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Speaker 1: Good morning. It's Monday, the fourteenth of August in London.

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Speaker 1: This is the Bloomberg Daybreak euro podcast. I'm Stephen Carroll

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Speaker 1: coming up today. Growth concerns multiply over strains in Chinese sectors,

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Speaker 1: from property to shadow banking. Goldman Sachs forecasts a FED

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Speaker 1: rate cut in the first half of next year, and

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Speaker 1: Mark Zuckerberg tells Elon Musk to stop wasting his time

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Speaker 1: with talk of a possible cage fight. Let's start with

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Speaker 1: an end up of our top stories. Fears are growing

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Speaker 1: about the health of the Chinese economy, with shadow banking

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Speaker 1: the latest cause for concern. Three firms say that one

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Speaker 1: of China's largest private wealth managers, Joangxi, missed payments on

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Speaker 1: multiple high yield products. Meanwhile, mega developer Country Garden is

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Speaker 1: also on the brink of default. Bloomberg's China Economy and

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Speaker 1: Government editor Jill Deesis says the latest data paints a

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Speaker 1: grim picture.

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Speaker 2: It's that loan data that was absolutely horrific for China.

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Speaker 2: I mean Chinese thanks extending the smallest amount of new

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Speaker 2: monthly loans since two thousand and nine. I We've had,

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Speaker 2: you know, talked to a few analysts about this had

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Speaker 2: some suggestion that really it's that household data as well.

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Speaker 2: I mean, household loans were incredibly poor, indicating that a

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Speaker 2: lot of people are spending time repaying their mortgages. I mean,

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Speaker 2: it's just another indicator along with that really bad deflation

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Speaker 2: data that we had last week, that right now demand

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Speaker 2: is incredibly weak in this economy, and you have to

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Speaker 2: see how that's going to move forward.

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Speaker 1: Dear Jesus was speaking as other signs emerged that all

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Speaker 1: may not be well. The number of active China focused

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Speaker 1: hedge funds slipped for the first time since at least

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Speaker 1: twenty twelve. China's slowing recovery, geopolitical tensions with the US,

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Speaker 1: and a crackdown on the tech sector of all helped

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Speaker 1: to cool the demand for Chinese assets As losses mount.

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Speaker 1: Goldman Sachs economists expect the Federal Reserve to start cutting

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Speaker 1: rates by the end of June next year. It comes

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Speaker 1: as a growing number of economists say the US may

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Speaker 1: achieve a soft landing and avoid recession. PIMCO co founder

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Speaker 1: Bill Gross says real yields are starting to bite.

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Speaker 3: We're going to start to see the effect of a

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Speaker 3: two percent real rate on consumers and consumption going forward,

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Speaker 3: therefore lower reel GDP and therefore inflation in my view

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Speaker 3: around three percent.

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Speaker 1: Bill Grosse, who retired from mass that management in twenty nineteen,

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Speaker 1: says treasuries are overvalued, putting the fair value of a

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Speaker 1: ten year yield at four and a half percent. He

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Speaker 1: added the widening government deficit will add supply pressure to

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Speaker 1: the bond market. Landlords are leaving the UK rental market

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Speaker 1: at an accelerated rate following a sharp increase in mortgage costs.

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Speaker 1: Analysis of tax data by property firm Saviles shows landlords

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Speaker 1: sold twenty five thousand homes between April and May. That's

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Speaker 1: a near fourteen percent jump on the previous month. A

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Speaker 1: separate report from Hampton's International showed landlords who sold properties

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Speaker 1: in the first half of the year made ten percent

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Speaker 1: less than last year, while six percent of them sold

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Speaker 1: at a loss. The European Central Bank will deliver one

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Speaker 1: final rate hike in September, according to a poll of

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Speaker 1: economists by Bloomberg. The kitsensus view is that policymakers will

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Speaker 1: vote for one more quarter point rate rise next month,

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Speaker 1: bringing the benchmark to four percent. The survey then suggests

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Speaker 1: that officials will start cutting borrowing costs in March of

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Speaker 1: next year. That's a month earlier than previously thought. Russia

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Speaker 1: says its navy has opened fire on a cargo ship

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Speaker 1: and the Black Sea, forcing it to stop for inspection.

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Speaker 1: It's the first such reported incident since the grain deal collapse,

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Speaker 1: showing tensions are running high in the key shipping region.

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Speaker 1: It follows claims from Moscow yesterday that it prevented an

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Speaker 1: attack on the Kirch Bridge, linking Crimea to Russia. Ukrainian

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Speaker 1: MP kiro Rudik says she's waiting to hear more details

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Speaker 1: about that from Kievs armed forces.

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Speaker 4: We have not.

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Speaker 5: Received confirmations from our military about if the bridge is

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Speaker 5: damaged and how bat it is. However, I want to

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Speaker 5: remind everyone the bridge is a valid target for us.

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Speaker 1: Meanwhile, the Washington based Institute for a Study of War

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Speaker 1: said Keys' troops made quote tactically significant advances on the

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Speaker 1: border between Zaporijia and douniatsk Oblasts. The strikes in Hollywood

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Speaker 1: are threatening Britain's film industry, leaving of thousands of jobs

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Speaker 1: in Limbo. Blomberg's un Parts has the details.

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Speaker 6: It's now more than one hundred days since the Writers

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Speaker 6: Guild of America and the Screen Actors Guild walked out

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Speaker 6: over pay. Unions in the UK are not striking, but

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Speaker 6: crews working on the many US back productions now find

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Speaker 6: themselves with no income at a time of rampant inflation.

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Speaker 6: Pinewood Studios, home to the James Bond franchise, told investors

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Speaker 6: this month that all seven of the major films and

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Speaker 6: shows currently being filmed there are on hold. The situation

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Speaker 6: highlights the close ties between the twelve billion pound British

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Speaker 6: film and TV industry, which employs one hundred and eighty

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Speaker 6: thousand people, and the US media giants. According to British

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Speaker 6: Film Institute, over the last five years, more than two

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Speaker 6: thirds of total UK film spending has come from US

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Speaker 6: backing In London, I'm Unepot'spen Bay Day Break Europe.

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Speaker 1: Mark Zuckerberg has accused Elon Musk of not being serious

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Speaker 1: about the pair having a cage fight, and says it's

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Speaker 1: time to move on from the saga. Bloomberg's Ed Baxter

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Speaker 1: has the story.

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Speaker 7: The Meta CEO seems seriously up to his neck in disgust,

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Speaker 7: leading to the question was this ever more than just

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Speaker 7: an Elon Musk trolling expedition quote. If Elon ever gets

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Speaker 7: serious about a real date and official event, he knows

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Speaker 7: how to reach me. Otherwise, time to move on. He

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Speaker 7: says he will focus on competing with people who take

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Speaker 7: the sport seriously. Musk has not said much since he

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Speaker 7: reported he had neck issues. Maybe we can just set

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Speaker 7: it up using AI in San Francisco. I'm at Baxter

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Speaker 7: Bloomberg Daybreak Europe.

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Speaker 1: Those are some of our top stories on the program

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Speaker 1: this morning. I caught my eye though, a story from

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Speaker 1: our colleague Lacy Weiss, looking at the push to return

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Speaker 1: workers to the offices here and how that risks undercutting

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Speaker 1: a surge in the hours that women are working here,

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Speaker 1: which is reversing one of the positive trends for the

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Speaker 1: economy here in the UK. Now, this is an analysis

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Speaker 1: of official data by Bloomberg showing that women in the

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Speaker 1: UK are putting in more time at work than ever

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Speaker 1: thanks to hybrid work policies that developed during the pandemic,

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Speaker 1: allowing more flexibility around the time that employees are spending

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Speaker 1: in the office and at home. So that's a positive

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Speaker 1: story for the UK economy, But of course we know

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Speaker 1: there's been a push from employers to try and get

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Speaker 1: workers to spend more time back in the office, particularly

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Speaker 1: the likes of JP Morgan, Amazon, Blackrock, Goldman Sachs are

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Speaker 1: all trying to limit the options of hybrid work and

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Speaker 1: their fears now that this positive trend since the pandemic

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Speaker 1: could actually be reversed as a result of this. Tony Wilson,

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Speaker 1: director of the Institute for Employment Studies, one of those

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Speaker 1: quoted in Lucy's stories, saying that the increase in women's

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Speaker 1: errors and the drop in men's likely oddly reflects people

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Speaker 1: being able to work more of the errors that they

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Speaker 1: want in a tight labor market. And this, as we've seen,

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Speaker 1: according to O and S data, more women shifting from

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Speaker 1: part time to full time work. That's one aspect of

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Speaker 1: the hybrid work story that we're following for you today.

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Speaker 1: But I'll also draw your attention to the latest m

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Speaker 1: Life Pulse survey as well, looking at the question of

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Speaker 1: unlimited paid time off, so something that we know that's

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Speaker 1: offered by many tech companies, some policy that became particularly popular. Now,

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Speaker 1: this is a story that I think if you read

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Speaker 1: it with the eyes of someone who sits in Europe,

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Speaker 1: will look slightly different, But sixty four percent of more

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Speaker 1: than a thousand respondents the M Life Pulse survey say

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Speaker 1: that companies that offer the option of a limited paid

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Speaker 1: time off will do better than the SMP five hundred.

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Speaker 1: This is something that for example, Goldman Sachs made ways

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Speaker 1: last year when the announced they would roll out this

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Speaker 1: unlimited paid time off to senior staff. There only around

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Speaker 1: eight percent of US companies actually offer it, but it's

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Speaker 1: interesting to see the view is about whether that affects

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Speaker 1: the company's stock price as well. I did dig into

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Speaker 1: the details of the survey though, and look at how

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Speaker 1: I suppose employers how many days people would take if

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Speaker 1: they had the option of paid time off. It's lower

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Speaker 1: than you might think, the majority saying that they're looking

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Speaker 1: at taking around up to twenty four day. Twenty one

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Speaker 1: to thirty days was the most popular option that people selected.

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Speaker 1: That was thirty nine percent of respondents there. So that's

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Speaker 1: the latest M Life Pulse survey. Let's turn back to

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Speaker 1: the latest stories coming out of China this morning, and

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Speaker 1: we're looking at those financial strains that appear to be multiplying.

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Speaker 1: The latest focus on one of the country's largest private

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Speaker 1: wealth managers jiang Xi missing payments on several high yield products.

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Speaker 1: We've got Bloomberg James Maker with us from Beijing for

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Speaker 1: more on this story. James, great to have you with us.

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Speaker 1: This is, as I say, the latest be a string

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Speaker 1: of stories of reports of missed payments in the financial sector.

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Speaker 1: How widespread is this strain and how concerning is it?

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Speaker 8: It seems to be, it seems to be growing.

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Speaker 9: It's sitting multiplying across different parts of the financial sector.

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Speaker 9: So you know, as you mentioned and John Wrong which

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Speaker 9: is a connected they're both wealth management products, or they

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Speaker 9: both trust companies that provide wealth management sort of investment

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Speaker 9: options for Chinese consumers, and they both have apparently missed

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Speaker 9: payments on investment products that were due last month or

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Speaker 9: earlier this month. And it seems to be growing concern

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Speaker 9: across that industry. You know, this is where people put

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Speaker 9: their money in short or medium term investments in hope

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Speaker 9: getting better returns than they would from a bank account,

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Speaker 9: and that you know, are more and more of these

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Speaker 9: companies are not.

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Speaker 8: Getting a bit of payback the money that they've borrowed.

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Speaker 9: And then you have obviously Country Garden and Sino Ocean,

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Speaker 9: which are two housing developers which are also struggling to

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Speaker 9: pay back interest rates, interest payments on bonds. So at

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Speaker 9: the previously it's just been offshore bonds. Country Guarden now

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Speaker 9: is suspended trading an eleven on shore bonds and are

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Speaker 9: struggling to pay back some of the new that's due

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Speaker 9: on some of those. So you're seeing these payment sort

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Speaker 9: of concerns kind of multiplying across the economy in different sectors,

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Speaker 9: as I said, and it's all seems to be coming

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Speaker 9: to ahead at the moment.

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Speaker 8: Maybe it's gonna get a lot worse though.

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Speaker 1: Yeah, in terms of looking at the shares and Country

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Speaker 1: Gardens this morning down another sixteen percent in trading in

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Speaker 1: Hong Kong. I mean, how big a concern are these

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Speaker 1: issues for Beijing? Are there any signs of intervention from

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Speaker 1: them on this front?

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Speaker 9: I mean, I think the Country Garden one especially is

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Speaker 9: incredibly concerning. They were the biggest housing developer in China

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Speaker 9: by a large margin, and you know, the salespparently fell

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Speaker 9: sixty percent year on year in July because obviously, why

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Speaker 9: would you buy a house from a housing developer that

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Speaker 9: you're not sure is going to be around next month

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Speaker 9: at alone?

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Speaker 8: In the two or three years is going to take

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Speaker 8: them to deliver your house.

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Speaker 9: So, you know, this is kind of emblematic of the

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Speaker 9: broadest slow down or the border problems in the housing market.

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Speaker 9: You're still seeing twenty thirty percent falls and housing sales

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Speaker 9: here in year, you're seeing twenty thirty percent falls in

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Speaker 9: excavated sales, which is what you need when you want

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Speaker 9: to build new housing construction, unique construction equipment. And so

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Speaker 9: the the big problem I think for Beijing on this

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Speaker 9: is that the housing sector is just not turning around

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Speaker 9: and just still continue to you know, they have this

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Speaker 9: slow motion collapse now we've been seeing for the last

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Speaker 9: two two and a half years, and that's driving weak

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Speaker 9: demand for houses, but it's also driving to weak demand

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Speaker 9: for industrial goods and then also for white goods and

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Speaker 9: things that go into houses, and so this is really

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Speaker 9: damaging for the broader economy as a whole. Then if

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Speaker 9: you start getting into a financial crisis where people are

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Speaker 9: investing your money and not being paid that money back

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Speaker 9: and these wealth manager products, that's that's going to make

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Speaker 9: a whole that's a whole nother problem that you know,

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Speaker 9: I'm sure that that Beijing didn't really want to have

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Speaker 9: to deal with it this time.

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Speaker 1: Yeah, certainly fascinating to see these age developments under as well.

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Speaker 1: For now James Mager and Beijing, thanks very much for

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Speaker 1: joining us with those details up next to private equity

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Speaker 1: bats on UK healthcare and London tourist tax woes.

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Speaker 6: Now the Paper Review on Bluebird Daybreak Europe, the news

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Speaker 6: you need to know from today's papers.

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Speaker 1: And bloombergs Ley Angerrens is with us in studio for

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Speaker 1: the latest on those stories. Lea and let's start with

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Speaker 1: the Financial Times the headline their private equity groups bet

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Speaker 1: on UK healthcare as NHS waiting lists grow.

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Speaker 4: Yes, indeed, Stephen and this story really highlights the influx

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Speaker 4: of private equity money, showing the growing influence of financial

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Speaker 4: investors in the NHS, and basically the Financial Time says

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Speaker 4: private equity firms are just buying numerous UK health companies

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Speaker 4: as they seek to cash in on these really long

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Speaker 4: NHS waiting lists that we have. They have bought dozens

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Speaker 4: of healthcare companies, including things like ambulance, fleets, icre clinics

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Speaker 4: and diagnostic businesses over the past two years, and according

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Speaker 4: to the consultancy lang Abisson, private equity firms have struck

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Speaker 4: one hundred and fifty deals for UK healthcare companies in

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Speaker 4: the last two years alone. That's pretty huge over that

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Speaker 4: short period of time. Now, the private equity industry, Stephen,

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Speaker 4: has really been criticized in the past for its lack

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Speaker 4: of transparency as well as for pursuing profits over good

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Speaker 4: quality healthcare provision. But the sector is just arguing this now,

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Speaker 4: saying that it's really important they get involved to create

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Speaker 4: extra capacity as the NHS struggles with things like staff shortages.

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Speaker 4: There are seven point six million patients currently on the

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Speaker 4: waiting list when it comes to the House service at

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Speaker 4: the moment. So this is something that really shows, like

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Speaker 4: I said earlier, what this money is doing in the

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Speaker 4: healthcare system, providing an opportunity they argue to bring down

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Speaker 4: these huge waiting lists.

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Speaker 1: Yeah, and obviously, as you say, the interest of private

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Speaker 1: equity firms very interesting to what given the pressures on

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Speaker 1: the NHS and to see what they're obviously seeing a

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Speaker 1: business interest in investing in that sector as well. Another

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Speaker 1: story from the Times that you've picked out Leane tourist

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Speaker 1: tax hits retail spending in London.

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Speaker 4: So Stephen, this is something that big businesses in the

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Speaker 4: UK have come out and talked about before. This is

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Speaker 4: nothing new, but we get the figures in now basically

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Speaker 4: saying what the situation is with this extra tax on

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Speaker 4: people who want to come in and do shopping, foreign

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Speaker 4: buyers basically and the government's post Brexit tourist tax is

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Speaker 4: damaging the retail sector's competitiveness. This is what companies were

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Speaker 4: worried about after the introduction of that twenty percent tax

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Speaker 4: and overseas spending shops in London they're really struggling to benefit.

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Speaker 4: And remember this is after post COVID so that they

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Speaker 4: were hoping all the travel to the UK would really

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Speaker 4: lift retail spending, but instead people going to Paris and

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Speaker 4: other European cities to spend all their cash. So Mulbury,

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Speaker 4: the high end fashion brand, it's closed its store in

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Speaker 4: Bond Street and they say this is after the tax

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Speaker 4: led to this dramatic drop in footfall and sales. So

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Speaker 4: the New West End Company, a lobby group representing businesses

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Speaker 4: in central London, estimates that scrapping the tax could increase

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Speaker 4: treasury receipts by at least three hundred and fifty million pounds.

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Speaker 4: They've been calling for that. Remember Quasi qua teng in

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Speaker 4: his mini budget, He's said he would scrap this twenty

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Speaker 4: percent tax once he got his deal through, which never

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Speaker 4: actually happened, and then Jeremy Hunt reversed that.

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