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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Boomberg Day Accurate podcast, available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Wednesday, the

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Speaker 2: twentieth of March. Here in London. I'm Caroline Hepca coming

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Speaker 2: up today blowing up. The SMP touches a new record

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Speaker 2: as trader's question if artificial intelligence is becoming a bubble

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Speaker 2: joining the dots. Wall Street Eye is the Fed's rate forecast.

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Speaker 2: For clues on cuts to come and supersized JP Morgan

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Speaker 2: Chase lifts its dividend by nine and a half percent

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Speaker 2: in the wake of a record annual profit. Let's start

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Speaker 2: with a roundup of our top stories. US equities touched

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Speaker 2: a record high as FED positioning and AI optimism boosted

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Speaker 2: the market. The S and P five hundred rows about

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Speaker 2: zero point six percent yesterday on optimism that the FED

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Speaker 2: will signal a rate cut as soon as June. But

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Speaker 2: Wall Street is so divided on whether the US dock

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Speaker 2: market's meteoric rise has gone too far too fast that

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Speaker 2: even Bank of America's own strategists seem to disagree. Here's

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Speaker 2: Global Research, head of US Equity and Quantitative Strategy Sevita

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Speaker 2: Supermanian saying that there is no bubble.

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Speaker 3: This is not a market like ninety nine, where everybody

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Speaker 3: is telling you to back up the truck on all equities.

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Speaker 3: They're saying back up the truck on a few equities,

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Speaker 3: megacap tech, you know, some pharma, but there's no broad

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Speaker 3: spread euphoria in my view.

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Speaker 2: Supermanian's view appears to diverge from the banks chief investment

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Speaker 2: strash is Michael Hartnett, who said last week that a

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Speaker 2: bubble was forming. The FED is expected to hold interest

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Speaker 2: rates later, with markets focused on the updated dot plot

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Speaker 2: and any guidance on when cuts will start. Bon traders

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Speaker 2: stepped up short bets against treasuries in anticipation of a

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Speaker 2: sell off. Sam Consulting founder Claudius Sam says that she

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Speaker 2: hopes for a dull session.

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Speaker 4: My hope for this meeting. It is the most boring

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Speaker 4: meeting ever, and you have traders falling asleep at their desk,

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Speaker 4: like we know they're not going to cut this week,

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Speaker 4: and we better not see anything material change on that

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Speaker 4: summary of economic projections, in particular the are we looking

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Speaker 4: at likely three cuts or two cuts?

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Speaker 2: Claudia Sam, there well, like some analysts Jerome Powell.

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Speaker 5: Well.

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Speaker 2: Many anlists think that Jerome Powell will avoid signaling any

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Speaker 2: imminent reduction, but Bloomberg Economics says that he may offer

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Speaker 2: a dubvish surprise. The Biden administration is said to be

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Speaker 2: considering sanctions for Huawei's secretive CHIT network. Bloomberg's Brian Curtis

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Speaker 2: has more now from Hong Kong.

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Speaker 6: Sources say the US could blacklist Chinese semiconductor firms. This

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Speaker 6: comes after Huawei not a significant technological breakthrough last year.

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Speaker 6: Now such a move would mark another escalation in a

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Speaker 6: US campaign to ring fence China's AI and semiconductor ambitions.

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Speaker 6: Sources to say most of the Chinese entities affected were

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Speaker 6: previously identified as chip making facilities. These are facilities built

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Speaker 6: by Huawei. No final decisions have yet been made in

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Speaker 6: Hong Kong. Brian Curtis Bloomberg Radio JP.

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Speaker 2: Morgan Chase is boosting its dividend by nine and a

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Speaker 2: half percent. That story now from Blebeg's Charlie Pellett.

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Speaker 7: The New York based bank lifted its dividend to a

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Speaker 7: dollar fifteen a share after reporting a record profit last year.

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Speaker 7: The unexpected increase marks the second time in the past

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Speaker 7: twelve months that JP morgan Chase has boosted its quarterly payout.

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Speaker 7: JP Morgan Chase generated about fifty billion dollars of net

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Speaker 7: income in twenty twenty three and had raised the payout

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Speaker 7: by five percent to a dollar five a share for

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Speaker 7: the third quarter. So far this year, JP morgan Chase

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Speaker 7: shares are up thirteen point nine percent at next reports

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Speaker 7: earnings April twelfth. In New York, Charlie Pellett Bloomberg Radio.

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Speaker 2: The French Final Minister says he would hesitate to board

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Speaker 2: a Boeing jet. Bruno Lamaire added that he'd be cautious

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Speaker 2: about flying on the aircraft because he values his life

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Speaker 2: and favors flying with rival Airbus.

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Speaker 8: You prefer situation.

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Speaker 7: I prefer the situation of Airbus to Boeing. I now

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Speaker 7: prefer flying in Airbus over Boeing. My family too, they

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Speaker 7: care about me.

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Speaker 2: The French finance minister there, speaking through a translator at

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Speaker 2: the Europe twenty twenty four conference. He also praised the

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Speaker 2: Airbus Ceogian Fury, who was in the audience, for still

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Speaker 2: producing the best planes. Boeing has been in crisis mode

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Speaker 2: since an almost new aircraft lost a large fuselage panel

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Speaker 2: during a flight back in January. The company had no

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Speaker 2: immediate response to Lemaire's comments. Black Rock has condemned Texas'

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Speaker 2: decision to disinvest eight and a half billion dollars from

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Speaker 2: its school's fund. Texas officially cut ties with Blackrock on

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Speaker 2: Tuesday over its fossil fuel policies. Blackrock responded by saying

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Speaker 2: that it would hurt the state's schools financially. The chairman

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Speaker 2: of Texas's State Board of Education, Aaron Kinsey, who administers

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Speaker 2: the fifty three billion dollar Texas Permanent School Fund, so

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Speaker 2: that the decision was in order to comply with a

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Speaker 2: twenty twenty one Texas law. Black Rock described the move

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Speaker 2: as arbitrary and said it ignores its one hundred and

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Speaker 2: twenty billion dollar investment in Texas public energy companies. Now

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Speaker 2: to the UK, Rachel Reeves pledged a fundamental course correction

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Speaker 2: for the UK economy whilst delivering a prestigious economics speech.

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Speaker 2: The Shadow Chancellor said that Britain is stumbling blindfolded into

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Speaker 2: bigger state spending. Whilst delivering the Mays Lecture in London.

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Speaker 2: She also set out key economic objectives for the next

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Speaker 2: labor government in.

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Speaker 8: The face of a more unstable world. The task is

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Speaker 8: not only to recognize the acute risk, but also to

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Speaker 8: identify the huge opportunities to reject managed to decline, renew

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Speaker 8: our common purpose and rebuild growth on strong and secure foundations.

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Speaker 2: Thank you very much the Labor parties, Rachel reeves. They're

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Speaker 2: delivering the Mains lecture in the City of London. Her remarks.

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Speaker 2: Comma's opposition and number Jeremy Hunt told the House of

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Speaker 2: Lords that the government is considering October for a general election.

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Speaker 2: In a moment, we are going to delve into a

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Speaker 2: very interesting story. I mean talking about interest rates. The

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Speaker 2: changing interest rate environment is really squeezing a pair of

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Speaker 2: very well known investors here in the UK, the Isa Brothers.

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Speaker 2: Our UK business reporter Sabha Meddings will be joining me

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Speaker 2: in just a moment to discuss that story. But first

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Speaker 2: let's dive into the FED decision today. Concluding a two

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Speaker 2: day meeting, with the most recent core inflation data out

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Speaker 2: of the US still running hot markets now expect three

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Speaker 2: rate cuts from the FED, as opposed to six at

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Speaker 2: the start of the year, and it's all eyes on

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Speaker 2: the dot plot. Joining Matt me Now is Bloomberg anchor

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Speaker 2: Critty Gupta in the radious studio, Good morning, Pritty. Look

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Speaker 2: what do you think we're set up to learn then

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Speaker 2: from this FED meeting? Because it's not anticipated that there'll

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Speaker 2: be any rate cup move.

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Speaker 1: Yeah, you've never seen Wall Street in such a consensus here,

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Speaker 1: and that could also be dangerous, some would say, although

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Speaker 1: this time it's been described as a boring meeting, a

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Speaker 1: snooze fest. Nothing really that exciting unless you look at

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Speaker 1: what I would argue is the least exciting plot of

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Speaker 1: the Federal Reserve, the dot plot, and that's where that

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Speaker 1: median dot really comes in handy and along. Our chief

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Speaker 1: of Bloomberg Economists actually has made the point that if

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Speaker 1: you look at the consensus, we have this really cool

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Speaker 1: function on the Bloomberg terminal that kind of plots where

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Speaker 1: how dovish and how hawkish people are. She kind of

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Speaker 1: plotted it over time, and you start to see the

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Speaker 1: dots and basically kind of these little their little faces

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Speaker 1: on the terminal spread further and further apart, showing that

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Speaker 1: there isn't really a consensus on the Federal Reserve and

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Speaker 1: on the FMC on where to go next the way

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Speaker 1: that on Wall Street, it's quite clear where everyone thinks

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Speaker 1: the Federal Reserve should go. That is is a little

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Speaker 1: bit dangerous when it comes to the market moves. We're

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Speaker 1: on the surface. Even though we may not get a

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Speaker 1: rate change, the move and the dollar, the move and

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Speaker 1: the treasury market may actually come from that median dot.

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Speaker 1: If you start to see inflation expectations tick slightly higher,

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Speaker 1: if you start to see the rate cut forecast moved

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Speaker 1: out a little bit more on the timeline a lot

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Speaker 1: simply because think of the last two data points that

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Speaker 1: we got hot CPI numbers two in a row, now

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Speaker 1: hot PPI numbers and higher unemployment. Yes, we got to

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Speaker 1: drop in some of most job as claims, which is

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Speaker 1: a good thing. So we're not seeing as much of

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Speaker 1: a kind of a tight labor market, but you are

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Speaker 1: ultimately seeing the unemployment rate take up, which isn't always

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Speaker 1: a good thing.

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Speaker 6: Yeah.

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Speaker 2: Absolutely, I mean we've been in the range of five

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Speaker 2: and a quarter to five and a half percent in

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Speaker 2: the US since July. What do you think we'll also

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Speaker 2: learn about the balance sheet? About quantitative tightening, I mean

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Speaker 2: the slightly more wonky end of the fat. But that's

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Speaker 2: what's going to come to the fore here surely.

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Speaker 1: Yeah. So the quantitive tightening pleat piece is something that

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Speaker 1: the Federal Reserve has made quite clear. They're not looking

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Speaker 1: to actively sell bonds on the open market. They're looking

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Speaker 1: to just let it kind of roll off the balance sheet.

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Speaker 1: So when some of their holdings mature, instead of selling

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Speaker 1: them and on the market, they're just going to kind

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Speaker 1: of collect the coupon and let them go, but then

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Speaker 1: not reinvest those funds. So that's kind of the way

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Speaker 1: that they're doing quanta tightening. It's meant to be a

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Speaker 1: more or a less abrasive way to affect the liquidity story.

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Speaker 1: That being said, I do expect comments on the liquidity

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Speaker 1: piece of the equation as well, because there was so

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Speaker 1: much concern in the last six months about well, is

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Speaker 1: the bond market seeing enough buyers and seeing enough demand

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Speaker 1: at a time when the US government is trying to

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Speaker 1: raise more and more funds to kind of serve its deficit.

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Speaker 1: And we haven't actually seen that drop and demand. In fact,

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Speaker 1: we've seen the opposite. More and more people are bidding

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Speaker 1: for it on the expectation that you're going to see

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Speaker 1: these rate cuts. Liquidity is not an issue, but there's

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Speaker 1: a question of when it might be commercial real estate.

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Speaker 1: Kind of those fears are still swarming around. So even

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Speaker 1: the geopolitics, attention to the Red Sea, what the read

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Speaker 1: through might be into the US consumer story, all of

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Speaker 1: those on the docket today.

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Speaker 2: Is there a disconnect event between the ecode that we

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Speaker 2: the S and P five hundred yesterday and you know

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Speaker 2: where the dot plots may be and the bond market.

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Speaker 7: A little bit.

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Speaker 1: So, so what strikes me when you talk about the

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Speaker 1: stock market and the Federal Reserve they don't like to

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Speaker 1: look at financial conditions easing. When if you see a

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Speaker 1: stock market hitting recordized, that is by definition to the

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Speaker 1: stock market the financial conditions easing. That being said, those

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Speaker 1: questions about asset price inflation haven't necessarily spooked the Federal

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Speaker 1: Reserve as they have simply because the fundamentals around it

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Speaker 1: is one that it's an AI momentum trade and too,

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Speaker 1: this is US consumer resilience. So in fact for the

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Speaker 1: Federal Reserve talking about consumer resilience, talking about the Federal

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Speaker 1: Reserve actually kind of having the soft landing, or some

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Speaker 1: would call a perfect landing. We had a guest on

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Speaker 1: Bloomer TV this week calling it that that is actually

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Speaker 1: a badge of honor for the Federal Reserve. So it's

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Speaker 1: unlikely he's going to push back, but you never know.

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Speaker 2: Okay, interesting, Christie, thank you so much for your time

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Speaker 2: being in the radio studio this morning. That is Bloomberg

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Speaker 2: anchor Quitti Gupta. Then looking ahead to the Federal Reserve

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Speaker 2: the end of the two day meeting today. Pretty fascinating. Now,

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Speaker 2: the Isa brothers, mostly in and Zuba, have built a

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Speaker 2: sprawling thirty billion dollar m part with six thousand petrol stations,

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Speaker 2: more than that worldwide subway, restaurants and one of the

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Speaker 2: UK's biggest grossers to their name. But cracks do seem

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Speaker 2: to be appearing as higher for longer interest rates are

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Speaker 2: putting pressure on an empire that has been built with

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Speaker 2: a lot of leverage. Show me now to discuss this

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Speaker 2: story is the author our UK business reporter, Sabah Medding. Sabah,

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Speaker 2: good morning. The brothers. They're quite well known in the

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Speaker 2: UK to some extent, I mean, certainly because they've built

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Speaker 2: such a business and so they're fairly well there anyone

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Speaker 2: who doesn't know them, who are they? Well?

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Speaker 9: Indeed? I mean it's an extraordinary entrepreneurial story that began

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Speaker 9: in Blackburn from two brothers who grew up there. They

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Speaker 9: sort of one of them, Zuba, bought a petrol station

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Speaker 9: and from there he kind of brought Mossian in and they,

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Speaker 9: as you say, they built this extraordinary empire that stretched

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Speaker 9: from the US to Australia, across the UK and parts

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Speaker 9: of Europe. And what they did, they sort of did

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Speaker 9: something quite quite clever with these petrol stations. Obviously, when

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Speaker 9: you're driving up the motorway now you might be able

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Speaker 9: to stop in at services and it's quite smart and

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Speaker 9: you can get petrol and everything you might need. But

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Speaker 9: they really did sort of transform what were sort of crusty,

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Speaker 9: old sort of petrol stations into something a lot neater,

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Speaker 9: a lot sort of filled a lot more people's needs.

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Speaker 9: And that kind of has led them to this vast expansion.

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Speaker 2: Yeah. Absolutely, and so they've also ended up only Britain's

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Speaker 2: third biggest grosser.

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Speaker 9: They did, I mean, their partner in all of this

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Speaker 9: has been the private acuity firm TDR Capital, and today

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Speaker 9: together they've been really smart at raising debt, particularly as

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Speaker 9: you say, in this sort of era of low interest rates.

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Speaker 9: So in twenty twenty one, in the depth of the pandemic,

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Speaker 9: they teamed up to buy Asda from Walmart for six

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Speaker 9: point eight billion pounds, and that did thrust them into

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Speaker 9: the spotlight. They were no longer the sort of entrepreneurial

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Speaker 9: brothers that round petrol stations, you know. That really did

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Speaker 9: sort of get the eyes of MPs the public on

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Speaker 9: them when they own this huge brand.

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Speaker 2: Yeah. Absolutely, But now the Empire is under much more pressure,

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Speaker 2: isn't it obviously, as we were in a completely different

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Speaker 2: environment in terms of interest rates.

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Speaker 9: Yeah, exactly. So, I mean they are higher rowing costs,

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Speaker 9: which has forced them to sort of scale back some

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Speaker 9: of their ambitions. They sold KFC late last year and

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Speaker 9: they've done some sad and lease backs in the US.

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Speaker 9: I mean, one thing that we did, my colleague En Stuffles,

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Speaker 9: did the calculations with the Bloomberg Billionaires Index, and we've

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Speaker 9: tracked they still have oval stakes of one billion dollars

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Speaker 9: each across their holdings, but that's a slump of almost

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Speaker 9: sixty percent. So they are their financials are definitely under

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Speaker 9: under strain.

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Speaker 2: Yes, and they've also come under a lot more scrutiny

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Speaker 2: because of the cost of living crisis.

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Speaker 9: Yeah, so obviously Asda was always the real price leader

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Speaker 9: when it came to food, food and also petrol. And

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Speaker 9: Mosslin was pulled in front of the MPs a couple

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Speaker 9: of times last year to sort of after accusations they

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Speaker 9: were putting up a fure prices. They've obviously denied it,

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Speaker 9: you know, they're still trying to keep prices low, but

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Speaker 9: it has definitely led to a bit of scrutiny. And

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Speaker 9: then also, I mean, their own relationship has also been

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Speaker 9: in the spotlight.

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Speaker 2: Yes, why is that? I mean, and Mossin announcing that

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Speaker 2: he's stepping down from Asda.

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Speaker 9: Yeah, so we thought Zuber has been always sort of

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Speaker 9: staid with EG group while while Moston's been there sort

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Speaker 9: of the grosser in all of this. He went up

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Speaker 9: to Leeds to run ASDA after the acquisition. But yeah,

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Speaker 9: he did an interview a few weeks ago where he

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Speaker 9: said he was going to step back. And that means

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Speaker 9: that TDR and ASDA are now looking for a new CEO.

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Speaker 9: It certainly looks like the brothers are slightly in retreat,

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Speaker 9: certainly from Asda. We don't know what the future of

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Speaker 9: Martin's role will be and Zoober very very much seems

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Speaker 9: more focused on EG and running the Plectro station, so

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Speaker 9: it's going to be really interesting. Time to see what

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Speaker 9: happens next.

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