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Speaker 1: This is Bloomberg Daybreak Europe, but this Thursday, the twentieth

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Speaker 1: of April in London. Coming up today, more Deuce in

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Speaker 1: the battery. Tesla's protects its EV lead and vows to

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Speaker 1: continue cutting prices. Relations on the rocks, the clash between

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Speaker 1: HSBC and its biggest shareholder heads for a showdown banking it.

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Speaker 1: Wall Street's biggest lenders brush off a bruising aurso for

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Speaker 1: some of their small arrivals.

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Speaker 2: UK pension funds go risk off on Hunt's big plan.

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Speaker 2: Michael O'Leary says the UK will be paying into EU

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Speaker 2: budgets and a US consultancy giant goes zen on yoga.

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Speaker 2: Those other stories we're looking at in today's papers. And

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Speaker 2: I'm Leanne Gerns and we're.

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Speaker 3: Live for day two of the Bloomberg New Economy Gateway

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Speaker 3: Europe in Ireland, where you're a Goup President Pascal Donna,

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Speaker 3: who says the EU must engage with China.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast on Apple, Spotify, the Blueberg Business App

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Speaker 4: and everywhere you get your podcasts. Good morning I'm Stephen Carroll.

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Speaker 1: And I'm Lizzie Burden. Here are the stories we're following today.

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Speaker 1: Tesla will continue to cut prices to boost demand. That's

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Speaker 1: the message from the CEO, Elon Musk, who says the

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Speaker 1: move gives the electrical electric vehicle maker the upper hand

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Speaker 1: over its rivals.

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Speaker 5: We really don't think about competitors that much. We're the

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Speaker 5: only ones making cars that technically we could sell for

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Speaker 5: zero profit for now and then yield actually tremendous economics

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Speaker 5: in the future through autonomy.

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Speaker 1: However, Musk's strategy continues to eat into the company's industry

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Speaker 1: leading profit margins. Tesla's operating margin was eleven point four

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Speaker 1: percent in the first quarter. That's down from just over

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Speaker 1: nineteen percent a year ago. The electric car giant delivered

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Speaker 1: four hundred and twenty three thousand cars in the first quarter,

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Speaker 1: and Musk says it still has a shot at making

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Speaker 1: two million cars this year. Meanwhile, HSBC says proposals this

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Speaker 1: week from its largest shareholder, ping An Insurance would destroy

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Speaker 1: shareholder value. Bloomberg's Richard Salamat has more from Hong Kong.

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Speaker 6: Not only that, HSBC says the restructuring proposal would mean

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Speaker 6: lower dividends. It's in effect a sharp rebuke of ping

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Speaker 6: An and its vision of unlocking value at the British Bank,

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Speaker 6: HSBC fully rejected the suggestion of a partial listing of

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Speaker 6: its Hong Kong business, saying the plan's smack of financial

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Speaker 6: engineering and that ping An misunderstands HSBC's business. The bank

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Speaker 6: report's first quarter results on the second of Main holds

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Speaker 6: its annual meeting three days later. Expect fireworks.

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Speaker 1: That was Richard Salamat, reporting on HSBC. The Fed's Beige

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Speaker 1: Book says the US economy stalled in recent weeks, with

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Speaker 1: hiring and inflation slowing and access to credit narrowing. Assessment

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Speaker 1: marks a step down in the tone from the previous one,

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Speaker 1: published in early March, just before the collapse of Silicon

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Speaker 1: Valley Bank. This as New York Fed President John Williams

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Speaker 1: warned that recent banking stress may make it more challenging

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Speaker 1: for households and businesses to access credit. Williams says that

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Speaker 1: while the banking sector has now stabilized, spending may still tighten,

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Speaker 1: and in a quarter where three smaller US lenders collapsed,

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Speaker 1: Wall Street's biggest banks continued to flex their money making muscles.

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Speaker 1: Rounding off a week of better than expected results was

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Speaker 1: Morgan Stanley. Its investment bank and wealth units surpassed analysts

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Speaker 1: expectations even as profits fell from a year earlier, but

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Speaker 1: chairman and CEO James Gorman says the coming quarters could

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Speaker 1: be a bit bumpy.

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Speaker 7: I expect the markets to remain choppy through this earning

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Speaker 7: season and for the next several months repsent any geopolitical

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Speaker 7: surprise or limited progress on bringing down inflation, I think

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Speaker 7: twenty twenty three is likely to win on a constructive

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Speaker 7: note in most areas.

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Speaker 1: Gorman also told analysts that he expects to see another

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Speaker 1: one or two rate hikes from the Fed. The ECB

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Speaker 1: will need to continue raising rates if the Central Bank's

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Speaker 1: latest forecasts remain on track. That's the message from European

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Speaker 1: Central Banks Governing Council member Pablo Hernandez de Cars, who

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Speaker 1: says the size of the move will hinge on future data.

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Speaker 8: We still are closely monitoring the financial intensions created by discidians,

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Speaker 8: and of course that we stand ready to respond to

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Speaker 8: us and when necessarily, to maintain price on financial stability.

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Speaker 1: Decaus, who also head Spain's central banks, spoke to Bloomberg's

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Speaker 1: Maria Todaeo at our New Economy Gateway Europe conference, and

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Speaker 1: he's not the only senior official that's been making news

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Speaker 1: at Bloomberg New Economy Gateway Europe. At the event You're

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Speaker 1: a Group of President, Pascal Donaho told us that the

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Speaker 1: Bloc needs to resist pre show from the US to

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Speaker 1: decouple from Beijing.

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Speaker 9: I believe engagement where China continues to be essential trade

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Speaker 9: with them, I believe is inevitable, and from a European perspective,

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Speaker 9: I want all of that to be happening with our

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Speaker 9: economic foundations a lot stronger than they are at the moment,

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Speaker 9: and it's our responsibility here in Europe to fix that.

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Speaker 1: Speaking to Bloomberg's deputy editor in chief Ritto Gregory, Donaho

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Speaker 1: added that Europe needs to strike the right balance as

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Speaker 1: it deepens its trade relationship with China while developing the

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Speaker 1: Bloc's economic strength. So those are our top stories this morning. Now,

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Speaker 1: Stephen Carroll isn't in the studio with me. Sadly, his

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Speaker 1: chair is empty next to me, but that's because he's

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Speaker 1: in Ireland for the Bloomberg New Economy Gateway Europe event.

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Speaker 1: Stephen it seems where you are the europe europe Group

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Speaker 1: president was the main course at last night's dinner.

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Speaker 3: Yeah, I mean we're in a part of the world

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Speaker 3: that's famous for its venison. Wicklow venison is something that's

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Speaker 3: quite well renowned. But it did seem that, in fact,

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Speaker 3: during the dinner conversation here at the Bloomberg New Economy Gateway,

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Speaker 3: you were a prevent Pascal Donna who had plenty to

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Speaker 3: chew over. In fact, and that questioning from Rehta Grigori

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Speaker 3: so interesting to hear his comments on China. Course, this

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Speaker 3: comes after Arslavanderlin and Emmanuel Macron were in Beijing recently,

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Speaker 3: and this idea of needing to engage with China very

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Speaker 3: much the message coming from the Eurogroup President in that

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Speaker 3: conversation as well, talking about it being essential. And while

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Speaker 3: there may be a difference in tone in how the

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Speaker 3: EU deals with China versus the US, the fact that

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Speaker 3: it rather difference in tone from different parts different countries

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Speaker 3: in the European Union, the fact that there is engagement

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Speaker 3: is what's essential, and that I suppose does mark a

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Speaker 3: bit of a difference in tone of what the US

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Speaker 3: is saying on this issue as well. There was lots

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Speaker 3: of other issues covered in that conversation as well, things

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Speaker 3: like reform of the EU's fiscal rules along and ongoing process,

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Speaker 3: but something that Pascal Donna who did say, you know,

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Speaker 3: he was he was optimistic about getting done, and the

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Speaker 3: general message of the conversation was that he was cautiously

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Speaker 3: optimistic about the future of European economy, while acknowledging the

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Speaker 3: challenges and of course how the entire continent has been

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Speaker 3: upended by Russia's invasion of Ukraine. He did say that

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Speaker 3: the expectation is that inflation, for example, does look like

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Speaker 3: it's coming down. They're expecting it to come to five

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Speaker 3: percent this year and below three percent next year, and

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Speaker 3: that there is a consensus from both finance ministers who

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Speaker 3: are members of the Eurogroup and also the European Central

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Speaker 3: Bank that this is, you know, something they're going to have.

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Speaker 3: They have a consensus on bringing inflation down as a priority.

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Speaker 3: He did discuss some of those ongoing reform projects, things

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Speaker 3: like the banking Union, the Capital markets Union in the EU.

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Speaker 3: He did say actually that he hoped that it had

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Speaker 3: those done. It was put to him by by our

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Speaker 3: coolleig Gretor Grigory that would it be done while we

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Speaker 3: were all still alive, and Pascal said not only that

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Speaker 3: it be done while they were alive, young and healthy.

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Speaker 3: So I think lots of optimism they're coming from the

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Speaker 3: Yur Group president. But a fascinating and wide ranging conversation here.

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Speaker 1: And you've got a busy day coming up. What else

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Speaker 1: is on your agenda for today?

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Speaker 3: A couple of big names going to be discussed, So

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Speaker 3: the idea of this event is to discuss some of

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Speaker 3: those big issues facing Europe. So there is going to

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Speaker 3: be a question or discussion rather around Europe after over

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Speaker 3: a year into the Russian invasion of Ukraine. So we

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Speaker 3: have the former Croatian president speaking here as well as

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Speaker 3: the former ukm bassadors to the US. Kim Derek is

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Speaker 3: here too. We're going to be discussing regulation and actually

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Speaker 3: a conversation we'll be having later on the program with

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Speaker 3: Arland's Data Protection Commissioner, Helen Dixon. She is the leading

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Speaker 3: regulator for big tech in Europe because of the base

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Speaker 3: those tech companies have in this country. So discussion about

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Speaker 3: the Brussels effect, how regulation made in the EU has

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Speaker 3: an effect elsewhere in the world as well. Energy on

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Speaker 3: the agenda as well to be discussed too. Plus we'll

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Speaker 3: be hearing from the Theta leover Adker later on here

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Speaker 3: as well too, So plenty more to come from the

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Speaker 3: Bloomberg New Economy Gateway Europe, and some great conversations on

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Speaker 3: radio here as well.

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Speaker 1: Fantastic We'll be staying tuned for all of that, Thanks

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Speaker 1: Stephen Carol. More interviews to come, of course, from just

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Speaker 1: outside Dublin. Now I want to turn to the US.

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Speaker 1: Wall Street's largest banks have finished reporting their first quarter

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Speaker 1: earnings yesterday, Morgan Stanley rounding out a highly anticipated results

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Speaker 1: season just a month after the collapse of Silicon Valley

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Speaker 1: Bank prompted the industry's most turbulent period since the financial crisis. Well,

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Speaker 1: Charlie Wells is here to give us his analysis of

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Speaker 1: those results. Charlie, what went wrong and what went right

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Speaker 1: for Morgan Stanley in particular.

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Speaker 10: Oh boy, So it's been difficult to be a Wall

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Speaker 10: Street bank recently, and that's primarily because of the deal

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Speaker 10: making slowdown that we've seen really over the past year.

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Speaker 10: No one wants to IPO right now. It's just a

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Speaker 10: really difficult market. Fees aren't necessarily going to come from there,

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Speaker 10: and we saw at least an ability at Morgan Stanley

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Speaker 10: to stem some of the fall down, but not astronomical numbers.

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Speaker 10: They're also strikingly you know, Morgan Stanley and Goldman Sachs

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Speaker 10: are sort of arch right. And one sticking point that

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Speaker 10: Morgan Stanley will really see is they lost out in

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Speaker 10: that equities trading market to Goldman this past quarter. That's

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Speaker 10: not gonna be great. But on the upside, look, Morgan

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Speaker 10: Stanley is a wealth juggernaut. They saw revenue for the

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Speaker 10: first quarter up eleven percent from the year before. Their

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Speaker 10: CFO said that they brought in twenty billion dollars in

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Speaker 10: since March on all of that turmoil in the US

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Speaker 10: banking sector, and now Morgan Stanley oversees four point six

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Speaker 10: trillion dollars, which really makes it what I said before,

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Speaker 10: a juggernaut.

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Speaker 1: And now that we've brought the big Wall Street banks,

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Speaker 1: you still got lots of regionals to report. What should

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Speaker 1: we expect there?

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Speaker 10: Yeah, so that really has been in focus since March,

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Speaker 10: when you know, Silicon Valley Bank collapsed and there was

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Speaker 10: a lot of concern about liquidity. I think really what

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Speaker 10: we'll see is this focus on deposits are these smaller

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Speaker 10: banks able to hold on to customers' money. There was

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Speaker 10: a fair amount of movement after the turmoil last month,

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Speaker 10: but the banks that have been able to demonstrate that

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Speaker 10: they're holding onto deposits or even growing deposits have been

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Speaker 10: well rewarded in the markets. Yesterday, Western Alliance, you know,

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Speaker 10: we saw that shares actually the day before were up

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Speaker 10: as much as twenty percent because they were able to

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Speaker 10: demonstrate that from March twentieth to April fourteenth, they actually

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Speaker 10: brought in three billion dollars in deposits. So it's going

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Speaker 10: to be a razor sharp focus on if they can

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Speaker 10: keep that money within and the collapses.

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Speaker 1: To the combody bank can the other smaller US banks

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Speaker 1: is really still barely in the rear view mirror. Give

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Speaker 1: us the big picture. Where does the industry stand now?

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Speaker 10: Oh yeah, I mean we went into this earning season wondering,

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Speaker 10: you know, how much of that money had moved from

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Speaker 10: smaller banks to bigger banks. Were there going to be

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Speaker 10: issues over stability, And it's looking, you know, a little

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Speaker 10: premature to say that we're out of the woods, but

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Speaker 10: the industry, at least from the first quarter results that

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Speaker 10: we're seeing from these megabanks seems to be in decent shape,

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Speaker 10: particularly if you are a large Wall Street bank. I mean,

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Speaker 10: maybe no surprises there, but they seem to have been

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Speaker 10: able to withstand the turmoil and also benefit from some

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Speaker 10: of the issues that caused problems for smaller banks, in

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Speaker 10: particular higher interest rates. So these big banks were still

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Speaker 10: able to make money from higher interest rates in the

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Speaker 10: form of net interest income that seems like it potentially

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Speaker 10: may have peaked. Some CEOs seem to be suggesting that

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Speaker 10: over the course of the next year, you know, that

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Speaker 10: may be diminishing. But of course JP Morgan on Friday

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Speaker 10: of last week reported that they were seeing, you know,

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Speaker 10: potentially an increase in net interest income, potentially bringing an

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Speaker 10: eighty one billion dollars there. So again, these big banks

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Speaker 10: able to withstand a lot of the pressures of the

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Speaker 10: smaller regionals just were not okay.

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Speaker 1: Charlie Wells, thanks for being with us in the studio.

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Speaker 1: That's our Bloomberg Wealth reporter Charlie Wells. Up next, UK

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Speaker 1: pension funds go risk off. On Hunt's big plan, Michael

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Speaker 1: O'Leary says the UK will be paying into EU budgets

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Speaker 1: within fifteen years and the US consultancy Giant goes Zen

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Speaker 1: on Yoga.

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Speaker 4: Now, the paper Review on blue Bird Daybreak Europe. The

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Speaker 4: news you need to know from today's papers.

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Speaker 1: Helloly Anne Gerrind You've been flicking through the UK newspapers

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Speaker 1: for us, starting with the Financial Times. The headline is

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Speaker 1: UK pension funds urge Hunt not to force them to

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Speaker 1: invest in risk your assets.

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Speaker 2: Yes, indeed, Lizzie and the story in the FT, I

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Speaker 2: think really outlines the battle between business figures and the

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Speaker 2: UK's pension industry. So the Chancellor, Jeremy Hunt is looking

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Speaker 2: to consolidate the pension sector in order to drive investment

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Speaker 2: in UK companies as we do see the economy in

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Speaker 2: a really sluggish position. But big business figures including Nigel

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Speaker 2: Willson and he's ahead of the insurer Legal and General,

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Speaker 2: and also Nicholas Lyons the City of London Mayor, are

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Speaker 2: pressing and Jeremy Hunt to take a radical step to

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Speaker 2: push some pension schemes to invest in fast growing young

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Speaker 2: companies here in the UK and also in infrastructure. But

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Speaker 2: the UK pensions industry is now worried and is warning

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Speaker 2: Jeremy Hunt not to force retirement schemes to invest in

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Speaker 2: these what they're calling riskier assets. However, Jeremy Hunt says

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Speaker 2: he's not comfortable with telling pension funds where to invest,

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Speaker 2: but he's not ruled out such a move as he

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Speaker 2: looks to boost the sluggish economy. Of course, we've got

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Speaker 2: all the data out over the past week and the

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Speaker 2: Chancellor's preference would actually be for Britain's highly fragmented pensions

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Speaker 2: market to be consolidated and he'd like to finish that

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Speaker 2: or do that along the lines of Canadian or Australian

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Speaker 2: WORL lines what they basically do with their pensions, and

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Speaker 2: that's to really get investment back here in the UK.

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Speaker 2: But once again just a massive debate between Hunt and

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Speaker 2: the UK pensions industry.

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Speaker 1: Yeah, desperately trying to revive growth in the UK of course,

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Speaker 1: only flat lined in February. One thing he could do

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Speaker 1: to stop the weight on growth would be to end

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Speaker 1: the strikes, but that's another matter The Guardian. Meanwhile, Leanne

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Speaker 1: says that the UK is going to sign a deal

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Speaker 1: paying it into the EU budget within fifteen years. That's

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Speaker 1: according to the Ryan AirBoss.

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Speaker 2: It is indeed, and the outspoken CEO of the Irish

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Speaker 2: budget airline has launched a fresh attack on Brexit. Now,

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Speaker 2: he's frequently criticized the economic impact it's had. That's something

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Speaker 2: none of us can deny and as well known. But

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Speaker 2: Michael O'Leary is now predicting the UK would end up

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Speaker 2: signing a Norway style deal with the EU in the

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Speaker 2: next ten to fifteen years and which it would pay

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Speaker 2: into the BLOCKS budget.

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Speaker 1: So this is what he's seeing for the future.

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Speaker 2: He didn't stop there. Actually, he also said the UK's

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Speaker 2: departure from the EU would be negative on the UK economy,

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Speaker 2: no question about it, he said, and he said that

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Speaker 2: will be over the next three to five years now.

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Speaker 2: He made these comments during Bloomberg's New Economy Gateway event

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Speaker 2: which is happening in Ireland. Of course we know Stephen

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Speaker 2: Carroll is there in Wicklow as that goes on, and

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Speaker 2: he was speaking to a panel. It was a discussion. However,

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Speaker 2: there was actually a little bit of positivity. He added

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Speaker 2: that Richie Sunak had struck a better deal with the

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Speaker 2: Windsor Framework post a Brexit agreement, and he said this

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Speaker 2: is a way forward for the UK and EU. He

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Speaker 2: kind of echoed the words yesterday I was watching the

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Speaker 2: speech by the former US President Bill Clinton. He was

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Speaker 2: giving it at Queen's University in Belfast, and he also

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Speaker 2: lent his support the Windsor framework.

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Speaker 1: So there we are for a glimmer of hope, then

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Speaker 1: not all negative. And finally The Times has the headline

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Speaker 1: US consultancy Baine will recruit pay recruits to spend a

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Speaker 1: year doing yoga.

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Speaker 2: So a leading American consultancy is offering new recruits from

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Speaker 2: business schools thousands of dollars to hold off joining and

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Speaker 2: kill some time basically to become a yoga instructor or

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Speaker 2: head out on safari. So Bain has given sizeable financial

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Speaker 2: incentives to recruits with postgraduate business degrees to push back.

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Speaker 2: They start days, and that will actually be until April

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Speaker 2: and next year. The Wall Street Journal also reporting McKinsey

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Speaker 2: is doing exactly the same thing. But even though yoga

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Speaker 2: and safari sound very fun, the underlying reason Lizzie is

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Speaker 2: really more sinister. This is because a consultancy sector is

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Speaker 2: bracing for an economic down turn and job cuts are happening.

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Speaker 2: We know this McKinsey laying off two thousand staff ey

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Speaker 2: the American division five percent of their staff, so things

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Speaker 2: aren't looking too good. At the moment when it comes

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Speaker 2: to this sector and the Wall Street journals basically reporting

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Speaker 2: that pushing back the start date for new recruits maybe

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Speaker 2: the best way to get around the downturn in the

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Speaker 2: sector which is happening at the moment.

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Speaker 1: We wouldn't have to pay me to spend a year

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Speaker 1: doing yoga. Imagine a year after in tennis playing tennis.

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Speaker 2: I still think I'd like to be paid, but you'd

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Speaker 2: only be paid twenty thousand dollars. If you actually chose

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Speaker 2: to work for a charitable organization, you'd be paid forty

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Speaker 2: thousand dollars, or if you wanted to learn.

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Speaker 1: A love another language, thirty thousand dollars.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 1: Spotify and anywhere else you get your podcasts.

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Speaker 3: You can also listen live each morning on London Dab Radio,

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Speaker 3: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 1: Our flagship New York station is also available on your

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Speaker 1: Amazon Alexa devices. Just say Amazon Play Bloomberg eleven thirty.

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Speaker 1: I'm Lizzie Burden and.

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Speaker 3: I'm Stephen Carroll. Join us again tomorrow morning for all

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Speaker 3: the news you need to start your day right here

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Speaker 3: on Bloomberg Daybreak. Europe