Speaker 1: Good morning. It's Wednesday, the twentieth of September here in London.
Speaker 1: This is the Bloomberg Daybrecate podcast. I'm Caroline Hepka and.
Speaker 2: I'm Stephen Carroll. Coming up today. The rate of UK
Speaker 2: inflation unexpectedly cools, raising the prospect that interest rates could
Speaker 2: be close to their peak.
Speaker 1: The Mayor of London tells us that Rishi Sunak is
Speaker 1: weaponizing climate change, as the Prime Minister considers delaying a
Speaker 1: ban on the sale of combustion engines.
Speaker 2: And as electric vehicle sales saw in the EU, Ursula
Speaker 2: Vanderline warns that China's massive subsidies need to be investigated.
Speaker 1: Let's start with a round up of our top stories.
Speaker 1: Britain's inflation has unexpectedly fallen to the lowest level in
Speaker 1: eighteen months, easing pressure for further interest rate hikes from
Speaker 1: the Bank of England. The consumer price INDEGS rose by
Speaker 1: six point seven percent from a year ago in August,
Speaker 1: but that was less than the six point eight percent
Speaker 1: gain the month before, and it was well below the
Speaker 1: seven percent that economists had expected. Bloomberg's UK corus Lizzie
Speaker 1: Burden says it's good news for central bank policy makers
Speaker 1: in the UK.
Speaker 3: We've heard the chief economists of the Bank of England, Huepill,
Speaker 3: talking about us reaching the peak of table mountain, maybe
Speaker 3: the end of the rate rises, and it makes it
Speaker 3: easier that that could be the case tomorrow.
Speaker 1: Bloomberg'slazy Burden says that the latest data may still not
Speaker 1: be enough though to stop another quarter point interest rate
Speaker 1: increase tomorrow, given that inflation is still more than three
Speaker 1: times the bank's target of two percent.
Speaker 2: The Mayor of London has offered a stinging rebuke of
Speaker 2: Conservative Party plans to roll back some green policies, calling
Speaker 2: it lazy politics from a weak prime minister. Richie Sunac
Speaker 2: says he wants to implement climate pledges in a quote
Speaker 2: more proportionate way. It's understood Sinax considering delaying a ban
Speaker 2: on the sale of new patrol and diesel cars until
Speaker 2: twenty thirty five. Speaking to Bloomberg, London's Mayor, City Can
Speaker 2: derided the move and this.
Speaker 4: Is basically, you know, lazy politics from a weak prime
Speaker 4: minister throwing red meat to his backbenches because he so.
Speaker 5: We can in effectual.
Speaker 2: That's not only Can who's been pouring scorn on the idea.
Speaker 2: The former Conservative business secretary and COP twenty six president
Speaker 2: Alek Sharmer says the change won't help economically or electorally.
Speaker 1: The head of the European Commission says that the EU
Speaker 1: needs to investigate massive subsidies that China gives its electric
Speaker 1: vehicle industry. The comments come as the EU's latest car
Speaker 1: sales data shows electric vehicles exceeded twenty percent of overall
Speaker 1: sales for the first time in August. As If Onderlion
Speaker 1: told Bloomberg that the Bloc won't accept unfair competition.
Speaker 6: We want the level playing field for our companies, and
Speaker 6: what we see is massive subsidies in the EV sector
Speaker 6: in China, which is of course unleveling our playing field,
Speaker 6: and we do not accept this in the internal market
Speaker 6: for our companies, so we do also not accept it
Speaker 6: for Chinese companies.
Speaker 1: Rondallian's comments come after the European Commission announced the anti
Speaker 1: subsidy of destigation last week, which could lead to tariffs
Speaker 1: on made in China evy imports. Beijing has called the
Speaker 1: move a naked act of protectionism and could restrict access
Speaker 1: to Europein exporters.
Speaker 2: In response, the Federal Reserve is expected to pause rateikes
Speaker 2: today for the second time this year, while leaving the
Speaker 2: door open for another increase as early as November. With
Speaker 2: the inflation still well above the fed's two percent target
Speaker 2: and the US economy resilient, officials made pencil in one
Speaker 2: more hike in their quarterly projections. Bridgewater Associates co Chief
Speaker 2: investment Officer Karen Carneal Tambor says the FED may be
Speaker 2: slower to cut rates than many expect.
Speaker 7: The bar is high to either raise or lower rates
Speaker 7: from where we are today. When you look at what
Speaker 7: it takes to get fast rate declines, usually you need
Speaker 7: the economy collapsing pretty quickly. There's a sense of urgency, right,
Speaker 7: economies collapsing sense of urgency, lower rates as fast as
Speaker 7: you can. That's very far from where we are today.
Speaker 7: We don't have a collapsing economy create that, and inflation
Speaker 7: is still uncomfortably high. It's not as as it was.
Speaker 7: It has been coming down, but the impetus for I
Speaker 7: got a lower rate quickly is certainly not there.
Speaker 2: You can hear that full conversation with Karen Carneel tambora
Speaker 2: accorded at the end of August on the latest episode
Speaker 2: of Bloomberg Wealth of David Rubinstein will bring you their
Speaker 2: FED rate decision live here on Bloomberg at seven pm
Speaker 2: London time, followed by Jern Powell's press conference thirty minutes later.
Speaker 1: Now, the Confederation of British Industry has postponed its annual
Speaker 1: meeting at the last minute over concerns about cash flow.
Speaker 1: Poomberg's You and Potts reports.
Speaker 8: The CBI is long beeing, Britain's biggest business lobby group.
Speaker 8: Now Sky News reports it's thought to be as little
Speaker 8: as four weeks away from running out of money. Up
Speaker 8: until early this morning, the CBI's website listed it's AGM
Speaker 8: due to kickoff today at ten am, but the business
Speaker 8: group told members yesterday its big annual meeting is being
Speaker 8: postponed due to cash flow issues. Its money problems come
Speaker 8: after dozens of the UK's biggas company suspending engagement with
Speaker 8: the CBI in the wake of a series of allegations
Speaker 8: of serious sexual misconduct to the group in London. I'm
Speaker 8: you in Pots of Bloomberg.
Speaker 1: Radio President Joe Biden is calling on world leaders to
Speaker 1: stand with the Ukraine in its war against Russia. He
Speaker 1: made the appeal at the UN General Assembly in New York.
Speaker 9: If you allow Ukraine to be carved up, is the
Speaker 9: independence of any nation secure? Hid respectfully suggest the answers, No,
Speaker 9: we have to stand up to this Neked aggression today
Speaker 9: and the tour other would be aggressiors tomorrow.
Speaker 1: Biden's remarks attracted applause from UN delegates, including his Ukrainian counterpart,
Speaker 1: Valdomei Zelenski, who was in the audience. Concerns have been
Speaker 1: growing over the cost of backing Ukraine's fight, with Kiev's
Speaker 1: forces struggling to make major battlefield gains. Boomberg understands that
Speaker 1: one G seven official sees the war lasting as long
Speaker 1: as seven years, and says that allies need to plan
Speaker 1: financially to continue supporting.
Speaker 2: Consumers accidentally caught a glimpse of Microsoft's future video game
Speaker 2: plans after the tech giant mistakenly provided confidential information to
Speaker 2: a federal court website. The details were part of the
Speaker 2: FTC's antitrust suit against its takeover of Activision Blizzard, including
Speaker 2: unannounced games under refreshed Xbox console. The information has since
Speaker 2: been removed.
Speaker 1: Those are our top stories for you this morning. On
Speaker 1: the markets. European stocks are currently up by three tenths
Speaker 1: of one percent, forty one hundred shares also gaining six
Speaker 1: tenths of one percent. Two year Treasury yields trading at
Speaker 1: five sports zero eight. The big move though markets a
Speaker 1: thirteen and a half basis point decline for two year
Speaker 1: UK guilt yields now trading at four point eight five percent.
Speaker 2: The story linked to those inflation numbers we were talking
Speaker 2: about from Bloomberg opinion column of some More and Summerset
Speaker 2: Web this morning writing about the slump in the buy
Speaker 2: to let market. So we know that rents have been
Speaker 2: going up at an almost record pace, in fact twelve
Speaker 2: percent year on year, thirty percent hiresince the start of
Speaker 2: the pandemic, but the number of people who are willing
Speaker 2: to stay in the by to let markets splickly take
Speaker 2: out to new mortgages has slumped. Obviously, rising rates is
Speaker 2: a big problem. Add to that, marrin Somerset Web says
Speaker 2: rising regulatory costs, incoming net zero rules, few extra wealth taxes,
Speaker 2: and the risk that rent control could pose to the
Speaker 2: income on these properties as well. And essentially many because
Speaker 2: a lot of we're talking about a lot of small players,
Speaker 2: and we talk about the vite let market are saying
Speaker 2: it's not worth it and pulling out. But that creates
Speaker 2: a whole different problem, is that the supply in the
Speaker 2: market shrinks, rents keep going up, and you're present potentially
Speaker 2: presented with a rental crisis.
Speaker 1: Yeah, look, rent on issue, aren't they. I mean there's
Speaker 1: a problem with landlords, with upgrading old buildings, with the
Speaker 1: cost of renting, you know, with how you professionalize it,
Speaker 1: with climate change coming. But I just wonder whether we're
Speaker 1: going to really get anything out of this government of
Speaker 1: Chuca's government. You know, this is a fraught issue. And
Speaker 1: lady we're talking about ris you talking about sort of
Speaker 1: rolling back some green pledges seeing that as a win
Speaker 1: electorally potentially for the Conservatives.
Speaker 8: Yeah, we'll be.
Speaker 2: Watching to see what the parties say about this when
Speaker 2: we get closer to the election. Let's get more details
Speaker 2: though on today's big data print. Consumer price inflation in
Speaker 2: the UK unexpectedly falling to the lowest level in eighteen months,
Speaker 2: easing pressure for further rate ikes from the Bank of England.
Speaker 2: We've already seen the market scaling back their bets on
Speaker 2: what the Bank will do next ahead of its meeting tomorrow.
Speaker 2: Let's get more from our senior UK economist, Dan Hansen. Dan,
Speaker 2: great to have you with us. Is took us through
Speaker 2: I suppose your reaction to what we saw in the
Speaker 2: data this morning, a slowdown in in core and in
Speaker 2: the headline CPI rate.
Speaker 10: Yeah, I mean it was in good morning. Sorry, it
Speaker 10: was a huge surprise, to be honest with you, but
Speaker 10: of course a welcome surprise because we've spent most of
Speaker 10: this year discussing upside CPI surprises, so it was nice
Speaker 10: to get a get a downside surprise, I think. So
Speaker 10: you're absolutely right. I mean, the thing that really caught
Speaker 10: my eye was the core number falling to six point
Speaker 10: two percent, and beneath that if you look at if
Speaker 10: you look at the breakdown, it looks pretty widespread, so
Speaker 10: that all important services inflation number fell from seven point
Speaker 10: four percent to six point eight percent. So it's still
Speaker 10: very elevated, but nonetheless it's finally moving in the right direction,
Speaker 10: particularly when we're thinking about the Bank of England. So
Speaker 10: I think there was there was a lot of good
Speaker 10: news in the in the release, and of course with
Speaker 10: the with the bank meeting tomorrow, it does throw up
Speaker 10: a bit of a cloud of uncertainty about what they
Speaker 10: might might decide to do.
Speaker 1: Yeah. Absolutely. Do you think that it is going to
Speaker 1: influence their decision tomorrow. I'm just looking at the function
Speaker 1: on the Blueberg terminal that shows what markets expect. I mean,
Speaker 1: you've seen a big pullback now in terms of the
Speaker 1: percentage probability of a rate height tomorrow out of the
Speaker 1: Bank of England.
Speaker 10: Yeah, I mean, and I think that's obviously the obviously
Speaker 10: the correct reaction to the day. I mean, I think
Speaker 10: there are a few things. I mean, the bank will
Speaker 10: definitely want to be sure this is durable. In terms
Speaker 10: of the dropping core inflation we've seen, particularly in the UK,
Speaker 10: less so in the Eurozone and the US, but core
Speaker 10: inflation has been quite volatile. It has bounced around. We've
Speaker 10: had upside mainly upside surprises, but now we've had a
Speaker 10: downside surprise as well, so the path down hasn't been smooth,
Speaker 10: so they want to be sure it's durable. I mean,
Speaker 10: in terms of tomorrow, I think there's still enough concern,
Speaker 10: or there will still be enough concern around the pay
Speaker 10: growth data for them to hike again. But I definitely
Speaker 10: think it's a much more balanced decision with this, because
Speaker 10: if you think about it, the pay data or the
Speaker 10: pay growth data is the only thing that's really surprised
Speaker 10: to the upside. Now you've got services inflation surprising to
Speaker 10: the downside, you've got the economy weakening, and you've got
Speaker 10: the unemployment rate rising fast than they expect. So there's
Speaker 10: a lot of dubbish news on the data front other
Speaker 10: than the pay growth data. But I think on balance,
Speaker 10: the bank is going to lean towards probably just doing
Speaker 10: one more, just essentially on insurance. But I think that
Speaker 10: beyond that, there's there's a real question about is that
Speaker 10: going to be the last one?
Speaker 9: And is that it?
Speaker 10: And will they will they choose to send a stronger
Speaker 10: signal that they're going to pause in following tomorrow's hike.
Speaker 2: If it is a hike and a pause, or perhaps
Speaker 2: signaling a pause now and one more hike to come,
Speaker 2: How how soon could we start to think about interest
Speaker 2: rate cut to the BIOI yeah, I mean, that's the that.
Speaker 10: Would be what the main question. And I think actually,
Speaker 10: when you think about tomorrow, that would be one of
Speaker 10: the things the bank wants to guard against having got
Speaker 10: to the peak. The last thing it wants is the
Speaker 10: debate quickly shift to the timing of the first cut.
Speaker 10: You know, we've heard from Hugh Peel, the Chief Economist,
Speaker 10: about this idea of table mountain rates staying higher for longer.
Speaker 10: For that to be an effective strategy, markets need to
Speaker 10: believe that tightening is still potentially on the table and
Speaker 10: there is a tightening bias. Jay Power has been very
Speaker 10: good at that doing that, the Federal Reserve chair. So
Speaker 10: I think for us at least we think in the
Speaker 10: middle of next year will be the timing of the
Speaker 10: first cut. So our first cuts in the second quarter
Speaker 10: of twenty twenty four. I think the risks are probably
Speaker 10: to it being a little bit later than that. I mean,
Speaker 10: we've had some good news on inflation today, but the
Speaker 10: grind lower is going to take time. Getting down to
Speaker 10: that two percent is going to take a very long time.
Speaker 10: We don't think it's going to happen till early twenty
Speaker 10: twenty five. So I think we've got the first cut
Speaker 10: coming in in the middle of next year. But I
Speaker 10: think it wouldn't surprise me at all if it was
Speaker 10: delayed all attle bit later.
Speaker 1: Okay, that's interesting, do you think though, I mean that
Speaker 1: the UK's position compared to the rest of the world
Speaker 1: does remain pretty fraught, doesn't it. I mean, compare us
Speaker 1: to the US and Europe, the inflation picture is still
Speaker 1: very difficult.
Speaker 10: Dan briefly, Yeah, and that's exactly the point. And I
Speaker 10: think that's why they're going to be careful about not
Speaker 10: claiming victory from one inflation number. So I think, you know,
Speaker 10: tomorrow it is likely we're going to get a hike,
Speaker 10: and they're also not going to be too confident about
Speaker 10: confident about signaling victory. And it's also why next year,
Speaker 10: if there are cuts, they'll be very limited. They're going
Speaker 10: to keep more to keep rates restrictive until infact really
Speaker 10: does get close to that two percent number.
Speaker 1: Okay, Dan, thank you so much for being with us.
Speaker 1: Bloomberg Senior UK economist Dan Hanson, let's.
Speaker 2: Bring you more now of our interviewed London's mayor City
Speaker 2: Can He says the Prime Minister is week for pulling
Speaker 2: back on green policies. He's been speaking to Bloomberg's Francine Lackway.
Speaker 4: Well, what's happening is some people are trying to weaponize
Speaker 4: climate change, weaponize air pollution. And here's the perversity of
Speaker 4: what Prime Minister Sunac is doing.
Speaker 5: We've seen in the UK and September.
Speaker 4: In London in September, for the first time ever, four
Speaker 4: consecutive days of temperatures north of thurny degrees celsius. We
Speaker 4: saw last year in London temperatures north of forty degrees celsius.
Speaker 5: Wildfires in London. We've seen across.
Speaker 4: Europe and the global North in America, wildfires, droughts, heat waves.
Speaker 4: The response of government should be actually to turn this
Speaker 4: awful crisis into an opportunity, creating green jobs, a green
Speaker 4: new deal, thinking about how we can both save the planet,
Speaker 4: address climate change, but also give people security and have
Speaker 4: that just transition. And this is basically, you know, lazy
Speaker 4: politics from a weak prime minister throwing red meat to
Speaker 4: his backbenches because he's so weak and ineffectual.
Speaker 11: Do you think you could have been better supported by
Speaker 11: Kerstarmarch with you guys.
Speaker 4: Well, I recognize that we've got to make sure we
Speaker 4: take people with us. I recognize that addressed people's concerns,
Speaker 4: but concerns. But from kir Starmer and the Labor Party,
Speaker 4: what I would hope to see and we are seeing,
Speaker 4: is plans to.
Speaker 5: Address the climate emergency. You've got an announcement from the
Speaker 5: Shadow of Finance.
Speaker 4: Secretary Rachel Rehees saying, you know what, in the first
Speaker 4: term of a labor government will be invested into the
Speaker 4: tune of twenty eight billion pounds a year, which is
Speaker 4: a wall terms, akin to more than President Biden's Inflation
Speaker 4: Reduction Act.
Speaker 11: But Mayor, is it fair to say that you could
Speaker 11: have gotten more support by Drestarma on u les and
Speaker 11: also in the by elections and you haven't because it's
Speaker 11: now a political hot potato.
Speaker 4: But what happened was the by election in Oxbridge and
Speaker 4: Rice that took place a few weeks before the units
Speaker 4: was expanded. People had judginge concerns which we were addressing
Speaker 4: at the same time people were playing on that as
Speaker 4: well as so. Kier and I are close friends. We've
Speaker 4: flowing to over for more than twenty five years. The
Speaker 4: only thing we disagree about is I support a great
Speaker 4: soccer team, great football team Liverpool.
Speaker 5: He sports a rubbish roun Arsenal okay.
Speaker 11: But apart from football, what kind of advice would you
Speaker 11: give him to win the general election?
Speaker 7: No?
Speaker 5: I don't give care advice.
Speaker 4: You know what I do is I'm a friend to
Speaker 4: care but also an example of what a labor politician
Speaker 4: winning the difference we can make being pro business, supporting
Speaker 4: businesses to flourish and thrived, being pro enterprise, being pro
Speaker 4: fighting a climmergency, being pro clean building, recognoumns, affordable homes,
Speaker 4: making sure we invest in public transfer and young people.
Speaker 4: And what do want people to see across the country
Speaker 4: is that that's the difference labor women can make. Compare
Speaker 4: to contrast to a Conservative government where there's been economic mismanagement.
Speaker 4: List trust is all from many budget last year, but
Speaker 4: also a week at ineffectual Conservative leader.
Speaker 11: What can labor now do to be closer to businesses?
Speaker 11: There has been a campaign to actually get them on board.
Speaker 11: I think the latest polls show that they be pretty
Speaker 11: happy with the labor government.
Speaker 10: What would you do more?
Speaker 4: Well, there's two There's two things that people want to
Speaker 4: see from good leaders. One is addressing social injustices, but
Speaker 4: also economic competence, supporting businesses, being proud to spaught businesses,
Speaker 4: being pro businesses.
Speaker 5: Being pro business. One of the things that we've got
Speaker 5: to have the humility.
Speaker 4: Is politicians to do accept is you know, we don't
Speaker 4: create the jobs the wealth of prospiracy for often we
Speaker 4: think we do, but we don't. We can create the
Speaker 4: environment where businesses flourish and thrive, and work with businesses
Speaker 4: to be pro well paid jobs, to work with businesses
Speaker 4: to make sure they invest in young people, to work
Speaker 4: with businesses to train up people to have the skills
Speaker 4: for the.
Speaker 5: Jobs being created.
Speaker 4: My nervousness about the Layer Party is our reputation in
Speaker 4: the recent past has been with anti growth or anti prosperity.
Speaker 4: What KOs Arma Rachel reeves their teams have done is
Speaker 4: to reassure businesses by listening to them that we are
Speaker 4: pro business.
Speaker 5: We're back at business.
Speaker 11: As a result, Mayor, sure, should London have gotten the
Speaker 11: rm IPO and was it a kick in the teeth
Speaker 11: not to have done so?
Speaker 5: I'm sorry, hey you the r IPO.
Speaker 4: Well listen, But the great thing about you know, London
Speaker 4: is our in the line strengths are still there. We
Speaker 4: you know, even post Brexit, we are still a city
Speaker 4: that has got all the things that businesses need to
Speaker 4: invest in London, to expand in London and to run
Speaker 4: in London.
Speaker 11: Mayor, what are you most excited about in the climate space?
Speaker 7: So?
Speaker 5: Is it green?
Speaker 11: Vard issuance. Can London Financial as a centre actually become
Speaker 11: a hub for a green finance and green issuance.
Speaker 4: We started our conversation by you talking about the Ultra
Speaker 4: Amission Zone, the world's biggest clean air zone.
Speaker 5: There are so many exciting things happening in London.
Speaker 4: We have the largest amount of electric buses in the
Speaker 4: western world, the largest amount of rapid charging points in
Speaker 4: the in Western Europe, bigger party you know, brecon numbers
Speaker 4: of trees being planted, rewild in half at taxi electric.
Speaker 4: What I'm saying to investors around the globis London is
Speaker 4: the green capital of the world. This crisis of the
Speaker 4: clim emergency can be an opportunity. We have a green
Speaker 4: bond in London, more than five hundred million pounds come
Speaker 4: to London invest and also at the same time make
Speaker 4: sure that the London Stock Exchange is known as the
Speaker 4: green stock Exchange.
Speaker 11: But may can London do that by itself? If you
Speaker 11: have a government that doesn't really believe in its own
Speaker 11: plasures in the transition I.
Speaker 4: Say this, I said this with the utmost humility and
Speaker 4: no complace. See this government is only here for a
Speaker 4: short time in the near future, there's a general election
Speaker 4: as soon as it's called. I'm hoping the British public
Speaker 4: gives Labor a chance to be in government. And one
Speaker 4: of the things that Kirstar has done this week, another
Speaker 4: good thing is done, is is to set out a
Speaker 4: direction of travel that with a Labor government will the
Speaker 4: closer in alignment with the European Union. And so what
Speaker 4: I say to people nervous about this ineffectual, ineffective Conservative
Speaker 4: government is their life span is very short.
Speaker 5: They'll be out of power very soon.
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 2: stories making news from London to Wall Streets and beyond.
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Speaker 1: I'm Caroline Hepka.
Speaker 2: And I'm Stephen Carroll. Us again tomorrow morning for all
Speaker 2: the news you need to start your day right here
Speaker 2: on Boomberg Daybreak.
Speaker 1: Europe,