欧元区8月PMI超预期升至52.1，德国制造业创四年新高

NEWSMAKERS AND MARKET MOVERS, THIS IS "THE PULSE WITH FRANCINE LACQUA." ♪

GOOD MORNING AND WELCOME TO "BLOOMBERG BRIEF." WE HAVE JUST HAD CROSSING THE TERMINAL THE LATEST EUROZONE PMI NUMBERS FOR AUGUST. THE COMPOSITE NUMBERS RISING TO 52.1. THE FORECAST HAD BEEN 51.7 AND THAT IS UP FROM 52 ON THE NOSE THE LAST TIME. THIS IS THE AUGUST FLASH NUMBER AND WE COULD GET SOME ANALYSIS WITH OUR BLOOMBERG WESTERN EUROPE EDITOR. WE HAVE HAD THE GERMAN NUMBERS, MANUFACTURERS THEY ARE RECORDING THEIR BEST PERFORMANCE IN MORE THAN FOUR YEARS SO THAT ECONOMY HEALING.

BUT ALSO THE FRENCH NUMBERS COMING THROUGH, BUSINESS ACTIVITY UNEXPECTEDLY WEAKENING, BECAUSE PARTLY OF THE HEATWAVE. WHEN YOU LAYER ON THE EURO AREA WIDE PRINT, WHAT ARE YOUR TAKEAWAYS FROM THESE NUMBERS? GOOD MORNING.

OVERALL, GOOD MORNING, THE MAIN TAKEAWAY WILL BE THAT THE EURO AREA IS QUITE RESILIENT, IN LINE WITH WHAT POLICYMAKERS ACROSS THE REGION HAVE BEEN SAYING. AGAIN, WHEN THE IRAN WAR STARTED, WE WERE VERY CONCERNED THAT THE ENERGY SITUATION IN EUROPE WOULD MEAN THAT EUROPE WOULD BE, THAT THIS WOULD BE A MAJOR BLOW TO THE EURO AREA ECONOMY. IT HAS DONE SURPRISINGLY WELL. YES, FRANCE IS NOT DOING WELL. FRANCE HAS BEEN UNDER THAT 50 LEVEL FOR MONTHS NOW BUT GERMANY IS QUITE ROBUST.

THE HEADLINE NUMBER, THE COMPOSITE NUMBER IN GERMANY WAS A BIT SLOWER THAN EXPECTED BUT IT IS CLEARLY ABOVE THAT 50 LEVEL. THAT EURO AREA NUMBER PARTICULARLY GOOD. IN A WAY, IT DOES ALSO SHOW THAT THE EURO AREA CAN DO WELL EVEN IF THE NUMBER TWO ECONOMY IS NOT DOING WELL AND IF THE NUMBER ONE ECONOMY, GERMANY, IS NOT AS STRONG AS ANTICIPATED. GENERALLY, THIS SHOULD FILL US ALL AS EUROPEANS WITH JOY. LIZZY: DOES IT CHANGE THE PICTURE FOR THE ECB?

OVERALL, WE KNOW THE ECB HAS ALREADY HIKED INTEREST RATES. IT HIKED INTEREST RATES BY A QUARTER-POINT IN JUNE, AND JULY IT HELD PAT, HELD STILL. EVERYONE IS EXPECTING IT TO HIKE AGAIN IN SEPTEMBER AND THIS NUMBER ALLOWS IT TO DO THAT SIMPLY BECAUSE WE KNOW INFLATION WILL BE AROUND 3% FOR THE REST OF THE YEAR. IF THE ECONOMY WAS DOING VERY POORLY, THERE WOULD BE THE DANGER THAT WE CANNOT JUST AFFORD TO DO ANOTHER. .

RATE HIKE THIS NUMBER TODAY ALLOWS POLICYMAKERS TO DO THAT. WHAT HAPPENS AFTER SEPTEMBER? MARKETS ARE VERY MUCH PRICING ANOTHER RATE HIKE. SOME POLICYMAKERS HAVE SAID ANOTHER ONE WILL BE NEEDED. IF YOU LOOK AT THESE PMI NUMBERS, YOU CAN SAY WE DON'T HAVE STRENGTH EVERYWHERE, SO THOSE DOVES AMONG THE GOVERNING COUNCIL MEMBERS CAN USE THESE NUMBERS AGAIN TO SAY WE DO STILL NEED TO BE CAUTIOUS. LIZZY: OK, THANK YOU FOR BRINGING THOSE NUMBERS JUST -- NUMBER STRESS.

LET'S GET MORE -- NUMBERS TO US. LET'S GET MORE WITH CHIEF EUROPEAN EQUITY STRATEGIST AT MORGAN STANLEY AND ECONOMIST OVER AT JEFFERIES. GREAT TO HAVE BOTH OF YOU AROUND THE DESK. I AM GOING TO PUT ZOE'S QUESTION TO YOU. WHAT HAPPENS AFTER SEPTEMBER WHEN IT COMES TO THE ECB'S RATE HIKE?

THEY DO EXPECT THE ECB WILL NEED TO DELIVER MORE BUT THE WAY I AM SEEING IT IS THAT THE BALANCE OF THE ECB IS QUITE TRICKY. BECAUSE OF COURSE WE DO HAVE THESE INFLATIONARY PRESSURES BUT THE HEADWINDS ON THE EUROZONE ECONOMY ARE STILL THERE AND IF NOT GROWING, SO I THINK THERE ARE RISKS THAT IF THEY DO MORE THAN DELIVER THE HIKE WE EXPECT TO SEE IN SEPTEMBER, THAT THEY WILL START TO PUT ADDITIONAL PRESSURE ON WHAT IS A QUITE FRAGILE RECOVERY.

THE NUMBERS WE ARE SEEING IN THE PMI, I THINK IT IS REALLY GOOD TO SEE THIS RESILIENCE. WHEN YOU LOOK AT MANUFACTURING IN GERMANY AND YOU LOOK AT THE KIND OF DROUGHT CONDITIONS IN EUROPE, THE FACT THAT RIVER LEVELS HAVE DROPPED TO KIND OF HISTORIC LOWS, THAT MEANS THE PRESSURE ON MANUFACTURING IS STILL THERE, SO WE MAY NOT SEE THESE STRONG NUMBERS BEING CONTINUED IN SUBSEQUENT MONTHS. I THINK THE ECB NEEDS TO BE QUITE CAREFUL AS I THINK THEY ARE LIKELY TO REMAIN ON HOLD AFTER SEPTEMBER.

I THINK THERE WILL BE A LIVE DEBATE BECAUSE I THINK IT'S REALLY IMPORTANT WHEN WE LOOK AT WHAT IS GOING ON IN THE STRAIT OF HORMUZ, THERE IS STILL A LOT OF UNCERTAINTIES BUT I THINK THEY WILL REMAIN ON HOLD. LIZZY: HOW DOES IT CHANGE YOUR OUTLOOK FOR EUROPEAN STOCKS? RESILIENCE IS THE BOTTOM LINE FOR ZOE OUT OF THESE NUMBERS.

FOR EUROPEAN STOCKS, WHETHER PMI'S ARE STRONG OR NOT ACTUALLY DOES NOT REALLY HAVE A HUGE IMPLICATION, BECAUSE EUROPEAN EQUITIES ARE SO GLOBAL. I KNOW A LOT OF MY PEERS LOOK AT PMI'S AND YOU KNOW KIND OF EQUATE THEM TO EQUITY STRENGTH, BUT WE HAVE NOT REALLY FOUND A STRONG CORRELATION WITH EARNINGS WHATSOEVER BETWEEN EURO AREA PMI'S AND EARNINGS. MAJORITY OF REVENUES IN EUROPE ARE GENERATED ABROAD. THE PORTION OF PMI'S GLOBALLY THAT WE FIND IT BE MOST CORRELATED TO EARNINGS IS GLOBAL MANUFACTURING, SO IT IS INTERESTING THE GERMAN MANUFACTURER NUMBERS ARE SO STRONG BECAUSE THAT IS FOLLOWING THE GLOBAL MANUFACTURING TREND AND THE COMPANIES IN GERMANY ARE SO GLOBAL, SO WE JUST CONTINUE TO SEE STRENGTH.

I THINK THAT PMI'S ARE SUPPORTIVE FOR INFLOWS BECAUSE THEY IMPACT SENTIMENT BUT THEY ARE NOT CHANGING THE OVERALL PICTURE FOR US. LIZZY: THE PMI'S NOT SO IMPORTANT BUT SURELY THE HIGHER FOR LONGER INFLATION NARRATIVE COULD HAVE AN IMPACT ON MARGINS FOR EUROPEAN EQUITIES?

THEY ARE BENEFITING MARGINS. THAT HAS BEEN OUR BIGGEST CALL INTO THE LAST COUPLE OF EARNINGS SEASON. WE WERE TRYING TO FIND THE STRAIT OF HORMUZ DESTRUCTION, WHERE IT -- DISRUPTION, WHO IS THAT GOING TO HURT? ARE THEY GOING TO BE MISSES. WE CANNOT FIND ANYTHING. WE ACTUALLY FOUND MARGINS ARE BREAK INTO THE UPSIDE BECAUSE IN THIS KIND OF MODERATE INFLATION, NO RECESSION, WHAT YOU SEE IS WE HAVE VERY HIGHS CUTE TO THAT HIGH -- HIGH SKEW BUSINESS-TO-BUSINESS EXPOSURE.

THESE COMPANIES ARE PASSING ON PRICE INCREASES AND TAKING THE MARGIN ON TOP SO OUR GROWTH IN EUROPE IS 18%. LIZZY: I WANT TO PLAY YOU ABOUT SOME OF WHAT WE HEARD FROM THE U.S. TREASURY SECRETARY SCOTT BESSENT SPEAKING TO REPORTERS, TO BLOOMBERG IN FACT, ABOUT THE BOND MARKET MOVES THIS WEEK IN LIGHT OF HIS LATEST INTERVENTION. SEC. BESSENT: ANYTHING THAT HAPPENS WITHIN A 24 HOUR PERIOD IS NOISE. AND YOU KNOW, I THINK THAT ONCE THE MARKET UNDERSTANDS THAT WE ARE FOCUSED ON FISCAL CONSOLIDATION AND THAT WE ARE TRYING TO BRING THE MARKET BACK INTO EQUILIBRIUM IN A THINLY TRADED MARKET.

LIZZY: IGNORE THE NOISE, BESSENT SAYS. AT THIS POINT, HOW DESPERATE IS SCOTT BESSENT LOOKING? THERE IS A CREDIBILITY QUESTION, IS THERE NOT, WHEN YOU SEE THE BOND RALLY ACTUALLY NOT LASTING THAT LONG?

I THINK THERE IS OF COURSE A CREDIBILITY QUESTION AND YOU CAN SEE THAT PLAYING OUT IN THE DOLLAR AND HOW IT IS MOVING, BUT I THINK THE U.S. COMES FROM A POSITION OF STRENGTH THAT MAY BE OTHER COUNTRIES WOULD REALLY STRUGGLE TO COMPETE WITH WHEN YOU'RE TALKING ABOUT ONE OF THE MOST DEEP AND MOST LIQUID KIND OF BOND MARKETS, THE APPROACH OF THE TREASURY REALLY DOES HAVE A LOT OF WEIGHT. I THINK YOU COULD SEE ALLEYS FROM THE INITIAL ANNOUNCEMENT THAT WAS MADE ABOUT BUYBACKS THE MOVE IN MARKETS THAT PEOPLE ARE LISTENING AND LOOKING AT WHAT THE TREASURY IS DOING.

THE CHALLENGE IS THAT MAYBE MARKETS HAVE HAD SOME TIME TO THINK ABOUT AND REALIZED SCALING UP THE BUYBACKS DOES NOT NECESSARILY TIP THE SCALES. WHEN YOU LOOK AT THE SCALE OF LONGA AND ISSUANCE BUT ALSO THE SCALE OF THE U.S. DEFICIT -- LONG END ISSUANCE BUT ALSO THE SCALE OF THE U.S. DEFICIT. WHEN WE LOOK AT GERMANY, THE U.K. AND FRANCE, THESE COUNTRIES WHERE WE CONTINUE TO SEE AN INCREASE IN DEFICITS, WE CONTINUE TO SEE PRESSURE AROUND THE FISCAL SITUATION AND I THINK THAT IS SOMETHING WE ARE GOING TO CONTINUE TO SEE IN MARKETS, THAT TREND PLATY THROUGH.

LIZZY: THE DOLLAR IS WEAKER TODAY. HOW DOES THAT IMPACT EUROPEAN EQUITIES IF THE DOLLAR IS THE PAIN POINT OF ALL THIS INTERVENTION?

EUROPEAN EARNINGS HAVE BEEN RELEASED FROM. EURO STRENGTH DOLLAR WEAKNESS THAT HAVE BEEN REALLY STRONG. EURO STRENGTH -- EUROPEAN EARNINGS HAVE BEEN REALLY STRONG. WE ESTIMATE EVERY 5% RALLY IN EURO-DOLLAR BRINGS DOWN EUROPEAN EARNINGS GROWTH ANNUALIZED BY ABOUT TWO PERCENTAGE POINTS, SO IT WILL JUST SHIFT THE D