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Speaker 1: Good morning. It's Tuesday, the fifteenth of August in London.

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Speaker 1: This is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll.

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Speaker 1: Coming up today, China's Central Bank cuts interest rates after

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Speaker 1: a host of economic data illustrated this slowdown in the

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Speaker 1: country's economy. A grand jury in the state of Georgia

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Speaker 1: indict's former President Trump over attempting to overturn his election

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Speaker 1: defeat in twenty twenty, and a computer crash leaves the

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Speaker 1: Bank of England unable to process high value transactions for

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Speaker 1: six hours.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 1: China's Central Bank has unexpectedly cut interest rates as its

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Speaker 1: economic woes deepen.

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Speaker 2: The PBOC reduced.

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Speaker 1: The rate on its one year loans by fifteen basis

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Speaker 1: points to two and a half percent, the largest cut

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Speaker 1: since twenty twenty. The surprise move came as Beijing released

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Speaker 1: a raft of disappointing economic data, including a slide an

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Speaker 1: industrial output and an increase in unemployment. City Group's head

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Speaker 1: of Asia Trading strategy, Muhammad Appabai, doesn't expect the rate

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Speaker 1: cut to help.

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Speaker 3: The problem I think is not really one of liquidity's

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Speaker 3: The money supply is growing something like eleven or twelve percent.

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Speaker 3: The problem is really whether that money is being used,

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Speaker 3: so in some forms it's a bit of a liquidity

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Speaker 3: trap and needs more measures from the authorities to address

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Speaker 3: issues like confidence.

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Speaker 1: Muhammad Appabuye's comments comments on sentiment come as Beijing says

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Speaker 1: it's pausing publishing data on the country's soaring youth unemployment rate.

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Speaker 1: The announcement is likely to fan fears over economic transparency

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Speaker 1: in the world's second largest economy.

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Speaker 4: Now.

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Speaker 1: Concerns around the outlook for China's economy are being echoed

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Speaker 1: by the US Treasury Secretary Janet Yellen. She says the

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Speaker 1: countries slow down, we'll have some spillovers to the United States,

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Speaker 1: but she's still optimistic. Those comments come after a speech

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Speaker 1: in Las Vegas where she hinted at the risk that

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Speaker 1: China poses to a soft economic landing.

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Speaker 5: The Administration remains committed to taking actions to lower prices

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Speaker 5: for Americans where we can, and we continue to monitor developments,

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Speaker 5: particularly those abroad, that may affect prices and growth.

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Speaker 1: Johnny Allen also used her speech to reiterate her view

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Speaker 1: that cooling inflation can be achieved without an increase in unemployment.

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Speaker 1: The front runner in Taiwan's presidential race, says he will

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Speaker 1: cooperate with China to achieve peace. Lee Chungdo, who's currently

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Speaker 1: the Taiwanese Vice president, has told Bloomberg voters face a

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Speaker 1: choice about democracy itself.

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Speaker 6: We don't want to be enemies. We can be thrown

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Speaker 6: and we love to see China can enjoy democracy and freedom.

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Speaker 2: Just like us.

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Speaker 6: As long as Leo is parity and dignity, our door

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Speaker 6: is always open. We are willing to cooperate with China

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Speaker 6: to events peace and prosperity.

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Speaker 1: Lechingda spoke to Bloomberg exclusively as he starts a foreign

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Speaker 1: trip to the United States. China's fig ministry has condemned

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Speaker 1: a visit, saying it undermines their sovereignty. Donald Trump has

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Speaker 1: been charged in a fourth criminal case over his conduct

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Speaker 1: in the wake of the twenty twenty presidential election. Fulton

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Speaker 1: County District Attorney Fanny Willis is leading the case.

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Speaker 7: The indictment alleges that, rather than abide by George's legal

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Speaker 7: process for election challenges, the defendants engaged in a criminal

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Speaker 7: racketeering enterprise to overturn Georgia's presidential election result.

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Speaker 1: Willis is an expert in prosecuting racketeering, a crime typically

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Speaker 1: used to target street gangs and mobsters who use coercion.

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Speaker 1: The charges come as Trump has a commanding lead in

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Speaker 1: polls to be their report publican party presidential nominee next year.

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Speaker 1: The President has denied all previous charges. Shopkeepers in Argentina

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Speaker 1: have seen a massive jump in prices following a dramatic

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Speaker 1: primary election upset. A victory for radical outsider Javier Malay

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Speaker 1: led to a surprise evaluation in the Peso. Bloomberg's Patrick

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Speaker 1: Gillespie breaks down the impact of the surprise election win.

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Speaker 4: A stunning vote with Javier and Milay up ending really

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Speaker 4: the political class, and he was polled to finish third.

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Speaker 4: He came out finishing first, above the two established political parties,

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Speaker 4: and that caused bonds to fall below thirty cents on

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Speaker 4: the dollar.

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Speaker 2: This morning.

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Speaker 4: The official exchange rate was devalued about eighteen percent, one

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Speaker 4: of its biggest moves in several years. And in the

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Speaker 4: real economy, we're seeing businesses hike prices twenty percent overnight.

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Speaker 1: Patrick Allespie also points out that Argentina has an annual

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Speaker 1: inflation rate of one hundred and fifteen percent, making it

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Speaker 1: difficult for retailers to ad their prices fast enough to

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Speaker 1: keep up, and the Bank of England expects all delayed

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Speaker 1: payments to be settled today after a six hour outage

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Speaker 1: and its payment system.

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Speaker 2: Bloomberg's U and Parts reports.

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Speaker 8: The outage at the Bank of England yesterday was the

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Speaker 8: longest system crashed since twenty fourteen, prompting the Central Bank

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Speaker 8: to launch an official inquiry into the shutdown. Thousands of

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Speaker 8: home purchases and other financial transactions were delayed after the

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Speaker 8: bioe's Real time Gross Settlement service went down between six

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Speaker 8: am and midday. CHAPS, the payment system used for high

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Speaker 8: value transactions, including property sales, was also knocked out. Bloomberg

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Speaker 8: understands that a technical issue was to blame, unrelated to

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Speaker 8: an ongoing upgrade of the real Time Gross Settlement system.

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Speaker 8: Maintaining OURTGS is one of the BOE's corresponsibilities, with the

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Speaker 8: system central to the UK's financial stability.

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Speaker 2: In London, immune pots in both Day Break Europe.

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Speaker 1: Those are your top stories on the program this morning.

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Speaker 1: On the markets, the MSCIS Pacific Index as a tenth

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Speaker 1: of one percent weaker eurostocks fifty futures are four tenths higher,

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Speaker 1: and on Wall Street SMPM and e's are two tenths

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Speaker 1: of one percent higher.

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Speaker 2: Now looking at.

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Speaker 1: Some of the other stories that caught our eye this morning,

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Speaker 1: an interesting survey from the Bloomberg Terminal of about three

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Speaker 1: hundred terminal users around the label ESG something that has

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Speaker 1: become particularly political in the United States, there being somewhat

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Speaker 1: of an ANTIESG movement, the likes of the Florida governor

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Speaker 1: and presidential hopeful Rondo Santus among those who's criticized the

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Speaker 1: use of the term. Even Blackrock CEO Larry Fink back

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Speaker 1: in June said he doesn't want to use it anymore

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Speaker 1: after it had been weaponized. But interesting, around two thirds

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Speaker 1: of respondents in this survey said that the ANTIESG movement

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Speaker 1: will force firms to stop using the three letters, but

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Speaker 1: that they will continue to incorporate environmental, social, and government

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Speaker 1: metrics in their business. We know it's been a huge

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Speaker 1: change within the investing community to include these metrics in

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Speaker 1: investment decisions, and while the label it seems might be

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Speaker 1: attracting some unwanted attention, seems the sentiment behind them still

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Speaker 1: very much in the minds of investors that was another

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Speaker 1: story that caught our eye this morning on the program

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Speaker 1: Let's get the Latest now though, on the developments from China.

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Speaker 1: That surprise rate cut coupled with the release of disappointing

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Speaker 1: economic data. Our senior reporter James Maker joins us now

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Speaker 1: from Beijing. James, great to have you with us. How

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Speaker 1: bad was the data first of all that we got

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Speaker 1: today on the Chinese economy.

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Speaker 9: You saw much weaker than expected industrial apput data. You

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Speaker 9: saw much weaker than expected retail sales data. Investment data

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Speaker 9: also weaken then expected, and all those weakening from July

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Speaker 9: as well, not just weekend and expectations, but weaker than

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Speaker 9: they have been this year. And the data has already

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Speaker 9: been bad this year, so across the board, it was

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Speaker 9: a pretty poor result for the Chinese economy in July,

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Speaker 9: and there doesn't seem to be much sign of a pickup.

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Speaker 10: Happening at the moment in August.

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Speaker 9: So going into the second half of the year really

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Speaker 9: is you know there they are facing a pretty difficult situation.

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Speaker 1: Let's talk about then the steps taken by the PBOC

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Speaker 1: today surprise rate costs. Take us through the significance of

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Speaker 1: what we can take away from the central bank moves.

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Speaker 9: What you see, I think is the government is still

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Speaker 9: struggling to find a way to respond to the economic

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Speaker 9: slowdown which doesn't create more problems by you know, increasing

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Speaker 9: liquidity which then flows into financial in the financial markets

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Speaker 9: only or increasing the amount of decreasing the cost of

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Speaker 9: borrowing and then leading to reinflation of the housing bubble.

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Speaker 9: You know, the fundamental problem of the economy is weak

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Speaker 9: housing demand. The fundamental reason for that is the government

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Speaker 9: tried to pop the housing bubble and to create weak

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Speaker 9: housing demand.

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Speaker 10: So in a sense, the victims of their own success.

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Speaker 10: They have deflated the housing.

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Speaker 9: Bubble and now they're trying to make a softer landing

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Speaker 9: than they've created. But they don't want to reinflate the bubble.

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Speaker 9: They don't want people to go out and expect that

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Speaker 9: own houses again. So what the PBOC has done they

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Speaker 9: cut They cut the industrate by fifteen basis points, and

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Speaker 9: that will have a you know, somewhat stimulatory effect. But

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Speaker 9: the problem isn't that credit is too expensive. It's that

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Speaker 9: no one wants to borrow, no one wants to buy

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Speaker 9: a house. If you don't want to buy a house,

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Speaker 9: you don't need to borrow to buy a house. So

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Speaker 9: just making the cost of capital slightly cheaper isn't going

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Speaker 9: to change the fundamental problem of week week demand for

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Speaker 9: housing or weak demand for borrowing. I mean, if you

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Speaker 9: don't think that housing developers are going to be around

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Speaker 9: in a year, if you think that many of the

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Speaker 9: big housing developers now will default or we'll go bankrupt,

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Speaker 9: will stop building houses because their financially their financial system

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Speaker 9: is financial position is so poor. You're not going to

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Speaker 9: go out and buy a house from them because there's

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Speaker 9: no guarantee you actually get the house. So the PBC

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Speaker 9: is making an effort, but it's not really going to

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Speaker 9: change the fundamental problems in the economy.

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Speaker 1: I think it talk is through the reaction that we've

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Speaker 1: seen non markets to all of this news.

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Speaker 10: I mean, the end sorry that you aren't weakened as

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Speaker 10: logically it should.

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Speaker 9: The interest rate differentials with the dollar or with the

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Speaker 9: US A rising, you know, the Fed may still raise

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Speaker 9: rates again. So you've see the biggest differential interest rate

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Speaker 9: differential in more than a decade now between where rates

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Speaker 9: are in China where they're in the US. Markets fell

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Speaker 9: so obviously indicating that they think that this economic data

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Speaker 9: is very bad, and they don't think what's being done

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Speaker 9: so far by the government and the PVOC is enough.

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Speaker 9: And you also saw bond prices rising, so pretty pretty

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Speaker 9: negative reaction across the board this morning.

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Speaker 1: And we learned also today that China is going to

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Speaker 1: start publishing data on youth unemployment.

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Speaker 2: What's the explanation for this.

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Speaker 9: Well, the formal explanation from the National Bureau Statistics was

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Speaker 9: that they're redoing the calculation of youth unemployment because they

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Speaker 9: some students who are graduating from university and then looking

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Speaker 9: for jobs are being counted as unemployed, and the NBS

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Speaker 9: thinks they shouldn't be counted and employees that they're going

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Speaker 9: to retool that. A more cynical view would be that

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Speaker 9: the unemployment rate for youth was twenty one percent and

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Speaker 9: was expected to continue rising at least through the third quarter.

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Speaker 9: And so it was inconvenient from the government, which is

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Speaker 9: trying to put forward a positive view of the economy,

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Speaker 9: to have data showing every month that one fifth of

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Speaker 9: young people were.

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Speaker 10: Out of work.

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Speaker 9: So, you know, it could be a problem with the

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Speaker 9: data collection or how they define these things, but you know,

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Speaker 9: this isn't a surprise that this is how they calculate

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Speaker 9: the numbers. If they were wanting to increase the trust

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Speaker 9: that people have and the numbers that they release, they

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Speaker 9: could have gradually made this change, or they could have

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Speaker 9: released two sets of data for a little while and

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Speaker 9: you know, explained the difference and so people get used

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Speaker 9: to this change instead of just suddenly at the press

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Speaker 9: conference where they're meant to release the data saying, oh,

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Speaker 9: by the way.

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Speaker 10: We're not going to do that anymore.

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Speaker 9: You know, when when countries, countries do change how they

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Speaker 9: calculate various different things, including apointment, and usually where they

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Speaker 9: do that, they provide a period of period explanation and

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Speaker 9: then they provide often provide two sets of data for

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Speaker 9: a period so that you know, financial companies and people

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Speaker 9: can get their understanding of the new data, people can

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Speaker 9: grow comfortable with what's being reported, and then they gradually

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Speaker 9: move to the new system doing it suddenly like this

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Speaker 9: is a shock, and it just damages trust in the

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Speaker 9: government and it's whether the data is real or I

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Speaker 9: and it just writes cynical comparisons like the one I

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Speaker 9: just made where people just say it's clearly just because

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Speaker 9: the data is bad, they're hiding the bad data. It's

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Speaker 9: just not the way to do it.

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Speaker 1: Okay, James Maker in Beijing, thank you very much for that.

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Speaker 1: Up next, the UK loses out and the New Global

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Speaker 1: Order and why the world's wealthy are flocking to the US.

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Speaker 8: Now the paper review on Bluebird Daybreak Europe.

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Speaker 2: The news you need to know from today's papers.

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Speaker 1: Andre An Gerins is with us some details on those stories. Yeah,

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Speaker 1: let's start in the Wall Street Journal. The headline there

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Speaker 1: the economic losers in the New World Order.

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Speaker 11: Yes, indeed, Stephen, good morning to you. So basically what

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Speaker 11: the story sums up is a giant subsidies and rising

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Speaker 11: protectionism overturning decades of free trade. So smaller countries from

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Speaker 11: here the UK to Singapore are actually getting left behind

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Speaker 11: as the world's biggest economies are offering huge government incentives

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Speaker 11: to win green industries. The US, European Union and Japan

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Speaker 11: all working to become less dependent on China. The Inflation

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Speaker 11: Reduction Act is during this massive flood of capital to

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Speaker 11: the US. The EU is responding to this. What they

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Speaker 11: trying to do is put in its very own green

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Speaker 11: policy support package. Japan offering billions of borrowing to finance

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Speaker 11: a wave of investment in green technology. We know this

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Speaker 11: is all happening with the big economies, but industrialized nations

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Speaker 11: such as the UK, basically the Wall Street says, is

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Speaker 11: lacking this scale to compete against these huge economic blocks

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Speaker 11: in offering attractive subsidies. So this is really impacting a

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Speaker 11: lot of what is happening here. And they outline two

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Speaker 11: two UK companies that have done really well. That's a nexton.

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Speaker 11: It's a battery tech startup company, AMT Power. They've been

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Speaker 11: home grown, but they're looking to expand in different countries

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Speaker 11: because they just offer more attractive subsidies and better for

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Speaker 11: what they're looking for when it comes to growth. And

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Speaker 11: they also talk about the fact that this massive shift

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Speaker 11: is that an awkward time for the UK because it's

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Speaker 11: really struggling to chart a new course in the global economy,

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Speaker 11: and that is after Brexit, so things aren't so easy.

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Speaker 11: But this is a really insightful piece into how protectionism

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Speaker 11: is overturning decades of free trade and affecting the UK.

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Speaker 2: Yeah.

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Speaker 1: Interesting to see that put in a global contacts given

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Speaker 1: some of many of those themes that we have heard

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Speaker 1: from British businesses. The Telegraph next leanne the world's wealthy

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Speaker 1: are flucking. Where the world's wealthy are flocking to hide

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Speaker 1: their riches.

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Speaker 11: I was going to ask you this, Stephen, Do you

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Speaker 11: have any idea where the super wealthy go?

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Speaker 7: No?

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Speaker 2: I don't know any Okay, don't you know me?

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Speaker 11: No, I'm really kidding. So Bermuda private banks of Switzerland,

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Speaker 11: they might spring to your mind if you're listening on

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Speaker 11: your way into work, but it's actually the US, which

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Speaker 11: is a really interesting The world's most affluent are increasingly

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Speaker 11: piling their money into American states, some with a population

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Speaker 11: smaller than Devon. That's a seaside town here in the UK.

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Speaker 11: As infamous offshore tax havens have had to become more transparent,

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Speaker 11: the US has grown into the biggest helper of financial

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Speaker 11: secrecy in the world. That's because they have things like

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Speaker 11: trusts and also shell companies. So the US came out

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Speaker 11: on top for the first time.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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