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NEWSMAKERS AND MARKET MOVERS. THIS IS "THE PULSE" WITH FRANCINE LACQUA FRANCINE: GOOD MORNING EVERYONE, AND WELCOME TO "THE PULSE." OIL IS LOWER AS HOPE STILL THAT DIPLOMACY COULD DELAY OR EVEN OVERT ANOTHER ROUND OF U.S. STRIKES ON IRAN. PRESIDENT TRUMP HAS REPORTED TO WANT TO GIVE TALKS MORE TIME WHILE THE IRAN SAYS DISCUSSIONS ON REOPENING THE STRAIT OF HORMUZ ARE MAKING PROGRESS. THAT SKIDMORE WHERE ARE GLOBAL ENERGY LEADERS ARE ALSO GATHERING. ARE WE SEEING A GENUINE DIPLOMATIC OPENING? WE'VE BEEN HERE MULTIPLE TIMES BEFORE OVER THE PAST EIGHT MONTHS. OF COURSE PRESIDENT TRUMP MAKING THOSE REMARKS THAT HEADING IRAN AND THEN GOING BACK ON HIS WORD, BUT THIS TIME AROUND IS QUITE
CRUCIAL BECAUSE WE ARE HEADED TOWARD THE MIDTERM ELECTIONS. THAT IS HAPPENING TOMORROW AND THE TALKS OVER THE PAST COUPLE OF WEEKS, THE ANALYSIS, THE CONSENSUS WAS ALL IN SUGGESTION ELECTIONS. SO YOU SEE A LOT OF JITTERS AROUND GULF COUNTRIES FROM GULF OFFICIALS. BLOOMBERG RAN A STORY SUGGESTING THAT MINISTERS, OFFICIALS AND A SENIOR DIPLOMAT AND SENIOR ADVISOR SAID THAT THE REGION NEEDS TO COME TOGETHER AND ESSENTIALLY WORK AGAINST ANY RETALIATION AND IRAN DID SAY THAT A RETALIATION, IF THE U.S. WERE TO HIT WOULD BE INSTANTANEOUS. BUT SOME SIGNS OF POSITIVITY IN THE MARKET THIS MORNING AFTER THOSE REMARKS BY PRESIDENT TRUMP.
BRENT CRUDE, LAST I CHECKED, WAS DROPPING ABOUT 3%. THE NEXT FEW DAYS ARE GOING TO BE CRUCIAL BECAUSE THAT IS WHAT WE WILL BE WATCHING OUT FOR. AND OF COURSE, THE MEDIATORS THAT HAVE BEEN QUITE ACTIVE IN THE BACKEND. IN CHARGE OF MEDIATING BETWEEN THE U.S. AND IRAN SINCE THE START OF THIS WHOLE THING. THIS IS GOING TO BE CRUCIAL. THE NEXT 48 HOURS ARE GOING TO BE VERY IMPORTANT FOR US TO BE ABLE TO DETERMINE WHAT TRAJECTORY THIS REGION WOULD BE HEADED INTO OVER THE NEXT FEW WEEKS. FRANCINE: WHAT IS THE LATEST ON THE GROUND? ABEER: OF COURSE, YOU MENTION ENERGY LEADERS FROM ACROSS THE WORLD ARE HERE AS WELL AS ENERGY MINISTERS, SOME REALLY TOP OFFICIALS. BUT NOT JUST THAT, WE WERE ALSO
AT THE OPENING CEREMONY AND WE SAW SAM ALTMAN WALKING IN. SOME DEALS ABOUT IMPLEMENTING OPENAI FRONTIER MODELS INTO ADNOC SERVICES. PERHAPS WE CAN LISTEN TO SOME OF SAM ALTMAN FROM EARLIER IN THE DAY. THE AI INDUSTRY IS TALKED ABOUT WHAT IT MEANS FOR THE ENERGY INDUSTRY. AND NOW I THINK WE CAN REPAY THE FAVOR. NOT ONLY CAN AI ENABLE THAT IN ANY CREDIBLE NEW WAY, FOR MY WHOLE CAREER MY TWO GREATEST INTERESTS HAVE BEEN AI AND ENERGY. I NEVER THOUGHT THEY WOULD COME TOGETHER IN QUITE THIS WAY. YOU HEARD SAM ALTMAN TALKING AND UGLY DOBBY TODAY, HE HAD A MEETING WITH THE CROWN PRINCE OF ABU DHABI HERE AND THE BOSS OF ADNOC. NOT JUST OPENAI BUT ANTHROPIC,
OTHER AI COMPANIES ARE VERY INVESTED IN THIS REGION BECAUSE OF THE INVESTORS WHERE THE GOVERNMENT ITSELF. WE KNOW PARTNERSHIPS BETWEEN OPENAI AND G 42 HAS MATERIALIZED OVER THE PAST FEW YEARS, SO YOU ARE SEEING LEADERS IN THE ENERGY SPACE TRYING TO COME UP WITH CONVERSATIONS ABOUT RECOVERY AND OIL SUPPLIES. THAT IS GOING TO BE CRUCIAL ESPECIALLY WITH THIS REPORT EARLY IN THE DAY FOR GOLDMAN SACHS SUGGESTING THAT OIL PRICES ARE GOING TO BE ABOUT $105 PER BARREL IN DECEMBER. THEY UPPED THE ESTIMATE FROM ABOUT $90. WE ARE LOOKING AT ALL THESE CONVERSATIONS AND AGAIN, THESE ARE GOING TO BE CRUCIAL WHEN IT COMES TO ENERGY, SUPPLIES, AND RESILIENCE WHEN IT COMES TO TRADE ROUTES. FRANCINE: THANKS SO MUCH.
PRESIDENT TRUMP SAYS HE MAY HAVE TO BECOME MR. VITO IF DEMOCRATS WIN A MAJORITY IN TOMORROW'S MIDTERMS, WRITTEN ACKNOWLEDGMENT THAT REPUBLICANS COULD LOSE THE ELECTIONS. PRESIDENT TRUMP ALSO MADE HIS FINAL CAMPAIGN PITCH TO VOTERS THIS WEEKEND HOLDING RALLIES IN IOWA AND KANSAS. LET'S GET STRAIGHT TO ONLY CROOK WHO IS IN THE U.S. FOR US. ONE DAY TO GO UNTIL ELECTION DAY SO WHERE EXACTLY DO WE STAND? COMING DOWN TO THE WIRE. THE EFFECT WILL BE FELT ACROSS THE GLOBE FROM OBVIOUSLY THE UNITED STATES BUT OVER TO EUROPE AND WE GOT THAT INTERESTING INTERVIEW FROM THE PRESIDENT OF
THE U.S. WITH NEW YORK POST WHERE HE WAS SUGGESTING HE WOULD BE MR. VITO IN THE EVENT THAT YOU DID GET A SWEEP FROM THE DEMOCRATS ACROSS THE HOUSE WHICH IS WHAT THEY EXPECTED, BUT ALSO ACROSS THE SENATE AND MET A CERTAINLY SOMETHING THAT SEEMS POSSIBLE AT THIS STAGE, PARTICULARLY IF YOU BELIEVE SOME OF THE POLLING OVER THE LAST COUPLE OF HOURS THAT CAME OUT OVERNIGHT FROM NEW YORK TIMES AND CNE UNIVERSITY. JUST TO REMIND EVERYBODY, THE SENATE IS CURRENTLY HELD BY THE REPUBLICANS. IN ORDER FOR DEMOCRATS TO WIN IT, THEY NEED TO NET GAIN FOR SEATS, SO THERE ARE A LOT OF KEY RACES WE ARE WATCHING, SPECIFICALLY SEATS CURRENTLY HELD BY REPUBLICANS AND THAT CONFLICT.
CANDACE, TEXAS, OHIO, MAINE, NORTH CAROLINA, THOSE ARE ALL HELD BY REPUBLICANS RIGHT NOW. THE DEMOCRATS LEAD BY FIVE POINTS IN EACH OF THOSE. IF THEY MANAGED TO RETAIN ALL OF THE OTHER SEATS INCLUDING MICHIGAN WHICH OBVIOUSLY IS A RACE THEY HAVE A LOT MORE INTERESTING OVER THE WEEKEND, SENATE. WE SHOULD SAY OBVIOUSLY READING THESE POLLS, WE TAKE ALL OF IT WITH A HUGE GRAIN OF SALT BECAUSE THE POLLS HAVE BEEN VERY, VERY WRONG IN THE PAST BUT THIS MAKES HER FAIRLY POOR READING IF THESE ARE IN ANY WAY ACCURATE FOR REPUBLICANS. FRANCINE: SO YOU MENTIONED MICHIGAN. IT DEFINITELY WAS AN INTERESTING WEEKEND. HALEY STEVENS WITH THE SURPRISE ENDORSEMENT OF THE REPUBLICAN CANDIDATE IN MICHIGAN.
WILL THAT COMPANY THE PATH TO A SENATE MAJORITY FOR DEMOCRATS? DID VERY WELL COULD. MICHIGAN WAS A SEAT THAT WAS HELD BY A DEMOCRAT THAT RETIRED. ABDUL EL-SAYED ENDED UP WINNING IT, BUT ONLY BARELY, FEWER THAN 15,000 VOTES, LESS THAN 1% AND THERE'S BEEN A LOT OF ISSUES BETWEEN THE CANDIDATES, A LOT OF PERSONAL ISSUES AS WELL. BUT YOU NOW HAVE HALEY STEVENS THAT NOT ONLY DID NOT ENDORSE ABDUL EL-SAYED, BUT NOW IS ENDORSING THE TRUMP CANDIDATE WHICH IS A RARE ENOUGH EVENT IN ORDINARY TIMES OF AMERICAN POLITICS BUT PARTICULARLY IN THE AGE OF TRUMP TO HAVE A DEMOCRAT GO OVER AND CAMPAIGN WITH A REPUBLICAN IS FAIRLY REMARKABLE. IT IS A CLOSELY WATCHED RACE BECAUSE OBVIOUSLY THE DEMOCRATS NEED TO HOLD ONTO THAT BUT I
THINK THE MORE THING THAT IT UNDERLINES AS THERE ARE SOME FRACTURES THAT EXIST WITHIN THIS DEMOCRATIC PARTY. AND A LOT OF IT CAN BE SWEPT UNDER THE CARPET BECAUSE THERE IS SUCH A STRONG ANTI-FROM SENTIMENT AND THAT KIND IF I'S PEOPLE. THERE ARE A LOT OF QUESTIONS THAT WITH THE FUTURE OF THE DEMOCRATIC PARTY LOOKS LIKE AN SOMETHING THAT WILL CERTAINLY HAVE TO ANSWER TO THE PUBLIC IF THEY DO WHEN THE HOUSE AND THE SENATE. FRANCINE: WHEN YOU LOOK AT WHAT KIND OF IMPACT THIS HAS ON THE TRUMP FOREIGN POLICY, IT COULD IMPACT ENERGY, IT COULD IMPACT EUROPE. WHAT ARE YOU LOOKING AT?
THE NUMBER ONE THING IS HOW IT WILL BEAR ON THE WAR IN IRAN. DOES IT BURY THEM TO GO MORE EFFECTIVELY FOR GEOPOLITICS? MEANS FOR UKRAINE. THERE WAS THIS ALL OF BRANCH REACHED OUT TO VLADIMIR PUTIN TO GET THAT DIESEL ONTO THE U.S. MARKET. DO WE GET A REVERSAL AFTER THE MIDTERMS OR DOES HE SORT OF DOUBLE DOWN ON THAT? BUT I THINK THERE'S ANOTHER QUESTION. WHAT DOES THIS DEMOCRATIC PARTY LOOK LIKE IN TERMS OF FOREIGN POLICY? YES, IT'S GOING TO BE A PARTY CERTAINLY MORE ALIGNED WITH EUROPE AND THE REPUBLICANS, BUT IS THIS POTENTIALLY MORE PROTECTIONIST DEMOCRATIC POLICY?
A DEMOCRATIC PARTY THAT POTENTIALLY IS NOT GOING TO LIKE TECH? AGAIN, ALL OF THESE THINGS WE'RE GOING TO HAVE TO WATCH VERY CLOSELY. ONE OF THE KEY THINGS IS HOW THE DEMOCRATS TO FIND GOING FORWARD. FRANCINE: OLIVER CROOK ON THE GRANT NEW YORK. LIVE FROM MIDNIGHT TO 7:00 A.M. YOU CAME -- UKRAINE TIME. DEREK, SO GOOD TO SPEAK TO YOU, ESPECIALLY WHEN WE ARE TRYING TO FIGURE OUT WHAT THE FED IS ABOUT, WHAT THE FED DID OR DIDN'T DO. INDEED.
LAST WEEK WAS A BUSY WEEK. I THINK FROM THE FED MEETING, ONCE AGAIN WE'VE COME OUT OF A MEETING WITH THE MARKETS DEBATING WHAT IS THE REACTION FUNCTION OF THE FED? WHAT ARE THEY DOING? IF IT IS TOO PERSISTENT, I THINK IT CERTAINLY BECOMES AN ISSUE FOR THE MARKETS. FRANCINE: WHY ARE THERE SO MANY QUESTIONS? THIS IS THE FIRST TIME THAT HE IS CHAIR, OR IS IT BECAUSE OF POLITICAL PRESSURE THAT HE DOESN'T SAY WHAT HE WANTS TO SAY, OR IS IT THE MARKETS TRYING TO ADAPT BECAUSE THERE'S MANY DATA POINTS COMING FROM ALL SIDES?
KEVIN WARSH WANTS CHANGES TO BE MADE AT THE FED. OF COURSE WE HAVE FIVE WORKING GROUPS THAT WILL REPORT BACK BY THE END OF THE YEAR. ONE OF THOSE IS ON BALANCE SHEET POLICY. TWO VERY IMPORTANT ELEMENT FOR THE FINANCIAL MARKETS, AND YOU DO GET THE SENSE THAT WARSH WANTS TO HAVE SOME DEGREE OF RARE FLEXIBILITY IN THE APPROACH OF MONETARY POLICY, SO MAYBE MOVING AWAY FROM ONE SINGLE TARGET OF INFLATION, LOOKING AT A WIDER ARRAY OF INFLATION MEASURES. BUT ULTIMATELY THAT RESULTS IN A GREATER DEGREE OF FLEXIBILITY. THE MARKETS MIGHT MISINTERPRET THAT AND BE NERVOUS ABOUT MOVING AWAY FROM INFLATION OR TOWARD GROWTH, BUT I THINK THERE IS A CREDIBLE ARGUMENT TO BE MADE
THAT WARSH IS MOVING IN THAT DIRECTION AND THAT CERTAINLY POINTS TO A STEEPER YIELD CURVE AND CERTAINLY A NEGATIVE OUTLOOK FOR THE U.S. DOLLAR FRANCINE: I HAD A CONVERSATION ABOUT 10 DAYS AGO AND WHAT I FOUND REALLY SURPRISING WAS HE SAID LOOK, IF THERE IS SOME LINK TO DATA CENTERS WERE IF WE DON'T ALLOW AI TO THE LEVEL AND TO THE DEGREE THAT HAS BEEN PROMISED, THEN WE COULD SEE A RECESSION IN THE U.S. I HAD TO TAKE A DOUBLE TAKE. WHEN I SAW THE GDP DATA LAST WEEK, AI WAS ALL OVER THAT GDP REPORT. VERY, VERY STRONG. CLEARLY CONSUMERS LEVERAGED UP IN TERMS OF EQUITIES ARE DRIVING CONSUMPTION.
FIXED INVESTMENT, VERY STRONG. ON THE NEGATIVE SIDE, TRADE, IMPORT DEMAND, THE STRONGEST OVER THE THREE QUARTERS SO FAR THIS YEAR. YOU HAVE TO GO BACK TO THE YEAR 2000 TO HAVE THAT DEGREE OF STRENGTH AND IMPORTS. AI IS EVERYWHERE IN GDP AND IF YOU START TO GET A NEGATIVE MENTAL -- MOMENTUM GOING THROUGH, YOU CAN SEE QUITE A NOTABLE DECELERATION. THE GROWTH OUTLOOK STARTS TO CHANGE VERY QUICKLY. THE U.S. IS VERY EXPOSED, VERY DEPENDENT TO A CONTINUATION OF THE VERY POSITIVE STORY THAT WE HAVE ON AI AND THEREFORE THE U.S. DOLLAR IS ALSO VERY EXPOSED AND I THINK THE MARKET IS VERY LONG U.S. DOLLARS RELATED TO AI, AND IF THERE IS A DISRUPTION IN THAT, YOU CAN SEE QUITE A
NOTABLE TURN. THERE WAS A MISUNDERSTANDING WITH THE DOLLAR DID TO THE DOT-COM BUBBLE. ARE YOU SEEING PARALLELS? THE FLOW IS MONUMENTAL IN TERMS OF FOREIGN INVESTOR PURCHASES. INCLUDING OFFICIALS AND PRIVATE INVESTORS. U.S. INVESTORS AREN'T INVESTING INTO FOREIGN EQUITIES, BUT THE NET FLOW IS STILL VERY CONSIDERABLE. THERE IS STILL A NET POSITIVE IN TERMS OF THE AI LINK AND THEN OF COURSE IF YOU LOOK AT VALUATIONS UNIT FAIR NOT COMING INTO THE U.S., IF YOU JUST LOOK AT HOLDINGS OF U.S. ASSETS, THAT IS GROWING IN SIZE ALL THE TIME. IF YOUR HEAD RATIOS ARE NOT
PEOPLE AT THAT MOVES HIGHER, THE MARKET IS BASICALLY GETTING LONGER AND LONGER IN U.S. DOLLARS. FRANCINE: WE LOOK AT WHAT HAPPENS TO THE DOLLAR IN 2027, IS THERE A STARK DIFFERENCE BETWEEN THE FIRST AND SECOND HALF OF THE YEAR? AS YOU GO FURTHER OUT, I WOULD BE MORE CONVINCED. WE HAVE NO RATE HIKES. PART OF THAT IS A SLOWDOWN IN THE U.S. ECONOMY, BUT THAT IS NOT A BIG PART OF THE STORY. WE JUST THINK INFLATION PRESSURES ARE A LOT WEAKER OUTSIDE OF AI AND I THINK THAT WILL HELP TO ALLOW FOR THE FED TO STAY ON HOLD. IN THAT CONTEXT, IT STARTS TO BECOME A MORE COMPELLING STORY. BUT OBVIOUSLY GOING BACK TO THE AI STORY, GIVEN THE WOBBLES WE'VE HAD IN RECENT WEEKS, THERE'S DEFINITELY A PLAUSIBLE
ARGUMENT TO BE MADE, ESPECIALLY POST-ELECTIONS IF THE DEMOCRATS DO WIN. YOU CAN GET FURTHER UNCERTAINTY AND FURTHER QUESTIONS OF VALUATION. FRANCINE: ESPECIALLY WHERE RATES ARE TODAY. WHAT ARE YOU EXPECTING FROM THE BANK OF ENGLAND, A HIKE? YES. DEFINITELY. LOOKING AT NATURAL GAS PRICES AND THE U.K., THE CONTRACT IS UP TO THE 150% OVER THE LAST FOUR MONTHS SINCE THE U.S.-IRAN DEAL BROKE DOWN IN THE SUMMER. THAT'S A HUGE INCREASE. THE PRICE CAP ADJUSTMENT FOR JANUARY IS POTENTIALLY BETWEEN 25% AND 30%. SO NOW WHEN YOU'RE LOOKING AT HEADLINE INFLATION WE COULD HAVE INFLATION AT 4.5% IN TERMS OF THE ASSUMPTION OF THE PEAK IN INFLATION.
SO THEY DEFINITELY WILL HIKE ON THURSDAY, AND WE HAVE AN ASSUMPTION OF ANOTHER HIKE IN FEBRUARY OF NEXT YEAR. BUT IT'S VERY MUCH A MANAGEMENT STORY. HIKE THIS YEAR. DOES THAT LEADING CHANGE MARKET EXPECTATIONS? I DON'T THINK SO. THE LEAD CANDIDATE TO TAKE OVER, HE IS KIND OF CONSENSUS-DRIVEN ANYWAY THAT CHRISTINE LAGARDE WAS AS WELL. IF HE WAS STARTING TO BECOME THE CANDIDATE, MAYBE THERE MIGHT BE SOME ADJUSTMENTS IN PRICING. THE EURO ZONE ECONOMY HAS BEEN PRETTY RESILIENT EVEN WITH NATURAL GAS PRICES MOVING UP. THE EURO NOW HAS BECOME MORE CONSIDERATE, ONE OF THE REASONS THE EURO DROPPED BELOW EVEN THOUGH THE RATE SPREAD WAS
MOVING IN FAVOR. WITH THE SCALE OF INCREASE IN A GAS PRICES, IT IS STARTING TO BECOME A POTENTIAL NEGATIVE GROWTH STORY. BUT THE DATA SO FAR HAS ACTUALLY BEEN PRETTY RESILIENT. FRANCINE: AND BANK OF JAPAN? THERE'S A LOT YOU ARE MISSING OUT ON. THERE'S A LOT BUT I DON'T TALK ABOUT. THE BOJ, WE ARE ACTUALLY A BIT MORE HAWKISH THAN I THOUGHT. THE BOJ HAS A HISTORY OF FOCUSING ON GLOBAL MARKETS AND BEING CAUTIOUS IN ITS COMMUNICATIONS. HE WASN'T REALLY THAT CAUTIOUS ON FRIDAY.
VERY CLEAR THAT THERE'S MORE TO DO INCLUDING DECEMBER. HE VERY MUCH WANTED THE PRICING FOR A HIKE IN DECEMBER TO BE MAINTAINED. HE CERTAINLY DID THAT, BUT NOT MUCH IMPACT. THE JGB MARKET IS BEGINNING TO STABILIZE. THE CURVE IS FLATTENING. BEHIND THE CURVE BOJ STORY IS RECEDING, AND I THINK GRADUALLY THAT IS GOING TO START TO LOOK BETTER AND HAVE A MORE POSITIVE IMPACT ON FX AS WELL. FRANCINE: AND WHAT DOES THAT MEAN FOR THE TREASURY SECRETARY? I THINK ONE OF THE MOST FASCINATING STORIES OF THE YEAR SAFAR WAS SCOTT BESSENT AND HIS LEVEL OF INVOLVEMENT WHEN IT CAME TO BANK OF JAPAN. OBVIOUSLY DOLLAR-YEN HAS BEEN RELATIVELY STABLE.
57, 58. IF WE STAY STABLE, SCOTT BESSENT WILL PROBABLY NOT DO VERY MUCH. IF WE GOT BACK INTO INTERVENTION TERRITORY AND THAT IS REQUIRED AGAIN, WE MAY HEAR FROM SCOTT BESSENT AGAIN. BUT HE HAS LESS CRITICISM NOW. HIS MAIN CRITICISM WAS THE BOJ. WE ARE NOT TOO FAR AWAY FROM WHAT COULD BE DESCRIBED AS THE NEUTRAL POLICY RATE. IN THAT SENSE HE SHOULD BE RELATIVELY PLEASED. FRANCINE: THANK YOU SO MUCH AS EVER FOR JOINING US. COMING UP, AND LOOK AT APPLE EARNINGS THAT DRAW A LITTLE BIT LATER TODAY AFTER THE RELEASE OF THE COMPANY'S NEW FOLDABLE IPHONE. THAT'S NEXT AND THIS IS BLOOMBERG. AI IS SOMETHING UNLIKE
ANYTHING WE'VE EVER SEEN IN MY LIFE. YEARS. I'VE NEVER SEEN ANYTHING LIKE THIS. THE NOVELTY, THE SPEED OF PROGRESS, THE AUTONOMY. IN THE UNPREDICTABLY. 25 YEARS AGO, WE HAVE THE INTERNET AND E-COMMERCE. THEY DIDN'T HAVE THAT QUALITY OF A KNOWABILITY AS FAR AS I'M CONCERNED. THE BUSINESS MODEL FOR NOT THAT MYSTERIOUS. YOU TAKE ANTHROPIC, HOW MUCH IT WILL BE DOING IN FIVE YEARS? WILL THAT IS THE RIGHT REACTION, BUT IF THAT'S THE CASE, YOU CAN'T INVEST IN IT IN A WHOLLY ANALYTICAL VALUE-ORIENTED BASIS. YOU HAVE TO PLACE A BET. I'M WHAT IS CALLED A VALUE INVESTOR.
WHAT A VALUE INVESTOR TRIES TO DO IS FIGURE OUT WHAT IT WILL MAKE IN FIVE YEARS, AND SEE IF TODAY'S PRICE IS FAIR RELATIVE TO THAT EXPECTATION. I DON'T THINK WE CAN DO THAT WITH MUCH OF AI. MAYBE THE INFRASTRUCTURE PORTION IS SOMEWHAT PREDICTABLE. BUT WHEN YOU GET INTO A PURE PLAY AI COMPANY WHICH I DON'T KNOW, NONE OF US EVER HEARD OF THREE YEARS AGO, CAN BE REALLY FULL OURSELVES INTO THINKING WE KNOW WHAT IT WILL DO FIVE YEARS FROM NOW? AND YET THAT DOESN'T MEAN WE DON'T WANT TO BE IN IT. FRANCINE: THAT WITH THE OAKTREE CAPITAL MANAGEMENT CO-CHAIR SPEAKING EXCLUSIVELY WITH DAVID. APPLE IS SET TO GET THE FIRST SIGNS OF HOW NEW IPHONES ARE SELLING MY POST RESULTS LATER
TODAY. THE TECH SELLOFF LAST WEEK IS ALSO INCREASING THE SPOTLIGHT ON RECENTLY PROMOTED CHIEF EXECUTIVE JOHN TERNUS. FOR MORE, I WANT TO BRING IN MATT BLOXHAM WITH BLOOMBERG INTELLIGENCE. SO GOOD TO SPEAK TO YOU. SO THE NEW PHONES HAVE LIVED IN ON SALE A FEW WEEKS. HOW IMPORTANT IS THE DATA? I THINK IT'S GOING TO BE INCREDIBLY IMPORTANT. THIS WAS AN UNUSUAL LAUNCH BECAUSE THEY LAUNCHED SOME OF THE PHONES IN SEPTEMBER AND THEN ANOTHER LAUNCH IN LATE OCTOBER. I THINK THERE'S A COUPLE OF CONFLICTING TRENDS. THEY'VE MOVED PRICES UP TO TRY TO CAPTURE THE HIGHER INPUT COSTS, PARTICULARLY MEMORY. LOOKING AT THE REVENUE IMPACT THAT CREATES, BUT ALSO HOW MUCH OF A MARGIN CERTAINLY QUARTER ON
QUARTER THE MARKETS ARE EXPECTING A BIT OF A DRAG ON MARGIN BECAUSE OF THOSE HIGHER INPUT COSTS. I THINK IT'S GOING TO BE IMPORTANT HAVE A SIGNAL TO DEMAND BOTH FOR THE DUO, BUT ALSO HOW THE MARKET IS REACTING TO THE PRICES ACROSS THE RANGE AND WHETHER THAT IS GOING TO TEMPER DEMAND AND THE PRESSURE ON CONSUMER SPENDING RIGHT NOW. FRANCINE: WE'VE ALSO GOT PALANTIR RESULT A LITTLE LATER TODAY, QUALCOMM AND THEN LATER THIS WEEK. WHAT ARE WE ACTUALLY EXPECTING? PALANTIR IS EXPECTED TO POST A RECORD QUARTER, MAYBE ABOUT $2.2 BILLION.
THAT WILL BE VERY DOMINATED BY SUCCESS IN THE U.S. MARKET. I THINK THE INTERNATIONAL MARKETS ARE STILL STRUGGLING A BIT. IN THAT REGARD, THE EXPANDING RELATIONSHIPS ARE GOING TO BE IMPORTANT. ARM, AMD, THE KIND OF MIX BOTH TO SOME DEGREE BENEFITING FROM THE DEMAND FOR DATA CENTER CPU, BUT AGAIN, SOME KIND OF NOISE AROUND THE MARGINS, PARTICULARLY IN TERMS OF SOME OF THE SLOWER GROWTH WE ARE SEEING FROM THE CHINA SMARTPHONE MARKET. FRANCINE: MATT, THANK YOU SO MUCH, AS ALWAYS. THE PICTURE FOR MARKETS IS ONE OF WAIT AND SEE. U.S. EQUITY FUTURES ARE ACTUALLY ADVANCING AFTER A SELLOFF IN THE AI TRADE Q. WEEK WE ALSO HAD A REPORT THAT SAID THAT PRESIDENT
TRUMP WANTS TO GIVE DIPLOMACY WITH IRAN MORE TIME, AND THAT IS WHY WE ARE SEEING BRENT CRUDE. COMING UP, IT'S THE FINAL COUNTDOWN TO THE U.S. MIDTERM ELECTIONS. WE DISCUSS THE OUTLOOK AND HOW POLITICAL UNCERTAINTY AND DISCONTENT IS ALSO SURGING ACROSS EUROPE. THAT'S COMING UP NEXT, AND THIS IS BLOOMBERG. FRANCINE: GOOD MORNING, EVERYONE AND WELCOME TO THE POLLS. OIL PRICES HAVE FALLEN. PRESIDENT TRUMP WANTS TO ALLOW STRIKES. DEMOCRATS ARE SET TO MAKE GAINS.
THE TEXT SELLOFF EASES AFTER LAST WEEK'S ROUND. WE WILL HAVE MORE ON THE MIDTERMS SHORTLY. GOOD MORNING, FRANCINE. I AM DELIGHTED TO BE JOINED BY JEFF CURRY. A REGULAR AT THE POLLS, JOINING US FROM ABU DHABI. JEFF, GOOD TO HAVE YOU WITH US. LET'S TALK ABOUT THE MIDTERMS. FRANCINE WAS TALKING ABOUT IT. WE WERE TALKING ABOUT THE MIDTERMS ALL DAY LONG. HAPPENING TOMORROW, THE IMPACT ON ENERGY MARKETS, IF THE MIDTERMS WERE TO HAPPEN, THEY ARE IN FACT HAPPENING. PRESIDENT TRUMP HAS ELUDED A HIT AGAINST IRAN WOULD HAVE BEEN SO MANY TIMES. BACK TO DIPLOMACY IS HIS LATEST REMARK. BUT WHAT HAPPENED TO ENERGY PRICES? CAN YOU SEE FURTHER UPSIDE?
THERE IS A NEAR-TERM PROMPT OIL STORY. THERE IS A LONG-TERM REGIME SHIFT THAT THE MARKETS ARE PRICING. EVERYTHING IS ABOUT THE LONG TERM REGIME SHIFT. IT GOES BACK TO SOMETHING I TALKED ABOUT ON THE SHOW REPEATEDLY, THAT ENERGY SECURITY IS PARAMOUNT TO THESE MARKETS. THAT MEANS BUILDING REDUNDANCIES IN THE SYSTEM, REBUILDING STOCKPILES. CREATING A SYSTEM THAT IS FAR MORE RESILIENT THAN WHAT WE SAW BEFORE. YOU LOOK AT US TAKE CALENDAR 27 BRENT. IT'S NEAR $99 A BARREL, NEARLY 100. WTI IS OVER $90 A BARREL. THAT IS THE STORY THAT WILL PROCESSED WELL BEYOND THE MIDTERMS. -- PERSIST WELL BEYOND THE MIDTERMS. THE REGIME SHIFT WILL OCCUR REGARDLESS OF WHAT HAPPENS HERE AT THE MIDTERMS.
TO TALK ABOUT THAT MORE IN DETAIL, WE WERE LISTENING AT THE OPENING CEREMONY TO THE BOSS OF EADNOG. HOW IMPORTANT IS SHIFTING AWAY FROM TRADITIONAL ROOTS OF TRADE AND ENERGY FLOWS? JEFF: IT'S ABSOLUTELY CRITICAL. ONE OF THE POINTS I MADE BEFORE IS THE WORD ENERGY TRANSITION WAS COINED BY JIMMY CARTER IN 1977. IT HAD NOTHING TO DO WITH THE ENVIRONMENT. IT HAD EVERYTHING TO DO WITH RESILIENCY AND ENERGY SECURITY. HIS IDEA WAS OK, WE HAVE ONE SOURCE OF ENERGY AT THE TIME, WHICH WAS OIL AND IT WAS BEING BLOCKED.
LET'S LOOK AT ALTERNATIVE ENERGY SOURCES. LET'S CREATE A PORTFOLIO OF ENERGY AND DIVERSIFY OURSELVES. THAT'S WHERE SOLAR AND WIND, NUCLEAR POWER CAME INTO THE MIX TO CREATE THAT DIVERSITY. A HYBRID CAR IS THE BIGGEST SELLING CAR RIGHT NOW. WHY, YOU CAN RUN OUT OF OIL, GAS, URANIUM, SOLAR, WIND, THE LIST GOES ON AND ON. IT HAS THE DIVERSITY WHICH PROVIDES PROTECTION. WHEN YOU LOOK AT WHAT'S HAPPENING HERE, ENERGY SECURITY DROVE THE TRANSITION UP UNTIL CHERNOBYL AND THE COLLAPSE OF THE SOVIET UNION. PEOPLE FOCUSED ON SUSTAINABILITY AND THEY FOCUSED ON AFFORDABILITY. BUT AS SOON SECURITY. STARTING WITH RUSSIA AND UKRAINE IN 2022, HEY, WAIT, THE ASSUMPTION OF SECURITY IS NOT
REALLY IMPORTANT. I WANT TO TAKE A STEP BACK AND MAKE A POINT. THIS IS A PIECE WE WROTE BACK IN 2025 CALLED THE NEW JEWEL ORDER. IT DREW UPON OSLO'S HIERARCHY OF NEEDS. FEAR, GREED AND COMPASSION. WHAT DO YOU THINK IS DRIVING THE MARKET? THE GEOPOLITICAL HEADLINES OR THE FACT THAT TRADERS AND INVESTORS ARE LOOKING AT WHERE THINGS STAND AND SAYING THE MARKET IS STRUCTURALLY CHANGING AT THE MOMENT? JEFF: THE PEOPLE ARE FOCUSED ON THOSE HEADLINES. I DON'T THINK ANYBODY FOCUSES ON WHAT'S GOING ON AT THE BACK END OF THE CURVE, BECAUSE THAT'S WHAT YOU ARE PRICING, THE NEED TO DEAL WITH THE SECURITY ISSUE. THAT REDUNDANCY IS DRIVING UP
THE COST OF EVERYTHING. WHEN WE MADE OUR SUPER CYCLE CALL IN OCTOBER OF 2020, AT THE FRONT OF IT WAS DEGLOBALIZATION, FRAGMENTATION OF MARKETS, THE NEED FOR REDUNDANT SYSTEMS AND YOU ARE GOING TO HAVE TO ELECTRIFY THE SYSTEM AS PART OF THAT ENERGY TRANSITION. ELECTRIFICATION CREATES THAT DIVERSITY AND SUPPLY THE PROVIDES YOU THAT SECURITY. ULTIMATELY, IT WILL RAISE THE COST OF EVERYTHING. YOU WILL HAVE TO BUILD MORE INVENTORY, ALL OF THAT. WE ARE MOVING TO A MARKET THAT IS JUST IN CASE VERSUS JUST IN TIME. JUST IN CASE COSTS A LOT MORE MONEY. IT GOES BACK TO THE POINT OF OSLO'S HIERARCHY OF NEEDS. IN A JUST IN CASE WORLD, YOU ARE
DRIVEN BY THIS IDEA OF SECURITY AND FEAR. HIS WHOLE POINT WAS BUILD A SECURE BASE FOR YOUR CHILDREN. THE WHOLE IDEA IS BUILD A SECURE BASE FOR YOUR ENERGY. IF YOU CAN'T TURN THE LIGHTS ON, NOTHING IS GOING TO HAPPEN. LET'S TALK ABOUT THE COUNTRIES HERE IN THE REGION. THE GCC HAS BEEN TRYING TO DIVERSIFY OIL FOR OVER A DECADE AT THIS POINT. WHAT SHOULD THESE COUNTRIES DO IN THE MIDST OF EVERYTHING YOU JUST MENTIONED? JEFF: DIVERSIFICATION. CREATING MORE OWNERSHIP OF GLOBAL FLOWS, SO YOU ARE NOT JUST TIED TO WHAT'S GOING ON IN THE REGION. SO THAT YOU HAVE ACCESS TO MARKETS IN ASIA, NORTH AMERICA, EUROPE.
OWN THE UPSTREAM, OWN THE DOWNSTREAM. OWN THE ENTIRE SUPPLY CHAIN. ALL THAT MATTERED WAS THE UPSTREAM. BECAUSE WE ASSUMED SECURITY, SHIPPING, NOW WE HAVE TO WORRY ABOUT INSURANCE. OIL REFINING, NOW YOU HAVE TO WORRY ABOUT IT. YOU WANT TO OWN THE ENTIRE SUPPLY CHAIN AGAIN. THEY ARE GOING BACK TO THE POINT THAT DIVERSIFYING A PORTFOLIO IS WHAT YOU NEED IN A FRAGMENTED AND MORE DANGEROUS WORLD. JEFF CURRY, THAT WAS THE CONVERSATION WE WERE HAVING IN ABU DHABI. BACK TO YOU. WE ARE ONE DAY OUT FROM THE U.S. MIDTERM ELECTIONS.
PRESIDENT TRUMP SAID HE MAY HAVE TO BECOME MR. VITO. THE NEW YORK TIMES FOUND DEMOCRATS LEADING IN BATTLEGROUND STATES THAT WILL DETERMINE CONTROL OF THE SENATE. THE ESTIMATES ARE ANYWHERE BETWEEN 12 AND 25 SEATS. THAT COULD HAVE AN IMPACT ON THEIR ABILITY TO PROBE THE TRUMP ADMINISTRATION INVESTIGATIONS AND THE LIKE. IT'S DOWN TO SEVEN BATTLEGROUND STATES. THE BIG QUESTION IS ARE THE POLLS RIGHT THIS TIME OR ARE THEY UNDERCOUNTING MAGA VOTERS. IN 2022 AND 2018, THE MIDTERMS, THE POLLS WERE ACCURATE. IN 2022, THEY UNDERCOUNTED
DEMOCRATIC SUPPORT. THE DEMOCRATS HAVE A PATH TO WIN CONTROL OF THE SENATE. THEY ARE GOING TO HAVE TO FLIP THREE TO FOUR SEATS IN TOTAL. MOST OF THOSE WERE IN STATES THAT TRUMP WON BY DOUBLE DIGITS. THAT WAS A HUGE CHALLENGE AND HISTORIC BY ANY MEASURE. POLLSTERS TELL ME POLLS ARE A SNAPSHOT AND NOT A PREDICTION. EVEN THESE DEVELOPMENTS IN THE LAST COUPLE OF DAYS CAN MOVE THE NEEDLE IN THESE BATTLEGROUND STATES. THESE SCENES OF WHAT HAPPENED IN MICHIGAN WITH THE DEMOCRATIC CHALLENGER ENDORSING THE REPUBLICAN, WHAT HAPPENED IN ALASKA, WHERE THERE MIGHT BE A CONFLICT IN TERMS OF RESULTS, THESE CAN AFFECT THE OUTCOME. IT SEEMS TO BE SHOWING IN STATES
LIKE TEXAS, WHICH HAVE BEEN READ FOR A LONG TIME, VERY LONG TIME FOR CONSTITUENCIES THAT HAVEN'T VOTED RECENTLY. THAT'S THE BIGGEST CHALLENGE FOR ENTHUSIASM IS ON THE SIDE OF DEMOCRATS, BUT THE MATH IS STILL REALLY CHALLENGING. FRANCINE: IS THERE A WIDER CONCERN ABOUT THE DEMOCRATS, OR IS IT A PERSONALITY CONCERN? IT'S A VERY ON SERIES OF EVENTS, IT'S VERY UNUSUAL FOR A DEMOCRAT TO ENDORSE THE REPUBLICAN CHALLENGER. IT'S HARD TO SAY WHAT THAT MEANS FOR THE NUMBERS IN MICHIGAN. AGAIN, ALL OF THE SENATE SEATS ARE VERY CLOSE TO THE MARGIN OF ERROR. I THINK IT EXPOSES THE RIFT WITHIN THE DEMOCRATIC PARTY OVER ISRAEL, PRINCIPALLY. THAT IS WHAT THE DISAGREEMENT IS
FUNDAMENTALLY ABOUT. THE CONGRESSWOMAN WAS CRITICAL OF THIS POLITICAL ACTION COMMITTEE ADVERTISEMENT THANKING ABDUL EL-SAYED, AND WANTED HIM TO CONDENSE IT. HE SAID HE DIDN'T AGREE WITH IT, THAT DIDN'T GO FAR ENOUGH. DO SOMETHING LIKE THIS SO LATE IN THE GAME, IS IT A GAME CHANGER? MANY PEOPLE THINK PERHAPS NOT. HALEY STEVENS DIDN'T HAVE A HUGE AMOUNT OF GRASSROOTS SUPPORT. ALMOST HALF OF THE ELECTORATE IN MICHIGAN HAS ALREADY VOTED.
WE WILL SEE. IT HAS BEEN PROBABLY A WEAKER CAMPAIGN FOR THE DEMOCRATS IN MICHIGAN THAN SOME OTHER RACES, BUT HE IS STILL SHOWING WELL AHEAD OF HIS REPUBLICAN OPPONENT IN THE POLLING. FRANCINE: ALSO IN THE PAST SPENT A LOT OF TIME LOOKING AT MISINFORMATION. DOES IT CHANGE THE WAY PEOPLE LOOK AT VOTING? TO PUT IT INTO CONTEXT THIS IS PROBABLY THE MOST EXPENSIVE ELECTION IN U.S. HISTORY IN TERMS OF POLITICAL AD SPEND, AND YOU HAVE INDIVIDUAL RACES IN OHIO AND TEXAS VYING TO BE THE MOST EXPENSIVE NON-PRESIDENTIAL RACE IN U.S. HISTORY. AND YES, YOU HAVE THE WHITE HOUSE PUSHING OUT AI CONTENT, THE RUSSIANS WHICH I'VE WRITTEN ABOUT WEIGHING IN, TARGETING THE DEMOCRATS WITH MESSAGES THAT ARE IN LINE WITH THE REPUBLICANS AND
I THINK THE BIG PICTURE IS I THINK YOU'RE SEEING THIS NORMALIZATION OF FABRICATED CONTENT AND THE DANGERS OF COURSE THAT WE HAVE LOST AN UNDERSTANDING OF THE COMMON FACTS, A COMMON SENSE OF REALITY. AND WHAT DOES THAT DO TO OUR ELECTIONS AS AI BECOMES MORE AND MORE SOPHISTICATED POLITICAL AD SPENDING SKYROCKETS? I IMAGINE THIS IS NOT THE END AND ELECTIONS WILL BECOME MORE AND MORE EXPENSIVE AS TIME GOES ON. FRANCINE: IS IT THE OLD-FASHIONED RALLIES THAT PRESIDENT TRUMP IS SO GOOD AT THAT WILL ENERGIZE HIS BASE, OR IS IT THESE NEW FORMS OF MEDIA? WE ARE ABOUT TO FIND OUT.
MEMBER WOULD PRESIDENT OBAMA DID WELL WITH HIS GRASSROOTS INTERNET CAMPAIGNS, THAT FEELS ALMOST PREHISTORIC COMPARED TO WHAT WE ARE FACING. BUT DON'T FORGET THE ROLE OF PRIVATE DONORS AND ESPECIALLY ELON MUSK. THE CITIZENS UNITED, THE COURT DECISION WHICH ALLOWED A SINGLE DONOR TO CONTRIBUTE HUNDREDS OF MILLIONS OF DOLLARS IS ALSO IMPACTING. BUT MONEY ALONE AND ADS HAVE A HISTORY OF NOT WINNING RACES, AND THAT IS WHERE THE PEOPLE WHO ARE WILLING TO STAND IN LINE TO VOTE IN THAT VOTER ENTHUSIASM ARE GOING TO BE SUPER IMPORTANT. FRANCINE: WILL PRESIDENT TRUMP ACCEPT THE RESULTS NO MATTER WHAT THEY ARE?
HE WILL SAY I WILL IF THEY ARE FAIR, SO THAT IS NOT VERY REASSURING. WE'VE SEEN HIM MAKE MOVES PARTICULARLY IN ALASKA CHALLENGING SAYING HE'S NOT GOING TO CERTIFY THE RESULTS IF THIS OTHER CHALLENGER WITH THE SAME NAME AS THE REPUBLICAN CANDIDATE GETS A NUMBER OF VOTES THAT WOULD HAVE PREVENTED THE DEMOCRATIC CANDIDATE FROM WINNING. YOU ARE SEEING AND POTENTIALLY CHALLENGING OTHER RACES. WE DON'T KNOW. BUT HE HAS NOT SAID I WILL ACCEPT THE RESULT OF THESE ELECTIONS UNCONDITIONALLY. FRANCINE: HOW DOES THE DAY AFTER OR TWO DAYS AFTER, HOW DOES THAT CHANGE IS FOREIGN POLICY? WHAT DOES THAT MEANS IN TERMS OF HIS RENEWED FRIENDSHIP WITH RUSSIA AND WHAT HE WANTS TO DO IN IRAN?
THE PRESIDENT MAINTAINS CONTROL OVER FOREIGN POLICY. IF DEMOCRATS DO WELL, THEY CAN TRY TO INTRODUCE SOME GUARDRAILS, BUT IT'S GOING TO BE DIFFICULT AND LET'S REMEMBER THAT EVEN WITH A REPUBLICAN-CONTROLLED CONGRESS, TRUMP DIDN'T USE THEM FOR VERY MUCH. THIS HASN'T BEEN A VERY ACTIVE CONGRESS. AS WITH SO MANY THINGS, IT IS THE MARGIN OF VICTORY IF INDEED DEMOCRATS WIN BOTH CHAMBERS, THAT WILL IMPACT THE ABILITY TO CAUSE DELAYS IN CERTIFICATION OF AN INDIVIDUAL STATE AND WHATEVER PERCEPTION THE WHITE HOUSE HAS AND THE REPUBLICAN PARTY HAS ABOUT THE EXTENT TO WHICH THE VOTE IS A REBUKE OF MAGA POLICY, DOMESTIC OR FOREIGN. WE'VE SEEN THE ESCALATION IN THE RHETORIC ABOUT RESUMING BOMBING CAMPAIGN.
WHAT IS REALLY WORRYING IS THE SUGGESTION THAT NUCLEAR WEAPONS MIGHT BE USED IF, INDEED, THERE IS A MOVE TO ATTACK PICKAXE MOUNTAIN IN IRAN, BECAUSE THAT WOULD BE A REAL GAME CHANGER. FRANCINE: AND YOU BELIEVE IN? IT CHANGES ALMOST EVERY 24 HOURS. THERE IS A LOT OF SIGNALING GOING ON. THIS WHITE HOUSE HAS A HISTORY OF TRIAL BALLOONS AND TESTING THE RESPONSE, THE REACTION FUNCTION. WE'VE SEEN FRANTIC DIPLOMACY GOING ON IN THE MIDDLE EAST THAT THE QATARI'S AND OTHERS SAY THEY ARE BRACING FOR THE WORST, BUT HOW MANY TIMES ON A MONDAY MORNING HAVE WE SEEN A POSTPONEMENT OR A DEAL ACHIEVED AND OIL PRICES COME DOWN AGAIN. I THINK THAT REPUBLICANS IN THE
WHITE HOUSE NEED TO SEE THE RESULTS EVEN IF THEY SAY THEY WANT TO CALIBRATE, THEY ARE GOING TO AND IF REPUBLICANS GET HIT REALLY HARD, I THINK CONGRESSIONAL REPUBLICANS WILL START THE PUSHBACK. FRANCINE: WHAT IS THE LATEST ON RUSSIA? I THINK THE REAL CHANGE OF THE DEMOCRATS TO CONTROL OF BOTH HOUSES IS THAT THEY COULD CONTROL TO RESTART A BILL IN JUNE, THE UKRAINE SUPPORT ACT THAT CALLED FOR $8 BILLION IN LOANS TO UKRAINE TO BUY THAT FAITH HEADWINDS IN THE SENATE. CONNECTING MORE SUPPORT TO OVERRIDE A PRESIDENTIAL VETO? THAT IS AN OPEN QUESTION. I THINK IF TRUMP DOES LOSE CONTROL OF CONGRESS HE WILL TRY TO PIVOT TO FOREIGN POLICY IN HIS LEGACY, AND HE MAY TRY TO, AGAIN, RESOLVE THE WAR IN UKRAINE, BUT GIVEN THE WAY HE'S
BEHAVED SO FAR, HE'S PUSHING FOR A DEAL ON PUTIN'S TERMS, AND SWALLOW. FRANCINE: HAS THAT CHANGED? HALF THE PEOPLE WE SPEAK TO SAY HE HAS ALWAYS BEEN MORE ON VLADIMIR PUTIN'S SIDE BUT HE HAD TO TRY TO DISGUISE IT BECAUSE OF PRESSURE FROM WITHIN THE REPUBLICANS. BUT ACTUALLY WHEN YOU GO BACK AND LISTEN, IT'S UNCLEAR HOW FRIENDLY THEY REALLY ARE. I THINK ZELENSKYY HAS MANAGED TO CHARM TRUMP AT CERTAIN POINTS, BUT EVERY TIME TRUMP TALKS TO VLADIMIR PUTIN HE CHANGES HIS TUNE. SO I THINK HE REMAINED SYMPATHETIC TO PUTIN. I THINK HE HAD MEYERSON AS SORT OF AN AUTOCRATIC STRONG LEADER, AND I THINK HE IS NOW BLAMING UKRAINE FOR THE WAR, WHICH IS JUST REMARKABLE GIVEN THAT UKRAINE HAS BEEN INVADED AND IS
JUST DEFENDING ITS OWN TERRITORY. I DON'T THINK FUNDAMENTALLY HE HAS CHANGED. I THINK HE FULLY SINCE THE PROPHETIC TO RUSSIA AND PUTIN. AND I THINK THAT'LL BE ARE GOING TO SEE AT THE NEGOTIATIONS GO ON. FRANCINE: DEPENDING ON HOW BIG THE DEMOCRATS WIN, IS THERE A DANGER THAT THE COUNTRY SPLITS FURTHER IF THE DEMOCRATS ARE TOO AGGRESSIVE WITH IMPEACHMENT AND OTHER INVESTIGATIONS? START IF THERE'S DEFINITELY A RISK DEMOCRATS SPLIT FURTHER CONNECTING PART OF WHAT WE ARE SEEING WHETHER IT IS ABDUL EL-SAYED OR OTHER CANDIDATES IS THAT THE DEMOCRATIC SOCIALISM, THE PROGRESSIVISM IS OLDER MILLENNIALS COMING TO THE FLOOR. JD VANCE AND MARCO RUBIO ARE PART OF THIS. THIS IS ALSO KIND OF A TESTING
GROUND FOR NEW IDEAS, THE ISRAEL POINT IS AN IMPORTANT ONE. THERE WERE SOME EXPERIMENTATION GOING ON BECAUSE WE HAVE SEEN THE OLD GUARD ON BOTH PARTIES REALLY IN THE DRIVER'S SEAT, AND I THINK 2028, IT'S NOT TOO SOON TO START TALKING ABOUT PRESIDENTIAL ELECTIONS IN 2028 AND HOW THEY ARE GOING TO BE ABOUT THIS BATTLE FOR IDEAS BECAUSE YOUNGER PEOPLE IN AMERICA, AMERICA HAS GOT A YOUNGER ELECTORATE THAN WE HAVE HERE IN EUROPE. THEY SKEW DIFFERENTLY ON A NUMBER OF ISSUES. FRANCINE: SO INTERESTING. THANK YOU BOTH FOR JOINING US. I KNOW WE ARE GOING TO TALK ABOUT THE MIDTERMS ALL DAY AND THEN THE DAY AFTER. COMING UP, RYANAIR APPEARS TO EMBARK ON A COST-CUTTING DRIVE TO OFFSET A FUEL SURGE. WE WILL HAVE THE DETAILS NEXT,
AND THIS IS BLOOMBERG. WE ARE LOOKING AT ABOUT A $2 BILLION INCREASE, EXCLUDING DOLLARS THIS YEAR, COULD RISE TO $8 BILLION NEXT YEAR. WE PAID OFF ALL OUR DEBT, WE ARE REDUCING OUR FINANCING COSTS. 20% LESS FUEL, BUT WE ARE LOOKING AT EVERYTHING. AIRPORT COSTS, HANDLING COSTS. AND UPPER DEBATE, PROBABLY A PAY FREEZE NEXT APRIL FOR CABIN, CREW, AND THE MANAGEMENT TEAM AS WELL. FRANCINE: THAT WAS RYANAIR CHIEF EXECUTIVE MICHAEL O'LEARY SPEAKING TO US A BIT EARLIER. A 15% PROFIT DROP IN THE FIRST
HALF OF THE YEAR. THE LOW COST CARRIER SAID IT WILL BEGIN WHAT IT DESCRIBES AS A COST PURGE ACROSS THE BUSINESS AS IT LOOKS TO OFFSET A 2 BILLION EURO INCREASE IN FUEL CHARGES NEXT YEAR. WITH US NOW IS KATE DUFFY OF BLOOMBERG AEROSPACE. ALWAYS GOOD TO SPEAK TO YOU. TALK TO US ABOUT THE NUMBERS. EARLIER THIS YEAR THE UNCERTAINTY AROUND THE MIDDLE EAST WERE REALLY MAKE CONSUMERS MORE HESITANT TO BOOK FLIGHTS AND TRAVEL. AND THEY ARE ALSO BOOKING LATER AS WELL, SO CLOSER TO THE DEPARTURE DATE. THAT ALWAYS CREATE SOME UNCERTAINTY FOR AIRLINES. ALSO WITH UNIT COSTS, THOSE ARE MUCH HIGHER IN THE FIRST SIX MONTHS OF THE YEAR BECAUSE OF
THE PORTION OF UNHEDGED JET FUEL THAT RYANAIR HAS AND THEY HAVE MORE EXPOSURE TO IT. SO THIS IS SOMETHING THAT IS REALLY GOING TO CARRY ON UNTIL NEXT YEAR. MICHAEL WAS SAYING EARLIER THAT PROFITABILITY, THEY JUST DON'T PRICES. THEY'VE ALREADY TRIMMED THE WINTER SCHEDULE, SO THEY TAKE IT OUT ROUTES FROM THE NETWORK. THEY'VE TRIMMED A FEW ROUTES, SO WE JUST NEED TO SEE HOW NEXT YEAR GOES. FRANCINE: IF THE COST-CUTTING PLAN ENOUGH TO OFFSET THE HIGHER OIL PRICES? THAT'S THE BIG QUESTION. COST-CUTTING IS IN THEIR DNA.
THEY ARE VERY GOOD AT JUST SHAVING OFF PART TO THE BUSINESS THAT AREN'T BRINGING IN ANY REVENUE. BUT THIS NEW COST-CUTTING PROGRAM INVOLVED CUTTING DOWN AIRPORT COSTS, HANDLING COSTS. THEY ARE REVIEWING PAY FOR MANAGEMENT, CABIN CREW, PILOTS, AND EVEN LOOKING TO INTRODUCE AI INTO THE COMPANY FEATURES. THAT WILL HELP IN TERMS OF DRIVING THE COSTS DOWN. FRANCINE: KATE, THANK YOU VERY MUCH. A NET OUTFLOW OF $3.6 BILLION IN CRYPTO ASSETS AFTER CUSTOMER WITHDRAWAL FROM SUNDAY. THAT IS BILLETED THE SOFT BLOAT WITH OVERALL BUSINESS IN THE WAKE OF THE LARGEST DIAPER THEFT IN HISTORY.
THIS IS ONE OF THE MOST INCREDIBLE STORIES, SO WHAT IS THE UNDERLYING SENTIMENT? IT HAS BEEN RELATIVELY CALM, WHICH IS SURPRISING. YOU WOULD THINK THEY WOULD BE A LOT OF PANIC GOING ON, BUT BINANCE IS A HUGE COMPANY. IT'S RELATIVELY EXPECTED TO BE WELL-CATALYZED. JUST BY THEMSELVES FROM THEIR REVENUE THIS YEAR ALONE. BITCOIN IS NOT WITH HER PANICKING SO MUCH, IT HAS LOST ABOUT 5% AND EVERYBODY IS JUST KIND OF WAITING FOR THINGS TO GO BACK IN PLACE. A LITTLE BIT OF THE DRAW SO FAR, BUT FINANCE HAS ABOUT 135 BILLION DOLLARS IN ASSETS ON THE PLATFORM, SO THAT IS A DROP IN THE OCEAN.
THERE IS AN ELEMENT IF PEOPLE START PULLING THINGS OUT, WHERE THEY PUT THEM? FOR YOUR BORROWING STABLECOINS, SOME OF THE PLATFORMS EXPERIENCED SOME INSTABILITY BECAUSE THIS IS WHERE THE HACKERS WERE ALSO TAKING THEIR MONEY TO LAUNDER IT, BUT IT'S NOT GOING TO BE THE 2022 X FOR THAT WE ARE ALL FAMILIAR WITH. FRANCINE: MY FIRST REACTION WAS DIFFICULT HAPPEN TO BINANCE, IT COULD HAPPEN TO ANYONE. OR WERE THERE FAILURES IN THE BINANCE SYSTEM? IN THIS PARTICULAR CASE, THERE WAS AN ATTACK MADE BY THIS GROUP THAT STEMS FROM ONE OF THE NORTH KOREAN HACKING GROUPS. THERE WERE OTHER POINTS OF FAILURE THAT WE DON'T KNOW YET AND IN THIS PARTICULAR CASE, IT DOES SEEM TO BE KIND OF A VERY
CLASSIC HACKING. THEY TARGET ONE PERSON, THEY DID COMPANY INFRASTRUCTURE. IT'S NOT THE KIND OF THING WE'VE BEEN SEEING IN TERMS OF AIV AND USE OF MASSIVE SCALE. THAT DOESN'T MEAN TO SAY THAT A CAN'T BE SEEING AI REFERENCED A LITTLE BIT AND SOME OF THE LATEST CASES, BUT WE ARE STILL WILL BE. FRANCINE: EMILY, THANK YOU SO MUCH. CLOSER TO HOME TODAY WE WILL BE HOSTING A LIVE HUMAN DAY ON WHAT LAGARDE'S EXIT MEANS FOR THE ECB AND FOR EUROPE. THAT IS AFTER CHRISTINE LAGARDE ANNOUNCED SHE IS LEAVING THE ECB IN FEBRUARY. THAT DISCUSSION IS AT 1:00. BLOOMBERG SUBSCRIBERS CAN ALSO SEND QUESTIONS TO BE ANSWERED IN REAL TIME.
UP NEXT, IT IS "BLOOMBERG BRIEF."
