guy: thursday, 24th of september. stocks are down. the central bank is clearly the cause. the difference between them is interesting and why we are getting the reaction we are getting. the countdown to the close starts right now. announcer: the countdown is on in europe. this is bloomberg markets: european close with guy johnson and alix steel.

guy: every single sector bar. none down in europe. a lot of this out of the u.s.. clearly we see the big market to the fed that is being priced into europe. the ftse is down. you certainly have the pause in effect coming through into the u.k. market. taylor wimpey is one example of that. we are seeing affects -- positive effects coming through of a right pause into european, and more specifically u.k., equities. the question is, what happens if pi goes up next time? does the bank of england hike? who knows. alix: in the u.s., we are data dependent. we get existing jobless claims coming in under 200,000. we are seeing equities pick up

to the downside on existing home sale numbers. the s&p 500 is down 1%. major sectors in the red. amazon down 3%. seven straight days of losses, its longest losing streak since february. what is different in the bond market in the u.s. is the front end is rallying. you are seeing buying in the two-year. yields are lower and the backhand moves with you guys. we are seeing some speed from the ecb saying, maybe we are done. maybe no more hikes. yields are up by seven basis points. also the dollar. the dollar-yen now down by 0.6%. as we head to the boe tonight, we have to wonder if there is some intervention over what they will say around the currency and those rates. guy: are we going to see some currency intervention?

the bank of england today is fascinating because it is so hard to decipher what is happening over the road from here. we have a cap which means the governor basically was the deciding vote. the governor andrew bailey. we did not get a press conference today so we have to work our way through the statement. we have a little clip coming from him from the bank of england. this is what he has to say post the rate decision to leave rates unchanged. governor bailey: it is a premature celebration because we have a ways to go. you are watching the market carefully and have to do that. we also have to be careful in the judgments we reach on how permanent it will be, effects of the economy will come from it. you will be watching carefully. guy: that takes into the question today. the one from yesterday, we

evolved it. we have now had the fed and bank of england. are we there yet? it is a question that needs asking. the chief european economist is joining us now. nice to see you. i am struggling to understand the bank of england. you get a big cpi print earlier in the summer and he of england hikes by 50 basis points and we are caught off guard. you get a soft print this time and we have a hold. is the bank of england being pulled by the wind of the cpi data, which itself is quite volatile at the moment? >> that is a really good question. there are a couple points in aunts. first, we are close to getting to peak rate. there will be a lot of indecision. you will think i need to go 25 more or less rest six months to one year ago we were on the same page of we have to raise rates.

as we reach that, we are seeing the disagreement that number two, around the cdi print, that is the case. we should not be looking out the window and saying, what is cpi today? that should not push the decision. i should hope not. it is hard to decipher how sticky the inflation is. we have seen a little of this reaction. the cpi print came out and markets responded. the whole dynamics changed. which is the wrong way around. alix: i have to wonder, how bad to be think the pci will be friday? i understand the cpi projection but we are still at i've six. i find it hard to believe we will drop. jumana: if you look mechanically

at the cpi numbers, the base effects will drop dramatically over the coming months. yes, inflation will come down. according to our in-house projections, it will come down to 3% for the end of the year. if everything works like it should based on history, that is what we are expecting. the pmis have already been quite bad. tomorrow, given other leading indicators, it could be we do see it -- see recession we expect to see. guy: they have been expecting recession for quite some time so you may have to take that data with a pinch of all. dan hanson and i were kind of kicking around. the frustration we have with the bank of england of where we go next? where do you think -- what do you think will happen next? do you think we are done? i feel like i should get a

royalty for this one, do you think we are on top of the mountain or the meter horn -- the materhorn? jumana: a review at vanguard is we do not think we are done yet. guy: the bank of england, a couple more hikes still to come? jumana: one more hike, maybe two. are worried about wages and the stickiness of inflation so the terminal rate is a little higher than where it is today. guy: we did this months ago. in terms of royalties, do you think there is a danger they break the economy? is the race to 2% -- are we going to get to 2% or is today an admission that we cannot get to two percent without doing too much damage? jumana: we don't know that answer. we know the scenarios of hard landing, no landing or soft

landing have played out. can we get to 2%? of course. can we get there with a soft landing? in other words, no recession? our view at vanguard's we do not think so. we think a recession is the intermediate phase to something different which is likely to be a mild recession. we are not talking about a hard landing but we are talking a landing which involved some costs. alix: the big difference is growth was upgraded here at the fed and not at the boe. who gets to cut first? we are pricing out 50 basis points of cuts now as indicated by the dot plot of the fed. will the boe have the same luxury? jumana: that will depend on a lot of things. the growth point you mention is important because we see more fiscal and you lives in the u.s. compared to the u.k. if you look at the fiscal

impulse, our work shows that we have had more fiscal impulse through 2022 and 2023. the one thing i will say is the fed has a history of being more activist. they go up quicker and down clicker -- and down quicker so that may play into what we see next. guy: what is your expectation for what happened? how big do you think the gap will become between what happens in the u.s. and what happens in europe? the central bank of greece is talking about cust being the next move. the ecb does not want to admit that but the fed feels like it is miles away from that. if the bank of england cuts first, what impact will this have? jumana: that will have an impact on the dollar. that is where you will see it first on currencies. you will see it in capital markets. we don't know yet.

it depends on how the stickiness plays out. if you think they are looking at inflation today, but also in the future, in the future, it will be determined by growth. it is not obvious that we will see cuts first in europe. alix: i appreciate you. thank you for joining us. jumana saleheen of vanguard. more on the question of the day, are we there yet? caroline simmons, ubs u.k. people investment officer. as we hear more, you have the swiss national bank surprising with a right. here is the president on the choice. >> inflation pressure can lead to long-term flag longer than a few months ago. the horizon is not below 2%. the other factor is monitored killed -- monetary condition is

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>> for 10 years, debt was priced way too cheap and you were forced to go into equities. basically that subsidize a massive amount of returns. guy: the copresident of asset management eating a few minutes ago it easy global credit form taking place in london. when it comes to the rate story, now you know what the said and

he of england said so, are we there yet? joining us now is caroline simmons, chief u.k. investment officer. nice to see you. the bank of england and the fed pauses. are we there yet? are we finally at the end of the rate hiking cycle? caroline: possibly. we thought we were but we didn't think the fed would move the dots as much as they did. our view was sort of one and yesterday. we thought the bank of england would move today and that would be it. they did not so there is potential they will still do one more. the question is, why did they not do it today? i think it is bigger than you that in have to do with the slowing of the economy. and if it is slowing faster than they were expecting. maybe they don't need to hike again.

alix: basically, our view there because inflation is no longer the target? or are we there yet? if the boe is more on the latter, what does that do? caroline: for the u.k., it is more we are worried out growth which is why we are slowing coming off. for the u.s., it was that it is ok and the u.s. economy is quite strong. that's is why we saw the moves we saw. for us, we stay with fixed income and yields are attractive. there's plenty of room until you get to the breakevens. if things are worse on the growth picture, which let's face it, growth is going but we just don't know how much. guy: there is an argument that says the bank of england is not brave enough to do the damage necessary to get inflation down

to 2%. the journey from here to 2% is quite a long one. especially when it is already quite weak. if that is the case, do you think they are prepared to live with 4% or 3% for much longer? if so, what are the implications for investors in that world? caroline: i think 4% might be a bit higher than what anyone might be comfortable with. above 2% is probably ok versus below 2% which is what we had the last decade. we have to think about what is driving inflation. if they raise interest rates today or they do not, it takes 18 months to have its full impact. we have external shocks and prices like oil. what it means for investment is if you have inflation staying slightly higher than target, but

within a range, then that can actually ok for equities. if you have consistently high and concerns about inflation not being able to be stabilized, that may not be so good for the equity market because you would expect the bond yields to continue to rise. alix: i cannot believe i will say this but if we go back to the mountain thing, tabletop or materhorn -- if there is proof you said this before -- guy: if anyone wants to email me, i can provide proof. proof can be easily demonstrated. alix: caroline, you are an investor. which mountain are we on right now? let's go to just u.k. assets for the moment. how do you invest on that? caroline: it depends on time

frame but we are expecting tabletop until q2. guy: this is not higher for longer. when the cuts come, how quickly do they come? caroline: it depends on where the growth appears. our view is for the u.k., you will probably get because of 50 to 100 basis points over the course of next year. it is a gradual decline rather than we are in severe recession and cut. alix: what does value do in this world and where globally is the best place for that? caroline: value general release should perform well when yields are rising and -- generally should perform well when yields are rising at the growth is rising, or when inflation is consistently above 3%. the area is particularly

interesting for places like the energy sector. you need to be careful about banks which are technically a value segment but also interest rate sensitive. you have to get through the years before you can allow the valuation to unwind. you can have value in emerging markets and in some asian regions as well. guy: do you like all stocks? caroline: we do. we have a preference particularly for globally and the u.s. i like them on the u.k. side. we have a view that oil stays around $95 for the next 12 months so that is quite supportive. the cast yields on these are phenomenal, double digits. alix: do you think oil can close the gaps with the oil price? because oil markets here in the u.s. have closed the gap. caroline: i don't think they have closed the gap as much.

it is one of the big conundrums. the share prices between oil and gas prices have been different. there is an element of esg and uncertainty around oil prices. i do not think the gap closes fully. alix: thank you so much. we really appreciate it. caroline simmons of ubs. we want to clarify some mountain stuff. we talked about mountains june 27 and that is when i had no idea what guy was talking about. and the huw pill speech was august. guy: august 21. almost the exact same. i can send anyone who is ibing you a time stamped question of the day that comes off our video

feed from the 27th of june. huw pill on august the 31st. alix: you should do a package about this and put it on social media. guy: i agree. i may need help on that. i can do media. alix: i was thinking of media. you want to move on? that is fine. i was going to say post it and send it to the boe. coming up, alex murdoch announces he is stepping down from the head of his media empire so more on the impact of that next. this is bloomberg. ♪

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he is handing the reins to his son. joining us now is bloomberg news reporter gerry smith. however, he is still cheap emeritus. what does that mean? jerry: he put out a letter saying he would be very much involved, visiting corporate offices. he made it clear that his health is good and he will continue involved even though his title will change. guy: in terms of what this means for the way businesses run and the effect this big business -- this business can have, things have changed. he has been one of the most controversial figures in big media for generations. phone hacking and the list goes on and on. does this now change? is this a less controversial organization without mr. murdoch senior at the home? gerry: the news solidifies

locklin's control over the entire empire. to the extent that laughlin and roofer are still in touch, it is hard to see changing. alix: in terms of strategy or how fox approaches 2020 for? it is hard to understate how important for murdoch was along with the likes of turner, etc., in shaping media as we know today and politics. gerry: the timing is interesting because you have a big 2024 presidential election with donald trump still the leading republican candidate. there is a relationship between fox and donald trump. for example, where fox had a debate and try to bring donald trump used for show up. rupert murdoch had huge

influence in not just the media world but the political world. this does change things but i do not think it was a huge surprise to investors. he is 92 years old and had already handled the succession question when he handed the r eins to locklin -- lachlan. guy: this is succession. it is amazing to watch. thank you. gerry smith on the expected exit of mr. murdoch. the european is up next. way fascinating day for european assets. every sector in negative territory. the bank of england is pausing. who knows which way they will blow next? but yields continue to climb except for the front and in the u.s. but nevertheless, equities under pressure over here, fixed income under pressure, bonds under

pressure. the close is up next. this is bloomberg. ♪ with your hearing, if you start having a little trouble, you're concerned that it's going to cost you money. to this day i only paid what i had to pay for the device... when i go back everything is covered. there's so much you're missing by not having hearing aids. (♪♪) we'll find you a hearing aid that fits your lifestyle and budget. unlock your risk-free trial during our limited-time sounds of autumn event. call 1-800-miracle to book your appointment today.

guy: it is a sea of red here in europe. the effects of the phantom bank of england rippling through markets globally. the bank of england has paused. let me show you the session, and europe. we are down by 1.29 percent.

keep an eye on what is happening here, from a technical point of view. it is getting interesting and i think the market continues to see a bumpy september. let's talk about single stocks, bnp paribas, the effect has been really dramatic. the stock has been hit hard. today it is being unwound ferociously. that stock is down by 20%. taylor wimpey is down .04%. there was a call by the governor at the bank of england, there

are all kinds of factors in the mix indicating the bank of england is not quite done. you have next, and upgrade their. that stock is responding clearly to the upside. it speaks to the narrative how confusing it is to read what is happening in the u.k. economy. the u.k. consumer continues to hold up. there is wage growth, let's talk about the picture as to what happens next. on friday, france and germany's pmi data. it has been pointing to a recession for quite some time. we will talk to chris williamson tomorrow. you have the u.k. pmi, but that his rearview mirror stuff.

you have the s&p pausing. what is the bank of japan doing? it's alix: if they don't do anything in the next few hours what did they have to look forward to in the next few months. thank you so much for joining us, we really appreciate it. what do you expect from the bank of japan? >> i expect no change, -- guy: if the bank of japan does

not move soon, are we in danger of missing an opportunity to normalize rates? to at least get back to some degree of normality? >> that's an interesting point. i don't think they will miss their opportunity at this moment , there will be a moment for them where they can focus on quality. alix: they yanis at 148, for dollar-yen. do we get that in a forceful way? >> i think the yen is not

depreciating as quickly as it should be. maybe we will see more diverse comments coming, but i don't think they will conduct an intervention this time. guy: what is your expectation with what happens with the dollar? the yen is down while the dollar is stronger. do you think we will get intervention in the future? what tools can the bank of japan use if it doesn't change policies? >> they don't have a lot of firepower for that. the japanese yen depreciating against the dollar, the yen has

been doing well against the british pound and the euro. and yet, i think the yen will depreciate more as the market is higher for longer. alix: how will that categorize growth and inflation? chris: i personally agree. inflation is too points out. inflation has been sticky. i think after food prices come down we regulate quickly.

guy: there will be a critical decision tomorrow so we will pay attention overnight to what is happening. thank you very much indeed. let us check where european stocks finish today. negative session across the piece. the bank of england paused today lifting those domestic stocks. coming out, we will go to the meeting in new york the israeli economy minister will join us next. to talk about the relationship between the u.s. and israeli tech industry and what's happening and the israeli tech industry right now. this is bloomberg. ♪ ( ♪ ♪ )

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this is bloomberg. alix: israeli prime minister before he came to new york weston silicon valley including elon musk and it's all part of israel's effort to attract tech talent. minister, it is wonderful having you. do tech investors want to do business in israel? nir: the talent in israel israel. we have 10,000 start in israel. it is the highest ratio of innovation.

because our markets are relatively tiny the entrepreneurs go global. we are going global as fast as possible. the economic future of israel is taking our economy global and i'm happy to see the high interest in israel. guy: to pick up on that point, the high-tech industry of which you were once part has been part of the protest process and has been taking and voicing its concern about what the government is doing. how do you yourself fall on the issue of what is happening here? you have one foot in the tech industry and one in the government how do you feel about that? nir: to have hundreds of thousands of people from both sides of the aisle demonstrate,

israelis are patriotic and they care. i feel it is a good thing. on the technical stuff, anything we will legislate will have wide acceptance. we are focusing on the big challenges of israel. security with iran, peace with saudi arabia focusing on our economy and price of housing and goods in israel. the fact that there is political debate, that's fine. that's part of a democracy. alix: it's a judicial overhaul? this is a huge implication. at some point if tech investors are not happy will it lead them to pull out? nir: we will make some minor

changes that are widely accepted. 70% of israelis understand that the judicial system is not perfect. but changes are fine. but we are a democracy and is not going to change. what i keep saying to my friends in the tech world, we are a democracy. we believe in democracy. nobody wants dictatorship. let's do it together and collaboration to make our economies grow and i see more and more change in the world -- is interested and i believe we have a a good future. guy: if you go to silicon valley, do you think the numbers

of israeli entrepreneurs will increase? do you worry that we will see a brain drain? nir: i'm not concerned because we only have one jewish democratic state. i was just in germany reminding france and germany we are at the grandchildren of holocaust survivors and there is no other place in the world that is more secure than a jewish democratic state. we only have one jewish democratic state. and i am committed to make israel a better place. we know that israelis go back and forth, we have businesses in north america and in silicon valley.

there is a flow of people back and forth and i think it's a good thing. eventually, israel is the hub of innervation -- innovation. alix: you are in talks with the saudi's, what percentage are you putting on the fact that normalization could happen? nir: if you heard what and bf said and prime minister netanyahu said, this is real. i think it's in the best interest of all sides. there is a lot of progress in the discussion and there is a huge opportunity for the world to look at the arab/israeli conflict a mediated.

i do believe that many economic opportunities will arise from that. there is a discussion to have a clear economic path from india in the far east via the arab peninsula, israel to europe. it will make a lot of sense for transportation. the collaboration between israel and the saudi's and other countries, we see it. i see how it can happen. guy: what impact without have in terms of gdp? how big of a benefit would the israeli economy have as a result of that normalization? nir: we talk about other arab countries like indonesia that follow saudi arabia. we have relationships with egypt

and jordan and we have demonstrated that we can create relationships. it is a big step towards resolving many of the conflicts in the region. you can have relationships on the technology side and allows for transportation and a hub for trade. a wonderful opportunity for everyone involved. alix: thank you minister, the economy minister of israel. coming up, we will take you back to the credit forum in london. we will speak to michael gaddy. >> we take our job as fiduciaries seriously. we are long term capital

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alix: we now had back to the global credit form where dani burger is speaking to miguel aroughedi. miguel: when rates are high in capitals restrained that's a good time to be in the lending part of the market. >> while we are talking about growth. let's get into the nitty-gritty where the the products. we hear blackstone talking about

investment grade. how are you thinking about those products? miguel: the growth in asset-backed structures are real and this trend has been growing since the gmc. if you think about what i said earlier about this consolidation and shift in the liquid credit markets. we are now seeing similar things take hold in this market. if you go back to the gmc, thanks for taking bus risk. as a result, the securitization apparatus broadly speaking probably lost one trillion in capital. the itu and out of business and you have this distribution a dispersion of specialty finance

backing into the market and what's happening now, it's re-aggregating into the private market. in the corporate lending space, these assets and people left the system and now they are re-aggregating. the interest in the private market, the structure and cost of capital to meet the demand of capital in the market. most institutions can't. if you are an insurance company, 90% of your assets need to be investment grade and rated. that means you have to participate in a specific part of the environment if you're running institutional money you have the flexibility to bring cash pay, senior, and that creativity and flexibility is one of the biggest advantages of

the private market. what my peers are identifying israel. we have been at this business for a dozen years and have attacked him from the sub investment grade piece of it. dani: you have said before when asked about downturns in private credit downturns in all private -- prior cycles has done better than public investment grade markets. if we are in a world where private investment deals are getting done, is there some degree of sacrificing returns? miguel: it's all about risk return and when you're talking about high rate risk income alternatives is being bought by the investment community. they are paying for a location.

i think they are also paying for active management of the credit instrument. if your an insurance company and you can generate, you want to be with someone that can go and diminish that on your behalf. if you buy a bond there is an agency risk to it and there is a risk that the folks in your syndicate are not aligned with your view on credit. that's why private credit outperforms because of the control and that element of bilateral relationships where everyone is aligned to maximize the enterprise. there is no difference of opinion as to what their outcome is. dani: what about regionally,

where do you see the biggest gaps right now? miguel: i wouldn't say a gap, the geography are all growing at different rates with different opportunities. when i look at the u.s., you have bank consolidation, growth in private equity. guy: if you want to carry on with that conversation, you can do so online and get some great coverage of the global credit forum this taking place right there. let's talk about where we are with markets right now. there has been somewhat of a selloff post bank of england. u.s. equities are very much under pressure. the s&p is down by nearly 1%, nasdaq down by 1.2%.

around the world there reacting differently. the bank of england may have some effect on the yield markets. up next, jeff thomas. looking forward to that conversation. this is bloomberg. ♪

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from the heart of where innovation, power and money collide in silicon valley and beyond this is bloomberg technology with caroline hyde and ed ludlow. caroline: live from headquarters in new york, and i am ed ludlow. cisco makes a 28 billion dollars deal