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Speaker 1: This is the Bloomberg dayrecurate podcast, available every morning on Apple,

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Speaker 1: Spotify or wherever you listen. It's Friday, the third of

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Speaker 1: May in London. I'm Caroline Hepkin.

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Speaker 2: And I'm Stephen Carroll. Coming up today, Conservative lasses mount

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Speaker 2: as Labor makes significant gains in England's local elections.

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Speaker 1: Apple announces the largest ry purchase in US history. As

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Speaker 1: the tech giant predicts a return to growth.

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Speaker 2: Plus a Goldman offer to high performers. The Wall Street

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Speaker 2: Giant is scrapping the EU Era bonus cap for hundreds

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Speaker 2: of British staff.

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Speaker 1: Let's start with a roundup of our top stories. Labour

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Speaker 1: has scored a number of early victories in local elections

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Speaker 1: in England and Wales as the Conservatives look on track

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Speaker 1: for heavy losses. The opposition party also won the Blackpool

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Speaker 1: South by election with a massive twenty six percent swing.

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Speaker 1: New Labour MP Chris Webb says his landslide is a

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Speaker 1: sign that voters want change.

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Speaker 3: They've had it all for fourteen years of the Conservatives

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Speaker 3: being in power, lost trust of the British people and

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Speaker 3: Blackpool has had enough of this failed government which has

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Speaker 3: crashed the economy, destroyed our public services, and put up taxes.

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Speaker 1: Web's success is the first major setback in an expected

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Speaker 1: slew of defeats for a Sheisunac's Tory party. The Conservatives

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Speaker 1: have lost control of three local councils so far. Pulsters

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Speaker 1: expect that they could lose as many as five hundred

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Speaker 1: seats the Transport Sectory Mark Harper says that's because the

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Speaker 1: Conservatives are defending seats one at an electoral high point

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Speaker 1: back in twenty twenty one.

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Speaker 4: We had a vaccine bounce, We just come out of

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Speaker 4: a global pandemic and we got the benefit from the

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Speaker 4: public in that set of local elections, and that was

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Speaker 4: a very high base and most of these seats were

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Speaker 4: contested at that time, So you know, it is going

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Speaker 4: to make the evening difficult.

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Speaker 1: I think Harper and other Conservative MPs are likely to

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Speaker 1: be watching mayor All election results expected later today and

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Speaker 1: into the weekends, and if the West Midlands Mare Conservative

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Speaker 1: and Dey Street loses, many would see it as a

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Speaker 1: moment of danger for the Prime Minister.

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Speaker 2: Ishisunac shares in Apple have jumped in lay trading. The

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Speaker 2: company posted stronger than expected sales, predicted a return to growth,

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Speaker 2: and announced the biggest buyback in US history. Apple's board

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Speaker 2: approved a one hundred and ten billion dollar repurchase of stock,

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Speaker 2: while the firm also raised its quarterly dividend for the

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Speaker 2: twelfth year in a row. Here's our chief correspondent Mark

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Speaker 2: German on Apple's performance in China.

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Speaker 5: The biggest highlight was Apple did quite a bit better

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Speaker 5: in China than Counterpoint Research, ITDC and others had anticipated.

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Speaker 5: They had said that iPhone sales in China had declined

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Speaker 5: by nineteen percent. Tim Cook was asked to try to

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Speaker 5: square that away on the earnings call.

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Speaker 2: But the true is how could he right?

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Speaker 5: These are third party anounced reports, making one claim Apple

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Speaker 5: has the actual numbers.

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Speaker 2: Mark German referring there to CEO Tim Cook telling investors

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Speaker 2: on the earnings call that iPhone revenue in mainland China

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Speaker 2: grew on a reported basis. It's though that that that

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Speaker 2: discrepancy with Counterpoint and IDC may arise some differences in

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Speaker 2: the way, and that the analysis and appoll account for revenue.

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Speaker 1: Now two bank earnings credit Agricol reported first quarter profits

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Speaker 1: that beat estimates of one point nine billion euros four

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Speaker 1: hundred million above estimates. The games were driven by strength

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Speaker 1: in its international retail bank and corporate and investment bank divisions.

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Speaker 1: The French lender also has pulled forward a target to

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Speaker 1: reach adjusted profits of six billion euros a year ahead

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Speaker 1: of schedule. Meanwhile, SUSTA General has seen profits beat estimates

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Speaker 1: in the first quarter as equities traders outshone their bond

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Speaker 1: trading counterparts. For a fourth quarter in a row, income

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Speaker 1: from the trading of equities products rows three percent to

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Speaker 1: eight hundred and seventy million euros, although with that equity

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Speaker 1: performance was still behind Wall Street peers, who posted an

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Speaker 1: average six percent increase in revenue.

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Speaker 2: China's Away Technologies was put on the US trade blacklist

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Speaker 2: nearly five years ago, but Bloomberg has learned that the

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Speaker 2: company has been secretly funding cutting edge research at American universities.

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Speaker 2: Huawei is doing so as the sole funder of an

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Speaker 2: awards program run by the DC based Optica Foundation. Bloomberg

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Speaker 2: Technology and National security reporter Kat o'keeff broke the story.

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Speaker 6: Quawei is on so many different US government lists. Probably

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Speaker 6: the most significant are these Commerce Department restrictions that prevent

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Speaker 6: people and entities from sharing technology with the company, but

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Speaker 6: in terms of academic research or research that's meant to

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Speaker 6: be published, those rules don't apply.

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Speaker 2: Okeef says applicants and university officials told her they didn't

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Speaker 2: know about Huawei's role in their awards until a reporter

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Speaker 2: to asked about it. Huawei says it created the competition

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Speaker 2: along with Opticus to support global research. The Chinese company

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Speaker 2: added it kept its name private test wouldn't be seen

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Speaker 2: as promotional.

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Speaker 1: Bank of england efforts to stimulate the economy during the

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Speaker 1: pandemic caused one hundred and fifteen million billion pounds in

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Speaker 1: losses on quantitative easing. According to Bloomberg analysis, the central

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Speaker 1: bank is on track to lose at least one hundred

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Speaker 1: and twenty billion pounds on bonds bought during the COVID period.

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Speaker 1: UK taxpayers will have to cover the cost under a

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Speaker 1: guarantee that was agreed with the Bank of England when

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Speaker 1: the program launched in two thousand and nine. It's estimated

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Speaker 1: that taxpayers will cover the losses of about twenty billion

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Speaker 1: pounds per year for the next decade.

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Speaker 2: Goldman Sachs is set to scrap its pre Brexit cap

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Speaker 2: on bankers bonuses. With the mover sparked employee concerns that

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Speaker 2: fixed pay will be doctor as a result. Bloombergs team

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Speaker 2: Adebio has the details.

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Speaker 7: Top traders and investment bank is at gold and Sachs

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Speaker 7: will now have the opportunity to earn many times their

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Speaker 7: base salaries. That sas the bank prepares to ditch eu

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Speaker 7: ERA limits on bonuses after the UK government lifted local

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Speaker 7: pay restrictions for the sector six months ago. Bloomberg understands

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Speaker 7: that the news was announced internally this week, but some

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Speaker 7: employees fear their regular pay maybe cut to compensate. Goldwyn

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Speaker 7: Sachs is one of the first banks to lift its

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Speaker 7: UK caps since the government's rule change. In London, Tee

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Speaker 7: you add a bio Bloomberg Radio.

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Speaker 2: Well, let's get more now on those results of the

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Speaker 2: local elections overnight in the UK, showing Kis Starmer's Labor

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Speaker 2: Party has made important gains in the first council seats

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Speaker 2: to be declared. In England. Labor have also won the

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Speaker 2: by election in Blackpool. Chris Webb will be in the

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Speaker 2: new MP there, joining us to discuss the results as

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Speaker 2: Yugov's director of Political Annasis, Patrick English. Patrick, great to

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Speaker 2: have you with us this morning. The by election. First

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Speaker 2: of all, Kirs Starmer calls at seismic Chris Webb says

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Speaker 2: Prime Minister should now call a general election. How important

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Speaker 2: to swing to Labor was this good morning?

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Speaker 3: Yes?

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Speaker 8: Well, it was the third largest swing from the Conservatives

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Speaker 8: to Labor Party in post war British lateral history. So

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Speaker 8: this was indeed seismic and really quite a stark reminder

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Speaker 8: of just how bad really public opinion is for the

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Speaker 8: Conservative Party right now and how low their support is

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Speaker 8: right across the country. Are latest polling has them down

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Speaker 8: at eighteen percent of expressed vote intension and the result

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Speaker 8: that we saw in Blackpool South was very much in

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Speaker 8: line with that sort of level of nationwide support. So

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Speaker 8: I think it's a reminder. It serves as another piece

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Speaker 8: of evidence to suggest that the polling where it is

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Speaker 8: right now is probably a very accurate, pretty good reflection

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Speaker 8: of the relative popularity of the parties, and it suggests

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Speaker 8: that Labor are on course to have quite a seismic

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Speaker 8: election result themselves as and when that comes around, If

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Speaker 8: nothing changes in between now and when that election is called.

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Speaker 1: What do the local elections show in terms of the

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Speaker 1: council seats, Because obviously Blackpool South is for a seat

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Speaker 1: in Westminster for an MP. The local elections are very

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Speaker 1: fought on different issues, sometimes or not.

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Speaker 8: Yes, absolutely, they are local issues, local candidates, local stories.

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Speaker 8: For example, down in Plymouth has been a huge swing

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Speaker 8: against the Conservatives toward labor, much outside to what we've

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Speaker 8: been seeing around the rest of the country, and that's

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Speaker 8: down to the fact that the Conservative Council chop download

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Speaker 8: of trees and the dead of the night and then

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Speaker 8: the leader had to resign the day after. So local

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Speaker 8: issues do drive results. However, we can appeal to the

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Speaker 8: general patterns of trends and the general movement of parties

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Speaker 8: across all the suits being contested. The BBC will be

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Speaker 8: putting out its projected national share later as well, which

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Speaker 8: allows us to see if all areas of the voters

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Speaker 8: of countries a country had voted, how that might have

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Speaker 8: broken down, and it gives us a better comparison of

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Speaker 8: We can can then compare year or year on year

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Speaker 8: and see what kind of meant and the parties have

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Speaker 8: going to elections. I think looking at some interesting areas

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Speaker 8: as well to how the parties are performing Reza of

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Speaker 8: key battleground areas when it comes to constituencies, so up

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Speaker 8: in Northeast Lincolnshire. Labor managed to take that council out

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Speaker 8: Conservative hands and into no overall control. But that contains

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Speaker 8: both the constituencies of Scunthorpe and the new Grimsby and

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Speaker 8: Cleethorpe constituency too, let's say, the classic Red War constituencies

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Speaker 8: that Labor has to be winning back at general elections

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Speaker 8: to get a shot at majority. They have done very

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Speaker 8: well in the council election there and we're going to

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Speaker 8: be looking, i think to other areas such as Walsall

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Speaker 8: to see if they can repeat that story over in

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Speaker 8: the Midlands. Dudley as well could be very interesting. Hind

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Speaker 8: Burn another one that we've got our eyes on. Lots

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Speaker 8: of very fascinating races up and down the country which

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Speaker 8: you can't read directly across from council elections to general election,

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Speaker 8: but they can give you very strong indicators the relative

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Speaker 8: strength of the parties, who has momentum and who doesn't.

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Speaker 2: What about the other parties in this as well, the

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Speaker 2: Live Dems, the Greens and Reform UK's performance was talked

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Speaker 2: about a last in advance of this Yes well.

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Speaker 8: In fact, some of the most striking or strongest individual

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Speaker 8: performances then I have come from the Green Party. They've

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Speaker 8: come from in some cases third or fourth to sweep

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Speaker 8: through all opposition and take council seats. We've been seeing

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Speaker 8: them winning places like Peterborough down in Exeter up in

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Speaker 8: the North as well. They've been doing very well in Newcastle.

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Speaker 8: They've got some councilors there too, so they have been

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Speaker 8: putting on a very good show and what seems to

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Speaker 8: be a very good night for the Green Party. Reforms

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Speaker 8: started the night as probably the largest story. They had

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Speaker 8: some very very strong performances up in Sunderland and again

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Speaker 8: Warsaw's going to be interesting to see there because they're

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Speaker 8: getting another council which would quite heavily leave voting. They're

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Speaker 8: standing a good state of candidates there. We can't really

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Speaker 8: say of many other local authorities that haven't really organized

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Speaker 8: all that well for these elections, so Reforms certainly have

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Speaker 8: been pulling up some trees where they've been fielding candidates,

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Speaker 8: and the Little Democrats they haven't had a fantastic time

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Speaker 8: of it so far. I think they'll probably be a

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Speaker 8: little bit disappointed with where the figures are right now. However,

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Speaker 8: as has been pointed out by a few of their

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Speaker 8: politicians who've been on the airways overnight. Their strongest areas

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Speaker 8: are probably coming a little bit further down the line, councils,

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Speaker 8: more towards the south, where they are fighting directly with

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Speaker 8: the Conservatives rather than with Labor. See how they do

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Speaker 8: as those seats start to declare a little later on

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Speaker 8: in the count today and in to tomorrow as well.

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Speaker 1: Okay, Patrick, how do you think about then, these local

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Speaker 1: council elections in the national picture? I mean, how bad

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Speaker 1: is it for the Conservatives? Will the Tories, for example,

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Speaker 1: dump Richie Sunak before a national election that has also

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Speaker 1: been posited and the idea of when the general election

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Speaker 1: in the UK might come, I mean those national questions. Now,

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Speaker 1: what's your answer?

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Speaker 8: Well, I think certainly, as I said at the top

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Speaker 8: of this piece, the local authority elections result we are

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Speaker 8: seeing now and indeed the Black Poor Staff by election

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Speaker 8: would seem to suggest that the polling is correct about

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Speaker 8: where the parties are right now. So that would suggest

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Speaker 8: that Labor are well ahead. It would suggest that the

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Speaker 8: Conservatives are struggling. It would suggest that Reform UK are

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Speaker 8: a threat to the Conservatives and are eating into their

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Speaker 8: votes and causing them problems, and as regards to what

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Speaker 8: the Conservative Party are going to do about that, I

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Speaker 8: think it's it's unlikely that they will change leader. I

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Speaker 8: think that will probably be seen as a bit too

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Speaker 8: much political chaos ifever there was such a thing, and

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Speaker 8: they will probably be looking to just try and get

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Speaker 8: the economy stabilized, try and go long, as they say,

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Speaker 8: push the election data as far back as they can

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Speaker 8: so in the hope that people see perhaps those flights

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Speaker 8: taking off for Rwanda. Hopefully they start to feel the

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Speaker 8: benefits of a lower inflation rate, more money in their

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Speaker 8: pocket to be able to pay the bills that are

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Speaker 8: coming through their doors. But these are all ifs and butts,

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Speaker 8: and maybe's right now. The public are quite clear on reaches,

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Speaker 8: and they're quite clear on the Conservatives and the government,

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Speaker 8: and the message that they're delivering throughout these results, throughout

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Speaker 8: these opinion polls is that they want it changed and

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Speaker 8: they want them gone.

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Speaker 2: Okay, Patrick English, director of political analytics at you Gov,

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Speaker 2: Thank you so much for your analysis on the program

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Speaker 2: this morning.

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Speaker 1: Now to the earning story out of Apple. Of course,

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Speaker 1: yesterday shares an Apple jumped in after hours trading. The

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Speaker 1: company reported stronger than expected sales last quarter, despite revenue

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Speaker 1: falling by four percent. The iPhone maker also announced this

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Speaker 1: significance dock buy back, biggest in US history, worth one

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Speaker 1: hundred and ten billion dollars. Matt Bloxham is back with

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Speaker 1: us on Bloomberg Intelligence to take us through those earnings.

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Speaker 1: What was the particular bright spot then for Apple, do

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Speaker 1: you think?

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Speaker 9: Yeah? So, I think on the revenue side, it was

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Speaker 9: absolutely the China performance. That China is about eighteen percent

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Speaker 9: of their sales, and they did drink about eight percent down,

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Speaker 9: but the market was looking for about eleven percent decline,

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Speaker 9: and I think the overall commentary from the company about

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Speaker 9: their positioning in China was surprisingly positive, and I think

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Speaker 9: the analysts asked a lot of questions about China on

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Speaker 9: the call and didn't really quite kind of process what

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Speaker 9: they were hearing. From Tim Cook, he was saying, you know,

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Speaker 9: if you adjusted for some exceptionals last year, that's the

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Speaker 9: kind of grewge iPhone revenue in the quarter. In China's

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Speaker 9: had been a lot of channel checks, suggesting that they've

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Speaker 9: been under a lot of pressure with the iPhone in

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Speaker 9: the market. He said that in urban China that two

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Speaker 9: of their models that iPhone fifteen models were the top

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Speaker 9: selling phone, so you know, I think that was a

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Speaker 9: real bright spot, and I think they were quite optimistic

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Speaker 9: about the near and mid term outlook. I think on

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Speaker 9: top of that, Mac sales were particularly strong because they

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Speaker 9: had a product refresh there, and I think that gives

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Speaker 9: people encouragement that next quarter is basically next week they're

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Speaker 9: going to announce a new iPad lineup. iPad revenues were

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Speaker 9: down about seventeen percent and a quarter this reported, but

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Speaker 9: they're expecting us strong rebound next quarter, and I think

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Speaker 9: the fact that Mac sales are up on a good

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Speaker 9: product refresh gives people confidence that they'll rebound to.

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Speaker 7: That.

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Speaker 2: Of course, being Apple rewarding its shareholders for that kind

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Speaker 2: of positive set of results the massive share buy back

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Speaker 2: one hundred and ten billion dollars. How significant is that, Well, if.

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Speaker 9: You put this in the context of Apple's market cap,

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Speaker 9: it's about four percent, so you know, you'd kind of

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Speaker 9: expect that kind of return from many comes anyway, and

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Speaker 9: they're dividend is only about half a percent, so you know,

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Speaker 9: kind of four and a half percent total return. They're

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Speaker 9: in an incredibly you know, strong net cash position over

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Speaker 9: time they want to get to a kind of net

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Speaker 9: neutral position on the balance sheet, so I think it's

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Speaker 9: consistent with their overall kind of distribution policy, and you know,

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Speaker 9: to a degree, kind of reflects you. Obviously, by buying backstock,

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Speaker 9: you get a bit of earnings growth because you reduce

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Speaker 9: the share account and given the top line growth, even

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Speaker 9: if they return to growth next quarter, your earnings growth

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Speaker 9: is going to be relatively muted from the kind of fundamentals,

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Speaker 9: so that buyback gives a lift to the bottom line.

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Speaker 2: This is Bloomberg Daybreak Europe. You're a morning brief on

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

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Speaker 1: I'm Caroline Hepka and.

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Speaker 2: I'm Stephen Carol. Join us again tomorrow morning for all

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Speaker 2: on Bloomberg Daybreak Europe.