WEBVTT - FTSE 100 Peak Prognosis And Ballooning Tensions

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<v Speaker 1>This is Bloomberg Daybreak Cube for this Monday, the sixth

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<v Speaker 1>of February in London. Coming up today for see not Out.

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<v Speaker 1>The UK's leading index hit a record high, but is

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<v Speaker 1>that as good as it gets? More than just hotter?

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<v Speaker 1>Tensions rise as the U S shoots down what they

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<v Speaker 1>say is a Chinese spy balloom a wow number of

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<v Speaker 1>the Feds. Mary Daily reacts to the red heart US

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<v Speaker 1>jobs growth but sees no reason to change course trust

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<v Speaker 1>on the comeback trail, Astra Zeneca calls for increased investment,

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<v Speaker 1>and Solomon's DJ gig leads to bloodlines for Goldman. Those

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<v Speaker 1>are the stories we're looking at in today's newspapers, and

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<v Speaker 1>I'm Leanne Garon's plus a Tale of Two Cities. We

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<v Speaker 1>sit down for an exclusive chat with the Lord Mayor

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<v Speaker 1>of London and the Tokyo Governor. That's all straight ahead

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<v Speaker 1>on Bloomberg Daybreak Europe on DAB Digital Radio, London, Bloomberg

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<v Speaker 1>eleven three oh New York, Bloomberg Washington, d C, Bloomberg

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<v Speaker 1>one oh six one, Boston, Bloomberg nine sixties, San Francisco,

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<v Speaker 1>cyrus XM Channel one nineteen and around the world on

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<v Speaker 1>Bloomberg Radio dot Com and via the Bloomberg Business at

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<v Speaker 1>Good Morning. I'm Stephen Carroll and I'm Caroline Hecker. Here

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<v Speaker 1>are the stories that we're following today. The foot one

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<v Speaker 1>d is heading into the week, having hit a record

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<v Speaker 1>high on Friday, but the outlook for the future is

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<v Speaker 1>less rosy, as Bloomberg Samuel Etty and reports. On Friday,

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<v Speaker 1>the UK's blue chip index finally rose above its eighteen peak,

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<v Speaker 1>but it's still lagging behind over benchmarks in Europe, China,

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<v Speaker 1>and the US so far this year. In two higher

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<v Speaker 1>oil and gas prices helped boost energy giants BP and

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<v Speaker 1>Shell and lift the foot see one overall. Longer term, though,

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<v Speaker 1>the UK benchmark is virtually flat in dollar terms since

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<v Speaker 1>the twenty sixteen Brexit vote, while markets elsewhere have seen

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<v Speaker 1>significant gains. Paris overtook London is Europe's largest equity market

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<v Speaker 1>last year and remains firmly in the lead in London

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<v Speaker 1>and samue Letien Bloomberg Daybreak Europe well now. The feds

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<v Speaker 1>December dot plot remains a good signal of where rates

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<v Speaker 1>are headed that according to the Federals A Bank of

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<v Speaker 1>San Francisco president Mary Daily, speaking to Fox Business Daily

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<v Speaker 1>had this to say on January's Red Hot jobs reports.

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<v Speaker 1>The number today on the jobs report was a wow number,

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<v Speaker 1>but the trend was not surprising. We knew that the

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<v Speaker 1>labor market was strong has been strong despite the fact

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<v Speaker 1>that the economy overall has been slowing. And so right

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<v Speaker 1>now I see the December sep that we had in

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<v Speaker 1>our last meeting back for the two is being a

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<v Speaker 1>good indicator of where policy is at least heading. But

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<v Speaker 1>I'm prepared to do more than that if more is needed.

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<v Speaker 1>Mary Daily does not have a vote at this year's

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<v Speaker 1>rate meetings, however, have you will add weight to market

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<v Speaker 1>expectations that the hiking cycle is knowing it's end. The

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<v Speaker 1>US economy added five hundred seventeen thousand jobs at last month,

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<v Speaker 1>pushing the unemployment rate to a fifty three year low.

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<v Speaker 1>The United States has sent divers to salvage what they

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<v Speaker 1>believe is spy equipment from the Chinese balloon shot down

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<v Speaker 1>off the coast of South Carolina. The balloon was down

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<v Speaker 1>by an American F twenty two fighter jet on direct

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<v Speaker 1>orders from President Biden and Our Tangan, senior fellow at

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<v Speaker 1>the Chinese think tank the Tiger Institute, says it's hard

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<v Speaker 1>to understand what strategic advantage that Chinese expected to gain

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<v Speaker 1>from using the balloon. From the face of it, it

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<v Speaker 1>doesn't seem like a very good message. You can't really

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<v Speaker 1>figure out exactly how China would get ahead by sending

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<v Speaker 1>a balloon that's the size of three buses and clearly

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<v Speaker 1>visible to the American public. It's not going to help

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<v Speaker 1>relations or anything like that. And a Tangan spoke to

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<v Speaker 1>Bloomberg as China continues to insist the device as a

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<v Speaker 1>climate research airship, that's straight off course, however, of the

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<v Speaker 1>U s argues it's part of a broader spying program

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<v Speaker 1>by the country. Now, the Lord Mayor of London, Nicholas Lions,

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<v Speaker 1>and his Tokyo counterpart, Governor Euriko Koike, have been making

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<v Speaker 1>the case for closer ties between the two countries financial hubs.

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<v Speaker 1>Speaking exclusively to us here on Bloomberg Daybreak Europe, Lions

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<v Speaker 1>sought to downplay the threat to London from continental Europe

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<v Speaker 1>in terms of the threat to London as a global

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<v Speaker 1>financial center from what's happening in continental Europe. That we

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<v Speaker 1>we encourage competitiveness, what is happening in continental Europe will

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<v Speaker 1>only make us stronger. You will see that in Frankfurt,

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<v Speaker 1>or in Paris, or in Absterdawn, or in Dublin or

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<v Speaker 1>in Luxembourg, that there is an aspect of financial services

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<v Speaker 1>where there as real expertise, but nobody can compete with

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<v Speaker 1>London in terms of the whole ecosystem. That is just

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<v Speaker 1>not replicable. So the Lord Mayor of London. While he

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<v Speaker 1>also told us that the City of London has been

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<v Speaker 1>able to replace the seven thousand jobs lost since Brexit,

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<v Speaker 1>uk Kik added that closer ties between the UK and

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<v Speaker 1>Japan are down to both economics and strategic concerns over China.

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<v Speaker 1>The board of Reno has signed off on a deal

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<v Speaker 1>to rebalance its troubled alliance with Nissan and Mitsubishi. Under

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<v Speaker 1>the agreement, to the French carmaker will reduce its ownership

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<v Speaker 1>of Nissan from forty three to fifteen percent. The rest

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<v Speaker 1>of the current shareholding will be putting a trust which

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<v Speaker 1>will be slowly sold down. Representatives and the three companies

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<v Speaker 1>will hold a news conference in London later to announced

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<v Speaker 1>details of the plan. A hundred thousand nurses and ten

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<v Speaker 1>thousand ambulance staff in England are expected to strike today

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<v Speaker 1>and what's thought to be the biggest walkout in NHS history.

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<v Speaker 1>Members of the Rawal College of Nursing at Health Trusts

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<v Speaker 1>are taking action along with GMB members at seven ambulance services.

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<v Speaker 1>Both unions are demanding pay talks with ministers, saying that

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<v Speaker 1>the government could have prevented the strikes. Business Secretary Grant

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<v Speaker 1>Chefs says that the government is bringing in new anti

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<v Speaker 1>strike laws due to the lack of corporate and from paramedics.

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<v Speaker 1>That leaves the army who are driving the backups here

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<v Speaker 1>in a very difficult position of postcode lottery. If it

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<v Speaker 1>comes to having heart attack or a stroke when there's

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<v Speaker 1>a strike on, we cannot have that situation and that's

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<v Speaker 1>why I'm introducing laws for minimum safety levels. So that

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<v Speaker 1>was the business sexually Grant Shaps. Meanwhile, a second day

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<v Speaker 1>of nursing strikes will take place tomorrow. Those are top

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<v Speaker 1>stories this morning. Look at another very difficult week I

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<v Speaker 1>had for the NHS. If you're looking to try to

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<v Speaker 1>get doctor's appointments, things going to be very tricky. Yeah, absolutely.

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<v Speaker 1>Acclauding to the Bloomberg calculations, at least fifty five thousand

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<v Speaker 1>appointments are likely to be delayed just by this week's action.

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<v Speaker 1>The Government's in a very difficult position are the Raw

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<v Speaker 1>College of Nursing. The RCN has backed away from the

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<v Speaker 1>kind of pay wise it once, but it doesn't seem

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<v Speaker 1>to be any way forwards at the moment some of

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<v Speaker 1>the negotiations with government. Another story that cat my eye

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<v Speaker 1>this morning is to do with the housing market here

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<v Speaker 1>in the UK. Mortgages set for their slowest growth in

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<v Speaker 1>twenty eleven as we see the house prices. This is

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<v Speaker 1>research from the accounting from e Y Are College. Greena

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<v Speaker 1>and Gallas written up the story on the Bloomberg terminal

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<v Speaker 1>look another symptom of what we've been talking about for

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<v Speaker 1>so long, falling house prices and now it's having a

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<v Speaker 1>knock on effect and borrowing. Yes, Although in that e

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<v Speaker 1>Y research what I found interesting also was their stats

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<v Speaker 1>on business lending also expected to fall significantly obviously higher debt,

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<v Speaker 1>servicing costs, lower earning, supply chain snarls. Yes, there's still

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<v Speaker 1>a problem according to e Y. So you're also going

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<v Speaker 1>to see business lending drop this year. Up next Trust

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<v Speaker 1>on the comeback trail, astro Zenica calls for increased investment

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<v Speaker 1>and Solomon's dj gig leads to blurred lines for Goldman.

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<v Speaker 1>Now the paper review on blue Bird Daybreak Europe. The

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<v Speaker 1>news you need to know from today's papers, Bloomberg, Ley

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<v Speaker 1>and Gerrans joins us Now. The headline in the Telegraph

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<v Speaker 1>says Liz Trust set to rignite China route in fresh

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<v Speaker 1>challenge to Rishi Sunac. The GERANs March of the weekend

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<v Speaker 1>spent pouring over the attempted came back by the former PM.

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<v Speaker 1>You're absolutely right, Caroline, and I have the Sunday Telegraph

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<v Speaker 1>with me, and she broke I've got it right here

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<v Speaker 1>in the studio wrestling yes and yesterday she broke her silence,

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<v Speaker 1>Caroline with this four thousand word essay in the newspaper

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<v Speaker 1>Now she defended her tax cutting agenda, that course the

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<v Speaker 1>economic turmoil we saw in this country during the mini budget,

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<v Speaker 1>and she also criticized Richie Cenac. A line that I

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<v Speaker 1>picked out from her essay in the paper yesterday says

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<v Speaker 1>she criticized Whitehall strength of economic orthodoxy and its influence

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<v Speaker 1>on the market, and condemns Treasury officials for blindsiding her

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<v Speaker 1>over the collapse of the pension market, which did proceed

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<v Speaker 1>her resignation show she's standing resolute. She said that the

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<v Speaker 1>MPs weren't behind her, and of course she said that

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<v Speaker 1>she was brought down by the left wing economic establishment. Now,

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<v Speaker 1>moving on from that, we actually expected to see Liz

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<v Speaker 1>Trust today on camera for the first time since her resignation.

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<v Speaker 1>She'll be giving an interview to the Spectator magazine now

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<v Speaker 1>that will be broadcast on YouTube, and the former PM

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<v Speaker 1>will warn that the threat posed by Beijing has not

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<v Speaker 1>been taking seriously enough. And this is, as you say, Caroline,

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<v Speaker 1>she really continues her return to the political fray and

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<v Speaker 1>this is set to re ignite around between Trust and

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<v Speaker 1>soon Act. We saw this on the campaign trial who

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<v Speaker 1>would take the toughest stance against Beijing? So strong words

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<v Speaker 1>there from Liz Trust over the weekend. I think it's

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<v Speaker 1>just very interesting the level of reaction. It's the speed

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<v Speaker 1>at which Liz Trust is trying to rehabilitate her record

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<v Speaker 1>poor by anybody's standards, you know, fantasy, delusional, These are

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<v Speaker 1>the kind of words that you see in other newspapers

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<v Speaker 1>like The Independent and The Times on what she's saying.

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<v Speaker 1>You know, it's only a few months that she left office. Yeah,

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<v Speaker 1>hard to believe. As you say, the timing is very

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<v Speaker 1>tightly and let's turn into a story in the Times

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<v Speaker 1>next Astra Zeneca UK losing out on investment in life

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<v Speaker 1>sciences research. Yes, indeed, Stevens so Tom Keith wrote. He's

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<v Speaker 1>the president of Astra Zeneca right here in the UK

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<v Speaker 1>and he's told the Times newspaper the company has not

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<v Speaker 1>made new research and development capital investments in Britain since

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<v Speaker 1>twenty twenty one. He also warned that wider research and

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<v Speaker 1>development spending in the country could also now be at risk.

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<v Speaker 1>And this is due to uncompetitive fiscal environment, is what

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<v Speaker 1>he calls it. So speaking to the Times, he has

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<v Speaker 1>concluded that the UK is losing out on investment from

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<v Speaker 1>astra Zeneca, and that's two more competitive countries. A wildly

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<v Speaker 1>out of line NHS sales tax, he says, as a

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<v Speaker 1>real particular concern. Now the foot see one hundred company

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<v Speaker 1>increased US R and D spending to two point five

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<v Speaker 1>million back in twenty one. So once again we see

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<v Speaker 1>the fiscal environment affecting investment here, according to Astra Zeneca

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<v Speaker 1>speaking to the Times newspaper. Okay, interesting. Just lastly to

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<v Speaker 1>New York Times, the blurred lines between Goldman CEO's day

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<v Speaker 1>job and his DJ gig tell us more so, we

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<v Speaker 1>all love this, don't we. David Solomon, the chief executive

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<v Speaker 1>of Goldman Sacks. We know that he's been spinning records

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<v Speaker 1>for years, hasn't he outside of his job? But he

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<v Speaker 1>has now actually hit the remix jackpot. After meeting this

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<v Speaker 1>high flying US industry music executive that's Larry Mestel, Solomon

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<v Speaker 1>got the chance to put a new spin on one

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<v Speaker 1>of the most danced like dance two track sever I

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<v Speaker 1>must have met I've danced this for years, Whitney Houston.

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<v Speaker 1>I want to dance with somebody who loves me. And

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<v Speaker 1>Solomon told senior Goldman Sachs executives. And he does donate

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<v Speaker 1>any profits he makes as a DJ to a charity.

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<v Speaker 1>Remember he's an amateur GJ, so he's not even really

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<v Speaker 1>the big time. Sorry if you are listening, but do

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<v Speaker 1>not if you look at the size of his gigs.

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<v Speaker 1>Anybody who's seen the DJ numbers, you might not call it. Yes,

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<v Speaker 1>it's not the back garden. No, it's Habitha. That's where

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<v Speaker 1>he normally DJ. Is not the back garden, Caroline, Let's

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<v Speaker 1>remember that. But he has been slightly criticized in this piece.

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<v Speaker 1>And this is all over the blurredlines between his day

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<v Speaker 1>job as the Goldman CEO, and some employees have helped

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<v Speaker 1>him manage his DJ schedule and also his donations. And

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<v Speaker 1>this is according to three people who have worked with him.

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<v Speaker 1>And also what have he got that remix if he

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<v Speaker 1>was just a normal amateur GJ. So this is what

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<v Speaker 1>the piece in the New York Times is really focusing

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<v Speaker 1>on and arguing. Okay, fascinating stuff for the Anger, and

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<v Speaker 1>thank you very much for that review of the newspapers. Well,

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<v Speaker 1>let's move on to talk about a bit about the

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<v Speaker 1>equity markets here in the UK. We have hitting a

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<v Speaker 1>record high and trading on Friday. What does the future

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<v Speaker 1>hole though for the UK's Benchmark Index member uk Starts

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<v Speaker 1>reported Joe Eastern as with as in studio, Good morning

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<v Speaker 1>to you, Joe. So is this keep climbing? I think

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<v Speaker 1>potentially could keep going up with the broader market. But

0:13:14.320 --> 0:13:16.319
<v Speaker 1>according to the people that we've spoken to for the

0:13:16.400 --> 0:13:18.920
<v Speaker 1>piece we've got on the website today over the weekend,

0:13:19.200 --> 0:13:21.760
<v Speaker 1>and they kind of think that the outperformance could start

0:13:21.800 --> 0:13:24.280
<v Speaker 1>to fade now and we might have seen the peak

0:13:24.600 --> 0:13:27.319
<v Speaker 1>in you know, some of the energy prices, some of

0:13:27.360 --> 0:13:30.760
<v Speaker 1>the defensive trades have benefited the index, and people might

0:13:30.840 --> 0:13:33.120
<v Speaker 1>start looking elsewhere, taking a bit more risk and going

0:13:33.160 --> 0:13:36.080
<v Speaker 1>to the US, going to uh maybe even the FIR

0:13:36.360 --> 0:13:39.559
<v Speaker 1>two fift. So I think the outperformance potentially coming to

0:13:39.840 --> 0:13:43.160
<v Speaker 1>an end um. But but yeah, I'm trying to think

0:13:43.160 --> 0:13:46.880
<v Speaker 1>of a way to bring in some DJing puns. Think

0:13:46.960 --> 0:13:51.640
<v Speaker 1>of anything in terms of the performance of the index

0:13:51.720 --> 0:13:54.520
<v Speaker 1>in recent years compared to markets elsewhere, I mean, is

0:13:54.880 --> 0:13:57.240
<v Speaker 1>it's defensive and this is the environment that it should

0:13:57.240 --> 0:14:00.280
<v Speaker 1>be doing well in? Yes, I think so. I think

0:14:00.480 --> 0:14:03.920
<v Speaker 1>that what we've seen obviously in the past few months

0:14:04.240 --> 0:14:07.880
<v Speaker 1>is the interest rate expectations coming back down and then

0:14:08.080 --> 0:14:11.080
<v Speaker 1>the broader market you know this the European markets now

0:14:11.160 --> 0:14:14.199
<v Speaker 1>in a ball market, as they call it, up twenty

0:14:14.600 --> 0:14:17.520
<v Speaker 1>since the low. So potentially people are looking to take

0:14:17.559 --> 0:14:19.920
<v Speaker 1>more risks. And we've spoken to black Croc in the

0:14:20.000 --> 0:14:22.520
<v Speaker 1>piece and they're saying that they don't think that the

0:14:22.560 --> 0:14:25.760
<v Speaker 1>foots one has has meant much legs as it had before,

0:14:26.280 --> 0:14:30.720
<v Speaker 1>and they're looking elsewhere. And I think, particularly given the

0:14:30.760 --> 0:14:33.160
<v Speaker 1>way the energy markets looking, I think that could start

0:14:33.200 --> 0:14:35.480
<v Speaker 1>coming down and that would be a negative for the index.

0:14:36.000 --> 0:14:38.520
<v Speaker 1>You draw this comparison the piece to the trajectory since

0:14:38.640 --> 0:14:40.840
<v Speaker 1>Braxit in terms of dollar terms, and we look at

0:14:40.960 --> 0:14:44.240
<v Speaker 1>us at the spire, the banks about European indexes and

0:14:44.320 --> 0:14:48.600
<v Speaker 1>the foot see as well. How much of this underperformance

0:14:48.640 --> 0:14:51.239
<v Speaker 1>that we saw in recent times be can be attributed

0:14:51.320 --> 0:14:53.240
<v Speaker 1>to Braxit or what? What is the link that you've

0:14:53.280 --> 0:14:55.480
<v Speaker 1>drawn in the article. Some of it is to do

0:14:55.600 --> 0:14:58.160
<v Speaker 1>with Brexit, but obviously something we talked about a lot

0:14:58.280 --> 0:15:01.560
<v Speaker 1>is how around seventy five percent of the revenue comes

0:15:01.640 --> 0:15:06.000
<v Speaker 1>from abroad. And the FIRTE one hundred actually underperformed since

0:15:06.000 --> 0:15:09.160
<v Speaker 1>about twenty twelve, so since basically the back end of

0:15:09.200 --> 0:15:12.800
<v Speaker 1>the financial crisis, it started under performing. And that was

0:15:12.920 --> 0:15:16.520
<v Speaker 1>because everyone got obsessed with growth stocks, like you know,

0:15:16.680 --> 0:15:19.800
<v Speaker 1>tech stocks like Tesla and Google and stuff like that,

0:15:20.160 --> 0:15:22.200
<v Speaker 1>and the foot see one hundred doesn't really have much

0:15:22.280 --> 0:15:24.960
<v Speaker 1>big tech. We do have listed tech in London, but

0:15:25.080 --> 0:15:27.400
<v Speaker 1>it's the small cap the mid caps, it's not in

0:15:27.440 --> 0:15:29.840
<v Speaker 1>the foot see one hundred. So people avoided the foot

0:15:29.840 --> 0:15:32.760
<v Speaker 1>see one hundred. And then when interest rates went up,

0:15:33.240 --> 0:15:35.720
<v Speaker 1>the discount rates and some you know, technical things that

0:15:35.800 --> 0:15:39.640
<v Speaker 1>analysts look at made tech stocks less attractive and they

0:15:39.720 --> 0:15:41.680
<v Speaker 1>fell a lot, so the foot see one hundred fell

0:15:41.760 --> 0:15:46.280
<v Speaker 1>by less. But then Brexit came and added to the

0:15:46.360 --> 0:15:48.520
<v Speaker 1>woes for you know, the proportion of the revenue that

0:15:48.600 --> 0:15:51.160
<v Speaker 1>comes from the UK economy. Okay, just really briefly then

0:15:51.200 --> 0:15:55.280
<v Speaker 1>f Fittzee two fifty. Ravens cross c Io was in

0:15:55.400 --> 0:16:00.360
<v Speaker 1>last week saying actually reverse two fifty is that a goer? Yes,

0:16:00.520 --> 0:16:03.600
<v Speaker 1>because it's more cyclical. So I think that as people

0:16:03.640 --> 0:16:06.000
<v Speaker 1>are getting slightly more optimistic on the economy, the foot

0:16:06.000 --> 0:16:09.360
<v Speaker 1>see two fifty looks more attached to what's happening in

0:16:09.440 --> 0:16:11.800
<v Speaker 1>the economy, and it will. It will move in tandem

0:16:11.880 --> 0:16:14.960
<v Speaker 1>with the economy, whereas the foots does its own thing,

0:16:15.120 --> 0:16:17.680
<v Speaker 1>is in its own little world. But the foot two

0:16:17.760 --> 0:16:20.280
<v Speaker 1>fifty is a better way to track the economy higher.

0:16:21.840 --> 0:16:24.560
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

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