[Music]
news makers and market movers.
This is The Pulse with Francine Laqua.
>> Well, good morning everyone and welcome
to the Pulse. I'm Francine Laqua here in
London. Now, President Trump says he has
pitched a one-on-one meeting with with
the Russian President Vladimir Putin and
the Ukrainian leader for Vladimir
Zalinski. Now, that would be followed by
a trilateral summit involving all three
of them. It comes after his Monday
meeting with Zilinski and several
European leaders at the White House.
Now, anxious to avoid the disastrous
shouting match that ruined his last
visit, Zilinsky repeatedly thanked
President Trump for his involvement. The
gathering was a win for Western allies
who'd flown to Washington in a bit to
steer President Trump away from a quick
deal with Russia at Ukraine's expense.
While security guarantees for Keefe were
the key focus of the meeting.
>> In a very significant step, President
Putin agreed that Russia would accept
security guarantees for Ukraine. And
this is one of the key points that we
need to consider. And we're going to be
considering that at the table also like
who will do what essentially. I'm
optimistic that collectively we can
reach an agreement that would deter any
future aggression against Ukraine and I
think that the European nations are
going to take a lot of the burden. We're
going to help them and we're going to
make it very secure.
>> It's important that the United States
send a clear signal that it will be
among the countries that helps
coordinate and participate in security
guarantees for Ukraine. I believe this
is a big step forward. While I can't yet
disclose all the details, the political
will and decisions are already in place
and that's what's important.
>> Well, joining us now is Carl Built. He's
co-chair of the European Council on
Foreign Relations and of course former
Prime Minister of Sweden. Mr. Build,
thank you for joining us. What was your
main takeaway from what we saw in the
White House yesterday?
>> Well, I think the most important thing
that happened was really what did not
happen. I mean the European leaders
rushed to Washington after the disaster
in Alaska in order to prevent Trump from
sort of forcing Silinski into some sort
of dirty late deal. Uh that did not
happen. That was success. Um then as for
the rest, he still seems to be very
reluctant to uh urge a ceasefire of the
sort that was the centerpiece of the of
the western approach up until Aliaska.
And uh whether these bilateral meetings
that Trump is talking about will
materialize remains to be seen. Details
on security arrangements, that's good
that there was a discussion, but the
devil is in the detail. So remains to be
seen, but it prevented something that
could have been even worse.
>> So Mr. Built, we did spend a lot of the,
you know, the better half of the early
part of the week talking about Alaska
and how it was a clear win for Vladimir
Putin. Is it now less of a win or is it
still a Putin win, but the Europeans at
least were united and got a seat at the
table?
Well, Alaska is still a win for Putin
because what Putin managed to do in in
Alaska was of course to say to Trump,
forget about this ceasefire thing. Um,
and uh, prior to that, of course, Trump
has said, ceasefire, ceasefire, and if
you don't do ceasefire, I take measures.
All of that went out through the window
and that that wind remains.
Unfortunately, you heard some of the
European voices, MZ and Macron saying
yesterday, we need a ceasefire. uh but
Trump doesn't seem to be receptive to
that. But uh what happened yesterday was
that uh he he did not pressure Sinski
into making sort of these land swaps
that he evidently discussed with Putin.
Says land swaps or whatever you call
them are for Sinski and Putin to
discuss. Fair enough. And try to set up
a meeting between the two of them. Fair
enough. Is that going to happen?
Unlikely, I would say.
What do you think happens from now until
the end of the year? Do we even is
there, you know, a 15 or even higher
percent chance of of some kind of truce
or peace?
>> I think likelihood is less than it was
before Aliasa and I don't think the
meeting yesterday changed that very much
unfortunately.
>> I mean, I guess there are a couple of
things of course that that you know that
Europe wants to focus on. um it's
working on this trilateral meeting uh
possibly trying to have a little bit
more policy substance on what kind of
backing the US would have and then the
word and then the third is basically
giving up land. What do you think of
those three is is the most achievable.
>> Well, I I think giving up land is going
to be very difficult for for Silinski
particularly the the the giving up land
that Mr. would been asking for the
remaining of the Dyetsk region that is
really heavily defended areas that the
Ukrainians have been defending with
great success now for 30 or 32 months or
whatever it is by now that they should
give that up their well fortified
positions. I I think that's extremely
unlikely. It's not going to happen. So
we can forget about that for the time
being. uh whether there are other things
that can be sorted out in the bilateral
meeting that remains to be seen but so
far we have seen uh Mr. Putin very
reluctant to engage directly with uh Mr.
Silinski um they have these talks on a
lower level that produces very little uh
Mr. Putin of course prefers to deal with
Mr. Trump because he believes that he
can get Mr. to Trump to agree to certain
things which so far has proved to be
correct. So exactly where we are a
couple of weeks down the road, we are
probably further along when it comes to
discussing some sort of security
guarantee for the rather uncertain time
when the war has ended.
>> That's not a bad thing to why do you
think I mean actually the question is
probably is is Vladimir Putin now
normalized? Is he has he come back, you
know, uh, into international politics
because he was uninvited on US soil and
what's the reason President Trump has
done this?
>> Well, I mean, from from from the Russian
point of view, uh, Allesco was a
triumph. Um, the Russians have all the
they had this nostalgia for the old days
when the Soviet Union and the United
States were the two superpowers and the
two of them could have their summit
meetings and decide the future of the
world. Um, and uh, this looked like it
was back to the old days uh, with all of
the bombers flying by and honors and
whatever. Uh, so they're immensely
satisfied with the optics of it. And
they are satisfied also with the
substance in the sense that he got got
him off threats uh, if he didn't do a
ceasefire.
They're probably less satisfied after
yesterday because they had probably
expected Trump to put very heavy
pressure on Silinski to do some sort of
land deal. It doesn't seem like he did
that at all, which is a good thing. Um,
so the next step between Moscow and uh
and uh Washington remains to be seen. I
understand that sort of JD Vance and
Mark Rubian are going to task with
setting up that bilateral Silinski Putin
meeting. Um the best of luck to the
gentleman.
>> Yeah, Fred M I think says that the Putin
Zilinski talks could take place within
two weeks. Emanuel M says the trilateral
then with also President Trump may be
held within 3 weeks. Can any uh concrete
action happen with so little time?
>> Unlikely I would say. I mean nothing is
to be excluded in the world but but but
I I I I would I would not put very many
money if any money at all on there being
a bilateral meeting within two weeks and
a trilateral meeting within 3 weeks. I
think that is uh still still very
unlikely.
>> Uh Mr. Bolt, maybe final question on we
understand of course that the Europeans
really wanted to make sure that the US
promised to underwrite the future of
Ukrainian security and that was central
to the discussions yesterday. What do
you think will happen in that space?
>> Yeah, there was already some sort of
movement. Exactly what it was remains to
be seen. Uh they are saying they're
going to work further on it on the
details of it in the next few days and
weeks. And I think that will be
important to find out what that actually
is when and it is of course long-term
very important when there is an end of
the war and some sort of I don't think
it's going to be peace but end of the
fighting um and we resume the process of
EU accession and all of that for
Ukraine. We need also to help with the
security of Ukraine and the Europeans
can do and will do a lot but there's a
need for some sort of US engagement in
that and clearly the Americans opened up
for that. That is very important but
exactly what it entails
uh the devil is in the detail as I said
but exactly what it entails remains to
be seen but work in progress and uh in
the right direction.
Thank you so much. As ever, great to
speak to you again, Carl Built there,
the co-chair of the European Council on
Foreign Relations and the former Prime
Minister of Sweden. Now, SoftBank has
agreed to buy two billion dollars worth
of Intel stock in a surprise deal to
shore up the struggling US chip maker.
Meanwhile, Bloomberg has also learned
that the Trump administration is in
discussions to take a stake of about 10%
in the company. Let's get more with our
Tom McKenzie. Tom, thank you so much for
joining us. So first of all, what's the
motive behind uh you know the SoftBank
stake?
>> Yeah, there's a couple of key clear
takeaways from this news that SoftBank
is investing $2 billion US dollars in in
Intel. One is about the SoftBank
ecosystem itself. So Masioan really
trying to build out their stakes, his
position in terms of the infrastructure
that's underpinning this AI revolution.
So of course they they own ARM which has
some role to play. They have investments
in Nvidia, they have investments in TSMC
and now they have investments and will
have this investment in Intel. So it's
part of that as Masayoshi Sun is trying
to get more exposure to the upside
that's come through from AI and so far
that exposure he's had has been
relatively limited. The other key
takeaway is that this is a vote of
confidence clearly for Intel that has
been under pressure because of cost
cutting because of jobs because of the
the the fact that they're paying catchup
to Nvidia when it comes to AI
accelerators. But it's also a vote of
confidence in the Trump administration
strategy quite frankly of reassuring a
lot of that chip manufacturing capacity
back to the US and and Massa and and
SoftBank were pretty clear that they
believe that that is going to be
successful and that this is partly a bet
on that story of a US resurgent on the
back of chip manufacturing.
>> And what more do we know about the US
government's plans to buy a stake in
Intel? So of course Bloomberg had
reported last week that they were
looking at buying the stake and now we
have more details on how that could form
up and how that could shape up. So
potentially 10% stake. So the US
government would in that scenario be the
biggest shareholder of Intel. And what
you'd be looking at doing according to
our reporting is potentially changing
the investments that Intel has received
from the chips act the subsidies into
equity holdings. So far Intel has
received about$2.2 billion US through
that US chips act. It is on track to
receive close to 11 billion and the idea
is that you convert those subsidies into
a US government equity holding in Intel.
There's a big focus from the Trump
administration on the projects they had
lined up in Ohio, massive foundaries,
manufacturing chips. Those have been
delayed because repeatedly because of
the cost overrun and the fact they don't
have major clients, major customers to
buy from those foundaries. The Trump
administration wants to make sure that
those plans go ahead and this seems to
be part of that direction. But it's also
a reminder that the Trump administration
now is piecing together something of an
industrial strategy. They invested in a
rare earths mineral company. They're
they're taking 15% of revenues from from
Nvidia and and AMD in terms of those
sales into the Chinese market. So it's
broader of a bigger picture as well.
>> Yeah. And it's interesting the fact that
you know the Intel chief executive was
definitely the target of of Donald Trump
and then went to the White House to try
and and pivot him. Tom, thank you so
much. Tom McKenzie on the very latest
with Intel. Coming up, we talked to Bill
Browder, founder and chief executive of
Hermitage Capital. The prospects for
Putin's meeting. That's next. And this
is Bloomberg.
Well, President Trump has caused
Vladimir Putin to urge him to begin
making plans for a summit with the
Ukrainian President Vladimir Zilinski.
Now attention is now firmly on Putin and
whether he would agree to direct talks
before a possible trilateral meeting to
include the United States. Well, my next
guest was the largest foreign investor
in Russia in the 1990s. He's the author
of the best-selling book Freezing Order,
a sequel to Red Notice. He continues his
fight for justice after his lawyer,
Sergey Manitzki, was murdered in a
Russian prison. Bill Browder, a chief
executive of Hermitage Capital, joins us
now. Bill, thank you as always for
giving us a little bit of your busy
schedule. I know you um you know know
Russia and also Putin quite intimately.
How did he turn the situation around to
actually have a pretty good week on the
on the international front?
>> Well, there there's this strange um
affection, affinity, and respect that
comes from Donald Trump and and for
reasons that almost nobody can
understand. Um Donald Trump does not
want to um offend Putin. He does not
want to punish Putin. and he somehow
wants to be friends with him and and
Putin has taken advantage of this and
and um and I should point out it's not
he's not the only president that that
started this way. There there was George
Bush looked into Putin's eyes and saw
his soul. Barack Obama wanted to do a
reset, but but this one is particularly
um difficult because Putin is in the
middle of a of a war of aggression
murdering Ukrainians. And so this this
respect that that Trump has for Putin
and and the difference which he gives
him, Putin has played it for all it's
worth and and you know that Trump had
threatened really crippling uh uh
secondary sanctions on on the sale of
Russian oil if Putin didn't come to a
ceasefire. And I think that was the that
was the thing that that triggered Putin
to come to Alaska. And in Alaska, we
don't know what went went on behind
closed doors, but at the end of that
meeting, there were no crippling
sanctions and all of a sudden, there was
no demand for a ceasefire.
>> Yeah. And we saw I mean, I thought we
saw actually a pretty impressive
diplomatic initiative by Europe
yesterday, showing up at the White House
trying to support President Zilinski as
much as they could. I think Chancellor
Mertz also asked for a ceasefire. Is it
I mean, where are we now? Could we
actually see some kind of agreement
between Ukraine and Russia or is this
wishful thinking?
uh there there's not going to be any
agreement between Ukraine and Russia. Uh
one of the things I read this morning
was a readout from the Kremlin of the
phone call that they had last night um
between Trump and Putin. And the readout
from the Kremlin is totally different
than than what everyone else is talking
about. What the the there's the the idea
that there's supposed to be a bilateral
meeting between Zilinsky and Putin is
not what the Kremlin is talking about.
The Kremlin is is in their readout is
saying that it's been agreed that there
should be um more meetings between the
Russian government and the Ukrainian
government which they've already had.
And then it went on to say and in that
context um the meeting should be higher
level. Um that in in no way, shape or
form are they agreeing to a meeting
between um Putin and Zilinski. and and
taking a big step back from this whole
thing, it's very clear to anyone who
knows what Putin is up to that he
doesn't want to end this war and he
doesn't want to end the war on on all
all any terms that we we've been
floating around out there about land
swapping or anything like that. What
what Putin wants to do is is a total
subjugation of Ukraine. He doesn't want
Ukraine to be um a independent sovereign
country anymore. He doesn't want Ukraine
to have a military. He doesn't want
Ukraine to um uh have any type of of
independence, any foreign protection. He
wants Ukraine to be part of Russia. And
that's been his goal ever since the
beginning of this whole uh terrible war.
That's continues to be his goal. Um the
the one one thing you can say about
Vladimir Putin is he's very transparent.
He he hasn't he hasn't been in any way
saying anything other than that. And so
for for everybody to be talking about um
you know security arrangements for
Ukraine, we're getting we're putting the
cart way before the horse because Putin
doesn't want to do that. Putin wants
this war to continue and he wants to win
this war.
>> So Bill, a couple of questions on the
back of that. Why does Donald Trump say
that Vladimir Putin want peace? And
actually, how do you think the fact that
Vladimir Putin showed up in Alaska on US
soil? How is that playing out back home?
Well, it's so Putin's Putin's meeting in
Alaska was the biggest success he could
have ever had. Um, first of all, it was
symbolically amazing to to have the red
carpet rolled out on American territory,
to have Donald Trump um applaud him. Um,
that that couldn't be better from a
symbolic standpoint, but from a
substantive standpoint, um, I believe
that his main objective is to continue
the war. And he was allowed to continue
the war. And his second objective was
not to have crippling economic sanctions
imposed on his oil industry. And he was
somehow able to continue the war, no
ceasefire and without any crippling
economic sanctions. And so now he can
drag it out and and make all sorts of um
uh you know slight um you know uh
intimations of peace to Trump so that
the the these negotiations go on into
perpetuity and he can can continue to
war until you know he he hopes we give
up. that that's his that's his goal.
That's his idea and that's what he'll
continue to do.
>> So, could you see a situation where
Donald Trump actually normalizes I guess
um you know relationships with the with
Russia economically in terms of
businesses, but where the bombing of
Ukraine continues.
I I I don't see that happening for one
simple reason, which is what we saw
yesterday at the White House, which is
that um it would be so against world
opinion, first of all, against US
opinion, but against world opinion. The
fact that you had all these heads of
state all showing up at the White House
telling Trump, you know, Putin's a bad
guy, don't give into him. That that that
that's what the message was, you know,
don't attack Zilinski. Be tough on
Putin. and and Trump is is influenced by
that. I mean, it was a very flattering
thing for Donald Trump to have the
entire, you know, important people of
the world all converge with like 24
hours notice on the White House to to
make this point. And and um and you
know, he was he was his ego was was
stroked. He was flattered and he's not
going to go against the world so
dramatically with everybody all coming
in and showing him that difference.
Bill, do do you see any progress on
Europe seizing the 200 billion euros in
in Russia central bank assets frozen in
Europe to help Ukraine?
>> Well, I I I see um sort of marginal
progress and and it's it's very
important. This is this is a potential
gamecher for Ukraine. The United States
has stopped funding military aid for
Ukraine and the money needs to come from
somewhere. um the United Kingdom and
most other European countries don't have
the money to fill in the gap from where
the United States was and so it's got to
come from somewhere and the economic
realities will say that that money
should come from Vladimir Putin and that
money is sitting sitting on account 200
billion it's sitting on account at euro
clear in Belgium and it's sort of the
obvious thing um I think the economic
realities have to overcome the political
hesitation but I see that coming I I see
a lot lot of um movement in that
direction Because at the end of the day,
money is needed to continue to defend
Ukraine and that's got to be where that
money comes from.
>> Bill, as always, thank you so much. Sir,
Bill Browder, there chief executive of
Hermitage Capital. Now, let's talk a
little bit about the markets. We're
joined by Venram from our markets live
team. A lot of the talk this week, of
course, is on geopolitics, but what do
you make of the currency on bond market
reaction to news on Russia and Ukraine?
>> Morning, Francine. I think that the
markets are a bit all over the place.
They're they're a bit little bit
subdued. Uh principally for the reason
that your previous guest Bill Browder
was mentioning you know Kremlin seems to
be on a completely different page here
and the markets are questioning how far
this peace dividend and peace initiative
can go. There is still a lot of hoops to
jump through before the markets will
catch on to the glee. If you look at oil
prices, they haven't moved to lower much
at all. So the markets seem to be and
equity prices are sub subdued as well in
Europe and that seems to suggest that
the markets are questioning this peace
dividend and how far we can get there
and how quickly we can get there. So the
it at the moment the markets are saying
yes it's progress has been made in the
past 48 72 hours but the question marks
are still big and large and looming.
So vent, traders onto the Bank of
England. Traders now reckon that the BOE
won't be able to cut rates this year.
Are they positioned right?
>> Well, they're both right and wrong,
Francine, because they're right because,
you know, there is very little room for
the Bank of England to be able to cut
rates. Uh, you know, you we've got the
July inflation data coming up tomorrow
that is expected to show a print of 3.7%
on the headline inflation. Core
inflation is likely to hover around 4%
and services inflation is already around
5%. None of those metrics are clearly
anywhere near the 2% BOE target. So the
markets are saying look it will be a
policy mistake if they cut rates in
November. So they are signing a very low
probability of that event. But what we
can't forget that is that the Bank of
England at least quite a few members on
the policy committee are doubbishleaning
and they carried the weight through in
August to ensure a rate cut. And even
though the Bank of England thinks that
inflation will peak down the line at 4%,
they seem to be wanting to cut rates
which will be a policy mistake. And even
though because of that you know there's
the risk that because of the doubbish
leanings it can't be ruled out that they
can't cut further. So they're both right
and wrong for the reason right because
there is no policy room wrong because
the po bank of England may still
shoehorn in another rate cut
>> very quickly but in 20 seconds. German
yield curve pretty steep now. Where do
we go from here?
Well, I think that that steepness is
going to persist for some more time to
come because of the Dutch pension fund
reform that is realtering the demand
status for swaps and that swap curve is
is having an impact on what is happening
with the yield curve as well. So that's
going to persist in the short term.
>> Vent as always thank you so much Ven Ram
there. You can find him of course on the
Bloomberg terminal and on our website.
Coming up, we'll discuss where to find
investment opportunities in emerging
markets amid Trump's trade war and
political uncertainty. That's next. And
this is Bloomberg.
Good morning everyone and welcome to the
pulse. I'm Francil Laqua here in London
and these are your top stories. Donald
Trump pushes for a bilateral meeting
between Putin and Zalinski with the US
and European allies now promising
security guarantees for Keefe. Indian
Prime Minister Narendra Modi hails
Vladimir Putin as a friend as his
government also moves to bolster
relations with China. Plus, a surprise
from SoftBank. The Japanese investor has
agreed to make a $2 billion investment
in Intel. this as the US considers
taking a 10% stake in the chipmaker.
Now, President Trump says he's called
making plans for a summit with Vladimir
Zilinski. It comes after his meeting
with the Ukrainian president and several
European leaders at the White House on
Monday.
>> I think that we had very good
conversation with President Trump.
>> Very good.
>> And it really was the best one uh or
sorry, maybe the best one will be in the
future. I think if we play this well, we
could end this. And we have to end this.
We have to stop the killing. We have to
stop the destruction of Ukraine's
infrastructure.
>> Now, we are here um to work together
with you on a just and lasting peace for
Ukraine. Stop the killing. This is
really our common interest. Stop the
killing.
>> The next steps ahead are the more
complicated ones. Now, the the path is
open. you opened it last uh Friday, but
now the way is open for complicated
negotiations.
>> Everybody around this table is in favor
of peace
and uh and we work very hard and we've
worked very hard during the past few
years to have a peace which is a robust
and long-standing peace.
>> Well, joining us now is Oliver Crook in
Brussels. Alis, what more do we know
about the security guarantees for
Ukraine?
Yeah, I think that this is kind of the
main takeaway that we've got since this
meeting that happened with Trump and
Putin on Friday and over the weekend.
This idea beginning to emerge from a
number of Trump's advisers, namely um
Steve Whit, that there would be these
sort of article 5 style guarantees that
would in some way be furnished by the
United States. They would be part of the
security architecture. And I think for
European leaders, that is really the
thing that they needed to hear. I think
they will be very reassured that in
their trip to Washington DC yesterday,
this is something that was not just a
sort of flash of the pen that was
mentioned by a few advisers over the
weekend, this is something that Donald
Trump reiterated. Now, there's still a
lot of ambiguity around what the article
5 style guarantees mean. Does this mean
basically a kind of de facto NATO
membership for Ukraine without calling
it NATO? Would it mean that the United
States would enter a military conflict
theoretically if ever Ukrainian
sovereignty were imposed on again after
a peace negotiation? Then there are also
a lot of other questions about the idea
of troops on the ground. What European
nations would be willing to sort of
commit them. I think that what the
European leaders in Zilinsky have
learned from dealing with Donald Trump
particularly on the issue of Ukraine is
to not be the problem. Do not complicate
the situation. So as a consequence all
of these European leaders who showed up
in a huge number yesterday in Washington
DC showed a very unified front. What
Francine that paper's over are a lot of
very difficult conversations that are
going to have to happen domestically
when they get back home. It is all about
how the Europeans are going to pay for
this potential security guarantee going
forward. And of course, many of the
German officials that I have spoken to
and a number of other European leaders,
not everybody is totally convinced about
the idea of sending their own military
troops within Ukraine that might have to
theoretically return fire if Russia were
to once again uh impose on Ukraine. So
these are some of the very difficult
conversations that are now beginning.
But one of the great sort of takeaways
from the last couple of days is that
there is work being done at the very
highest level by the United States and
the Europeans to try to hammer out what
this article five like um structure will
actually look like.
>> Uh Ali, what is the likelihood of this
bilateral meeting between Zilinsky and
Putin and then the trilateral one
involving President Trump?
Yeah. So, what we know so far about that
is that President Trump spoke to
Vladimir Putin after the conversation
with European leaders. And I'll just
quote from him here what he put out on
Truth Social shortly after the meeting.
He said that at the conclusion of the
meetings, I called President Putin and
began arrangements for a meeting at a
location to be determined uh between
President Putin and President Zalinski.
After these meetings take place, I will
have a trilat and that would be the two
presidents plus myself. We're starting
to see a little bit of reporting from uh
some agencies across the wire. Um
Reuters saying that that me that meeting
could potentially happen in Hungary over
the next two weeks. I would take all of
that with a grain of salt because nobody
expected, for example, the Trump and
Putin meeting uh to take place um in uh
in Alaska. That being said, there were
still a number of European leaders that
were saying that basically it's
impossible to imagine a trilateral
meeting and to have these active
discussions without a ceasefire. And we
should say that ceasefire is not
something that is a Trump priority. um
after that meeting with Putin. So these
are going to be kind of the things to
watch over the next couple of weeks.
Could that be the bilat in the next two
weeks and potentially the trilat the two
weeks after that? That being said,
Francine, we're doing a little bit of
guessing because there are a lot of
unanswered questions still.
>> Yeah, many unanswered questions. It was
interesting listening to Bill Browder
saying that he read also the Kremlin
transcript but had a different version
to what we've been told in the West.
Ali, thanks so much as always. Oliver
Crook there in Brussels. Now the Indian
Prime Minister Narendra Modi has hailed
Vladimir Putin as a friend after
discussing bilateral cooperation with
the Russian leader. The call comes as
Mod's government also moves to bolster
relations with China. Now Modi is due to
meet with the foreign minister Wangi
today as both nations push to normalize
normalize relations amid diplomatic
tensions with the US. We share develop
confidence to dispel interference,
expand cooperation and to further
consolidate the momentum of improvement
and development of China India relations
so that while pursuing our respective
rejuvenation, we can contribute to each
other's success.
Having seen a difficult period in our
relationship, excellency, our two
nations now seek to move ahead. This
requires a candid and constructive
approach from both sides.
>> Well, for more, let's bring in Sudi
Ranjan Sen, our government reporter in
New Delhi. Thank you for joining us. So,
what can we actually expect from Wang's
meeting with Modi later today?
>> Well, we're not expecting uh any major
announcements from it, but the very
messaging of it, the very optics around
the meeting is what you know, one is
watching out for. Prime Minister Modi is
is going to China later this this this
month. It is his first visit in seven
years and therefore just shows the kind
of you know frostiness that was there in
the relation in the past uh few years
and how things have really turned around
and it happens amid uh you know
President Trump threatening uh you know
penalties on the on India slapping India
and China both with very high tariffs.
Of course the China tariffs have been
held in obeyance. So there is you know
this this is happening at a time when
there is a rethink uh perhaps in India
as to which way should India forge and
go ahead in its foreign relationship and
that is why this meeting uh with Wangi
is important and the meeting with uh in
in Beijing uh which we expect later this
month with between Prime Minister Modi
and President Triinping.
>> So Modi also spoke with Vladimir Putin
on his recent peace talks with Trump.
What do we know about that?
Well, I mean what we know about that is
is from the readouts that we have seen
and from the briefings that we've got
from from in the Indian side largely
discussions were around uh the uh
Putin's discussion in Alaska. He briefed
Prime Minister Modi of what all happened
and the two leaders then continued to
discuss uh the bilateral relationship.
This is important because it comes at
again it comes at a time when President
Trump had threatened India and we have
seen his aids uh you know kind of
squarely blaming India for funding
Putin's war machine which India kind of
denies very viferously. So these kind of
the the call takes place in that
background and India clearly hasn't
backed away uh from its Russia
relationship or given any indication
that it is willing to you know scale
down its engagement with Russia.
Sudi, thank you so much as always. Our
government reporter there, Sudi
Ranjansen. Now joining us now is Julia
Pellegrini, emerging markets portfolio
manager at Alian Global Investors. Thank
you for joining us, Julia. I mean
there's many questions on India and
China. But I mean, how is India actually
rechanging uh geopolitics at the margin
and what does that mean for investment
in the country?
>> Interesting times indeed. I mean the
saying that your enemies enemies your
friends comes to mind at this time.
Obviously India has to play well because
it has invested a lot in developing a
strong relationship with Mr. Trump. Uh
President Modi himself personally has
invested a lot in this given that he was
very close to him during Mr. Trump's
first term. So recent news headlines
around tariffs on India up to 50% in
case they don't stop buying Russian oil
have come as a real shock to the Indian
leadership and to India as a whole. So
this attempt to uh warm up relations
with China isn't surprising. India is
very much at the center of what we're
calling now multipolar world and it's
likely to continue to engage
constructively with both sides. We just
heard uh President Modi calling
President Putin. So we think it will
continue to again engage constructively
with all sides. It cannot afford to do
otherwise. Half of its exports going to
the US will be subject to sanctions
otherwise. So a lot more to see here but
we don't expect uh meaningful concrete
steps taking place in the very short
term. So we see a lot of headlines a lot
of uncertainty but that doesn't mean
that an India isn't an investable market
for us alongside many of the other
emerging markets that we've seen sort of
battered by headlines but there's
opportunities on the ground that we're
picking up.
>> So Julie I was going to ask you about
some of the opportunities. First of all
what asset class in India looks
attractive or could be attractive in the
coming quarters. So we've seen
interesting moves in the Indian local
bond space. Last year obviously a lot of
interest because of their addition to
major emerging market debt indices. Some
of that initial excitement has obviously
uh ended by now because that inclusion
has occurred and most recently we've
seen a selloff in Indian uh local bonds.
They have underperformed most of their
emerging market peers. But we think that
has now created some value that we could
look to get involved in because at the
end of the day because of these
headlines around tariffs and global
growth softening, we're likely to see a
central bank in India that is grappling
with solid growth but a softening one,
inflation well behaved and possibly more
room to cut than what the market price
is in now. So potentially an opportunity
to re-engage in the local bond trade
there. And that is the case for many
other emerging markets where we see
similar dynamics. solid fundamentals on
one side, central banking uh officers
having the room to reduce rates in the
context of global growth and their
domestic growth softening and that
creates an opportunity for the local
currency trade for us.
>> Julia, is there anything I mean when it
comes to India, is there anything for
example in the equity space? I know
there's also a massive consumption gap
with many more local retailers offering
their own products. I don't know whether
this is such a large economy that you
could see opportunities in emerging
companies. it the Indian economy has
traditionally been relatively close to
uh foreign uh companies and foreign
investors that is changing now we think
uh given the space that has been created
in the bar market that's probably more
interesting for us given the uncertainty
still at the level of the consumer
locally at the level of measures to spur
growth and to maintain at sustained
levels so we prefer to be involved in
the local bond space rather
>> um anywhere when you look at other
emerging markets I mean you're you're
basically saying that India could be a
mirror for other ones. Is it ones that
went through structural pain or where do
you see the biggest value?
>> Well, we've seen value in a lot of local
markets. Actually, a lot has occurred. A
lot has moved in local markets. We've
seen local markets in EM this year
delivering nearly 14%. twothirds of that
value has been delivered by moves in
emerging market exchange rates because
also of the change in the US
exceptionalism narrative the weak dollar
that has created a lot of tailwind for
any EMFX so a lot of that has run its
course we think there's more to come but
we're slowly shifting into a second half
of the year where global growth
considerations are taking more of a hold
there's a sense that the global economy
will be slowing down and hence that will
have repercussions on local growth
prospects as well. So then we go back to
a situation where some emerging markets
will again have relatively solid
fundamentals but the opportunity to cut
rates. So we see those opportunities
which
>> ones in Brazil in South Africa in Mexico
as well. So there's plenty of options to
diversify. So what we're trying to
highlight here is that yes there are
lots of headlines and lots of upheaval
from trade and geopolitics but the
opportunities for acting managers to
pick out those pockets of values are
there. Again, South Africa not always
the easiest country, but you were noting
yourself in your program earlier this
morning improvement in the electricity
situation, an economy that is overall
solid, that has made uh some fiscal
gains, government or national unity that
is holding together and doing some
reforms and a central bank that is
extremely credible and looking to lower
its inflation target. That is meaning uh
a structural reduction in interest rates
locally that is very very appealing for
investors like us.
>> Give me a sense of what happens to
dollar dynamics. So if the dollar
weakens from here again who does it
impact in terms of emerging markets
>> well a weaker dollar is generally a
positive news for all emerging markets.
That means that generally speaking all
EMFs will continue to perform well and
that is indeed what we are going to
continue to see in our base case. So we
will likely remain involved in many of
the M uh currencies again the rand uh
the Brazilian rii the Mexican peso and
so on. So these are some of the ones we
like the most but also the Turkish lera
which is a more idiosyncratic case
perhaps. What we're saying is that in
the second half of the year that gets
boosted further by the opportunity on
the local rate side as well. So an
overall very constructive year for
emerging markets and one where we're
seeing a lot of opportunities after
years of the asset class being a bit in
the doldrums.
>> Julia, thank you so much for joining us.
Julia Peligeri there, emerging markets
portfolio manager at Alian Global
Investors. Now coming up, oil sliding
today as traders weigh the outlook for a
ceasefire in Ukraine. We'll discuss that
next. And this is Bloomberg.
Welcome back everyone. Now S&P has
affirmed the its double A plus rating
for the US saying tariff revenues will
partially offset weaker fiscal revenues
from Donald Trump's so-called big
beautiful bill. Let's get more from our
very own Valerie Titel. Hi Valerie.
>> Hey good morning Francy. Maybe not a
surprise that they reaffirmed the double
A rating, but the reasonings behind it
were quite interesting. S&P ratings
calling the tariff revenue meaningful in
its statement overnight, saying, "We
expect the meaningful tariff revenue to
generally offset the weaker weaker
fiscal outcomes from that big, beautiful
bill that just passed in the Senate
earlier this year." Now, this comes at
an interesting time because if we look
at what's going on in the back end of
the bond market, it does look like
yields are starting to creep higher and
we're attempting 5% in that 30-year
yield. So, maybe the bond market isn't
necessarily buying for now that these
tariff revenues could pay for those tax
cuts and spending increases in that big
beautiful bill. But over the last four
days, we're up 10 basis points on the
30-year yield at 494. But this
phenomenon of yields moving higher in
the back end is not just going on in the
US. We're also seeing it here in Europe.
Yesterday, the UK 30-year guilt yield
reached the highest since 1998. Another
new year-to- date high for the backend
yields. Germany and French yields as
well on Friday. No clear catalyst, but
hit a 14-year high for both of those
names. So it goes to show that this move
in the back end of the bond market is
confusing some but do remember September
is a very busy month for issuance
especially in Europe. So perhaps some
concession being built into the back end
of the bond market. Francine
>> Valerie thanks you so much Valerie Titel
there. Now oil sliding today as traders
weigh the outlook for a ceasefire in
Ukraine. President Trump pushing for a
summit between Vladimir Putin and
Vladimir Zalinski after a series of high
level talks. Well joining us now is Al
Nightingale Europe oil markets editor.
Al, thank you. So what's happening with
oil right now?
>> So I obviously the uh traders are
watching those negotiations very
closely. Um but I don't know that
they're they're kind of taking a strong
view on the outcomes. We've seen so many
kind of geopolitical things come and go
in the oil market and traders when when
you're looking for real positions and
real kind of uh taking a view, they want
to see things that are definitely going
to affect supply or definitely going to
affect demand. And I don't think either
of these clear these negotiations
clearly do that. So um what we're
looking at really right now is a more of
an ongoing picture of supply and demand
and how people are viewing that and I
think going late into this year uh there
is an expectation for over supply and
maybe over you know in recent you know
in the past few weeks we've seen the
market starting to lose some steam. So
Al, talk to us about OPEC plus. What are
we expecting from OPEC plus in the
future? And again, if you look at the
price of oil, it could stay in this
holding pattern.
>> Well, that's a really interesting
question. Um, for quite some time now,
they've obviously been adding supply.
They've kind of completed this round of
supply increases. The delegates we've
spoken to have said that they could now
do anything. They could uh increase,
they could just keep supply the same, or
they could actually cut supply in, you
know, in the in their next kind of
meetings. So that creates an uncertainty
uh and kind of puts guard rails around
oil on you know obviously uh if they
were to cut supply then that changes the
the kind of expectations for supply
demand dynamics equally if we do keep
having this sort of weakness in prices
then maybe next year some of the supply
expectations will come off if you get
less investment in oil. So um there are
reasons to kind of be bullish and
bearish and that's I think why you're
seeing that holding pattern that you
talked about. Um Al, I mean what's the
latest on China buying Russian crude
oil?
>> Yeah, China is buying does seem to be
buying a bit more Russian crude. If you
look at the proportions of the seaborn
flows um it's you know India is what
matters here and um they they're very
cautious about US sanctions at the
moment. They're still buying or or being
subjected to US sanctions. They're still
buying. um there is a deadline in a few
weeks time where they could face more
aggressive US measures secondary tariffs
if that were to happen then India could
kind of create a void and we would have
to see what China would do a lot of
people think you know it will go
somewhere and that's the nature of the
oil market it goes somewhere so we have
to just see how that plays out and you
know how it really goes in time
ultimately will the US want to risk
supply I don't think so and that's where
you always have to think will the US be
willing to lose supply? Probably not.
>> So interesting. Al, thank you so much.
Aler Nightingale there with the very
latest on oil. Now, Hamas says it has
agreed to a truce deal proposed by Qatar
in Egypt to pause fighting with Israel
in Gaza. Diplomat told Bloomberg that
the proposal would see Hamas release
half of the hostages it still holds in
exchange for the release of Palestinian
prisoners and a partial withdrawal of
Israeli troops. Now, it's not clear
whether Israel has received the proposal
or whether it would agree to the terms.
In uh other news, fullear underlying
profit at BHP has fallen by more than a
quarter to its lowest level since the
pandemic. The results from the world's
largest minor were broadly in line with
expectations and came as prices of BHP's
key earners, ironor, and coing coal
coming under pressure from softer
Chinese demand.
>> Everybody's chasing higher standards of
of of living. uh to feed that growth, to
feed those higher standards of living.
The reality is the world's going to need
more of the commodities that uh that BHP
produces. There's more steel needed to
build cities, more copper uh needed not
only to to electrify the world, but for
the for data centers, so for AI. Um and
so we've tried to to orient the BHP
portfolio towards those commodities that
the world's going to need more of.
>> Now, as summer temperatures rise, some
of London's wealthier residents are
looking to install air conditioning
units in their homes. However, their
plans are often being thwarted by local
councils for technical and aesthetic
reasons. Well, we're now joined by
Olivia Rudgard from Bloomberg Green.
Olivia, thank you so much for joining
us. I mean, this is one of our most read
stories in the terminal today because
people are kind of either confused or
trying to understand exactly what's
blocking the uptake of aircon.
>> Yeah. So, there's a few different things
going on. I mean, one of them is that
London has a very um you know, it's very
well motivated uh cooling hierarchy. So
um councils are basically told
prioritize
passive measures like excuse me
like shading ahead of things like air
conditioning because of climate
concerns. Um and the another thing is
that there's a lot of buildings that
have conservation or aesthetic
protections. So if you have a building
that is deemed to be architecturally
very valuable, it's difficult really to
do a lot of things to it. So um a lot of
people are finding that they're applying
and they're being told either you have
to jump through all these hoops and it
takes a long time or you're sort of
being denied altogether. Yeah. So, so
why are Londoners finding overheating at
home to be such a problem?
>> I mean, they London has the same issue
that a lot of cities in the northern
hemisphere have.
>> Big cities. Yeah.
>> Yeah. Exactly. And and it's very well
it's not well adapted for climate
change. So, you know, there's this
really interesting mix of building
stock. Some of it is um Victorian homes
that have these kind of big floor
to-seeiling windows. Um in some cases,
you might have uh newer build um
properties that actually what's what's
happened is they're very well insulated,
but there hasn't been a lot of thought
given to ventilation. And as
temperatures rise because of climate
change, especially overnight, people are
finding that it's actually very
uncomfortable.
>> Um are there, I imagine, serious
implications, health implications for
overheating homes.
>> Yeah, absolutely. And especially at
night. So what what you often find is
that if um you have several days of a
heat wave, people are not able to
recover at night. They're they're still
suffering. They're still overheating. It
actually accentuates a lot of those um
long-term health problems and more acute
health problems um that you get as a
result of of heat. So that's stress on
the heart, stress on the respiratory
system. Um, and it can actually be a
very serious health risk.
>> So Olivia, I mean, new housing is being
built without aircon. What's taking so
long to change regulation?
>> Well, so so like I say, it's a lot of it
is actually um around it's it's
prioritizing more passive measures. So
they the the the planning rules actually
say that um housing developers should be
prioritizing things like smaller windows
and shading, which is very
well-intentioned. You know, it's it's
air conditioning. It puts a lot of
strain on the grid. Um it it it's
historically been not favored because of
the uh the carbon implications. Um but
actually, you know, there are calls now
for some of that to be changed um
because we are seeing this really acute
heating and overheating risk.
>> So Olivia, is policy around air
conditioning changing? Is it going to
change in in the foreseeable future?
>> Yeah. So there have actually been a
couple of changes. Well, there's been
one that's already happened this year.
So there's something called permitted
development which is where there are
certain changes you can make to your
home without having to ask ask for
permission. Um and actually the
government has added air conditioning
units that can both heat and cool to
that uh rule earlier this year. That
could actually have arguably some
climate benefits because people maybe
then aren't using their gas boilers in
the winter as much. They're using their
air conditioning unit to heat. The other
thing that might happen is there's a
subsidy program for heat pumps. So an
air conditioner is really just a form of
heat pump. Um and the government is
currently considering um allowing people
to get that subsidy, some level of
subsidy for a heat pump that can both
heat and cool as well.
>> All right, Olivia, thanks so much. The
regard there on Aircon in London. Now,
quickly, uh a lot going on of course
with Intel, the Trump administration in
discussion to take a stake of about 10%
of Intel by converting grants made under
the US Chips and Science Act into
equity. The other story is of course
SoftBank seeing a potential for a
turnaround at Intel with the government
valuing the company's manufacturing
prowess and actually putting quite a lot
of money in Intel. Up next, a Bloomberg
brief. They'll also talk about J. Powell
and Jackson Hall. This is Bloomberg.