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Speaker 1: This is Bloomberg Daybreak Europe for this Tuesday, the thirteenth

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Speaker 1: of June in London. Coming up today.

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Speaker 2: Reshuffling the deck, the boss of Barkleys tells US an

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Speaker 2: exodus of top bankers was driven by a decision to

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Speaker 2: refocus the business.

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Speaker 1: Stepping back, Goldman Sachs International CEO tells Bloomberg the bank

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Speaker 1: is ending its relationship with od Asset Management.

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Speaker 2: Misreading the room. City Warren's traders are underestimating how much

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Speaker 2: US inflation will drop ahead of today's CBI print.

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Speaker 1: Plus getting a leg up, ARM looks to Intel as

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Speaker 1: an anchor investor for its USIPO.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 3: and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Stephen.

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Speaker 1: Carroll and I'm Caroline Hecker. Here are the stories that

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Speaker 1: we're following today.

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Speaker 2: The Barkley CEO says a reshuffle in its investment bank

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Speaker 2: has led to more top deal makers than usual leaving

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Speaker 2: in recent months. C. S Venkata Krishnan replaced the heads

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Speaker 2: of his investment arm earlier this year, moving one to

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Speaker 2: Europe as the bank shifts focus there. He told Bloomberg's

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Speaker 2: David Weston the move is about looking ahead the next

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Speaker 2: decade of banking.

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Speaker 4: So what you've seen is rising interest rates, changing business models,

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Speaker 4: the importance of sectors that are fairly new to the economy,

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Speaker 4: not just technology, but sustainability, mobility, climate, tech. We began

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Speaker 4: with a very American investment bank here in the US,

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Speaker 4: based from the Lehman acquisition of Parklays, and we've grown

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Speaker 4: in Europe. We wanted to put more emphasis in Europe

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Speaker 4: as well.

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Speaker 2: Venkata, Christian, head of one of the head of the

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Speaker 2: world's largest non US investment bank, has been trying to

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Speaker 2: stem an exodus of talent in recent weeks as rivals

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Speaker 2: try to poach deal makers.

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Speaker 1: Goldman Sachs has told Bloomberg that the bank is ending

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Speaker 1: its relationship with od Asset Management. The news comes as

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Speaker 1: the Hedge Fund grapples with the complexities of divorcing itself

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Speaker 1: from its founder. Speaking exclusively to our editor at large,

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Speaker 1: Farcine Laqua, Goldman Sachs International CEO Richard Nodi had this

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Speaker 1: to say on the matter.

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Speaker 5: We hold ourselves to extremely high standards and we expect

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Speaker 5: the same of our client base. And that's how we

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Speaker 5: work together in partnership. And so you know, when new

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Speaker 5: information comes to light in any situation, we'd obviously reviewed

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Speaker 5: and reviewed quickly and then take the appropriate action.

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Speaker 6: So what you severed tires or are you still contemplating

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Speaker 6: what happens next.

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Speaker 5: We're in the process of moving away from their business.

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Speaker 1: Richard Node and his comments come after the FT reported

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Speaker 1: on a number of allegations of sexual assault against od

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Speaker 1: Asset Management founder Crispin od Od himself denies all the

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Speaker 1: allegations against him.

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Speaker 2: UK based chip designer Armors and talks with Intel to

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Speaker 2: anchor its New York initial public offering. Arm which is

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Speaker 2: owned by SoftBank, is looking to raise as much as

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Speaker 2: ten billion dollars in what will be one of the

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Speaker 2: largest IPOs this year. If the talks succeed, Intel will

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Speaker 2: be included in arms IPO prospectus ahead of the listing.

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Speaker 1: Now we are waiting, of course, the USCPI figure. Bond

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Speaker 1: traders are underestimating the drop in inflation ahead of today's

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Speaker 1: USCPI numbers. That is the view of the City Banks.

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Speaker 1: Threshes ragaev Datla he expects a miss to the downside

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Speaker 1: as the market comes off two straight lower than forecast.

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Speaker 1: Prints Ola Sonola, Fitch Ratings head of US Regional Economics,

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Speaker 1: says that things are heading in the right direction.

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Speaker 7: The trend line is certainly positive. I think when you

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Speaker 7: look at shelter inflation, which is the biggest component in

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Speaker 7: terms of CPI, the expectation is that that would trend

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Speaker 7: down over the coming months because market rates have actually

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Speaker 7: came down and market rates tend to lead that CPI component.

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Speaker 1: Ulu Sonola speaking to US Then now Tuesday CPI report

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Speaker 1: comes just a day before the Fed's policy decision, with

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Speaker 1: traders wagering that officials will hold interest rates steady.

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Speaker 2: The European Union is planning to launch a formal antitrust

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Speaker 2: complaint into Google's two hundred and twenty five billion ad

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Speaker 2: tech business. It could pave the way for massive fines

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Speaker 2: for parents, Alpha Brat and strike at the heart of

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Speaker 2: the advertising technology that drives most of the tech giants revenue.

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Speaker 2: Bloomberg has learned that the list of charges could be

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Speaker 2: announced as soon as Wednesday. The tech giant has already

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Speaker 2: been fined eight point six billion dollars by the EU

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Speaker 2: around how it uses its dominant position in online advertising.

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Speaker 1: A government plan to bring in voluntary price caps on

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Speaker 1: food in Britain has been rubbished by one of the

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Speaker 1: country's most experienced retailers. Archie Normant, the chairman of Marks

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Speaker 1: and Space, said didn't mince his words when we asked

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Speaker 1: him about the idea here on Day Break Europe.

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Speaker 8: I mean, dear, oh dear. I've heard some hair brand

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Speaker 8: ideas come out of the political world in time, and

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Speaker 8: that's one of them. Central foods are coming down in price.

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Speaker 8: The market is taking them down. They're coming up down

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Speaker 8: price as we speak. And we all know price caps

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Speaker 8: don't work anyway. We learned that, and dad would he.

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Speaker 1: Norman also criticized the UK's Competition and Markets Authority. He

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Speaker 1: told us that the CMA, which is investigating the price

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Speaker 1: of groceries quote, hasn't got anything right for about three decades.

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Speaker 1: And those are our top stories.

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Speaker 2: I'm sure a nonether of us have been accused of

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Speaker 2: getting nothing right in the past three decades. Sounds like

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Speaker 2: a complaint for a teenage child.

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Speaker 1: Well, no, listen, I think it's quite serious. You know

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Speaker 1: the issues around I mean, listen, this is the biggest

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Speaker 1: regulator in the UK right now, and the fact that

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Speaker 1: it doesn't have the confidence of somebody as significant as Norman,

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Speaker 1: I think is pretty telling. And yeah, that it hasn't

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Speaker 1: been right for so long. It's about, you know, the

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Speaker 1: money that goes into this kind of regulatory oversight, the

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Speaker 1: backing that it has.

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Speaker 2: Yeah, yeah, I'm Another story that caught my eye this

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Speaker 2: morning was to do with angry air passengers. I mean,

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Speaker 2: I travel a lot, and I can definitely see signs

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Speaker 2: of what we're reporting on. Here is this warning from

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Speaker 2: the International Air Transport Association that there's been a massive

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Speaker 2: jump in the number of air rage incidents for twenty

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Speaker 2: twenty two, so one disorderly incident report for every five

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Speaker 2: hundred and sixty eight flights last year, So that is

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Speaker 2: a major increase from twenty twenty one as well. I

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Speaker 2: mean some of the war high profile ones. I think

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Speaker 2: people have probably heard of that there was this incident

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Speaker 2: of somebody opening an aircraft door in an Asiana flight.

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Speaker 2: But I mean there's the interesting kind of pointing at

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Speaker 2: about the psychology of how people are feeling about flying

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Speaker 2: after the pandemic. Anyone who did fly over those two

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Speaker 2: years used to empty aeroplanes used to things being a

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Speaker 2: little bit different.

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Speaker 1: I think that's it. You see the line that ill

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Speaker 1: between this story, it's a bit like your child common

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Speaker 1: It makes me think about all of the reporting that

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Speaker 1: there's been, certainly in the UK, around the poor behavior

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Speaker 1: of children in schools. You know the fact that that

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Speaker 1: two year, three year hiatus of social interaction has had

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Speaker 1: perhaps a more deep seated impact on people socializing. I

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Speaker 1: don't know if that's the link that I well.

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Speaker 2: A warning anyway from my ata if you're traveling this summer,

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Speaker 2: be nice, good advice, good advice for life in general.

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Speaker 1: Children and adults.

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Speaker 2: Indeed, yes, people of all ages, be a good airline

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Speaker 2: passenger this summer.

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Speaker 1: Okay, let's move on and talk about one of our

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Speaker 1: key interviews this morning. The CEO of Berkley cs VN

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Speaker 1: Kata Krishnan says that they've lost more top bankers than

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Speaker 1: usual because of the reshuffle at the bank. Van Kata

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Speaker 1: Krishnan has been speaking to Bloomberg's David Weston.

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Speaker 4: First of all, we are losing a few investment bankers,

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Speaker 4: but not that much more than what is normal annual turnover.

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Speaker 4: I mean, this is the period in the first few

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Speaker 4: months of the second quarter when people have been paid

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Speaker 4: their bonuses, and there's a little bit of musical chairs.

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Speaker 4: As you know, it's a time owner tradition in this industry.

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Speaker 4: We made a management change in our investment bank. We

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Speaker 4: spend a lot of time last year thinking about what

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Speaker 4: we expected the banking landscape to be over the next decade.

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Speaker 4: So what you've seen is rising interest rates, changing business models,

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Speaker 4: the importance of sectors that are fairly new to the economy,

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Speaker 4: not just technology, but sustainability, mobility, climate, tech. And then

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Speaker 4: there is just the different players and the importance of

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Speaker 4: the players in the banking market. The private equity groups

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Speaker 4: have been very large, Private credit funds are becoming bigger.

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Speaker 4: They're slightly disintermediating what banks are doing. And we as

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Speaker 4: we've began with a very American investment bank here in

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Speaker 4: the US based from the Lehman acquisition of Barclays, and

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Speaker 4: we've grown in Europe. We wanted to put more emphasis

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Speaker 4: in Europe as well. So you bring it all together

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Speaker 4: and you're talking about us thinking about the next generation

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Speaker 4: of leadership of the investment bank, building on our strends

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Speaker 4: in debt capital markets, but growing in equities growing in

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Speaker 4: m and A growing in Europe. And when you do

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Speaker 4: that kind of organizational change sometimes it has impacts.

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Speaker 9: Well, you suggested something I was curious about. It is

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Speaker 9: there a strategic shift in emphasis in the Investment Bank

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Speaker 9: a little bit away from United States and toward Europe. Because,

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Speaker 9: as I recall, your two co heads before were based

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Speaker 9: in the United States. The two coheads now are going

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Speaker 9: to base in Europe.

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Speaker 4: One is in Europe and one is here in the US.

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Speaker 4: So it's not a shift so much as an expansion.

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Speaker 4: It is to try to give more attention to Europe.

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Speaker 4: Relatively speaking, the US remains critically important to US and

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Speaker 4: the US businesses or some things, especially in the dead

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Speaker 4: capital markets, where we are absolutely leading and we want

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Speaker 4: to maintain that position.

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Speaker 9: Absolutely in debt couple of markets. What about equity? Are

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Speaker 9: you shifting toward equity?

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Speaker 4: We are trying to expand and grow our business in

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Speaker 4: both equities and advisory.

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Speaker 9: Given your insight into the business in the United States,

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Speaker 9: what do you make of the economy and the consumer

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Speaker 9: I mean, are you seeing delinquency's rise? Are you seeing

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Speaker 9: some tightening your credit?

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Speaker 4: No, so we're seeing just on the margins some increase

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Speaker 4: in delinquencies. We're seeing people continuing to economize. We see

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Speaker 4: that in the UK as well as in the US.

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Speaker 4: The most important thing is that employment is holding up,

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Speaker 4: and employment is one of the most important determinants of

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Speaker 4: individual credit behavior.

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Speaker 9: There's been a little bit of the shaking up, if

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Speaker 9: I could put it that way, in the US banking system,

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Speaker 9: with some of the regional banks, starting with Silicon Valley Bank.

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Speaker 9: What do you make of that situation? More broadly, do

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Speaker 9: you expect more bank failures in the United States?

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Speaker 4: I'm not sure I expect failures. What I expect is

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Speaker 4: concerns and banks cleaning up their act if you like.

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Speaker 4: So banks which have asset liability problems will go get

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Speaker 4: ahead of it. They will try to sell assets. I

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Speaker 4: think the net effect of it will be a curtailment

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Speaker 4: or diminishment of lending, especially in Middle America where the

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Speaker 4: regional banks have have a footprint.

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Speaker 9: Are you tightening your credit standards right now?

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Speaker 4: So the big banks, I think all tightened our wholesale

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Speaker 4: credit standards through the leverage finance business last year. And

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Speaker 4: you know there were many large loans, some didn't get placed,

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Speaker 4: and so the wholesale banks with rising rates, tightened their

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Speaker 4: credit standards. The retail standards, we have tightened it, but

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Speaker 4: they are marginally tighter than they were said during COVID.

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Speaker 4: I think what you're going to see in the regional

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Speaker 4: banks is a tightening of credit standards in areas like

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Speaker 4: commercial real estate, small business lending, the things that they do.

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Speaker 9: So you said the magic words commercial real estate. How

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Speaker 9: exposed is Barclay commercial real estate?

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Speaker 4: First of all, not very much. We do some direct

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Speaker 4: lending in the UK, but it's small and in the

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Speaker 4: US we mostly finance vehicles or portfolios of commercial real

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Speaker 4: estate assets, but we have adequate protection in terms of

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Speaker 4: first loss protections and loan to values.

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Speaker 1: So that was the Berkley ceocs ven Kata Christian there

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Speaker 1: speaking to Bloomberg's David Weston about the states of well

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Speaker 1: the business lending and also it's a top flight employees.

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Speaker 2: Now, could today's US CPI reading change the Federal Reserve

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Speaker 2: decision tomorrow? Bloomberg Economics expecting to see a slow down

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Speaker 2: in the year on your reading from May from four

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Speaker 2: point nine percent in April to four percent in May.

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Speaker 2: For the headline figure, the core CPI numbers is expected

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Speaker 2: to slow to five point two percent. Our market supporter,

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Speaker 2: Valery title is here with more on this story. Does

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Speaker 2: this CPI print matter?

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Speaker 3: Valery?

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Speaker 6: Look, Stephen, That is a good question, because that's currently

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Speaker 6: what the market is debating.

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Speaker 10: You really have two camps out there.

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Speaker 6: You have people who say the FED has really over

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Speaker 6: telegraphed this pause.

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Speaker 10: The data has come in hot all month.

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Speaker 6: Why would they change their mind with twenty four hours

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Speaker 6: to go until their FED decision? The CPI print doesn't

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Speaker 6: matter today. The Fed's going to pause anyway. And then

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Speaker 6: you have another camp which says, look, the Fed, and

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Speaker 6: especially Powell has told us they're extremely data dependent, why

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Speaker 6: would they overlook this CPI print even though it's close

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Speaker 6: to their decision. Yes, it's still time for them to

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Speaker 6: change their mind. That a hot core print today could

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Speaker 6: shift the dial on where June's priced. And you know,

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Speaker 6: we get to a moment today this is kind of

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Speaker 6: the disaster scenario for the market that CPI comes in

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Speaker 6: a bit hot, especially that core number, and we get

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Speaker 6: to a moment today where the market freezes with June

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Speaker 6: fifty to fifty priced with less than twenty four hours

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Speaker 6: to go, and we sit here and panic and wait

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Speaker 6: for some sort of signal from the FED on which

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Speaker 6: way it's going to be.

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Speaker 1: Hang on, how high is the baff for that to happen?

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Speaker 6: Okay, So the people who think that the Fed's gonna pause,

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Speaker 6: no matter what they think, the bar is, you know,

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Speaker 6: the core month on month number has to come in

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Speaker 6: screamingly hot, like point eight versus a point four consensus,

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Speaker 6: a big beat. Other people are saying, you know, it

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Speaker 6: could just come in slightly hot, and that would get

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Speaker 6: enough the market to start questioning this Fed pause because

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Speaker 6: in some way aren't they being intellectually inconsistent by saying

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Speaker 6: they're so data dependent yet almost instead of hiking in June,

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Speaker 6: they're just going to promise one in July. That's not

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Speaker 6: how central banks should work. The data is already lagged.

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Speaker 6: If they make a decision lagged based on that, that's

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Speaker 6: even more of a lag.

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Speaker 10: They should hike now if they know that they're going

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Speaker 10: to hike later.

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Speaker 2: So faugh Valerie's question of the day, how dependent is dependent?

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Speaker 2: A word too? On the Chinese Central Bank decision today,

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Speaker 2: Valerie cutting its short term policy rate before more economic

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Speaker 2: Do there more economic data there to you on Thursday?

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Speaker 10: Yeah?

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Speaker 6: So this is This is funny. This is not the

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Speaker 6: rate that we expected them to touch first. This is

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Speaker 6: the seven day repo rates. It's essentially the interbank lending

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Speaker 6: rate the banks at which the rate at which banks

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Speaker 6: lend to each other short term. But the key for

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Speaker 6: the markets here is this just is another signal that

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Speaker 6: the China is about to really turn into an easing cycle.

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Speaker 10: We know that they set a bigger rate.

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Speaker 6: On Thursday, that's their one year MLS free Bloomberg Economics

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Speaker 6: now thinks that that's a done deal, that that rate

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Speaker 6: is going to be cut given this this move overnight,

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Speaker 6: so a bit symbolic. It's not the rate we thought,

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Speaker 6: it's not the one that's a big deal, but it

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Speaker 6: just means there's more to come.

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Speaker 1: Yeah, okay, I mean I suppose a lot of people

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Speaker 1: wondering whether it's just a reaction to the worse than

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Speaker 1: expected PI data out of China and whether yeah, more

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Speaker 1: maybe to come on Thursdays.

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Speaker 10: So that's that's the question mark.

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Speaker 6: And don't remember we also get the China activity data

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Speaker 6: on Thursday morning as well, so you know that could

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Speaker 6: confirm the downtrend two months in a row or throw

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Speaker 6: it into question. But they're already moving, and they're already easy,

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Speaker 6: and that's a good signal to see.

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Speaker 2: stories making news from London to Wall Street and beyond.

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