROCK.

THANK YOU SO MUCH FOR JOINING US. WHAT A WEEK.

WE HAVE MADE IT TO FRIDAY. WE STILL HAVE A WHOLE TRADING

DAY AHEAD. IT IS INCREDIBLE. YOU HAVE THE S & B.

IT SURPRISE A LOT OF PEOPLE. EVEN THE BOJ.

EVERYTHING WAS WELL TELEGRAPHED. IT IS THE FED GIVING HOPE WITH

THIS RISK-ON TEUD ATTITUDE.

>> TAKING THE CUE FROM THE BOJ FOR A SECOND, WE HAVE SEEN THE

EXIT FROM THE NEGATIVE INTEREST RATE POLICY BUT IT IS REALLY

INTERESTING THAT EVEN THOUGH THEY TELEGRAPHED IT REALLY WELL

AND THEY HAVE TECHNICALLY EXITED THE CONTROL POLICY AS

WELL, THE BACKSTOP HAS NOT BEEN TAKEN AWAY.

MARKETS HAVE RUN WITH THAT. WE’RE SEEING THAT POSITIVE RISK

FOR MARKETS AND JAPANESE ECK TREASURIES ONE OF OUR KEY

OVERWEIGHTS. FRANCINE: IS THERE A CONCERN THAT

ACTUALLY SO, THE BOJ HAS HIKED LAST. THIS IS NOT A LIFTOFF.

THIS IS NOT A SEE SEA CHANGE.

>> THIS IS WHY I PUT THE BOJ IN A DIFFERENT BUCKET.

THIS IS THE END OF NEGATIVE INTEREST RATE POLICY AND NOT

THE START OF THE SEEKLE. WHEN WE LOOK AT THE FED AND

EVEN TO BOE TO A CERTAIN EXTENT, IF WE ZOOM OUT THE

PICTURE IS THIS IS A GOOD ENVIRONMENT FOR RISK ASSETS

BECAUSE WE’RE RIMPLEGGING CLOSER TO RATE CUTS EVEN IF

THEY ARE NOT HAPPENING THIS WEEK OR TOMORROW.

THIS IS NOT THE END OF INFLATION VOLATILE IF I.

WE HAD A COUPLE OF VOLATILE NUMBERS IN JANUARY AND FEBRUARY.

WHEN I THINK ABOUT THE TAA RISK ON AND THE SAA GETTING MORE

DYNAMIC BECAUSE OF THIS VOLATILITY AND MACRO. FRANCINE:

THANK YOU SO MUCH FOR JOINING US. CHINA KIND OF LEFT RIGHT AND

CENTER. DIDN’T REALLY MOVE MARKETS

EXCEPT FOR TODAY.

>> ONE THING THAT WAS REALLY INTERESTING IS THAT OBVIOUSLY

WE’RE SEEING DOLLAR STRENGTH EVERYWHERE, BUT THE U.N.

SPECIFICALLY WAS PARTLY TRIGGERED BY THE CURRENCY AT

THE OPEN MEANING IT SIGNALED TO MARKETS IT WAS WILLING TO

TOLERATE A BIT MORE WEAKNESS. PART OF THAT THEY ARE SEEING

DOLLAR STRENGTH ALL AROUND THE WORLD.

THEY UNDERSTAND IT IS NOT LIKE FIX THE CURRENCY FROM ITS TRUE

VALUE FOR A LONG TIME. THAT IS WHAT WE ARE KIND OF

SEEING THE WEAKER U.N. TODAY. ON THE BACK OF SOME CONCERNING

EARNINGS. FRANCINE: BASICALLY TRADERS, YOU KNOW,

SAY LOOK, THERE IS WEAK CORPORATE GUIDANCE AND BEIJING

AT THE SAME TIME IS RELAXING ITS GRIP ON THE CURRENCY.

WHAT AM I LEFT WITH? ARE THOSE SOME OF THE QUESTIONS

THAT TRADERS ARE ASKING?

>> YEAH, I THINK CHINESE POLICY MAKERS ARE IN A BIND HERE.

THEY HAVE BEEN SIGNALING FOR THE PAST COUPLE OF WEEKS THERE

IS GOING TO BE ANOTHER RESERVE REQUIREMENT RATIO CUT.

THE PROBLEM IS IF YOU’RE EASING MONETARY POLICY TO PROP UP

GROWTH THEN NATURALLY YOU YOUR CURRENCY WILL DECLINE.

CHINA HAS ALWAYS BEEN QUITE UNCOMFORTABLE WITH TOO MUCH

CURRENCY WEAKNESS AND TOO MUCH OUTBLOW THES AND I THINK THEY

ARE BACK IN THAT POSITION WHERE THEY ARE HAVING TO GRAPPLE WITH

THOSE FORCES TAME. FRANCINE: THERE IS A LOT GOING ON THIS

WEEK. CHINA LEFT, RIGHT AND CENTER.

INTERESTING WEEKS WITH WHERE YOU UNDERSTAND BEIJING IS

TRYING TO DO SOMETHING OTHER THAN WE THINK THEY WERE.

>> WHEN I PUT IT INTO THE CONTEXT OF OUR PORTFOLIO VIEWS,

THE EMERGING MARKETS, ONE THING WE’RE SEEING WITH DEVELOPED

MARKETS AND RISK ON AND RISK APPETITE TO ADD TO EQUITY

POSITIONS IN PLACES LIKE TO U.S. AND JAPAN.

WE’RE SEEING LUKEWARM SENTIMENT FROM INVESTORS AND WE SEE THIS

IN SOME OF THE CLIENTS’ CONVERSATIONS THAT WE’RE HAVING.

THERE IS SELECTIVE -- WHEN I LOOK AT THE FLOW PICTURE, VERY

STRONG FLOW MONTHS FOR EMERGING MARKETS.

MOSTLY IN SINGLE COUNTRY EXPOSURES.

THINKING ABOUT MORE PRECISION EXPOSURES OPPOSED TO THE BROAD

BUCKET. FRANCINE: THE OTHER TWO STORIES HAPPENING

WITH IN THE WEEK IS GOLD TOUCHING $22 AND BITCOIN TRADE

AROUND $66,000. SO WE HAD THAT RECORD HIGH 10

DAYS AGO AND IT IS NOW NOT DOING AS WELL.

WHAT ARE SOME OF FORCES? IS IT ALL TO DO WITH CENTRAL

BANKS OR POSITIONING AHEAD OF SOMETHING?

>> I THINK THAT BEHIND THOSE TWO RALLIES IS PROBABLY THE

EXPECTATION FOR RATE CUTS. IT IS KIND OF INTERESTING AFTER

GOLD IS TRADING. BITCOIN HAS AN EXTREME RUN UP.

WE’RE SEEING A BIT OF A PULLBACK IN SENTIMENT AND WE’RE

ALSO STARTING TO SEE SOME OUTFLOWS FROM THE BITCOINETF’S.

THAT IS CONTRIBUTING TO THE MOVE.

IT IS ALWAYS HARD TO TELL WITH CRYPTO. FRANCINE:

FEELS LIKE OPPOSING FORCES BUT TAME IT IS PART OF THE SAME

MOVEMENT.

>> I’M GOING TO BE MORE CONTRARIAN HERE.

LOOK AT THE GOLD-SILVER RATIO. GOLD HAS BEEN ALL ABOUT GOLD

AND WE LIKE GOLD. WE HAVE BEEN QUITE POSITIVE ON

IT. WE HAVE NOT SEEN THE FLOWS EVEN

THOUGH WE’RE POSITIVE ON THE PRICE ACTION. IT IS A BIT UNDER

POSITIONED. IF YOU LOOK AT SILVER THAT,

GOLD-SILVER RATIO HAS HIT RECORD LEVELS AT ONE POINT IN

RECENT WEEKS. SILVER HAS BEEN LAGGING.

ONE THING WE’RE SEEING IS SOME CATCHUP, RELATIVE VALUE TRADES

ON SILVER RELATIVE TO GOLD. SOME OF THE FUNDAMENTALS THAT

DRIVE GOLD ALSO DRIVE SILVER BUT IT HASN’T CAUGHT UP.

FRANCINE: IS IT JUST AN INFLATION PLAY?

I’M UNCLEAR WHAT GOLD IS DOING NOW.

>> EXACTLY. GOLD TENDS TO BE MORE OF A SAFE

HAVEN. IT HAS BECOME MORE STEABL BECAUSE OF MORE STECKY

PURCHASES FROM CENTRAL BANKS. SILVER A MIX.

IT IS A PRECIOUS METAL. IT HAS AN INDUSTRIAL USAGE AS

WELL. YOU COULD THINK OF IT AS A TRADE WHERE YOU PUTTING AN

UPSIDE RISK ON THE WORLD ECONOMY OUTSIDE HEDGE WITH

SILVER. MOSTLY A TECHNICAL TRADE IF YOU

BELIEVE IN TECHNICALS BECAUSE IN RATIO LOOKS TOO STEEP.

FRANCINE: DOES ANYONE NOT BELIEVE IN

TECHNICALS? I’M KIDDING. WHEN YOU LOOK AT INDUSTRY, IT

WAS A BIG WEEK FOR LUXURY BECAUSE WE HAD THE COMPANY THAT

OWNS GUCCI DISAPPOINT. YOU HAVE THIS MICRON FLYING OFF

THE SHELVES GIVING US HOPE WITH SEMICONDUCTORS IN GENERAL.

ALPHABET AND APPLE BEING SMASHED.

>> IT IS INTERESTING. WE USED TO THINK OF THE

MAGNIFICENT 7 AS A GROUP. WE HAVE SEEN DIVERSION WITHIN

THAT MANAGE ANY SEPTEMBER SEVEN. IT HAS BEEN INTERESTING TO

OBSERVE NVIDIA, KIND OF FUELING SO MUCH ENTHUSIASM AND STILL

GOING UP FURTHER ON THE BACK OF THE RECENT ANNOUNCEMENTS ABOUT

SOME NEW CHIPS. I THINK IT HAS BEEN KIND OF

INTERESTING. IF YOU LOOK AT THE STOCK MARKET

AND THE MOMENTUM STRATEGY WHERE YOU’RE JUST KIND OF BUYING THE

PAST WINNERS FROM THE PAST 12 MONTHS, THAT HAS BEEN GOING UP

LIKE A STRAIGHT LINE. I THINK AS THE SIGN KIND OF HOW

POSITIVE SENTIMENT IS. EVERYONE IS RIDING THE SAME

TRAIN HERE WHICH ALWAYS RAISES THE QUESTION.

IS IT A TOO CROWDED TRADE AT THIS POINT? FRANCINE:

NOW LET’S LOOK PREMARKETS SPOUTS WEAR BRAPPEDS, NIKE AND

LULULEMON DROPPING AFTER THEY BOTH LOWERED THEIR SALES

OUTLOOK. NIKE SAYS IT EXPECTS REVENUE TO

FALL AS IT SHUFFLES OUT OLD MERCHANDISE.

WE’LL INTEREST B TALKING TO PASCAL DONAHUE AND IRELAND’S

MINISTER FOR PUBLIC EXTENDTURE AND REFORM.

THAT EXCLUSIVE CONVERSATION IS NEXT. THIS IS BLOOMBERG.

♪

FRANCINE: E E.U. LEADERS CONTINUE TO MEET IN

BRUSSELS TODAY. NEGOTIATIONS CONTINUING OVER

BILLION DOLLARS WORTH OF SUPPORT FOR YOU CRANE USING

PROFITS FROM FROZEN RUSSIAN ASSETS.

LET’S GO LIVE TO THE SUMMIT IN BRUSSELS. OVER TO YOU.

>> FRAN, THANK YOU SO MUCH. WE’RE JOINED NOW BY THE

PRESIDENT OF THE EURO PASCAL DONAHUE.

HE IS ABOUT TO SPEAK WITH E.U. LEADERS ALONGSIDE MADAM LAGARDE.

ALL THAT I SPEAK TO PARTICULARLY THE AUTO

INDUSTRY, THERE IS A LOT OF CONCERN IN 2024.

WHAT ARE WE EXPECTED ON GROWTH IN EUROPE PARTICULARLY

INFLATION?

>> WE CAN EXPECT GROWTH AND INFLATION TO CONTINUE TO FALL.

THE GROWTH IS NOT AS HIGH AS WE WOULD WANT.

EVEN THOUGH WE DO HAVE GROWTH, ALONGSIDE OUR GOAL TO HAVE

RECORD LEVELS OF EMPLOYMENT. WE HAVE TO ACKNOWLEDGE

UNCERTAINTY AND RESCUES THAT ARE CONFRONTING EUROPE AT THE

MOMENT. MAINLY BECAUSE WE ARE SO CLOSE

TO THE WAR. WE ARE STILL IN A PHASE OF

GROWTH ALBEIT LOW GROWTH.

>> DO YOU THINK IT ACTUALLY COULD HAVE A LONGER TAIL?

>> I BELIEVE WE’LL GET TO 2%. E I BELIEVE THE RIGHT DECISIONS

ARE BEING TAKEN. ON A MONETARY AND POLICY LEVEL.

>> I WANT TO TALK ABOUT WHAT WE’RE HERE TO TALK ABOUT WITH

THE E.U. LEADERS. AS THE PRESIDENT OF THE E.U.

GROUP FEW KNOW THE EUROPEANS AND FINANCE MINISTERS AS WELL

AS YOU DO. WILL WE GET AN AGREEMENT TODAY?

DO YOU THINK THERE IS A WILL THERE?

WHERE ARE I THINK IT WILL TAKE SOME TIME TO GET TO THAT

AGREEMENT. THE COMMISSION PUBLISHED A

PROPOSAL ON THAT THIS WEEK AND HAS TO GO TO THE EUROPEAN YOU

AND BE CONSIDERED WITH MANY MEETINGS THAT WILL TAKE PLACE.

THAT WILL TAKE TIME TO DO. THERE IS MOMENTUM BEHIND US.

I BELIEVE PROGRESS WILL BE MADE. WHAT WILL HAPPEN IS THIS

PROPOSAL WILL GO TO THE MEMBER STEPS OF THE EUROPEAN UNION.

EFFORTS WILL BE MADE TO CONTINUE TO COORDINATE THIS

ISSUE ON AN INTERNATIONAL LEVEL. >> WE HAD A PROPOSAL OUT OF THE

UNITED STATES ON THE SO-CALLED FREEDOM BONDS LOOKING AT HOW TO

DEAL WITH THE FUTURE PROFITS AND POTENTIALLY PACKAGE THEM TO

FRONT LOAN MUCH LARGER QUANTITIES.

>> THIS IS THE KIND OF ISSUE THAT WILL HAVE TO BE CONSIDERED

IN THE CONTEXT OF THE PROPOSAL WITH THE EUROPEAN COMMISSION.

I DO BELIEVE THERE IS A RECOGNITION REGARD PG

IMPORTANCE OF THIS ISSUE BUT AS I SAID, THE PROPOSAL HAS ONLY

JUST BEEN PUBLISHED. THIS PROPOSAL THAT NEED TO BE I

BELIEVE IS LEGALLY SOUND AND NOW GOVERNMENTS NEED A LITTLE

BIT OF TIME TO RESPOND BACK TO US.

THE KEY POINT IS THAT PROGRESS HAS BEEN MADE AND WE NEED TO

CONTINUE TO LOOK AT HOW THIS WILL BE COORDINATED ACROSS THE

INTERNATIONAL AND ECONOMIC COMMUNITY.

>> IT IS FRONT AND CENTER FOR THE FINANCE MINISTERS AN E.U.

LEADERS. IS THIS A PIPE DREAM OR IS

THERE A PATH TO THIS?

>> IT HAS BEGUN HERE TODAY. WE HAVE HEARD A NUMBER OF

MEMBER TAKING ITS MAKE THE CASE FOR US.

I THINK IT IS FAIR TO SAY AT THE MOMENT, THERE IS A

CONSENSUS ON THE MATTER HOWEVER, THE EXPENDITURE HAS

BEEN INCREASED CONSIDERABLY OVER THE LAST 18 MONTHS.

A FEW WEEKS AGO HERE IN THIS BUILDING, PRIME MINISTERS

REACHED AGREEMENT ON A 50 BILLION EURO FUNDING PACKAGE

FOR YOU CRANE OVER THE NEXT NUMBER OF YEARS, SOME OF WHICH

IS RELATED TO THOSE EVENTS. THERE IS CONSENSUS THE NEED TO

BUILD UP. THAT IS HAPPENING.

>> A QUICK WORD ON THEEIB. DO YOU THINK THERE WILL BE A

RULE CHANGE? DOES THERE NEED TO BE MORE

MONEY ALLOCATED TO DEFENSE?

>> I UNDERSTANDEIB ARE LOOKING AT THIS ISSUE.

THE NEW PRESIDENT IS DOING AN EXCELLENT JOB LEADING THEEIB.

THEY WILL BE LOOKING AT WHAT THEIR ROLE IS IN RELATION TO

THIS AND THEY HAVE BEEN ASKED BY PRIME MINISTERS AND FINANCE

MINISTERS TO CONSIDER THIS ISSUE AND REPORT BACK TO THEM

SHORTLY.

>> YOU HELD ON TO THIS POSITION WITH THE IRISH GOVERNMENT.

DO YOU SUPPORT SIMON HARRIS FOR PARTY LEADER?

>> OF COURSE I DO. I HAVE KNOWN SIMON FOR MANY,

MANY, MANY YEARS. I BELIEVE HE HAS ALL THE

QUALITIES THAT WILL NEAL HIM TO BE A VERY, VERY SUCCESSFUL

LEADER AND WILL ALU HIM TO BE AN EXCELLENT -- WE HAVE HAD A

VERY DRAMATIC WEEK. I BELIEVE HE HAS DONE A

PHENOMENAL JOB. AS THE LEADER OF OUR PARTY.

I WISH HIM EVERY SUCCESS AND EVERY GOOD WISH IN THE TIME

AHEAD. I VERY MUCH LOOK FORWARD IN

WORKING WITH HIM.

>> THERE WILL BE A CANDIDATE RESHUFFLE.

WILL YOU CONTINUE TO SERVE IN YOUR POSITION IN THE CABINET?

>> I OF COURSE HOPE TO CONTINUE WITH MY WORK BUT MANY MOMENTS

LIKE IN IN THE PAST, I’M NOT GOING TO MAKE HIS LIFE ANY MORE

DIFFICULT BY MAKING STATEMENTS. OF COURSE I WANT TO CONTINUE

WITH MY WORK BUT I RECOGNIZE IT IS HIS DECISION.

>> THANK YOU SO MUCH FOR YOUR TIME HERE AND TALKING IRISH

POLITICS AND OF COURSE THE VERY COMPLICATED ON THE VERY BEST

ISSUES THAT CONFRONT EUROPEAN LEADERS HERE.

FUNDING EUROPEAN DEFENSE AND GETTING THE FUNDS CRITICALLY TO

UKRAINE. FRANCINE: AS ALWAYS, THANK YOU SO MUCH.

GREAT INTERRUE THERE WITH THE EURO GROUP PRESIDENT.

WE’LL HAVE PLENTY MORE ON UKRAINE AND PLENTY MORE FROM

BRUSSELS ALSO COMING UP. APPLE WE’LL HAVE THE LATEST ON

THE TECH GIANT AND ITS MOUNDING PROBLEM WITH REGULATORS.

THAT IS NEXT. THIS IS BLOOMBERG. ♪

FRANCINE: WELL, APPLE SHARES ARE NARROWLY

HIGHER IN PREMARKET TRADING. THEY LOST MORE THAN 00

BILLION IN VALUE YESTERDAY. U.S. REGULATORS ARE SUING IT FOR

VIOLATING ANTITRUST LAWS ACCUSING THEM OF DOMINATING THE

MARKET. APPLE SAYS THE LAWSUIT IS WRONG.

JOINING US IS ALEX WEBB. WHAT EXACTLY IS APPLE ACCUSED

OF?

>> SQUEEZING OUT COMPETITION ON A NUMBER OF DIFFERENT FRONTS.

THINGS LIKE THE APPLE WATCH. IT DOESN’T LET OTHER SMART

WATCHES INTERACT QUITE AS EASILY WITH THE IPHONE AS THE I

WATCH DOES ITSELF. MASS JAGES FROM GOOGLE’S

ANDROID IT APPEARS AS A GREEN MESSAGE RATHER THAN A BLUE

MESSAGE AND THE BIG ONE IS PAYMENTS.

WHETHER OF COURSE IF YOU WANT TO MAKE A PAYMENT THERE IS

APPLE PAY BUT YOU CAN’T SAY USE IT ON YOUR IPHONE OR ANY OTHER

COMPETING SERVICE. THESE ARE THE SORT OF THINGS

THEY ARE HONING IN ON. FRANCINE: WAS THE DODGE MUCH MORE

AGGRESSIVE THAN WE THOUGHT THEY WOULD BE AND WHAT IS IT GOING

TO LEAD TO?

>> I THINK THE SCOPE OF IT. THE NUMBER OF THINGS, IS

PROBABLE MORE COMPLETE THAN A LOT OF PEOPLE HAD ANTICIPATED.

THEY HAVE GONE FOR A PRETTY BROAD PALAT.

THERE MIGHT BE A CERTAIN DEGREE OF HEDGING THEIR BETS.

YEAH, IT IS SORT OF THE BROADEST KIND OF FULL FRONTAL

ASSAULT AS IT WERE ON THE KIND OF SYSTEM THAT WE HAVE EVER

SEEN. FRANCINE: THEY ARE FACING SCRUTINY IN

EUROPE.

>> THE INTERESTING THING IN EUROPE OF COURSE IS IN THE U.S.

THEY ARE ARGUING THIS ON THE BASIS OF THE CURRENT LAW.

IN EUROPE, THEY HAVE CHANGED THE LAW AND NOW IT IS LOOKING

AT WHETHER APPLE ACTUALLY ENGAGES WITH THESE LAW CHANGES

CORRECTLY. THERE ARE SOMAKIZATIONS THAT IT

HASN’T. OF COURSE APPLE DENIES THIS.

PARTICULARLY WHEN IT COMES TO PAYMENTS THROUGH OTHER SERVICES.

FRANCINE: THANK YOU SO MUCH. AS ALWAYS, ALEX WEBB.

THIS IS A STORY I HAVE FEELING WE’LL TALK ABOUT A LOT.

IT WILL RUN AND RUN. ALEX IS LIKE OH, YEAH.

COMING UP, GERMAN BUSINESS CONFIDENCE RISES.

WE’LL GET THE LATEST ON THE LATEST SURVEY.

AGAIN, A LOT OF THE FOCUS THIS WEEK HAS BEEN FOR EXAMPLE ON

THE BOJ. IT HIKED AT LAST. WE HAVE A

GREAT BLOOMBERG OPINION PIECE SAYING THIS DOES NOT

NECESSARILY MEAN WITH THIS RATE HIKE THERE IS A NEW CYCLE THAT

STARTS. THE OTHER BIG STORY THIS WEEK

IS OF COURSE THE FED, WE HAVE HAD MARKETS THAT HAVE BEEN MUCH

MORE RISK ON THAN IN THE LAST FOUR TO FIVE WEEKS.

THE U.S., YOU CAN SEE TWO YEAR, 460 AND THE 30 IS AT 4.41.

HAVE PLENTY MORE ON MARKETS AND GOLD AND BITCOIN TOO.

THIS IS BLOOMBERG. ♪

FRANCINE: STOCKS HEADING FOR THEIR BEST

WEEK OF THE YEAR AFTER A RAFT OF CENTRAL BANK MEETINGS

INDICATE THAT A PIVOT TOWARD LOOSER POLICY IS ON TRACK.

DOUBLE TROUBLE FOR APPLE. THE IPHONE MAKER LOSES MORE

THAN 00 BILLION IN VALUE AFTER BEING SUED BY THE U.S.

JUSTICE DEPARTMENT DUE TO ANTI-TRUST VIOLATIONS.

NIKE SHARES FALL FURTHER PREMARKET AS THE WORLD’S

LARGEST SPORTSWEAR RETAILER LOOKS TO REALIGN ITS PRODUCT

OFFERING. GOOD MORNING, EVERYONE.

WELCOME TO "THE PULSE." I’M FRANCINE LACQUA HERE IN

LONDON. GERMAN BUSINESS HAS COME IN

HIGHER THAN EXPECTED WITH THE CONFIDENCE INDEX RISING TO 87.8.

I’M JOINED BY THE PRESIDENT OF THE INSTITUTE.

THANK YOU SO MUCH FOR SPEAKING TO US.

ON THE BACK OF THESE NUMBERS FINALLY A LITTLE BIT OF

ENCOURAGING NEWS. HOW WOULD YOU QUANTIFY THIS

NEWS? IS IT SURPRISING? A TURNING POINT OR WAIT AND SEE?

>> IT IS PROBABLY A REAL TURNING POINT BUT THE SECOND

INCREASE WE HAVE SEEN. WE HAD ONE IN FEBRUARY AND NOW

THIS. I WOULD SAY IT IS A STABILIZE

IETION AND AFTER THE -- STABILIZATION.

I THINK THIS IS COMFORTABLE WITH MOST FORECASTS THAT ARE

SAYING IT IS GOING TO BE A STAGNATING ECONOMY IN GERMANY

IN 24 BUT NOT A SHRINKING ECONOMY. IT IS A STABILIZATION.

OF COURSE WELCOME. FRANCINE: OF COURSE THE CONCERN IS THAT

FORECASTERS ARE REALLY COUNTING ON CONSUMERS TO TRY AND DRIVE

THIS AND SO FAR IT HAS BEEN VERY, VERY TIMID.

WHAT IS HOLDING PEOPLE BACK FROM SPENDING MORE?

>> IT’S PROBABLY THE UNCERTAINTY ABOUT THE FUTURES.

MANY PEOPLE ARE WORRIED. WE SEE REAL INCOMES ARE

INCREASE AGENT THE MOMENT. WAGES ARE RISING MORE QUICKLY

THAN INFLATION. EXPECTED INFLATION.

AND IT’S GOOD IN CONSUMER CONFIDENCE BUT AT THE SAME TIME

PEOPLE SEEM TO FEEL THE UNCERTAINTY ABOUT THE FUTURE,

BUT IN THE DATA TODAY, WE SEE SOME BRIGHT SPOTS.

WE SEE FOR INSTANCE HOSPITALITY STRONG.

WE SEE IMPROVEMENTS IN RETAIL. THEY ARE COMING FROM A LOW

LEVEL. IT SEEMS THAT CONSUMER CONFIDENCE IS INDEED RISING AND

THAT IS ONE OF THE FACTORS WE EXPECTED AS POSITIVE THIS YEAR.

FRANCINE: I GUESS SOME OF THE OTHER

THINGS THAT IS PUZZLING A LOT OF PEOPLE IS THE PROTRACTED

WEAKNESS OF GERMANY WHEN IT COMES TO MANUFACTURING.

MANUFACTURING SECTOR HAS BEEN IMPROVING ALL OVER THE WORLD

AND CERTAINLY IN MANY, MANY REGIONS ACROSS THE WORLD AND IN

EUROPE. WHY HAVE WE NOT SEEN THAT BOOST

IN GERMANY SO FAR?

>> SO IN GERMANY, MANY COMPANIES ARE MANUFACTURING THE

FEEL OF THE UNCERTAINTY ABOUT THE POLITICAL ENVIRONMENT AND

REGULATION. A HEAVY BURDEN OF BUREAUCRACY

AND TAXES. IT IS QUITE UNUSUAL INDEED THAT

THE GERMAN EXPORTERS HAVEN’T BEEN ABLE TO BENEFIT.

AGAIN, IN THE DATA TODAY WE SEE AN IMPROVEMENT IN EXPECTATIONS.

GERMAN COMPANIES DO EXPECT TO BENEFIT FROM THIS HOME RUN IN

THE GLOBAL ECONOMY. AT THE SAME TIME WE SEE ALL THE

BOOKS STILL SHRINKING. THE IMPROVEMENTS HAVE NOT

ARRIVED BUT AT LEAST COMPANIES ARE BECOMING A LITTLE MORE

OPTIMISTIC. OF COURSE THERE IS STILL

UNCERTAINTY ABOUT THE FUTURE PART OF ENERGY POLICY.

PRICES HAVE COME DOWN. ESPECIALLY FOR GAS.

NOT AS FAR AS NECESSARY TO HELP THAT SECTOR OF THE ECONOMY.

FRANCINE: THE LABOR MARKET HAS REMAINED

FAIRLY RESILIENT ACTUALLY. IN FACT, EVEN BECAUSE THERE IS

THIS ECONOMIC WEAKNESS, YOU EXPECT TO THAT TO CONTINUE TO

BE CASE?

>> YES, WE DO. WE SEE SOME SECTORS TO HAVE

ECONOMY, FOR INSTANCE THE CAR INDUSTRY AND SUPPLIES TO THE

CAR INDUSTRY WHERE WE SEE JOB LOSSES BUT OVERALL THE MAJORITY

OF COMPANIES IS STILL LOOKING FOR PEOPLE AND SOME COMPANIES

ARE ACTUALLY HELD BACK BY A LACK OF STAFF.

SO WE DON’T EXPECT A AN INCREASE IN EMPLOYMENT.

THAT IS ANOTHER FASTBALLER STABILIZING THE ECONOMY AT THE

MOMENT. IT IS A STAGNATION WITHOUT A

HIGH LEVEL OF UNEMPLOYMENT. FRANCINE:

OF COURSE GERMANY HAS BEEN HIT BY A LOT OF STRIKES, MACHINE

THAN USUAL AND MORE THAN OTHER COUNTRIES.

WHAT DOES THIS TELL US ABOUT WAGE GROWTH AND THE LABOR

MARKET? SOMETHING SO IMPORTANT TO THE

ECB AND THEIR FUTURE POLICIES.

>> YES, THERE IS SOME TIGHTNESS IN THE LABOR MARKET AND THAT IS

DRIVING WAGES. IT DOES INCREASE THE BARGAINING

POWER OF UNIONS AT THE SAME

TIME THE STRIKES IN GERMANY, WE HAVE SEEN ARCH STRIKES OF SMALL

UNIONS THAT EXPLOIT

PARTICULARLY MARKET POWER LIKE TRAIN DRIVERS OR PILOT.

THE BIG UNIONS HAVEN’T REACTED TO THE LABOR MARKETS BY

INCREASING WAGES OR INCREASING WAGE DEMANDS MASSIVELY.

THERE ARE SIZABLE WAGE INCREASES BUT IT COULD BE WORSE

FROM THE PERSPECTIVE OF THE COMPANIES IN TERMS OF THE

FUNCTIONING OF THE LABOR MARKET SIGNIFICANT WAGE INCREASES ARE

WHAT IS NEEDED BECAUSE IF THERE IS NOT ENOUGH STAFF, IF

COMPANIES DO NOT FIND PEOPLE THEY NEED TO PAY MORE. FRANCINE:

THE ECB IS NOW YOU KNOW, THE SIGNALING IS PRETTY CLEAR THEY

WILL START CUTTING IN JUNE. HOW HELPFUL BE THAT BE FOR THE

GERMAN ECONOMY?

>> FROM THE PERSPECTIVE OF THE GERMAN ECONOMY, EVEN EARLIER

RATE CUTS WOULD BE APPROPRIATE BUT THE ECB LOOKS AT THE

EUROZONE AS A WHOLE AND IS WORRIED ABOUT WAGE INCREASES IN

THE SUBSECTOR IN PARTICULAR. IT IS FINE IF THIS COMES IN

JUNE BUT THAT WOULD HELP THE GERMAN ECONOMY.

ONE OF THE WEAKNESSES IN GERMANY IS CONSTRUCTION AND

THAT WOULD ALSO HELP IN PARTICULAR FOR CONSTRUCTION.

FRANCINE: THERE IS A THERE IS THE LATEST

PLAN TO REDUCE THE CORPORATE TAX BURDEN TO THE TUNE OF 7

BILLION EUROS. IS THAT HELPFUL OR DO YOU THINK

OTHER THINGS WOULD BE MORE HELPFUL FOR ECONOMY?

>> THAT WOULD BE HELPFUL. IT IS THE TAX BURDEN IN GERMANY

IS ONE OF THE HIGHEST IN THE G-7 SO IT WOULD BE GOOD.

THIS LAW GOT STUCK IN THE SECOND CHAMBER IN GERMANY SO

THE SECOND CHAMBER WHERE THE STATES ARE REPRESENTED HAS

ALREADY REDUCED THIS PACKAGE. THEY HAVE SAID IF THEY AGREE,

THEY ONLY AGREE TO SOMETHING LIKE 3 BILLION.

IT HAS BECOME A VERY SMALL PACKAGE.

IT’S NOT GOING TO BE A GAME CHANGER.

THE DIRECTION IS FINE BUT IT IS NOT GOING TO CHANGE MUCH IF IT

COMES. FRANCINE: THANK YOU AS ALWAYS FOR JOINING

US. THE PRESIDENT OF THEEFO IPS CONSTITUTE.

COMING UP, E.U. LEADERS DISCUSS FURTHER TARIFFS

ON GRAIN. WE’LL LOOK AT HOW THE U.K.-RUSSIAN CONFLICT HAS

TURNED INTO A GLOBAL ECONOMIC CONFLICT. THAT’S NEXT.

THIS IS BLOOMBERG. ♪

FRANCINE: YOU’RE LOOKING LIVE AT THE

PRINCIPLE ROOM. COMING UP AN INTERVIEW WITH

MOHAMED EL-ERIAN AT 7:00 A.M. EASTERN. THIS IS BLOOMBERG.

♪ WELL, THE PROPOSED VIEWS OF

FROZEN RUSSIAN ASSETS TO FUND BILLIONS OF DOLLARS IN SUPPORT

TO UKRAINE IS THE VERY LATEST FOR THE WEST. WE ALSO LOOK AT

HOW THE WAR AND SANCTIONS ARE IMPACTING THE ECONOMY.

I’M PLEASED TO BE JOINED BY STEPHANIE BAKER, AUTHOR TO HAVE

NEW BOOK, PUNISHING PUTIN INSIDE THE GLOBAL ECONOMIC WAR

TO BRING DOWN RUSSIA. ALWAYS GREAT TO SPEAK TO YOU.

YOU HAVE SOME PRETTY UNIQUE INSIGHTS.

THE UKRAINE RUINED STOCK ON CAPITOL HILL AND THERE IS TALK

IN BRUSSELS ABOUT FREEZING ASSETS AND GIVING THE MONEY TO

UKRAINE. IS THERE A LITTLE WILL? >> WHAT THEY ARE LOOKING AT NOW

IS TAKING THE PROFITS FROM THOSE IMMOBILIZED RUSSIAN

CENTRAL BANK ASSETS THAT ARE CURRENTLY BEING EARNED BY EURO

CLEAR IN BELGIUM AND USING THOSE PROFITS FOR UKRAINE TO

FUND THROUGH THIS E.U. FUND TO PROVIDE MILITARY

ASSISTANCE AND THE THINKING THERE IS THAT’S NOT SEIZING THE

PRINCIPLES. THAT IS THAT IS A LOWER LEGAL

HURDLE TO SURMOUNT. THE EURO CLEAR DOESN’T HAVE A

LEGAL OBLIGATION TO PAY ANY INTEREST ON THOSE ASSETS TO THE

RUSSIAN CENTRAL BANK AND SO THAT’S WHAT’S MOVING FORWARD AT

THE MOMENT. FRANCINE: TARIFFS ALSO SEEM TO BE

SPLITTING OPINION. SOME SAY THEY WORK.

ORES SAY THEY DON’T. COULD IT ACTUALLY MAKE A

DIFFERENCE IF THERE WERE TARIFFS ON RUSSIAN GRAINS?

>> I THINK THIS IS GROWN OUT OF FRUSTRATION IN EUROPE THEY ARE

SEEING AN INFLUX IN UKRAINIAN GRAIN PARTICULARLY IN COUNTRIES

LIKE POLAND WHICH HAS CREATED A POLITICAL PROBLEM.

THERE IS THIS DISCONNECT, WHY ARE WE STILL IMPORTING RUSSIAN

GRAIN WHEN WE’RE FLOODED WITH UKRAINIAN GRAIN, WHY NOT STOP

OR LIMIT THROUGH TARIFFS THE AMOUNT OF RUPP RUSSIAN G GRAIN

INTO THE E.U. FRANCINE: ALSO ASKING UKRAINE TO STOP

WITH DRONES HURTING SOME OF THEIR OIL FACILITIES.

ON THE OTHER HAND IT COULD BE USED TO CRIPPLE THE ECONOMY.

WHAT IS THE RIGHT WAY TO THINK ABOUT H?

>> IN WASHINGTON GAS PRICES ARE VERY SENSITIVE TO THE RUNUP TO

AN ELECTION. YOU HAVE SEEN THE PRICE OF OIL

CREEP UP OVER THE PAST MONTH OR TWO.

UKRAINE IS BUST THE RATED THAT THE KREMLIN’S OIL REVENUES ARE

STILL QUITE HIGH AND THE WEST HASN’T DONE ENOUGH AND THEY ARE

GOING TO TAKE MATTERS INTO THEIR OWN HANDS.

THERE IS A DELICATE BALANCE HOW FAR N.E.C.

GO WITH THIS AND HOW MUCH DAMAGE THEY CAN INFLICT.

THE PROBLEM IS ONCE THEY DAMAGE SOME OF THE REFINERY FACILITIES

BECAUSE OF SANCTIONS THEY ARE HAVING DIFFICULTY REPLACING

SOME OF THOSE PARTS. SO IT DOES SLOW DOWN THEIR

ABILITY TO REFINE PRODUCTS AND THAT HAS AN IMPACT ON OIL

PRICES. MANY THINK RUSSIA IS GOING TO

BE EXPORT MANAGER CRUDE OIL AS A RESULT. FRANCINE:

INDIA SAID IT WILL STOP TAKING OIL FROM CERTAIN TANKS.

IS IT A GAME CHANGER OR LIP SERVICE?

WASHINGTON IS ENFORCING THE SANCTIONS THEY IMPOSED.

THEY PUT SANCTIONS ON THE RUSSIAN STATE SHIPPING COMPANY

AND INDIA IS NOW SAYING WE’RE NOT GOING TO TAKE ANY OIL FROM

THEIR TANKERS. WE DO NOT WANT TO BE MIXED UP

IN ANY SANCTIONS VIOLATIONS AND

THEY HAVE DONE THAT WITH OTHER TANKERS

THAT HAVE BEEN BLACKLISTED. I THINK YOU SEEING SANCTIONS

ENFORCEMENT HAVING SOME EFFECT. FRANCINE: THANK YOU VERY MUCH.

STEPHANIE BAKER. HER NEW BOOK IS OUT I THINK NOW.

>> NO, EARLY SEPTEMBER. FRANCINE:

IT HAS BEEN ONE OF THE KEY DRIVES OF INFLATION ACROSS

EUROPE WITH THE U.K. EXPOSED TO ENERGY EXPORTS.

INFLATION FELL TO ITS LOWEST LEVEL IN 2 1/2 YEARS.

RETAIL SALES STRONGER THAN EXPECTED AND BLOOMBERG

ECONOMICS SAYS A THE BRITISH RECESSION IS OVER.

SOME ARGUE THIS IS PAPERING OVER THE CRACKS OF BREXIT AND

SAY THE LASTING -- OF LEAVING THE E.U.

IS INESCAPABLE. MATT, THANK YOU FOR JOINING US.

WHY WRITE A COLUMN ON BREXIT NOW?

>> WELL, IT HAS BEEN EIGHT YEARS FOR ONE THING.

EIGHT YEARS IS PLENTY OF TIME TO DO AN ASSESSMENT AND WE HAVE

I THINK BY ALL ACCOUNTS EMERGED FROM COVID-19 SERGE IN THE U.S.

SO IT IS A GOOD TIME TO SAY ALL RIGHT, WHAT IS THE SITUATION

WITH THE U.K. SINCE WE HAVE RECOVERED SO TO

SPEAK FROM COVID-19 AND THE ANSWER IS THE MARKET TOLD US

EIGHT YEARS AGO THAT BREXIT WAS A GIANT STEP BACK FOR THE U.K.

AND THE MARKET IS TELLING US TODAY THE SAME THING.

SO THAT IS THE REASON FOR TAKING THIS VERY SERIOUSLY AND

NOT ONLY THAT, IF YOU ASKED THE BRITISH PUBLIC WHICH THEY DID

LAST JULY, THE BRITISH PUBLIC SAID WE WOULD LIKE TO REJOIN

THE E.U. AND CURIOUSLY IN AN ELECTION

YEAR IN THE U.K., POLITICIANS FROM BOTH PARTIES WOULD RATHER

DISCUSS GAZA 3,000 MILES AWAY THAN DOING SOMETHING WITH THE

E.U. WHICH IS VERY IMPORTANT TO BRITAIN’S HEALTH. FRANCINE:

ARE THERE ANY ANALOGIES TO BE MADE WITH BREXIT?

>> YOU KNOW, IT IS PROBABLY THE WORST DISASTER, MARKET DISASTER

IN AT LEAST IF YOU LOOK AT THE CURRENCY IN MODERN BRITISH

HISTORY. THE POUND HAD A RECORD DECLINE

THAT DAY, JUNE 23, 2016, WHICH WAS THE DATE OF THE REFERENDUM

THE POUND HAS NOT RECOVERED SINCE THEN.

AND TODAY, IF YOU LOOK AT THE EQUITY MARKET, YOU LOOK AT THE

DEBT MARKET, BREXIT HAS IMPOSED A PREMIUM PENALTY, IF YOU LIKE,

ON BRITISH ASSETS AND SO INVESTORS TODAY HAVE TO PAY A

LOT MORE AND SUFFER A LOT MORE IN THEIR RETURNS OWNING BRITISH

ASSETS WHETHER IT IS DEBT OR EQUITY. THAT IS A CONSEQUENCE OF

BREXIT. THE REASON FOR THAT IS BY THE

WAY, IF YOU BREAK WITH 40% PLUS OF YOUR TRADING PARTNER, WHICH

IS WHAT THE E.U. REPRESENTED TO BRITAIN, YOU’RE

GOING TO PAY A PRICE. TO PUT THAT IN CONTEXT

ACTUALLY, THE U.S. DEPENDS ON MEXICO AND CANADA.

THOSE ARE THE TWO BIGGEST TRADING PARTNERS.

THAT IS ACTUALLY ABOUT HALF OF WHAT THE E.U.

REPRESENTS TO BRITAIN. IF WE DID SOMETHING SIMILAR OF

COURSE IT WOULD BE A CATASTROPHE.

SO THAT’S WHAT THE U.K. IS LIVING WITH.

THE PUBLIC BELATEDLY REALIZES THAT AND THE MARKET IS

CONSISTENTLY REMINDING BRITAINS THAT THE COUNTRY, IN A RELATIVE

SENSE HAS GOTTEN SMALLER, NOT BIGGER. FRANCINE:

I GUESS THERE IS A BIGGER QUESTION WHETHER THE WORLD HAS

LEARNED ANYTHING FROM POPULISM. THERE ARE THOSE WHO SAY WE HAVE

TWO CANDIDATES FAIRLY TO THE CENTER AND THAT IS PARTLY

THANKS TO BREXIT BECAUSE SOME OF THE MORE COLORFUL POLICIES

HAVE BEEN WEEDED TO ONE SIDE.

>> YEAH. I GUESS, YOU KNOW, LOOK, THERE

IS A SILVER LINING IN EVERYTHING.

THERE IS THE SAYING, EVERY PROBLEM THERE IS AN OPPORTUNITY.

IT’S TRUE. THE CENTER IS WHERE YOU GOVERN

BEST. THE CENTER IS WHERE YOU GET THINGS DONE.

SO PERHAPS WE ARE GETTING TO A POINT WHERE PEOPLE REALIZE THAT

THE KIND OF POLITICS THAT IS PREFERRED AND THAT IS GOING TO

BE BENEFICIAL IS FROM THE CENTER.

NOT THE RIGHT OR THE LEFT. FRANCINE: THANK YOU SO MUCH.

MATT WINKLER, A BLOOMBERG EDITOR IN CHIEF EMERITUS OF

COURSE. COMING UP, NIKE WARNS INVESTORS

THAT SALES WILL TAKE A HIT THIS YEAR.

WE TAKE A CLOSER LOOK AT THE RETAIL LANDSCAPE.

THAT IS COME UP SHORTLY. THIS IS BLOOMBERG.

♪

FRANCINE: REDDIT ENDED ITS FIRST DAY 48

PRKT% HIGHER IN THE FOURTH BIGGEST U.S. I.P.O. OF THE YEAR.

A TOUCH LOWER IN PREMARKET TRADING.

CHARLIE WELLS IS WITH US. WHAT IS BEHIND THIS, DAY ONE IT

FLEW OFF THE SHELF.

>> IT WAS A POP. I THINK WITH ANY I.P.O.

YOU’RE WORRYING IS IT GOING TO BE A FLOP OR A POP?

ARE THEY GOING TO GO UP OR DOWN? THEY HAVE BEEN SPINNING THIS

A.I. STORY HOW THEY CAN USE THE TROVE OF DATA THEY HAVE GOT TO

HELP EMPROVE THEIR LARGE LANGUAGE MODELS.

IT SEEMS LIKE TO MARKET YESTERDAY BELIEVED THAT.

THIS BODES WELL FOR OTHER COMPANIES THINKING ABOUT

I.P.O.ING USING REDDIT AS A TEMPERATURE CHECK.

THAT WAS HOT YESTERDAY. FRANCINE:

WE’RE WATCHING FEDEX EARNINGS WHICH BEAT EXPECTATIONS.

>> THEY DID ON PROFITABILITY. YOU THINK ABOUT THE U.S.

SHIPPERS, FEDEX AND UPS. UPS HAS BEEN OUTPERFORMING.

FEDEX AND FEDEX EXPRESS, THERE WERE A LOT OF REDUNDANCIES

THERE. THEY HAVE BEEN UNDER RESTRUCTURING.

SOMETHING THAT INVESTORS LIKE, THEY WERE ABLE TO TALK ABOUT

$45 BILLION IN BUYBACKS.

THE SHARE PRICE UP 13% IN LATE TRADING YESTERDAY. FRANCINE:

NIKE HAS WARNED INVESTORS THAT SALES WILL TAKE A HIT LATER

THIS YEAR. THIS IS AS THE SPORTSWEAR GIANT

WORKS TO MAKE ADJUSTMENTS TO BETTER MATCH MERCHANDISE WITH

SHOPPERS THAT THEY WANT TO BUY. THIS COMES AS LULULEMON

RELEASED A LOWER THAN EXPECTED SALES OUTLOOK AS VISITS TO U.S.

STORES SLOWED AT THE BEGINNING OF THE YEAR.

I’M DELIGHTED TO BE JOINED BY ANDREA. WHAT IS GOING ON WITH

SPORTSWEAR?

>> IT IS IN A STATE OF UPHEAVAL. THERE ARE THREE THINGS GOING ON.

THE GREAT ROTATION WHICH IS THE MOVE WE’RE STILL IN

CASUALIZATION BUT THERE IS A MOVE FROM THE SLOUCHY LOUNGE

WEAR WE WERE WEARING IN THE PANDEMIC TO MORE FORHALL STYLE.

FRANCINE: WE’RE MORE CHIC NOW.

>> EXACTLY. THIS THIRD FACTOR WHICH I CALL

THE GREAT FRAGMENTATION. FOR MANY YEARS, NIKE, ADIDAS,

PUMA, THEY COULD SELL ALL KINDS OF PRODUCTS TO ALL CONSUMERS AT

ALL PRICE POINT. NOW YOU HAVE COMPETITORS

FILLING IN AWAY AT THEMES. LULU IN AT LEISURE THAT ARE

TAKING BITS OF THEIR SALES. THEY ARE LIKE MID MARKET

FASHION BRANDS AND THEY HAVE BECOME TOO RELIANT ON A SINGLE

PROJECT THAT BURNS BRIGHT AND THEN FADES.

THEY HAVE TO GET A PIPELINE OF NEW PRODUCTS.

NIKE HAS BEEN PARTICULARLY SUFFERING WITH THIS AND THAT’S

WHAT THEY ARE TRYING TO ADDRESS. FRANCINE:

WHAT IS THE READ FOR ADIDAS?

>> I THINK IT IS QUITE LIMITED. TER BOTH FACING THE SAME BIG

PICTURE. THE NEW C.E.O.

OF ADIDAS SET UP HIS THOUGHTS LAST WEEK.

HE SEEMS MUCH MORE ON THE PULSE OF WHAT’S GOING ON.

HE SEEMS TO UNDERSTAND THAT THESE BRANDS ARE FASHION

BUSINESSES AS WELL AS SPORTS BUSINESSES.

HE CAME FROM PUMA WHICH IS MORE FASHION FOCUS.

HE NOTICED THINGS IN 2022 SOME OF THE STUFF, THE GAZELLE, THE

STYLES WERE REALLY HEATING UP BECAUSE OF COLLABORATIONS WITH

GUCCI. LAST YEAR HE RAMPED UP THE

PRODUCTION OF THOSE STYLES BUT HE IS NOT THINKING THIS IS

GOING TO STAY STATIC. HE IS LOOKING AT WHERE ITS

MIGHT GO NEXT INTRUSION NEW PRODUCTS AND FIGURING OUT WHERE

HE CAN TAKE THAT RANGE ON. FRANCINE:

WHAT IS GOING ON AT LVMH? WE HAVE THE NUMBER TWO STEPPING

DOWN. IT IS A RESHUFFLE. ARE THEY LOOKING FOR A PERSON

TO REPLACE HIM OR TRYING TO MAKE THE BUSINESS SLEEKER?

>> I THINK WE ARE GETTING THIS SORT OF ALMOST GENERATIONAL

CHANGE AT LVMH. YOU HAVE HAD A NUMBER OF SENIOR

EXECUTIVES WHO WORKED ALONGSIDE HIM RETIRING MOVING TO

DIFFERENT ROLES. WHAT EVERYBODY IS WATCHING,

EVERY LITTLE CHANGE AT LVMH IS FASCINATING BECAUSE AT SOME

POINT WE’RE GOING TO GET THE TRANSITION TO THE NEXT

GENERATION. IT IS REALLY WHICH OF HIS

CHILDREN GETS THE ROLE. IS IT ONE? DO THEY SPLIT IT?

WHAT HAPPENS? THE INTERESTING THING ABOUT

THESE SENIOR MOVES IF IT IS ONE OF THE YOUNG CHILDREN, DO ONE

OF THE SENIOR EXIFERS STEP IN UNTIL THEY ARE READY? FRANCINE:

THANKS SO MUCH. "SURVEILLANCE" UP AHEAD AND THIS IS BLOOMBERG.

♪