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This is the Bloomberg Daybure podcast.

Good morning. It's Tuesday the 19th of

May. I'm Caroline Hka in London.

President Trump says he is holding off

on planned strikes against Iran, but

markets remain concerned. Standard

Chartered CEO announces plans to

eliminate thousands of jobs in favor of

AI in a bid to replace what he calls

lower value human capital. Plus, why

Milan's wealth boom means even lawyers

are commuting from more affordable

turin. Let's start with a roundup of our

top stories. President Trump says that

he has called off planned strikes

against Iran after an appeal from

leaders of Persian Gulf allies. Speaking

from the White House, President Trump

told reporters why he chose to pull

back.

>> I was asked by Saudi Arabia, Qatar, UAE,

and some others if we could put it off

for two or three days, a short period of

time because they think that they are

getting very close to making a deal.

>> The president has repeatedly threatened

renewed military action against Iran

without following through. And market

moves suggest that traders are becoming

increasingly unmoved by the president's

rhetoric on the Middle East. Stocks are

headed for a third day of declines as a

lack of tangible progress in resolving

the US Iran standoff keeps inflation

concerns front and center with oil

prices and bond yields remaining

elevated. Bloomberg senior Washington

editor Wendy Benjaminson says Trump's

latest comments underline the bind he

now finds himself in. It is another

example of Trump threatening

civilizational destruction and or even

just air strikes and then backing off

for one reason or another. And you know,

we think that the sort of ongoing effect

of this is that it's giving Iran

confidence that they can just wait this

out, that they can just keep throwing up

proposals that they know the US isn't

going to accept.

>> Wendy Benjaminson speaking there,

President Trump also warned that the US

is prepared to attack if an acceptable

deal isn't reached. However, he did not

set a deadline for securing a deal.

Standard Chartered has announced plans

to cut more than 15% of its support

staff by 2030 with those roles to be

replaced by AI. In a blunt message, CEO

Bill Winters said, "It's not cost

cutting. It's replacing in some cases

lower value human capital with the

financial capital and investment capital

we're putting in." The lender

headquartered in London says the roughly

8,000 job cuts will drive productivity

and help to raise income per employee by

about 20% over the next two years. The

move align standard charted with global

peers seeking tech efficiency. HSBC is

mulling deep job cuts over the coming

years while Wall Street firms are

similarly pivoting. Now shares in Sander

Charted in Hong Kong rose by more than

4% after the announcement.

A federal court in California has

dismissed claims filed against Open AI

and its top executives by Elon Musk.

Musk accused Open AI CEO Sam Alman of

betraying the firm's mission to benefit

the public by switching it into a

forprofit business. The jury found that

Musk though waited too long to file his

lawsuit despite having enough knowledge

about his claims years ago. Bloomberg

Intelligence's senior litigation analyst

Matthew Shettenhelm says the result is

significant for the chat GPT maker.

This lawsuit potentially threatened to

hang over the company's head. Elon Musk

was seeking court issued limitations on

the company's ability to pursue its

for-profit mission and really to be

limited and hamstrung by its original

charitable roots. So this win for the

company reduces that risk.

>> Bloomberg intelligence analyst Matthew

Shatenhelm there. The jury's conclusion

did not address Musk's central claim

that Open AI abandoned its

responsibilities to develop AI for the

benefit of humanity. Musk and his

lawyers have vowed an appeal against the

verdict, but didn't get into specifics

about what they will argue. European

Union officials are to meet today in an

effort to finalize legislation for the

block's trade deal with the United

States. Blueberg's Yuan Pods has the

details.

>> President Trump's July 4th deadline for

the EU to ratify its US trade deal is

now less than 7 weeks away. EU officials

meet today mindful of an earlier threat

from Trump to hike tariffs on European

car imports to 25%.

He's unhappy the EU hasn't moved quickly

enough to implement the deal signed

nearly a year ago now. A final version

must be agreed by parliament, the

commission, and the council and then

voted on. In London, I'm Yan Pots,

Bloomberg Radio. Greenland's leader has

warned that President Trump's ambition

to acquire the territory remains

unchanged. That's despite what he

described as a constructive meeting with

the US special envoy. Prime Minister

Yenszri Nielsen said yesterday's talks

had been conducted in a quote respectful

manner. The meeting was also attended by

Greenland's foreign minister and the US

ambassador to Denmark. Neielson told

reporters that he used the gathering to

reiterate that Greenlandic people are

not for sale. Now to the UK. the

favorite to replace Prime Minister Kier

Stalmer has indicated that he would keep

the current government's fiscal rules in

place, but he wants to reverse

austerity. Andy Burnham says that

Britain needs a serious rewiring.

>> A vote for me will be a vote to change

Labor to make life more affordable

again. This is the choice in this

bi-election. I know why I'm standing. I

know what I'm offering. I know what my

party has offered in the past has simply

not been good enough.

Andy Bernan speaking there. His

spokesperson told Bloomberg that the

mayor would not change Chancellor Rachel

Reeves' strict limits on government

borrowing. Labour is sounding out

alternatives to Karma after a fifth of

the party's lawmakers called on him to

resign. But the search for a new

direction has pushed British bond yields

higher as investors anticipate fresh

spending promises.

And lastly, the UK government is

consulting on a change to ring fencing

rules for banks. Rather than separating

retail and trading banking totally, the

new plans would give banks an allowance

to move between the two. Bake's James

Walk has more.

>> It was a response to the 2008 financial

crisis. Ring fencing was designed to

separate retail savings from riskier

trading desks. But now the UK government

wants to bring risk back, at least in a

limited way. They claim the plans, which

are under consultation, would unlock 80

billion pounds of funding for UK firms.

But shares of the lenders were little

changed on the news yesterday given

their two trillion pound combined loan

book in London. James Walco, Bloomberg

Radio.

>> And those are our top stories. Now in

the markets, Asian stocks dipping. The

Msei Asia-Pacific index down by 7/10en

of 1%. Fading optimism about an Iran

deal continues to hit markets. All

country world index down a tenth of 1%.

Stock futures for the United States in

the red. NASDAQ futures dropping half of

1%. Although for the US stocks 50

futures still in the green up almost 210

of 1%. The dollar strengthening the yen

hovering around 159. 10ear Treasury

yield adding a basis point at 4.6. 6%

JGB futures extending losses there.

Brank food futures down 2.1%

this morning at $1977

the barrel. Those are the markets. Now,

in a moment, we'll bring you the latest

on the economic impact of events in the

Middle East. Plus, we'll discuss why

Milan is suddenly seeing a boom in

wealth and what it actually means for

the city. But another story has caught

my eye this morning. Are you set on a

summer of travel? Well, checklist

tourism is being made worse apparently

by social media and also by the travel

industry. This according to Bloomberg's

Jamie Smith. The behavior may be as old

as tourism itself. I know. And that

dates back well to the Grand Tour in the

1800s. But today this uh is comes with a

much more awareness of course about how

it impacts the environment. And Jamie

points to a few destinations where photo

op tourism is really damaging the place

itself like the Greek island of

Santorini, parts of Turkey, but also

writes about the efforts to actually

help tourists to engage more deeply.

Efforts in Egypt, for example, bringing

in electric buses or a museum in

Florence that houses Michelangelo's

David to try to get museum goes to sort

of linger post that selfie. It does come

with the catch though. Prices for

visitors in those uh tourist

destinations are going up. But I think

it's really interesting that there are

big efforts to try to help people engage

with place, with art, with culture.

Anyway, it's a lovely story and I'm

going to put a link to it in our podcast

show notes for you to read. Now, the

crisis in Iran hovers between escalation

and some form of resolution as President

Trump held off on an attack against Iran

after Persian Gulf leaders appealed for

more time to reach a diplomatic deal.

Joining us now is Zad Bloomberg

economics is chief emerging markets

economist. Good morning, Siad. The US

president is clearly in a very difficult

position. He's created a bind. How much

would further military action increase

oil prices? How big a shock would

further military intervention be?

>> Good morning, Caroline. Um, well, the

war has already sent oil from $65 per

barrel to about $110 per barrel. That s

seems about fine where the market is. A

resumption of war by itself uh would not

necessarily lead to higher oil prices

unless it causes further disruption in

the oil market. And the biggest

disruption and the biggest risk is the

East West pipeline in Saudi Arabia and

the Britzy port of Yamba. That's the

biggest diversion that we've had away

from the straight of Hormuz that's

supplying the world with about 5 million

barrels of oil per day. That's roughly

5% of global supplies and that is the

biggest risk for oil markets. For them

to go higher, you need further

disruption and that is the biggest risk

to disruption. Well, you've also been

writing about how uh and whether the oil

market can then absorb the shock of the

war. How much demand destruction is

happening or may continue to happen do

you think?

>> Sure. If you take take a step back, the

war has basically deprived the global

economy of about 10 to 12 million

barrels of oil per day. Now, for the

world, it cannot consume more than it

produces. So how did we offset how does

the glo how did the global economy

offset this loss of supplies? I think it

did three things. 40% of the offset came

from the fact that the world has been

drawing down on its inventories. 30% of

that offset was coming from demand

destruction, people consuming less oil

and the other 30% was the fact that the

world was going to end up with a massive

surplus of oil. Instead surplus never

materialized. Um, so in terms of demand

destruction, we think it's about 30% of

that 10 to 12 million barrels of oil

that we lost. Some of it came in the

form of less energy consumption. Some of

it came in the form of consuming energy

but non- oil energy. So it could be

either dirty energy sources like coal or

clean ones like renewables.

>> Okay. So that's what happens in terms of

the response globally. As for the

closure of the straight of hormones,

Bloomberg is also looking at this

growing supply chain pressure and what

it means for inflation.

>> Yes. So basically the war did two

things. Uh it had a massive shortage of

oil which led to a surge in oil prices

and that translated into higher

inflation almost immediately and that's

what everyone has been focused on. But

it's also a slow slowmoving process in

the sense that it's disrupting supply

chains through shipping through critical

material through drawing down on

inventories and my colleagues Rana Saged

and Anagalva have looked at the impact

of this. Basically we do have supply

chain shortages their impact on

inflation is not materializing now. It

takes time for that to materialize into

final product inflation. That'll

probably take about 12 to 18 months and

that will add to uh basically the global

inflation surge. It won't be as big as

oil. It won't be as fast as oil but it

is significant and it would enter into

into the thinking of central banks

around the world.

>> Yeah. And that's going to be key isn't

it? Thank you so much for being with me.

Ad is Bloomberg economics is chief

emerging markets economist just talking

about well what could be quite a long

impact in terms of the crisis in Iran.

Stay with us more from Bloomberg day

coming up after this. Now Milan was once

a second tier financial center but

there's been an influx of wealth that

has sent rents and living costs soaring

and really transformed the city. Joining

us now is senior editor Anthony Palazzo

from Rome to talk about this story.

Anthony, good to speak to you. Milan's

been reinventing itself probably for a

decade. Recently, the economy has really

been booming, but the city is also

feeling quite a lot of growing pains

from this. How?

>> Yes, that's right, Caroline, and thank

you for having me. Uh the city has

really been the biggest beneficiary of

Italy's incentives to attract wealthy

residents from places like R London and

draw expats into returning. Um and it,

as we say in the piece, this has also

produced a knock-on effect of higher

costs for homes and really everything

else. And it's the most expensive city

in Italy. So we we what we found was

that a number a growing number of

professionals like corporate lawyers,

people in the financial industry even

have been choosing to live in Trin

instead, which is cheaper and less than

an hour away by train.

>> Wow. So more people then opting to

commute into Milan. What's that like?

>> Well, it's not for everyone certainly.

Uh but there are definite benefits for

those who can make it work. For one

thing, if you want to purchase a home in

central Milan, for example, it's €1.8

million on average. In downtown Tin,

it's about onethird of that cost. U and

also things like private schools are

less expensive, the pace of life is

quieter, and uh these are things that

are attractive for for families. Um,

what we found a lot of the people that

we spoke with were millennials who are

through that that grueling early part of

their career. They have more flexible

schedules. They don't have to be in the

office every day. Um, and some have uh

family in the area who can provide a

backs stop for emergencies. So, those

are the people that that this is really

an attractive option for those people.

>> Yeah, it was a really interesting story

to read. There's even a name, isn't

there, for the commute between Turin and

Milan, which I will not attempt in

Italian. Mito mi t, right? That's the

spelling of it.

>> That's right.

>> Yeah, I like it. It's a lovely story,

Anthony. Thank you so much. At least, I

think a really interesting one. Milan,

much smaller than London, Paris, New

York, of course. Uh, but you know, all

of the pressures as it wants to grow.

This is Bloomberg Daybreak Europe, your

morning brief on the stories making news

from London to Wall Street and beyond.

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I'm Caroline Hepka

>> and I'm Steven Carroll. Join us again

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need to start your day right here on

Bloomberg Daybreak Europe.