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

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

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Speaker 1: you listen. It's Wednesday, the twentieth of March. Here in London.

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Speaker 1: I'm Caroline Hepca Coming up today Blowing up the SMP

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Speaker 1: touches a new record as trader's question if artificial intelligence

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Speaker 1: is becoming a bubble? Joining the dots. Wall Street Eye

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Speaker 1: is the Fed's rate forecast for clues on cuts to

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Speaker 1: come and supersized JP Morgan Chase lifts its dividend by

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Speaker 1: nine and a half percent in the wake of a

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Speaker 1: record annual profit. Let's start with a roundup of our

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Speaker 1: top stories. The Federal Reserve left interest rates on hold,

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Speaker 1: but reiterated its outlook for three twenty five basis point

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Speaker 1: rate cuts this year, sending bonds and stocks to fresh records.

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Speaker 1: The unanimous fifth straight pause had reporters asking, Chad your

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Speaker 1: own Powell when cuts are coming. He says that US

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Speaker 1: inflation is on a bumpy road.

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Speaker 2: The January number which was very high. The January CPI

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Speaker 2: and PCE numbers were quite high. There's reason to think

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Speaker 2: that there could be seasonal effects there, but nonetheless we

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Speaker 2: don't want to be completely dismissive of it. The February

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Speaker 2: number was high, higher than expectations. I take the two

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Speaker 2: of them together and I think they haven't really changed

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Speaker 2: the overall story, which is that of inflation moving down

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Speaker 2: gradually on a sometimes bumpy road.

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Speaker 1: Despite Powell's caution on when the first rate cuts could come,

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Speaker 1: the forecast is for three rate cuts this year, and

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Speaker 1: that Boyd market is the benchmark. MSCI Asia Pacific Index

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Speaker 1: enjoyed its best day in more than four months, while

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Speaker 1: a Bloomberg gage of commodity prices rose to its highest

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Speaker 1: level this year. Now, the Bank of England is expected

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Speaker 1: to follow the FED and keep rates on hold later today.

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Speaker 1: The question for investors is when the central Bank plans

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Speaker 1: to reduce rates from their sixteen year high. Recent price

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Speaker 1: and wage data has shown inflationary pressures easing in the UK,

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Speaker 1: with CPI sliding to three point four percent in February.

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Speaker 1: Serling is the best performing G ten currency against the

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Speaker 1: US dollar this year, on bets that the Bank of

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Speaker 1: England would hold rates higher for longer than its peers.

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Speaker 1: In corporate news, Barclays is making deep cuts to its

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Speaker 1: deal making trading and research departments. The changes are part

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Speaker 1: of a year's long effort to improve returns in inbooks,

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Speaker 1: tewa Adebayo has the details.

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Speaker 3: In recent months, Wall Street giants from JP Morgan to

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Speaker 3: City Group have responded to a go will deal drought

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Speaker 3: with a slew of job cuts, but at Berkeleys the

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Speaker 3: changes are strategic. Hundreds are set to lose their jobs

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Speaker 3: as the lender eyes bigger profits for its investment bank division.

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Speaker 3: The firm has been under fire from investors questioning the

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Speaker 3: high running costs of its Wall Street operations for some time,

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Speaker 3: especially as other divisions routinely outperforming now see ecs Vencate.

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Speaker 3: Christian is seeking to put those queries to rest by

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Speaker 3: streamlining his workforce and bolstering the company's advisory and equity

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Speaker 3: underwriting offerings. In London. To Adibaio Bloomberg Radio.

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Speaker 1: Leo Veradkar has stepped down as Ireland's Prime Minister. The

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Speaker 1: leader's coalition government recently suffered too heavy defeats in referendum

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Speaker 1: campaigns to change constitutional language on women and the family.

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Speaker 1: Veradkar gave his reasons for leaving as personal and political.

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Speaker 4: I've had the honor of helping to lead Ireland from

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Speaker 4: unemployment to full employment, from a budget deficits to budget surplus,

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Speaker 4: from austerity to prosperity through Rexit, when we prevented a

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Speaker 4: hard border between North and South and protected our place

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Speaker 4: in Europe.

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Speaker 1: Leo Veradkar will remain as t shook until his successor

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Speaker 1: is chosen, but his resignation as leader of the Fena

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Speaker 1: Gael Party is effective immediately, with minister's Pascal Donaho and

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Speaker 1: Simon Coveney seen as pos successes. The sudden resignation of

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Speaker 1: Radcar leaves Ireland at a crossroads.

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Speaker 3: Now.

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Speaker 1: To Reddit executives and other shareholders, they're raised seven hundred

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Speaker 1: and forty eight million dollars in the pricing of its

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Speaker 1: initial public offering. According to a statement confirming Bloomberg reporting,

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Speaker 1: the platform sold twenty two million shares at thirty four

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Speaker 1: dollars each, putting the price at the top of the

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Speaker 1: marketed range. Bloomberg's Ed Ludlow says that the company's Ibo

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Speaker 1: IPO has been hotly anticipated.

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Speaker 5: People are looking forward to a Reddit listing. It's been

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Speaker 5: a long time coming, right. This is one of the

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Speaker 5: kind of og Silicon Valley tech companies. It was one

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Speaker 5: of the original y Combinator incubated startups, founded in two

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Speaker 5: thousand and five, so it's an almost twenty year path

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Speaker 5: to the public market.

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Speaker 1: Bloomberg's tech reporter Ed Ludlow speaking there well. Despite the pricing,

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Speaker 1: Reddit's fully dileted valuation is six point four billion dollars.

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Speaker 1: That's down from a ten billion dollar funding round in

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Speaker 1: twenty twenty one when the company first launched plans to

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Speaker 1: go public. Read it is yet to achieve profitability. Now,

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Speaker 1: in just a moment, we're going to look at the

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Speaker 1: FED decision. Our economics columnist Daniel Moss will be joining

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Speaker 1: me to talk about that and its effect on global markets.

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Speaker 1: But first, Sam Bankman Freed is being sentenced next week,

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Speaker 1: and there is a really fascinating battle over exactly how

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Speaker 1: long he's going to spend in prison. It is quite

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Speaker 1: something and Bloomberg's a reporter Rachel Graff has been writing

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Speaker 1: about it. So remember the jury in Manhattan convicted Bankman

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Speaker 1: Freedd in November of seven charges, including wire ford and conspiracy,

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Speaker 1: all to do with the collapse of FTX and Ala Mader. Well,

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Speaker 1: the prosecutors want forty to fifty years in jail for

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Speaker 1: the FDx co founder. They talk about his historic crimes

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Speaker 1: involving more than a million victims, and the language is

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Speaker 1: quite quite punchy. They talk about him having shown unmatched

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Speaker 1: greed and hubris of megalamania, and Bankmin Freed refusing to

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Speaker 1: admit that he's done something wrong. In defense now, Sam

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Speaker 1: Bankmanfreed says that the US prosecutor's proposals to put him

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Speaker 1: in jail for fifty years are distorting reality and that

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Speaker 1: they're trying to paint him as a depraved super villain.

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Speaker 1: So you get the flavor of the sort of language

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Speaker 1: that's being used. And the actual sentencing is going to

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Speaker 1: take place on the twenty eighth of March. It's something

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Speaker 1: that caught my attention. Perhaps it will catch yours. Have

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Speaker 1: a read of Blimberg's Rachel Graff and her Peace on

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Speaker 1: this extraordinary battle. Now about exactly how long he's going

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Speaker 1: to spend in a US prison? Now to the Federal Reserve,

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Speaker 1: it maintained its outlook for three rate cars this year,

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Speaker 1: suggesting that it isn't alarmed about a recent optic in inflation,

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Speaker 1: but nearly half a FED officials did prefer two or

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Speaker 1: fewer rate reductions. In twenty twenty four, so it's quite

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Speaker 1: a split on the MPC. Let's bring in Bloomberg's economics columnist.

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Speaker 1: This is Daniel Moss, who joins me. Now, Dan, great

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Speaker 1: to have you on the program. How big, then, is

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Speaker 1: the concern about US inflation? Is it just a bumpy

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Speaker 1: descent as Jay Powell was talking about.

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Speaker 6: Yeah, there's concern there, but it's not alarm. So let's

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Speaker 6: look at where we've been over the past couple of years. PCEE.

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Speaker 6: The inflation gauge that the two percent target is based

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Speaker 6: upon was well above seven percent in twenty twenty two.

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Speaker 6: The monthly CPI number published by the Labor Department was

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Speaker 6: well over nine percent. You know, we've come down significantly

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Speaker 6: from these levels. And Jay Powell acknowledged in his opening statement,

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Speaker 6: which is the more or less unscripted part of his

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Speaker 6: press conference, policy is restrictive and it is constraining both

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Speaker 6: growth and inflation. So sure, they've taken note of some

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Speaker 6: of these numbers in the past couple of months, which

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Speaker 6: have been a little bit higher than anticipated, but it's

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Speaker 6: not enough to fundamentally derail the story, which is that

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Speaker 6: inflation is retreating. You can use bumpy or another term.

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Speaker 6: But the trend is there, and they project cuts in

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Speaker 6: interest rates sometime this year. You So, look when Powell

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Speaker 6: first started talking like this in December, market's got extremely excited,

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Speaker 6: and that was where March came from. But no Fed

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Speaker 6: official came close to endorsing March. So there's been this

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Speaker 6: sense of letdown. Now there's relief that these numbers quote

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Speaker 6: unquote bumpy haven't derailed the fundamental picture. This was never

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Speaker 6: going to be a year of massive twenty twenty. You know,

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Speaker 6: two thousand and eight style rate cuts. Okay, that scenario

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Speaker 6: just wasn't plausible. You can have a couple of rate

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Speaker 6: cuts and policy can still be restrictive, and that's where

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Speaker 6: they want to go.

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Speaker 1: Okay, so the market's got it all wrong that they're

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Speaker 1: getting it more right now. I mean the rally that

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Speaker 1: we've seen off the back of this is very significant.

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Speaker 6: Well, I wouldn't say they had it all wrong. I

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Speaker 6: would say perhaps, you know, emphasis in a couple of

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Speaker 6: places of the narrative could have been different. That's almost

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Speaker 6: central banker speak.

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Speaker 1: Isn't it It is? It made me pause, Daniel in

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Speaker 1: terms of then the balance sheet, that was the other

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Speaker 1: issue isn't it How quickly the Central Bank deals with

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Speaker 1: the balance sheet, how it deals with the balance sheet.

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Speaker 6: Yeah, well, again, this is consistent with the idea that

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Speaker 6: they want to make policy a little less restrictive through

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Speaker 6: the course of this year, you know, and if you

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Speaker 6: zoom out, you know, we also heard from Christine Legarde

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Speaker 6: in the past twenty four hours there's not a Central

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Speaker 6: Bank of consequence that's talking seriously about more hikes. Let's

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Speaker 6: put it that way. You know, we're either talking about

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Speaker 6: the timetable for reductions or you're if the new Reserve

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Speaker 6: Bank of Australia governor's saying, well, we're not ruling anything

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Speaker 6: and then we're not ruling anything out. How's that for

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Speaker 6: going out in a limb. But you know, interest rates

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Speaker 6: have peaked in any place that really matters. Okay, they're

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Speaker 6: going down this year. It's a question of how far

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Speaker 6: down they go and how quickly. And yeah, sure they

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Speaker 6: prefer you know, inflation be a lot closer to averaging

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Speaker 6: two percent over time. But look where we've been. Policy

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Speaker 6: is well into restrictive territory now, so by definition, you

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Speaker 6: can make a couple of cuts and still be somewhat restrictive.

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Speaker 1: Yeah, exactly, Daniel, Thank you so much for being with

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Speaker 1: u's ben Berg's economics columnist Daniel Morson. So just giving

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Speaker 1: us well the trajectory I think, putting into perspective how

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Speaker 1: far we've come in this year where we're talking about

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Speaker 1: the path for rate cuts and little else besides, Daniel,

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Speaker 1: thank you so much for being with me. Now, let's

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Speaker 1: turn our attention to another of our stories this morning.

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Speaker 1: So this is Fidelity International. It's recently changed CEOs and

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Speaker 1: announced it is cutting around a thousand of its staff.

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Speaker 1: These are changes at the firm reveal the power of

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Speaker 1: its chair and one of the more powerful women in finance.

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Speaker 1: This is Abigail Johnson, our asset management reporter Lukire Giftop,

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Speaker 1: who joins me now to discuss this. I mean, this

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Speaker 1: is Fidelity International. This is a US funding giant, isn't

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Speaker 1: It has happened recently in terms of Fidelity International.

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Speaker 7: Fidelity International is actually separate to the US giant. They

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Speaker 7: set it up in ninety sixty nine and then they

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Speaker 7: span it out. But the Johnston family, which is a

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Speaker 7: very powerful billionaire family, still owns a very significant part

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Speaker 7: of it. So yes, at the end of last year

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Speaker 7: and Richard, who was CEO, stepped down a bit unexpectedly.

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Speaker 7: People were quite surprised because she's very well respected. CEO

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Speaker 7: is now called president, who's been there for a few years.

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Speaker 7: Started earlier this month, and then a few days later

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Speaker 7: they announced they're cutting one thousand jobs, which is about

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Speaker 7: nine percent of the stuff, one out of ten employees.

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Speaker 7: And this is surprising to the city and too many

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Speaker 7: in the industry because Fidelity is a very prize it's

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Speaker 7: a privately owned company. It doesn't really tell a lot

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Speaker 7: of give a lot of information about itself, and nearly

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Speaker 7: ten percent of staff is quite a big number to call.

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Speaker 1: So why do you why do what do you think

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Speaker 1: that the change is mean? Then in that sense, I.

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Speaker 7: Think, well, with Abby Johnson, we don't really decide of

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Speaker 7: the Atlantic connector so much if Youdelt's international, but she

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Speaker 7: is the chair and her family is set to own

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Speaker 7: about forty percent of the company. So, you know, speaking

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Speaker 7: to people and out of the reporting, one has come

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Speaker 7: out is that she's actually quite involved. People are whispering

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Speaker 7: that she wasn't very happy with how things were going. Potentially,

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Speaker 7: it's very hard to know exactly how things are going.

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Speaker 7: But with the available data, we can see they're have

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Speaker 7: been heavy outflows from many of the funds and that

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Speaker 7: the cost at least for the UK regulated entities has

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Speaker 7: reason a lot and the profits have dropped, so there

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Speaker 7: will be changes there. Asset management is challenged in general,

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Speaker 7: but this has been a bit of a surprise because

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Speaker 7: we don't really it's just come out of the blue.

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Speaker 7: We don't really know what's happening there. They don't have

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Speaker 7: to file quarterly statements to sell us.

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Speaker 1: And what's it meaning? It's to the UK business then,

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Speaker 1: do you think so?

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Speaker 7: I think the UK business will be particularly affected in

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Speaker 7: terms of the layoffs because it does employ about one

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Speaker 7: third of the stuff, if not more. We had a

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Speaker 7: story coming out of China earlier this month, earlier this

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Speaker 7: week actually, which said that they're cutting twenty or so

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Speaker 7: roles in China and in Hong Kong where they employ

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Speaker 7: about two thousand people in China and Hong Kong. So

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Speaker 7: you know, you can imagine what will happen in the

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Speaker 7: rest of the world. And I think London is one

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Speaker 7: of the places where we understand that they had hired

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Speaker 7: a lot over the last few years, so it's quite

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Speaker 7: possible that there will be a big kind of clear

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Speaker 7: out in some departments.

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Speaker 1: What about Abigail Johnson what it means for Boston because

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Speaker 1: she seems to be better known and has done more

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Speaker 1: business there.

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Speaker 7: Perhaps so the Fidelity in Boston is a fan giant.

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Speaker 7: They manage four point nine trillion in discretionary assets. They've

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Speaker 7: been quite forward looking with digital assets venture capital. That

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Speaker 7: hasn't happened so much this side of the Atlantic. So

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Speaker 7: I think it's fair to wonder if they're going to

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Speaker 7: try and bring some of that, you know, implement some

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Speaker 7: of that over here where. Yes, if they've pushed in

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Speaker 7: private assets lately, but it doesn't quite have that cloud

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Speaker 7: as the business does over there in the US.

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