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The forces shaping markets and the economy are often hiding behind a blur of numbers. So that's why we created The Big Take from Bloomberg Podcasts, to give you the context you need to make sense of it all. Every day, in just 15 minutes, we dive into one global business story that matters. You'll hear from Bloomberg journalists like Matt Levine. A lot of this meme stock stuff is, I think, embarrassing to the SEC. Follow The Big Take Podcast on the iHeartRadio app, Apple Podcasts, or wherever you listen.
If this is the Bloomberg Daybake, you'll have podcasts available every morning on Apple Spotify or wherever you listen. It's Tuesday, the 19th of November in London. I'm Caroline Hepka. And I'm Stephen Carroll. Coming up today, hedge fund titan Ken Griffin says he's very anxious about Donald Trump's potential tariff policies. European markets have been losing against the US for decades, but investors fear things could get even more brutal under the next president.
Plus, searching for a solution, Bloomberg learns that US competition officials want Google to sell its chrome browser to break up its monopoly.
Speaking to the UK's Oxford Union, the Citadel founder and Republican donor said tariffs are a, quote, long slippery slope that can be profitable in the short run, but damaging to US companies' ability to compete globally in the long run. Financial chiefs are increasingly turning their attention to how the incoming administration's policies will impact the economy. Here's what city group CEO Jane Fraser told the HKMA Global Financial Leaders Summit overnight.
The agenda is largely pro-growth. Some questions around whether it will also be inflationary. And it's one where I think we know what is coming. When we think about it, probably 40s, if you'll forgive me, tariffs, taxes, the tapering of regulation and tightening of inflation. That was Citigroup CEO Jane Fraser speaking in Hong Kong.
With the comments on tariffs from two of the biggest names in finance came as the CEO of Morgan Stanley also expressed concerns about the changing economic environment for business. Here's what Ted Pick told that event in Hong Kong.
There are ongoing inflationary themes that bear consideration, some element of de-globalization, ongoing climate transition, the muscularity of the nation state, or regionalized, i.e. defense, war. Those are all inflationary.
Morgan Stanley's Ted Pick and Citadel's Ken Griffin both expressed reservations about the economic impact of President-elect Trump's immigration policies. It comes as Trump confirmed his plan to use the U.S. military for a mass deportation program in a post on his truth social network.
While the business secretary says the UK shouldn't jeopardise its relationship with the EU for a trade deal with Donald Trump, Jonathan Reynolds told a committee in the House of Lords that Britain would not seek to choose between its key export markets.
I mean, the US is a major and important trading partner for the UK, £300 billion of bilateral trade, but, you know, compared to the EU with over £800 billion of bilateral trade. Clearly, if there are things that we are offered or asked to do, that would result in an adverse relationship on the European side. We'd have to weigh the consequence of that.
The comments from the Business Secretary come as the Labour government looks for ways to boost trade and growth. Prime Minister Kierstamatov reported at the G20 that he would restart talks on a UK-India-free trade agreement next year. Negotiations on that deal stalled in May after two years, despite the strong personal relationship between the former Prime Minister Rishisunak and India's Narendra Modi.
European Central Bank President says the European Union should be pulling its resources. Speaking at an event in Paris, Christine Lagarde said boosting productivity growth in areas like defence and climate should be a priority. Her call for greater integration echoes warning some other policymakers who say Donald Trump's return to the White House could accelerate a new era of protectionism.
Russia's invasion of Ukraine has now entered its thousandth day with tens of thousands of people killed on both sides. The U.S. President Joe Biden has now authorized Ukraine's use of long-range missiles to strike targets inside Russia. But at the G20, the U.K. Prime Minister Kiyastama refused to be drawn on the specifics of Britain's policy.
I'm not going to get into operational details because Putin is the only winner in that situation. But I've been really clear for a long time now we need to double down. We need to make sure Ukraine has what is necessary for as long as necessary because we cannot allow Putin to win this war.
Stalin's comments have been echoed by French officials attending the G20 summit. They have also refused to say whether Kyiv would be allowed to use their missiles against targets in Russia. Meanwhile, German Chancellor Olaf Shultz has maintained his decision not to give Ukraine access to their long-range missiles, saying that he needs to act prudently.
Denver has learned the top competition of officials at the U.S. Justice Department have asked a federal judge to force Google to sell off its Chrome browser. We're told the DOJ will ask federal judge Amit Mehta to also require measures related to artificial intelligence and Google's Android smartphone operating system. Mehta is the same judge who ruled back in August that Google illegally monopolized the search market. The DOJ officials, along with states that have joined the case,
also plan to recommend Metaimpose Data Licensing Requirements. And if Meta accepts these proposals, they have the potential to reshape the online search market and the developing AI industry. By the way, this case was filed under the first Trump administration and continued under President Biden. In New York, I'm Doug Krsner, Bloomberg Radio.
A Hong Kong court has sentenced 45 pro-democracy activists to after 10 years in jail. The former Democracy Advocate Benny Tai was handed down the longest sentence under China's security law for organising unofficial primary polls in 2020 for the Legislative Council.
Former youth activist Joshua Wong got four years and eight months. The US has called the case politically motivated the mass arrests of democracy advocates in 2021, effectively silenced the city's entire political opposition and is likely to further deter dissent in Hong Kong. The trial of former media mogul Jimmy Lai is due to resume today.
Now in a moment we're going to be talking a bit more about the G20 gathering and also one of our deep dives about European stocks, why they've been in retreat, the outflows, the pressure on the euro, as a result really and turbocharged by Donald Trump's
arrival in a few weeks in the White House. But there was a picture out of the G20 that I want to pause on for a moment. You know that adage picture speaking a thousand words and all. The G20 family photo right in front of Rio's Sugar Loaf Mountain was quite fascinating. There was Xi Jinping, China Xi, right at the front in the middle alongside India's Modi. Sergei Lavrov was sort of at the back, standing in for President Vladimir Putin. But
There was no President Joe Biden. It was like geopolitical spot. The difference is like who's missing from this photo that we should be able to recognize. So no Joe Biden, a couple of other notable absences as well. Though Italy's Georgia, Melanie wasn't there. No Justin Trudeau from Canada either.
So, it was apparently an organizational mix-up, but it doesn't bode particularly well at a time when world leaders are trying to present themselves as being united when there are so many challenges facing the world that some of the key figures were absent. The US officials saying that the photo started early.
But the symbolism is all there, isn't it? That Biden wasn't particularly visible, maybe at the gathering. My view is that it's not the only one who's perhaps coming to the end, maybe of their political tenure. I mean, you've got Germany's Earl of Schultz and also France's Emmanuel Macron, kind of seen also as maybe lame duck in their administrations.
Well, let's focus from the symbolism to the substance of what the leaders were discussing at the G20. In Rio, of course, many of them looking to the potential impact of what Donald Trump and the White House might mean for trade and diplomatic relations. Let's bring in our AMIA News Director, Rosalyn Matheson, who joins us in studio for more
The issue of trade hanging over this gathering was because everyone is thinking about what's going to change, come January, how international relations through the medium of trade could be upended, a particular concern for European leaders.
But you were just talking about symbolism and substance, and in fact both of those things tend to come together, energy 20, communique, which a lot of people say communique is a communique, but you always look for certain words in the communique and certain language, and particularly in the first Donald Trump administration, the language around trade.
became extremely fraught in his communiques. In fact, he famously ripped up a communique at the G7 summit that was in Canada after he had signed it. And so you can see that that's hanging over this meeting. You've got European leaders, Macron, only a couple of days ago, warning of the risk of Europe being pulled into a trade war, not just with the US, but also with China, so multiple fronts happening. And that's because Donald Trump is talking about tariffs.
of, you know, 10 to 20 percent, even on countries that he were considered to be his allies and his friends. He sees every country really when it comes to businesses being a competitor. So Europe is looking down the barrel of tariffs. And we know, of course, again, in the first Trump administration, there was a lot of tension over steel and iron in particular.
We can imagine that coming back, but also there's a lot of other sectors that could become problematic. You're seeing a lot of language at the G20 amongst leaders, perhaps not in the communique, but about the need to preserve that global rules-based order, which is not just about security. It's also about trade. Absolutely. Bloomberg intelligence economist Anna Wong has done some extremely interesting analysis in terms of
on aggregate how much she thinks it's going to increase tariffs, the base case being that weighted tariffs will increase by 5 percentage points, so from about 3% currently to the expectation of 8% at the end of 2026.
So that's the kind of Bloomberg analysis of the situation. The text, as you mentioned, is also so important. On the war in Ukraine and the crisis in the Middle East does seem to be that the language is papering over some really deep divides and differences.
And we can see some of the leaders are even acknowledging that before the communique is officially done, although it's normally tried to try and get it done before the meeting begins, including Olaf Sholts, the German leader who was there saying, hang on, I think the language here is not strong enough in support of Ukraine and also in recognising that Hamas did in fact attack Israel on October 7.
And so you can see the language is trying to be very generic in both places in Ukraine. It's sort of talking most about things like food security and the need for food security in the region, not the fact that this war has been going on for more than two years. And we're probably getting to the point where Ukraine's going to be forced in some fashion.
to negotiate. And again, the statements of needing to keep supporting Ukraine seem to be there, but in the ether, in the conversations behind the scenes at the meeting is a reality of, well, we can't keep sending military and financial aid there into perpetuity. And so there's going to have to be talks at some point.
Okay. Well, plenty more to watch from the G20 for now. Rosalind Muth and our EMEA News Director. Thank you. Join Capital Group CEO Mike Gitlin on the Capital Ideas podcast. Investment professionals reveal how they find their next great idea, what gives them their investment edge, and a few personal stories. Subscribe wherever you get your podcasts. Capital Client Group Inc.
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Now in the days since the US election, European stocks have retreated, outflows have picked up and the euro has skidded towards parity with the US dollar. Now the trend is being turbocharged by Trump's proposed policy mix of tariffs, deregulation and loose fiscal policy and tax cuts in America. Joining us now to discuss is Bloomberg's Farah Al-Barawi,
who leads our team covering European equities. Farret, thank you for being with us. What's the backdrop for stocks and what's being priced into European equities markets right now?
Good morning. Well, you have really investors describing such a steep discount to European equities versus the US. That's a 40% record low for Europe versus the US. And the underperformance of the stock 600 versus the S&P 500 is one of the widest on record this year. So investors clearly aren't favoring Europe.
And you have a lot of outflows coming through and now recommending to buy Europe as a contrarian call because the US is just providing a lot more growth, a lot more diversification. You have the AI plays and Europe really doesn't have something similar to that.
And all the passive inflows are generally geared towards the U.S. If you look at the composition of the U.S. market, you have about eight companies that are valued at more than $1 trillion. In Europe, not even a single company is valued at over $500 billion.
The market in the US is about four times bigger than all the markets in Europe combined. So again, it's just such a massive market that it makes Europe, with its lackluster growth, with the headwinds that are potentially going to come through from Trump's proposed tariffs. It makes it not a very attractive destination for stock investors looking for lucrative returns, as we've seen.
from the US. It's now known as a diversifier because some equity investors may not put all their eggs in one basket, but investors are not questioning is it good to just be known as the diversifier in a portfolio. What about the outlook for the euro as well? Some structures even have been saying that parity could be the only way for euro dollar.
Absolutely. And that call for parity is only increasing. It's not decreasing. The euro has been under significant pressure trading at the weakest level in over a year. And more and more investors are expecting it to slide to parity with the dollar.
JPMorgan, Goldman Sachs, city groups say that the euro is one of the biggest, it's set to be one of the biggest losers from a Trump presidency going again back to that tariff agenda that the president-elect has set on the table. And especially given Europe is quite reliant on manufacturing and it has several industries such as autos making up a really big part of its economy. Parity is definitely something that more and more people are discussing these days.
This is Bloomberg Daybreak Europe. Your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com.
Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa played Bloomberg 1130. I'm Caroline Hepka. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak Europe.
The forces shaping markets and the economy are often hiding behind a blur of numbers. So that's why we created The Big Take from Bloomberg Podcasts, to give you the context you need to make sense of it all. Every day, in just 15 minutes, we dive into one global business story that matters. You'll hear from Bloomberg journalists like Matt Levine. A lot of this meme stock stuff is, I think, embarrassing to the SEC. Follow The Big Take Podcast on the iHeartRadio app, Apple Podcasts, or wherever you listen.
