francine: welcome to bloomberg markets. back to the bank of england target at 2% of the first time in three years. nvidia takes a crown after a relentless rally and they overtook microsoft as the world's most valuable company. the ipo postponed. golden goose has decided to shelf because of significant deterioration in market conditions. quite a lot going on in the markets. happy juneteenth to those who celebrate. a lot of markets in the u.s. are closed. thinner trading volumes than

usual. european stocks started the day by posting moves with traders trying to see fresh catalyst in the wake of the latest tech driven rally in the u.s. european stocks coming down in the last hour. on the ftse, a lot of talk about cpi print and what it needs for the bank of england going forward. the nasdaq 100 also, trading not open in the u.s. but futures up after nvidia at yesterday became the world's most valuable company, extending record-breaking surge. quite a lot of folks will be on u.s. benchmarks. yesterday the s&p was close to the 5500 mark. france with a lot of people and question marks about who will be the prime minister on the election july 7 second round. we are keeping a close eye on the 10 year yield and brent at 85.06.

european stocks lower at the pound strengthens after inflation hit 2% for the first time in years. does that change the dynamics for the bank of england especially right before an election? imogen: the bank of england would like to think it changes the calculus but i don't think it does very much. if you look at the forecast, expecting inflation to converge at 2% in the spring which it has. what they were expecting is the reading would be 1.9 percent in may, a tad higher than what they expect. the bank of england says the rates will stay elevated relative to the call by the end of this year and probably into next year. the crucial calculus for the bank of england is what happens with services in inflation and core inflation.

core inflation is still at 2% and the room for the bank of england to cut rates is not very much. francine: i know you had great thoughts on the fed and conditions. but so much when it comes to french politics and bonds. what would it take for the bond buyers to come into that market? ven: i think france debt rating if you look at how it has traded close to bonds these days, spain and portugal, spain has a lower rating and a smaller economy but it has a single handle a as opposed to the aa france has. france's should be treated on

parcel with spain's debt and one would think that would think an increase of 10 to 15 basis points. after that, it will start sloping down on the france debt because it will become more attractive from a portfolio perspective. francine: interesting. thank you for the latest on the u.k.. we have a couple of great stories looking at bargain hunters in the bond markets. for all of the market dynamics, let's get straight to imogen bachra, the market had at natwest. we are in an election campaigning mood and we will not hear from the bank of england until late look at the inflation figures. does it change the dynamic for when they will cut rates? francis: the boe had elevated service price inflation to be

the key indicator of inflation persistence and the key of what they were watching to give them the signal they could cut rates. that print at 5.7. it still leaves in august cut in the balance. had it been higher if you could easily say and august cut is off the cards. had it been lower, you can say it brings to a clear base case. but 5.7 is a no man's land but in we are left being august a marginal base case for a rate cut but not a high conviction call and i don't think today's data puts us in a closer that the first rate cut will come in august. francine: that means we will hear from the back of england and does it make it harder for markets to know how to decipher that august decision? imogen: a little bit. we will get the numbers tomorrow.

we will get the usual communication from them that was planned pre-election. it is harder for markets to understand how bank of england will digest this print and print last month higher than expectations and that put a is filler for the bank and rate cuts for the year. that 5.7 print was a bit of no man's land and makes it hard to see they will materially change the forward guidance. the market is left waiting for after the election when the quiet period is lifted and then be the august cut in the august meeting. how much does the election change the trajectory that u.k. will enjoy? imogen: we had the manifestoes but whoever is in power in the polls are pointing quite decisively in one direction at the moment but whichever

government is in power after the election, the overarching theme of the next parliament will be of fiscal constraint. we are left with very little headroom and that leaves the incoming government very little by way of discretionary polisario measures that can allow. with the change in government or without one, we are talking about a fairly bleak growth in the u.k.. when we think about trend growth in the u.k., that sub trend is a stagnant growth. francine: is the bank of england late to cutting rates and does it have a meeting to the trajectory? i know they were under fire for being late to hike. imogen: will only know that they are late to cut rates in hind states. we can only say years down the line. the difference between cutting in august versus cutting in september or november and the extra 25 basis points in terms

of the impact on the real economy is likely to be quite small. it will be hard to assess in the moment whether they are really that late and with the impact has been. francine: french markets in a pickle right now, a mess because of the uncertainty and resurgence of the left where they could do quite well in these parliamentary elections. what does it mean for active bond buyers. if there is a warning on france and italy and other countries about deficit spending. imogen: we had the excessive deficit procedure announcement today. spreads have stabilized over the last few days. we have probably seen a little bit of bond buying come back. there is an option tomorrow and that will be the first test of demand. it doesn't feel that way yet at spread levels which screams a buy and getting sncc evident -- getting significant --

importantly for france, one of the big buyers is japanese investors. we have had a couple out overnight and yesterday that suggest japanese life insurance companies are sitting back and waiting to see how the political situation unfolds. if not actively selling french abounds and that acts as a little bit of a negative. i think we will see buyers remaining on the sidelines and wait for a bit more clarity over the coming weeks. francine: it is going to be busy. it is going to be possibly volatile in two to three weeks. imogen: it keeps us busy. francine: coming up, france will face blowback for breaking deficit and debt rules. later in the hour, speaking to anna titareva at ubs asset management. this is bloomberg. ♪

francine: welcome back to bloomberg markets. the eu with breaking deficit and debt rules triggering a process that could lead to fines while elections are less than two weeks away. it is when you look at the polls unclear at the far right could really gain. there is an alliance that could gain on the left. heart of the rules complicate things in the campaign? >> we knew this was coming because we knew france deficit was last year and debt at 110%.

obviously the rules are 3% for deficit, 60% for debt. this comes at a very bad timing for president macron because we are just 10 days away from the elections that he called. last month when france was downgraded by standard & poor's, the crown was quick -- micron was -- macron was criticized for running the country. they said it is his responsibility and he cannot take care of french finances. even one who would become prime medicine if they get the majority on july 7, he is also trying to reassure the markets over the past couple of days

saying that the first thing he will do when he gets to power would be an audit of french public finances and his ambition is to show his physical seriousness. with this new warning on french public finances it is going to be hard to hear his warnings about the potential debt crisis. francine: so he is the candidate for marine le pen and said he wants some kind of coalition and if he doesn't get a majority he won't become prime minister. what does the market want, the favor for the markets in terms of reforms and things being put in place in manifestoes? caroline: he is clearly saying

this in order to convince the swing voters, those still hesitating to give power to the national rally because at the moment all of the polls are showing that yes they will come first and the snap elections but they will not get the majority in parliament. in fact the second in parliament would be the union of the left and macron would become a distant third with 18%. we will likely rezone in hung parliament where macron will have to find some on both sides and the union of the left is very fragile and could still implode by the next couple of weeks. francine: thank you very much for that look on the french elections. vladimir putin arrived for his first visit in north korea in

over 20 years. for more, we understand there are the trades being redone. north korea isn't really a trading partner so why is it important for vladimir putin to go there? what is he trying to gain from the trip? john: north korea has stocks of weapons and arms and soviet air systems on the front lines of ukraine. the biggest thing being sent our artillery shells. north korea has a huge artillery collection and has shells stockpiling for years and these of the main things that north korea has been sending to russia for the war in ukraine. francine: we know kim said russia is playing a critical role in keeping the strategic balance in the world. this is something that a lot of

the g7 leaders were strongly disagreeing with. is there a new world order being put in place? jon: i think what we are seeing is the two leaders who are deeply isolated, heavily sanctioned have found they are stronger together and they can defies some of the sanctions, outside pressures from the u.s. and its allies by banding together. this will make that grouping stronger between north korea and russia and it will come at the expense of the u.s. and its partners. francine: we understand vladimir putin will also travel to vietnam later today. what can you tell us about what he is trying to gain from them? jon: he is trying to rekindle relations, russia has investments in the vietnam oil

sector and also a question of weapons whether russia has something they could sell or acquire from vietnam. we will see a lot of ceremony. i'm not sure what we will get in terms of security and economic cooperation but putin does not have a lot of places he can go. vietnam is one of them. francine: thank you so much. i fx the russian news agency said russia and north korea have agreed to mutual assistance if attacked. still ahead, the uk's second richest man said the country has had enough of the tories. we will hear from jim ratcliffe. this is bloomberg. ♪

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francine: welcome back.

the uk's second richest purses -- person says britons have had enough of the tories who have been in office for 14 years. i spoke to jim ratcliffe. jim: i wasn't a fan of the wind and change. that was foolish -- of the london change. that was foolish. why do you want to encourage them to leave. it doesn't make sense. they bring enormous value to the economy. i think the regeneration of manchester caught investment. francine: what is your take on the u.k. right now with the elections? is it good for business? jim: i think the conservatives

have had a fairly long stint and they have put forward a whole series of prime ministers that haven't been terribly successful. i think the u.k. and everybody you can see they are ready for a change in they have had enough. francine: you have been disappointed with the way it brags it has run during is that a fair call? jim: yes. francine: how would you do it differently and how do you think labour. would you go into politics? jim: i don't think they would have me. i am not pc enough for politics

and i am certainly not very woke. francine: how would you run the country? jim: i think -- how would you run the country? or me you have immigration that is one issue in the other issue is the economic issue. if you just look at the economic issue, the u.k. economy is 2 trillion pounds and gdp is 2 trillion pounds and the government takes half of it, at least half. the government spend so in my view we spend 60 billion or 70 billion a year and the government spends one trillion, more than that. so you need to spend the money well because you are not spending your own money, you are spending the population of the

u.k. there are good reasons why people pay taxes. you have health care, police, roads, all those types of things. i don't think the government manages those things very well and i don't think it has the right quality people running it. they are spending a trillion pounds. the health service is a mess. we don't have security anymore. education is a mess. we can't run sewage systems in the u.k.. we have sewage systems from the victorian era. we allow the utilities for water to be sold off and mainly bought by french companies and the french companies pay 50 billion pounds in dividends but don't reinvest in the equipment to ensure we have top class equipment to manage our sewage and drinking water facilities good and then all of a sudden it is a crisis. these of the minimum

requirements to buy and if people don't behave then do what they do in america, there are consequences if you misbehave. francine: that was part of our conversation with jim ratcliffe. we also spoke at length about manchester united soccer for american viewers playing out tomorrow. coming up, anna titareva of ubs on the economic challenges in the u.k. with the upcoming elections and a boe rate cut in august starting to fade. this is bloomberg. ♪

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francine: welcome back. u.k. inflation fell back to the bank of england's 2% target for the first time in three years, a milestone coming too late for

rishi sunak. there is a lot to talk about. u.k. inflation falling to the 2% goal but some indicators that the boe is watching didn't fall as much as they wanted. what does that mean for the boe? >> with services being stickier headline came above the forecast and it surprised on services was much bigger. we know the boe is in a world where it is more tolerant to data surprises. the last thing we heard from the bank of england it is not giving any public statements or speeches because of the election but the last we heard was they were looking into a summer rate cut and looking into cutting by 75 basis points. we have had two cpi prints, services is proving sticky. they are facing higher costs

passing on to consumers. they are still looking at cuts in august but we think it will be less than with the bank of england and currently thinking 50 basis points for the year. francine: we have spoken with the bank of england governor and said once they start cutting they cut and cut. does that mean they cut and wait to see what happens? asa: this is a bit different because they hyped rates and now under normalizing they can act a bit more gradually. and i think they won't want to see services make more progress. getting headline to 2% will help services later on that they will want to see more progress. what is clear is with the headline at 2% the economy and labor market cooling and no case for policy restriction to be at this level so we can make little

steps in the current rate cut we think will be in november. francine: and a lot of the press competences, the governor always says bloomberg economics got it right and that makes me proud. traders are peering bets that the bank of england will cut in the coming months. there is the overarching inflation. and join us to talk about the u.k. and france and european sentiment is anna titareva. the market is moving on the back of the inflation data and something is happening in the u.k. market after the turmoil in france. it is the bank of england thinking they don't want to cut because they were maybe too late to hike? anna: also agree with the previous speaker that the first rate cut from the bank of

england will take place in august. we think in terms of approach to the cutting cycle the bank of england will be on the cautious side. if you look at the inflation numbers, headline is at target. there are two caveats to that. the bank of england and we expect inflation to re-accelerate over the end of the year. and secondly it services inflation more the gauges of inflation persistence the bank is a monitoring and still remains quite high and higher than what they expected. we are in some cautiousness from the bank of england. francine: do you worry that we are so data-dependent that it is almost impossible to predict what the tight -- tightening cycle has done and it could lead to a policy mistake? anna: we know policy works with flags and we are seeing transmission of rate hikes

coming through. i think we will only be able to tell the impact of the policy with some lags. in terms of approach to the cutting cycle it is with the bank of england but central banks globally are data-dependent and give limited guidance in terms of the pace and extent of the rate cuts. the current data environment does warrant a cautious approach. francine: when you look at market behavior, will it be more interesting on the currency side or guilt? abigail: conference --anna: on currency, we have to acknowledge sterling has done well. the fact that election outcome is almost fully priced in by the market and given there is a lot of political uncertainty in europe, our strategists are optimistic on sterling. we do expect some positive news on that front. given our more aggressive call

for rate cuts for the bank of england next year more than this year, we do expect repricing but you will need to see how the data plays out. francine: a lot going on in france, a surprise call to parliamentary elections, we are not sure the right is doing. all of that is getting slapped on the risk because of budget deficits. anna: the call for the election is a surprise. in terms of domestic politics, we cannot directly interpret the outcome of the european elections. they are suggesting the party will probably win majority.

not an absolute majority. if this is the outcome of the election we will end up with the government that would need the support of other parties to push through in terms of domestic agenda. the biggest risk going into the election is that either the far right for the far left alliance with an absolute majority, in case the government technically would be able to push through big spending pledges without external support. francine: even the body -- bond vigilantes are not touching france for the moment. anna: the biggest risk from the market perspective, a couple of uncertain elements. first in terms of the actual political agenda and policy, we

all look at the 2022 presidential election as the benchmark of the policies and at that time far right was promising big spending measures and that is the key risk. at the same time, we know deficit numbers in france last year it was a 5.5% and the european commission expects decline to 5.3%. that means it is likely it will advise to put france in the deficit procedure which will require tightening on fiscal policy. there is big disagreement in terms of what is required from the european side. this disagreement is key. we have seen the spread between germany and france and does that make the job as the commission much harder at a time when they

have to be competitive. in europe as a whole. in terms of spill over other countries, at the moment it seems cushioned to the france risk. there are a number of upcoming elections in other countries in germany and italy. there is spillover risk, looking at market reaction and development it seems to be relatively contained. francine: coming up, golden goose did not lay in a peer we will discuss the ipo that wasn't. that is next. this is bloomberg. ♪

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grab your pair today at olukai.com. francine: welcome back. the golden goose has postponed its ipo. the luxury sneaker maker has taken the position to shelve the decision now. this is a sneaker. they are sneakers that cost 600

pounds, almost $700. they came on the show to say that we are doing an ipo and three weeks later they pulled it. >> they are citing market changes. primera listed doc martin and that has been a disaster. it was clear that golden goose wasn't going to pop on the first day. they didn't want another doc martin on their hands. francine: is this because there is a problem in the sneaker sector or overall? andrea: i think it is a bit of both. 90% of it is speakers.

that has now slipped away. investors could see similarities clearly and it was signaling risk. it is taking out the valuation they hope for. francine: do you think other ipos will be pulled for the dampening on european luxury? andrea: it is possible. we will wait to see. francine: a different beast with she and -- and is doing well in the retail space. it is the middle market being crunched or across-the-board the higher and lower end? andrea: if the higher end is doing well, you've got some midmarket stories doing well. the britain mark. it is about giving customers

what they want. francine: some have seen a lot. andrea: if you are selling to the super rich, you are more insulated than if you are selling to the nearly affluent. they thought the caution was spreading from the middle class to super wealthy that could be a brand specific issue. francine: are we still quiet luxury? andrea: we are seeing the first signs of quiet luxury fizzling out. quiet luxury.

they need fresh trends and reasons to come and buy. if you have six of those sweaters you don't need another one. francine: turning to boeing and dave calhoun who faced eight senate hearing zeroing in on safety issues. he was accused of putting company profits ahead of safety. thank you for joining us. it feels like they can't catch a break, always some sort of bad story. does it impact orders, people flying are just more of a stock question. >> it is a bad story for boeing and they have been in the mix since january and in a spiral at the moment. and while calhoun was blessed by senators for the safety record, he did show contrition and talked about how boeing is

making changes and did talk about how the company is in the midst of overhauling the manufacturing practices and said the company is trying to turn around. that would reassure investors somewhat that they are trying to make steps toward getting quality back on track and consequently getting plane deliveries and generating cash. francine: calhoun said i'm here in the spirit of transparency and taking responsibility. did they talk about the timeline and where are we with that journey? >> bullying still hasn't meant production and still talking about how they are focused on quality -- boeing hasn't gotten the production going and still talking about how they are focused on quality.

they have said they will not raise a restriction until they see signs of progress. it is very early days but investors are looking at the fact that it is a duopoly with only two manufacturers and essentially a strong boeing is essential for the aviation industry. francine: the also came under fire for the $33 million compensation. >> he did come under fire and it was brutal to watch him answer those questions from the senators. there is a search on going for a new ceo which is being led by the chairman and boeing is in the midst and they are making headway. francine: not an easy job to advertise. thank you for that in the very latest on boeing. coming up, more on our

conversation with jim ratcliffe. this is bloomberg. ♪

francine: welcome back. jim ratcliffe, britain's second richest person said britons have had enough of the governing tories. he said this with an exclusive sit down with me yesterday and discussed topics including the chemical industry in the u.k.. she jim: there -- jim: there is not much chemical injury -- industry left. i don't think the government recognize the importance -- it is an enormous industry worldwide. look at petrochemicals in europe , similarly in america. in europe, a trillion euro industry.

there is very little left in the u.k. now. in the u.k. you go back 25 years, manufacturing was the same as it was in germany, 25% of gdp. germany is still 22% or 23%. it has a government which has been focused on maintaining a healthy manufacturing base in germany. in the u.k., we are maybe a percent of gdp from 25% 30 years ago. manufacturing is one of the reasons you have the power house and those types of initiatives because the north is a manufacturing base but it is pretty much all gone and it is probably too late now. francine: could labour not bring it back? jim: it would have to be long-term. francine: do they have a plan? jim: not that i am aware of.

in america they are in a great place for manufacturing, no carbon taxes, a government interesting in costs that are manageable. you look at europe, europe is a mess with petrochemicals and everyone is leaving petrochemicals. i have never seen it in my working life before. i am talking mainland europe but other places as well. energy costs five times, gas is five times the cost of america, electricity is five times the cost in america. it is 500% more. any sort of activity which involves using energy in some form or another is disadvantaged in europe compared to america or the middle east. on top of that, you have a carbon tax.

if you emit anything that has carbon in it, you pay a tax and you don't pay that in america. on top of that you have social costs. francine: do you think that is changing? we had european elections. will policies in your change because the european elections? jim: i think they are listening. three or four months ago we had a long chat about the state of industry in europe. i think they are listening. they were sympathetic with the arguments but i haven't seen any changes. energy is really important for an economy. francine: do you think you could have built your empire in the current environment in the u.k.

and europe? jim: i think it would be quite tough in europe now. if you look today, the majority of the profits come from the united states but 20 years ago the majority come from europe. it slowly moved across to the united states because it is a much more conducive environment for captain -- chemicals and petrochemicals and immense amounts of investment in the american marketplace and in china and the middle east. europe has been stagnant for 25 years. francine: that was part of our conversation with jim ratcliffe. tomorrow we will talk about manchester united as we talk about the premier league peer european stock struggling to build on the two day rally. traders seeking a fresh catalyst

and the hike driven gains in the u.s. we are watching u.k. inflation and reflation slowly across the developed world and u.k. inflation fell back to the bank of england's 2% target for the first time in almost three years . some of the underlying targets have not quite met. in france, the 10 year yield french and you could argue that global stocks have shrunk because of the political tensions in france but a lot of the stocks in france in turmoil. france getting scolded from the eu because they broke the deficits and debt rules. coming up, max kettner of hbc. this is bloomberg. ♪

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tom: u.k. inflation falls to the boe's target for the first time in almost three years. in north korea, the russian president arriving for his first visit in 24 years. we are seeing a grand welcome from kim jong-un. reprimanded over deficits, the eu slams france and five other countries from breaking the blocks deficits and debt rules. let's check in on the markets as a reminder the fiscal