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Speaker 1: This is Bloomberg Daybreak here for this Tuesday, the thirteenth

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Speaker 1: of June in London. Coming up today.

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Speaker 2: Another headache for the BOE. Unemployment unexpectedly drops as wages.

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Speaker 1: Surge, reshuffling the deck. The boss of Berkley's tells us

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Speaker 1: an exodus of top bankers was driven by a decision

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Speaker 1: to refocus the business.

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Speaker 2: Stepping back, Goldman Sachs's international CEO tells Bloomberg the bank

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Speaker 2: is ending its relationship with ODI Asset.

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Speaker 1: Management Plus getting a leg up. ARM looks to Intel

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Speaker 1: as an anchor investor for its USIPO.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 3: and everywhere you get your podcasts.

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Speaker 1: Good Money from London.

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Speaker 2: I'm Caroline he and a Tom mc kenzie. You're listening

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Speaker 2: today Break You now to the top stories around the world.

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Speaker 2: Britain's labor market unexpectedly tightening. Then as Caroline touched on

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Speaker 2: adding more fuel to the UK's inflation crisis, the unemployment

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Speaker 2: rate fell to three point eight percent in the three

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Speaker 2: months through April, defying economists who had forecast it rising.

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Speaker 2: Co CEO of EJF Capital Neil James Wilson says the

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Speaker 2: surprise will add to the Bank of England's fears about

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Speaker 2: persistent inflation.

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Speaker 4: This is a very high print, so it's not surprising

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Speaker 4: at all. You know that that you would expect that

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Speaker 4: the BOE is going to increase rates. I think you

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Speaker 4: do have a different dynamic here. I would point out

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Speaker 4: that over time that that labor data tends to be

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Speaker 4: a lagging indicator and so it usually is the last

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Speaker 4: economic data point that really comes down when the central

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Speaker 4: bank is raising rate.

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Speaker 2: Neil James Wilson added the UK's now moving in the

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Speaker 2: opposite direction to the US ahead of the FED policy decision.

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Speaker 2: That they also show the number of people in work

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Speaker 2: past pre pandemic levels for the first time, hitting new highs.

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Speaker 2: The UK have been the only gees of the nation

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Speaker 2: where employment and ours had not fully recovered.

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Speaker 1: The Berkleys CEO says that a reshuffle in its investment

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Speaker 1: bank has led to more top deal makers than usual

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Speaker 1: leaving in recent months. Csven Kata Krishnan replaced the heads

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Speaker 1: of his investment banking arm earlier this year, moving one

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Speaker 1: to Europe as the bank shift's focus. He told Bloomberg's

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Speaker 1: David west In the move is about looking ahead to

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Speaker 1: the next decade of banking.

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Speaker 5: So what you've seen is rising interest rates, changing business models,

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Speaker 5: the importance of sectors that are fairly new to the economy,

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Speaker 5: not just technology, but sustainability, mobility, climate, tech. We began

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Speaker 5: with a very American investment bank here in the US,

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Speaker 5: based from the Lehman acquisition of Barclays, and we've grown

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Speaker 5: in Europe. We wanted to put more emphasis in Europe

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Speaker 5: as well.

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Speaker 1: Ben Kata Krishnan is head of the world's largest non

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Speaker 1: US investment bank. He's been trying to stem an exodus

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Speaker 1: of talent in recent weeks as rivals try to poach

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Speaker 1: deal makers.

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Speaker 2: Staying on banking, and Goldman sax has told Bloomberg that

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Speaker 2: the bank is ending its relationship with od Asset Management.

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Speaker 2: The news comes as the hedge fund grapples with the

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Speaker 2: complexities of divorcing itself from its founder. Speaking exclusively to

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Speaker 2: our editor at Large, Fancye like what Goldman Sachs International

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Speaker 2: CEO Richard Nody had this to say on the matter.

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Speaker 6: We hold ourselves to extremely high standards and we expect

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Speaker 6: the same of our client base, and that's how we

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Speaker 6: work together in partnership. And so you know, when new

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Speaker 6: information comes to light in any situation, we'd obviously reviewed

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Speaker 6: and reviewed quickly and then you take the appropriate action.

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Speaker 2: So what you severed tires or are you still contemplating

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Speaker 2: what happens next.

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Speaker 6: We're in the process of moving away from their business.

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Speaker 2: Richard Nody's comments come after the FT reported on a

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Speaker 2: number of allegations of sexual assault by od Asset Management

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Speaker 2: founder Crispin Odi. He denies all the allgance all of

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Speaker 2: the allegations against him.

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Speaker 1: Now, bond traders are underestimating the drop in inflation head

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Speaker 1: of today's USCPI data. That is the view from Citybanks

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Speaker 1: trashist Ragav Dattler. He expects a miss to the downside

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Speaker 1: as the market comes off too straight lower than forecast prints. Meanwhile,

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Speaker 1: Fitch Ratings head of US Regional Economics Olu Sonola, says

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Speaker 1: that things are heading in the right direction.

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Speaker 7: The trend line is certainly positive. I think when you

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Speaker 7: look at charter inflation, which is the biggest component in

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Speaker 7: terms of CPI, the expectation is that that would trend

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Speaker 7: down over the coming months, and that's because market rates

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Speaker 7: have actually came down, and market rates tend to lead

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Speaker 7: that CPI component.

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Speaker 1: Ol Sonola there speaking to us. The CPI report at

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Speaker 1: one thirty pm London time today comes just the day

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Speaker 1: before the Fed's policy decision. Trade is betting officials will

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Speaker 1: hold interest rates study.

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Speaker 2: Our UK based chip designer ARM is in talks with

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Speaker 2: Intel to anchor its New York initial public offering. ARM,

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Speaker 2: which is owned by SoftBank, is looking to raise as

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Speaker 2: much as ten billion dollars and what will be one

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Speaker 2: of the largest IPOs this year. If the thoughts succeed,

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Speaker 2: Intel will be included in arms IPO prospectus ahead of

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Speaker 2: the listing.

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Speaker 1: A government plan to bring in voluntary price caps on

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Speaker 1: food has been rubbished by one of Britain's most experienced retailers,

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Speaker 1: Archie Norman, the chairman of Marx and Spencer, didn't mince

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Speaker 1: his words when we asked him about the idea here

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Speaker 1: on Daybreak Europe.

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Speaker 8: I mean, dear, oh dear. I've heard some hair brand

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Speaker 8: ideas come out of the political world in time, and

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Speaker 8: that's one of them. Central foods are coming down in price.

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Speaker 8: The market is taking them down. They're coming up down.

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Speaker 8: Price ass we speak, and we all know price caps

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Speaker 8: don't work anyway. We learned that and dad would.

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Speaker 1: Heath Norman also criticized the UK's Competition of Markets Authority.

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Speaker 1: He told us that the CMA, which is investigating the

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Speaker 1: price of groceries quote, hasn't got anything right for about

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Speaker 1: three decades. And those are our top stories this morning, okay.

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Speaker 2: And in terms of some of the most read stories

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Speaker 2: on the Bloomberg terminal right now, top of the list

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Speaker 2: is what China is doing in terms of stimulating its economy.

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Speaker 2: That's a Bloomberg scoop. There's also an interesting stories you

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Speaker 2: think about your travel plans for the summer. Apparently the

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Speaker 2: incidents of air rage have increased quite markedly, so a

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Speaker 2: number of incidents picking up as people travel. The airlines

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Speaker 2: are benefiting still from this kind of post pandemic boom

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Speaker 2: and the demand over the summer. But maybe a bit

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Speaker 2: of a warning around around tempers on airlines.

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Speaker 1: One disorderly incident reported for every five hundred and sixty

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Speaker 1: eight flights in twenty twenty two, so up sort of significantly.

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Speaker 1: Look I wonder whether it's tied though, to be honest,

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Speaker 1: to other kind of behavioral issues. I think it is

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Speaker 1: one of the unexpected consequences of the lockdown, you know,

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Speaker 1: the lack of sociability maybe has made us more aggressive. Well,

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Speaker 1: maybe it's just an airline specific industry issue and demands.

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Speaker 2: Maybe people are paying a lot more for their tickets.

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Speaker 2: Not to justify, not to to justify excuse this behavior,

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Speaker 2: but maybe expectations when you're paying this premium thirty forty

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Speaker 2: fifty percent on what you would usually pay, and expectations

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Speaker 2: about the service you get. Again, not to justify some

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Speaker 2: of the behavior that's outlined in this story.

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Speaker 1: Yeah, absolutely. Anyway, it's one being well read on the

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Speaker 1: Bloomberg terminal as we get up to a heated twenty

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Speaker 1: nine degrees celsius in London. Anyway, talking of the UK,

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Speaker 1: the labor market issue, and we got the data out

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Speaker 1: this morning and we now know that the jobs market

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Speaker 1: tightened unexpectedly in April as wages shot up and unemployment fell.

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Speaker 1: Joining us now Bloomberg Senior UK economist Dan Hanson, Good morning, Dan,

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Speaker 1: thanks so much for your time today. Bloomberg Economics now

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Speaker 1: sees a hike in August as well as in June

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Speaker 1: after this job's data. Why aren't you as hawkish though

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Speaker 1: as the markets right now?

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Speaker 9: Yeah, morning, Carolina, I think that's really good question. I

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Speaker 9: mean one thing, just to just picking up on what

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Speaker 9: you said there. I think something that was really interesting

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Speaker 9: about the date of this morning was the revision to

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Speaker 9: the payrolls number we had. Remember back last month we

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Speaker 9: had this massive drop in payrolls and that's now been

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Speaker 9: revised away. So I think that's that's sort of the

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Speaker 9: big one of the big bits of news for us

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Speaker 9: out of this and why we've shifted our call a

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Speaker 9: little bit higher. Why are we not a sqawkish as

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Speaker 9: the market? Well, I think a couple of reasons. One

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Speaker 9: is I think the bank is going to be the

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Speaker 9: Bank of England is going to be cognizant that a

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Speaker 9: lot of what it's done hasn't hit the economy yet.

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Speaker 9: It's most recent estimate is about a third of its

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Speaker 9: tightening to date has hit the economy. So there's a

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Speaker 9: lot more still to come. And we're seeing a lot

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Speaker 9: of disruption in the mortgage market at the moment, and

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Speaker 9: that that's one area that it's still feeding through to

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Speaker 9: as people roll off fixed mortgages, fixed rate mortgages. And

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Speaker 9: I think the other thing is that there's there is

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Speaker 9: going to be some respite, more respite on the inflation

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Speaker 9: in front, at least the headline in free inflation front

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Speaker 9: through energy prices. So I think those two things together

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Speaker 9: will give it the Bank of England at least some

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Speaker 9: room to take stock in September, though, I think the

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Speaker 9: risks are clearly clearly to the upside, particularly following today's report,

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Speaker 9: and particularly following those pay numbers which are far far

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Speaker 9: stronger than we or any other economists have been expecting.

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Speaker 2: Dan, give us, give us the latest thinking then of

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Speaker 2: in terms of peak rates from the BOE, from you

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Speaker 2: and the team, and how long they hold at that level.

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Speaker 9: Yeah, So I think, I mean there's a there's a

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Speaker 9: question here as well, because we had our first cut

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Speaker 9: penciled in in the second quarter of twenty twenty four.

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Speaker 9: I think that's the risk there. Again, it's looking increasingly

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Speaker 9: like we're going to get to a very high terminal

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Speaker 9: rate in the UK, at least relative to what people

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Speaker 9: were thinking that even two or three months ago. You know,

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Speaker 9: people were talking about four to twenty five four and

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Speaker 9: a half peak rate. We're looking at somewhere between fifty

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Speaker 9: and one hundred basis points above that already two or

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Speaker 9: three sets of surprising inflation and pay data, and I

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Speaker 9: think there's the risk then, is that the bank has

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Speaker 9: to just sit at that level potentially through the course

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Speaker 9: of twenty twenty four as well, just to bring down inflation.

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Speaker 9: I think the interesting dynamic that's submerging here as well

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Speaker 9: is that we've got rate forecast going higher, we've got

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Speaker 9: market rates going higher. But if you look at the

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Speaker 9: Bloomberg story on the terminal yesterday, we've got economists saying

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Speaker 9: that recession looks further away, recession looks less likely actually

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Speaker 9: for US now becoming more likely because of what needs

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Speaker 9: to what appears that will need to be done to

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Speaker 9: bring inflation back under control. It might be that the

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Speaker 9: bank needs to force the issue by weaken the economy

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Speaker 9: so much that a recession does actually come to pass,

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Speaker 9: albeit later than anyone had been expecting.

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Speaker 1: Dan, Yeah, very interesting. Okay, so the machinations, it's still

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Speaker 1: pretty volatile, isn't it in terms of what may happen

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Speaker 1: for the UK. Our Bloomberg senior UK economist Dan Hanson

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Speaker 1: taking us through the job support.

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Speaker 2: That's sort of a silicon vality. Bank UK has been

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Speaker 2: rebranded as HSBC Innovation Banking and aims to help tech

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Speaker 2: and life sciences businesses grow. It's going to operate in

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Speaker 2: the UK as well as the US, Israel, in Hong Kong.

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Speaker 2: The launch comes after the Lending Giant bought SVB UK

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Speaker 2: for just a pound in March, following the collapse of

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Speaker 2: its California based parent firm. Well a little earlier, I

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Speaker 2: spoke to the former SVB UK CEO and now the

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Speaker 2: head of the new entity, Aaron Platz. Here's what she

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Speaker 2: had to say.

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Speaker 10: The last last three months in March was a very

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Speaker 10: very difficult period and it was a i would say

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Speaker 10: bank round. It moved very very quickly. So being here

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Speaker 10: in the UK, we were working with some US colleagues.

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Speaker 10: On Thursday, Friday became you know, woke up Friday, opened

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Speaker 10: the doors. It was a slower burn than what we

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Speaker 10: saw in the US, but it was clear by Friday afternoon,

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Speaker 10: when the US parent was taken over by the FDI

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Speaker 10: see that we would continue to see some issues here

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Speaker 10: in the UK. And as you know, the SVB business

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Speaker 10: focused on innovation companies. Our premise was to make clients'

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Speaker 10: lives easier and to support them. So to be the

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Speaker 10: cause of such a stressful weekend was really challenging.

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Speaker 2: Do you think was it a case of the mothership

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Speaker 2: bringing down the UK subsidiary or are there things, as

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Speaker 2: you reflect back, that you and the team could have

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Speaker 2: done differently to mitigate some of the downside.

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Speaker 10: Yeah, I mean the US business was clearly under a

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Speaker 10: lot of pressure on the Thursday and Friday, and given

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Speaker 10: the same brand, we really did suffer from what was

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Speaker 10: happening in the US, and we were hopeful to open

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Speaker 10: the doors on Monday given the strength of the UK

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Speaker 10: business we were a separate legal entity, but as things

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Speaker 10: transpired over the weekend and the reliance on the US parent,

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Speaker 10: it was clear that that wasn't the right decision. So

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Speaker 10: we worked tirelessly over the weekend with the aim to

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Speaker 10: make sure that we could do everything possible to allow

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Speaker 10: our clients to continue to operate on Monday morning and

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Speaker 10: to save as many of the jobs and our amazing

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Speaker 10: employees that we could.

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Speaker 2: And obviously tangible relief across the UK tech sector. Of course,

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Speaker 2: you've rebranded, it was launched yesterday. You're now the head

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Speaker 2: of HSPEC Innovation Banking here in the UK. Talk to

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Speaker 2: us about how you fit the culture that thrust and

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Speaker 2: driving culture, that tech focus culture of SVP into the

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Speaker 2: legacy bank that is HSBC. How do you meld those

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Speaker 2: two cultures.

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Speaker 10: Yeah, well a couple of things. So we're super proud

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Speaker 10: of the name HSBC Innovation Banking. That was really co

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Speaker 10: created with our clients, early stage companies, venture backed businesses,

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Speaker 10: public and private corporates VC and PE funds and we

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Speaker 10: purposely wanted to make it a name that would resonate globally,

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Speaker 10: so UK, US, Hong Kong, Israel, Nordics where we have

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Speaker 10: teams on the ground and it's been exceptional to see

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Speaker 10: the pace and agility that HSBC has moved, not just

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Speaker 10: the weekend in March, but since that since that date,

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Speaker 10: and as Ian and Noel have been really vocal we're

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Speaker 10: going to keep the business together, We're going to keep

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Speaker 10: the team together to ensure that we maintain that agility

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Speaker 10: and that focus on in a businesses but then also

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Speaker 10: bring the best of HSBC. It is incredible to see

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Speaker 10: the size, scale, stability of that platform and it's really

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Speaker 10: accelerated the plans that we had in UK and Europe

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Speaker 10: by at least five years.

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Speaker 2: Wow, okay, at least five years. In terms of accelerating

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Speaker 2: those plans. Are you actively trying to get existing HSBC

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Speaker 2: technology customers to move into your part of the business.

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Speaker 2: Is that something that you're working on as well.

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Speaker 10: Now, we're trying to do what's right for the clients.

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Speaker 10: To be honest with you, We've got a lot to

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Speaker 10: do in terms of continuing to take care of the

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Speaker 10: existing client base. We've seen wonderful demand, especially after yesterday

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Speaker 10: launching the new brand, and if there's innovation businesses within

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Speaker 10: HSBC that need a particular product or service, we'll be

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Speaker 10: very very happy to provide that through the Innovation Bank.

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Speaker 2: And you've got staff here in the UK. Of course

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Speaker 2: the Nordics as well is well. Noel Quinn talking to

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Speaker 2: Bloomberg yesterday saying that he's keen to expand into continental Europe.

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Speaker 2: You're part of the business. Do you align with that

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Speaker 2: and are you looking to add headcount how aggressively do

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Speaker 2: you want to move on to continent for Europe?

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Speaker 7: Yeah?

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Speaker 10: One of our the vision and ambition, which after the

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Speaker 10: last couple of days I think has only grown to

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Speaker 10: be even stronger. We really want to be wherever there's

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Speaker 10: pockets of innovation, talent and capital, and what we're seeing

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Speaker 10: from a European innovation economy perspective is a lot of

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Speaker 10: strength and excitement. So over time I think absolutely working

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Speaker 10: with a team to find out where there's the pull

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Speaker 10: from the clients to make sure that we can set

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Speaker 10: up wherever that might be across Europe or globally. So

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Speaker 10: we've got a lot to do day two of the rebrand,

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Speaker 10: but you know, watch this space.

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Speaker 2: HSPEC obviously has a massive frontprint in Asia. Consequential for

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Speaker 2: the overall GROUPSPEC innovation banking logic kind of wester until

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Speaker 2: so far does Agia become a big play as well

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Speaker 2: for that part of the business.

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Speaker 10: I think over time absolutely, Again Noel has been really

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Speaker 10: vocal about wanting to take this business and this brand

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Speaker 10: global to benefit our clients, and you know, starting with

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Speaker 10: Hung Kong I think makes a lot of sense. And

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Speaker 10: then again we'll see post that where else we go

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Speaker 8: Mm hm