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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: DAYBAC podcast, available every morning on Apple, Spotify or wherever

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Speaker 1: you listen. It's Thursday, the thirteenth of June here in London.

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Speaker 1: I'm Caroline Hepcare and.

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Speaker 2: I'm Stephen Carroll. Coming up today. The Fed signals that

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Speaker 2: there will likely be a single rate cut this year,

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Speaker 2: but keeps the door open to a second.

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Speaker 1: G seven leaders reportedly agree to tap frozen Russian assets

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Speaker 1: to support Ukraine.

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Speaker 2: Plus private equity and focus. Bloomberg learns labor will target

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Speaker 2: carried interest In today's election manifesto, Let's start.

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Speaker 1: With a roundup of our top stories. Federal Reserve officials

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Speaker 1: have walked back their expectations for interest rate cuts this year.

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Speaker 1: Updated economic projections from policymakers show boring costs being lowered

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Speaker 1: only once in twenty twenty four. That's down from three

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Speaker 1: rate cuts previously forecasts. The Fed held interest rates steady

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Speaker 1: the meeting FED chairge your own Pal says the Central

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Speaker 1: Bank is taking a cautious approach.

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Speaker 3: We all make decisions about future meetings until we get there.

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Speaker 3: I think in terms of what we need to see,

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Speaker 3: we want to gain further confidence. Certainly, more good inflation

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Speaker 3: readings will help with that. I'm not going to be

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Speaker 3: specific about how many, because you know, really it's going

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Speaker 3: to be not just the inflation readings, it's going to

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Speaker 3: be the totality of the data.

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Speaker 1: Powell's comments came after figures showed course CPI cooling for

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Speaker 1: a second month in a row in May to three

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Speaker 1: point four percent year on year. Despite Powell's caution, investors

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Speaker 1: are still pricing in more than forty basis points of

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Speaker 1: easing this year.

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Speaker 2: G seven leaders are set to back a deal providing

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Speaker 2: Ukraine with fifty billion dollars of aid using the profits

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Speaker 2: from frozen Russian assets. According to a French official, the

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Speaker 2: technical details need to be finalized, but the aim is

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Speaker 2: for funds to make it to Kiev by the end

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Speaker 2: of the year. The news comes after months of wrangling

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Speaker 2: among US and European allies about how to use the

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Speaker 2: profits generated from two hundred and eighty billion dollars in

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Speaker 2: frozen Russian Central Bank funds, mostly which I stuck in Europe.

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Speaker 1: Bloomberg has learned the Labor Party is expected to alter

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Speaker 1: some tax rules for private equity fund managers if it

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Speaker 1: wins the general election. Changing the tax on carried interest

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Speaker 1: is of one of many measures being closely watched when

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Speaker 1: the party's manifesto is published later today. Labor leader Kirs

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Speaker 1: Starmer says his party's strategy on the economy and business

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Speaker 1: is working.

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Speaker 4: I concluded that I should listen to the electorate. And

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Speaker 4: when you lose that badly, you don't look to the

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Speaker 4: voters and say, what on earth do you think you

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Speaker 4: were doing, You look at your party and say we

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Speaker 4: have to change.

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Speaker 1: Starmer's manifesto looks set to reiterate key pledges, including a

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Speaker 1: cap on corporation tax at the current rate of twenty

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Speaker 1: five percent and a commitment not to increase income tax,

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Speaker 1: national insurance or VAT by The Institute for Fiscal Studies

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Speaker 1: says there is an inevitable choice coming on either cutting

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Speaker 1: spending or raising taxes no matter who wins the general election.

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Speaker 2: The French president Emmanuel Macron sists he won't step down

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Speaker 2: even if his party loses upcoming legislative elections. Frances holding

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Speaker 2: its two round parliamentary vote starting on the thirtieth of June.

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Speaker 2: Macron's political rival Marrying Le Penn is leading polls by

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Speaker 2: a wide margin with her far right National Rally party.

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Speaker 2: Speaking at a press conference, the French president sought to

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Speaker 2: dispel rumors about his future.

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Speaker 5: It's absurd. I believe in the strength of our institutions.

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Speaker 5: I did not intend to campaign more than I did

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Speaker 5: for the legislative elections of twenty seventeen and twenty twenty two,

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Speaker 5: but I thought that in today's circumstances it was important

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Speaker 5: to set the course and the method.

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Speaker 2: President Emmanuel Macron speaking yesterday. His speech comes after French

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Speaker 2: bonds tumbled on Tuesday, following reports the president had discussed

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Speaker 2: resigning if he suffered a big defeat in the elections.

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Speaker 1: Elon Musk is being sued by a group of former

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Speaker 1: SpaceX engineers for sexual harassment and vitaliation. The complaint has

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Speaker 1: been filed in a state court in California. Bloombergs teaba

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Speaker 1: Adebayo has the details.

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Speaker 6: The eight former employees claimed Musk knowingly and purposefully created

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Speaker 6: a hostile work environment. They say he brought vile sexual photographs,

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Speaker 6: memes and commentary that demeaned women all the LGBTQ community

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Speaker 6: into the workplace. The workers wrote an open letter in

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Speaker 6: twenty twenty two raising concerns about Musk's behavior and say

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Speaker 6: they were fired in response. The same group of employees

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Speaker 6: have already complained to the US National Labour Relations Board.

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Speaker 6: SpaceX and Elon Musk haven't commented on the lawsuit. SpaceX

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Speaker 6: previously denied wrongdoing and said that the fired employees violated

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Speaker 6: policies in London to her Adebayo Bloomberg Radio.

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Speaker 1: Now, in a moment, we'll bring you more on the

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Speaker 1: federal reserve rate decision, the dot plot, and will look

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Speaker 1: ahead to the much anticipation launch of the labor election manifesto.

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Speaker 1: But first, another story that caught our eye about how

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Speaker 1: demotivated workers are in the UK and how much of

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Speaker 1: a crisis that is because of the cost to the

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Speaker 1: UK economy. So this is research from Gallup. It shows

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Speaker 1: that only one in ten UK workers are classified as

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Speaker 1: engaged at work are putting in discretionary effort on the

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Speaker 1: task that they're asked to do.

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Speaker 2: I mean that already the definition I have issues with.

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Speaker 2: You know, you're paid to do a task going above

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Speaker 2: and beyond is not what you're paid for.

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Speaker 1: Okay, that's one definition. On the other hand, it's a

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Speaker 1: huge blow to the economy because it's really costing the

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Speaker 1: economy two hundred and fifty seven billion pounds. That's the

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Speaker 1: figure that's been come up with our colleague Aarena, and

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Speaker 1: Gel has been writing about this. It's the potential output

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Speaker 1: miss for the UK is basically about quiet quitters and

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Speaker 1: also I think overall, when you look at how engaged

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Speaker 1: people are at work, it always makes me slightly scared

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Speaker 1: because so few people are. Even across Europe, it's only

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Speaker 1: just above twenty percent of people who are like fully

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Speaker 1: engaged in their work, which I think is a real shame.

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Speaker 1: So that is still half of that level in the UK.

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Speaker 1: Normally we talk about productivity being about how much machine

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Speaker 1: equipment and IT equipment the company buys, not usually about individuals.

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Speaker 2: Yeah, I was interested to see in this research when

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Speaker 2: Gallup spoke to people who didn't feel motivated at work,

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Speaker 2: a lot of what they put that down to was

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Speaker 2: a lack of clarity about what needs to be accomplished.

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Speaker 2: And part of it is also so part of that

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Speaker 2: is kind of poor management and things you find in

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Speaker 2: an individual job, but part of it's also the big

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Speaker 2: macro situation facing the UK. You know, things like Brexit

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Speaker 2: or the pandemic or just general macroeconomic uncertainty leaving people

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Speaker 2: feeling un motivated.

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Speaker 1: Yeah, which is a real issue economically overall and for workers.

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Speaker 1: Have a read of that story on the Bloomberg terminal

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Speaker 1: this morning from Irena and Gel really nice, peace, Let's.

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Speaker 2: Bring you more now in the Federal Reserved and yesterday,

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Speaker 2: policymakers dialing back expectations for interest rate cuts this year

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Speaker 2: to just one versus the three that they previously indicated.

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Speaker 2: Our managing editor for FXS and Rates, Rachel Avans, is

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Speaker 2: with us from Moorrow morning. Rachel, can you talk us

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Speaker 2: through first of all us was what we learned about

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Speaker 2: the Fed's expectations for the rate path ahead, how much

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Speaker 2: divergences there are among policymakers.

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Speaker 7: Yeah, well, I think that was kind of something that

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Speaker 7: we were really focused on heading into this decision, was

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Speaker 7: where the Fed was going to come down in terms

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Speaker 7: of its dots, and we finally have an answer. They

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Speaker 7: did indeed scale back their expectations for cuts this year.

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Speaker 7: We were coming into the meeting with three cuts projected

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Speaker 7: by the Fed. We're then now projecting one cut. But

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Speaker 7: what was interesting to me was some of the discussion

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Speaker 7: afterwards in the press conference around how much the CPI

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Speaker 7: print really influenced policymakers in actually casting their votes for

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Speaker 7: the different cuts. You know, he basically indicated that while

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Speaker 7: some did sort of factor that into their consideration, most didn't.

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Speaker 7: And I think that's kind of why you saw sort

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Speaker 7: of the market reaction that we had yesterday, with very

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Speaker 7: much that the CPI print from the morning actually kind

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Speaker 7: of carrying through to the afternoon and being far more

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Speaker 7: of a sort of presence for the market than the

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Speaker 7: FED meeting ended up being.

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Speaker 1: Yeah, which we were discussing yesterday, weren't we That was

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Speaker 1: the big sort of question mark in terms of the

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Speaker 1: expectation then for the inflation path that is also very interesting.

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Speaker 1: I mean, the CPI number coming in kind of cool

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Speaker 1: than expected, but what do we see going forward? How

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Speaker 1: much of a blip is it?

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Speaker 7: Yeah, I mean that the FED has kind of been

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Speaker 7: sticking with this mantra of the fact that inflation is

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Speaker 7: coming down, and they've been, you know, not all shy

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Speaker 7: and expressing in past meetings that they've been frustrated at

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Speaker 7: that pace. You know, it really has been incredibly glacial.

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Speaker 7: But yesterday, I think was kind of an example of

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Speaker 7: where they want to see things heading. It's not necessarily

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Speaker 7: where they want to end up, obviously, and I think

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Speaker 7: that's why they were a little bit coy about the

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Speaker 7: exact timing of their first cuts. You know, Powell kind

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Speaker 7: of really did leave on the table at the press

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Speaker 7: conference the fact that you might see two cuts this

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Speaker 7: year rather than just the one kind of projected by

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Speaker 7: the dots. But there's no doubt about it. You know,

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Speaker 7: we did see kind of core inflation coming down more

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Speaker 7: than expected, and that was enough to kind of send

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Speaker 7: the market into a bit of a tizzy really, and

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Speaker 7: we saw a big rally off the back of that.

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Speaker 1: Yeah.

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Speaker 2: So as you say, the main number could er then

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Speaker 2: expected for the second straight month. What are the expectations

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Speaker 2: though from the FAD about where the interest or they

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Speaker 2: excuse me, the inflation path goes from here now, because

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Speaker 2: they had I suppose upgraded or you know, raised that

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Speaker 2: in the projections too.

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Speaker 6: Yeah.

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Speaker 1: Absolutely. And the market reaction I think very interesting in

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Speaker 1: terms of the bond market reaction, but also the reaction

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Speaker 1: from the dollar.

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Speaker 2: Yeah.

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Speaker 7: I was really watching the dollar because I think you

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Speaker 7: had kind of this sort of slight division really between

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Speaker 7: kind of like the path of treasuries and the dollar.

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Speaker 7: The dollar wants to see kind of like rates staying

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Speaker 7: higher for longer. The treasury market wants to see cuts

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Speaker 7: coming immediately. And you saw kind of an interesting reaction

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Speaker 7: as a result. Yesterday. The dollar did slip, but not

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Speaker 7: so significantly. It was around about point two percent yesterday

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Speaker 7: and it's up again today. So I think everyone kind

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Speaker 7: of got a little bit of what they were looking

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Speaker 7: for in the two different events. You know, the treasuries

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Speaker 7: traders were looking to the Fed saying, yeah, cuts are coming,

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Speaker 7: you know, don't worry, and looking to the inflation and thinking, well,

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Speaker 7: they can cut even more than they're saying. And the

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Speaker 7: dollar was really listening a little bit more to the

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Speaker 7: Fed and thinking, actually, maybe they won't even go till December.

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Speaker 7: We've got time to keep piling in.

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Speaker 2: Okay, Rachel Evans, thank you very much for joining us.

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Speaker 2: I'm managing editor for FX and Rates, Rachel Evans. They're

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Speaker 2: looking at the market reaction to yesterday's Federal Reserve decision,

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Speaker 2: as they've now sigling that just one interest rate cut

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Speaker 2: this year. Just looking at market pricing this morning for

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Speaker 2: the Fed as well. We're looking at about forty three

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Speaker 2: basis points priced in for this year, so not quite

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Speaker 2: at fully two cuts, but certainly leaning in that direction.

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Speaker 1: Yeah, absolutely right. Let's turn from economics to politics. In

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Speaker 1: the UK, the Labor Party is launching its manifesto today,

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Speaker 1: with key measures on taxation likely to be in focus,

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Speaker 1: after leader Keir Starmer promised to put economic growth and

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Speaker 1: wealth creation at the heart of his party's plans. Are

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Speaker 1: UK Politics, reported, James Walcock joins us now for more.

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Speaker 1: Blueberg has learned more about what might be in today's

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Speaker 1: party manifesto. What exactly do we know, James.

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Speaker 8: Well, so we're told that there may be some reference

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Speaker 8: to fixing what some including Dan Needle from Tax by AUTHOSIATEPS,

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Speaker 8: have called the carry interest loophole. Now they use the

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Speaker 8: word loophole. That's not always agreed, but the point being

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Speaker 8: is if you are work in private equity, you can

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Speaker 8: effectively take your stake of the profits of what you

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Speaker 8: make and use that as your income, claiming it as capital,

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Speaker 8: which is taxed at twenty eight percent as opposed to income,

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Speaker 8: which obviously if paid at that level, you'd be taking

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Speaker 8: it a forty seven percent marshal income tax. And so

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Speaker 8: it's something that Rachel reads back in twenty twenty one,

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Speaker 8: and said she wanted to look at and given what

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Speaker 8: we know about the Labor Party positions on tax that

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Speaker 8: we're likely to see as manifesto no national insurance raises,

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Speaker 8: no income raises, they're expected to say that, as well

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Speaker 8: as no corporation tax raises and VAT rises. They're a

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Speaker 8: big question about how they would raise this stuff. They

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Speaker 8: refused to rule out in the past capital gains tax changes,

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Speaker 8: So the detail of quite what could come Caroline could

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Speaker 8: be built into capital gains tax changes, or it could

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Speaker 8: be specifically for this carry interest loophole. But it's something

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Speaker 8: that look, Labor have made a big pitch to win

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Speaker 8: over business and to win over finance, and although private

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Speaker 8: equity is a subset of finance, it's something that I

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Speaker 8: think some private equity traders might wake up to read

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Speaker 8: Bloomberg this morning and be a bit surprised.

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Speaker 2: By Okay, so we have I think a fair picture

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Speaker 2: there about what the tax changes could possibly be in

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Speaker 2: the Labor and manifesto. James, what else should we be

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Speaker 2: watching out for when this announcement is made.

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Speaker 8: It will be interesting to see if there are any

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Speaker 8: surprises because the Labor team have been quite clear that

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Speaker 8: we shouldn't expect any They don't want to scare anyone.

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Speaker 8: They are twenty points up in the polls and they

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Speaker 8: would quite like it if it stayed that way, and

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Speaker 8: so a lot of it we already know. They want

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Speaker 8: to say growth is their number one priority. They want

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Speaker 8: to set out their retail offering, economic stability NHS waiting

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Speaker 8: lists a border security command, antisocial crackdown, and six tentousand

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Speaker 8: and five hundred teachers. For the business side, they want

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Speaker 8: to talk about a National Wealth Fund GB energy, a

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Speaker 8: TENI industal strategy. And then on the more controversial side,

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Speaker 8: the stuff that doesn't mentioned as much with people at

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Speaker 8: Bloomberg care about. We have workers' rights reform, issues around

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Speaker 8: housing planning reform at one point five million houses potentially,

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Speaker 8: and looking at relationalizing rail. That's all already announced and

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Speaker 8: anyone who reads the financial press probably already knows about it,

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Speaker 8: and so that will all be in there and we

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Speaker 8: will be hoping for more detail. But I think the

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Speaker 8: thing we have to know is that the political momentum

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Speaker 8: from this campaign has been that the Labor Party are

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Speaker 8: twenty points up in most polls, is certainly in Bloomberg's

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Speaker 8: composite in dex the polls and the momentum that gives

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Speaker 8: them is to give less on detail and more on

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Speaker 8: sort of vibes, to put it sort of bluntly, and

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Speaker 8: so they set out their growth missions in the past.

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Speaker 8: The question will be is how much they're willing to

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Speaker 8: put all that in black and white in the ways

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Speaker 8: that it can be held accountable for a five year

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Speaker 8: term if they were to win, I would say yes absolutely.

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Speaker 1: There was also, of course some interest yesterday evening because

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Speaker 1: you had kir Starmer and Rishi Sinac again doing big

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Speaker 1: sit down interviews more media. You know that the days

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Speaker 1: are ticking by, are getting closer to the actual vote,

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Speaker 1: which is interesting. But as you say, the Labor Party

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Speaker 1: specifically trying to be very very cautious. Do you think

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Speaker 1: that that causes them any problems?

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Speaker 8: Well, I mean to quote from the Institute of Physical Studies,

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Speaker 8: they say there is this inevitable trade off coming on

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Speaker 8: whether the UK government to come either raise his taxes

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Speaker 8: or cut spending. They say, like the situation the KA

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Speaker 8: government is in, the only option is to raise get debt.

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Speaker 8: Liz Trust has shown that's quite a difficult path at

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Speaker 8: the moment, and so for any future government that is

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Speaker 8: a choice and Labor today, if all the reporting and

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Speaker 8: everything that's been said by Labor sources to me and

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Speaker 8: many others in the media is true, they're going to

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Speaker 8: rule out some of their biggest tax leavers that they have,

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Speaker 8: which is why there's so much speculation, including our reporting

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Speaker 8: this morning, about the other leavers what they have left

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Speaker 8: because as Bloomberg's reporting over this week from Ellen Milligan says,

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Speaker 8: she was talking to the former Labor leader Neil Kinnock

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Speaker 8: and he said there needs to be room to maneuver

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Speaker 8: if they need to bring back investment fix the public sector.

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Speaker 8: And so it was funny you looked at that debate

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Speaker 8: last night. You mentioned that Kis Starmer and the conservat

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Speaker 8: lead Richie Sunak both being grilled by Sky's Beth Rigby.

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Speaker 8: For Richis Sunak, it was all on the record and

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Speaker 8: what he had done in his administration. For Kis Starmer,

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Speaker 8: so much of the conversation focus on tax, something that

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Speaker 8: you know, we in the finance world care about a lot,

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Speaker 8: but for the audience and for the other journeys there,

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Speaker 8: it was about how do these sums all add up

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Speaker 8: and what are you going to promise us what is

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Speaker 8: going to be the pitch today? So there is a

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Speaker 8: lot of pressure on Labor both to deliver on what

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Speaker 8: they put in the manifesto today, but also the expectations

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Speaker 8: that they themselves are set to fix the economy and

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Speaker 8: fix the state.

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