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Speaker 1: This is Bloomberg dayba Curu for this Wednesday, the fourteenth

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Speaker 1: of June in London.

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Speaker 2: Coming up today, stuff right now, thank you very much.

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Speaker 2: FED prepares for a pause, but have rates also.

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Speaker 1: Pete Bailey on the back foot at the Bank of England.

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Speaker 1: Governor laments slowly cooling.

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Speaker 2: Inflation, pleading not guilty. Trump argues he had the right

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Speaker 2: to take classified documents.

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Speaker 3: Cracks in Goldman Sachs and the most successful hedge fund

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Speaker 3: ever Met's on China. Those are the stories we're looking

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Speaker 3: at in today's papers. I'm James Wilcock.

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Speaker 4: Plus the Top Job Glass Ceiling.

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Speaker 1: A report finds a startling lack of female CEOs in

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Speaker 1: UK retail.

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Speaker 5: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 5: news You need to start your day in just one

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Speaker 5: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 5: and everywhere you get your podcasts.

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Speaker 2: Good morning.

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Speaker 1: I'm Stephen Carroll and I'm Caroline Hecker. Here are the

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Speaker 1: stories that we're following today.

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Speaker 2: Cooling inflation may have sealed the Federal reserves move to

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Speaker 2: pause its fifteen month rate hiking cycle.

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Speaker 4: Today.

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Speaker 2: US price rises slowed in May with CPI coming in

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Speaker 2: at four percent a year on year, while core inflation

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Speaker 2: slowed to five point three percent. University of Michigan professor

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Speaker 2: of economics Betsy Stephenson says the fed's job is still

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Speaker 2: not complete.

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Speaker 6: Bringing inflation down from four percent to two percent is

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Speaker 6: the hard part, and across a lot of measures, what

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Speaker 6: we're seeing is getting really sticky, and we don't have

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Speaker 6: a good reason to think that it's going to come

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Speaker 6: down really easily over the next year even further.

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Speaker 2: Betsy Stevenson's warning comes ahead of today's FOMC decision, which

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Speaker 2: will be published at seven pm London time. FED scha

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Speaker 2: Jerown Powell will then hold a press conference thirty minutes later.

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Speaker 1: The UK jobs market has so few available workers that

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Speaker 1: employers are having to hoard labor. That is the stark

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Speaker 1: ass of Bank of England Governor Andrew Bailey, who made

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Speaker 1: the comments after official data showed a surprise rise in

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Speaker 1: wages and a drop in unemployment. Here's what he told

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Speaker 1: the Economic Affairs Committee.

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Speaker 7: One of the things that firms pretty much universally say

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Speaker 7: to me, and have been cited to me for a

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Speaker 7: little while, is that they find it so hard to

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Speaker 7: recruit labor in the current market that they are not

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Speaker 7: going to release labor. There's labor hoarding going on.

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Speaker 1: Bailey's comments come on the same day the Bank of

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Speaker 1: England's chief economist, Hugh Peel said that balance is needed

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Speaker 1: between fighting inflation and damaging the economy. Traders now see

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Speaker 1: a fifty percent chance the Central Bank will raise rates

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Speaker 1: to six percent by February.

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Speaker 2: Donald Trump has told supporters he had every right to

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Speaker 2: keep the classified documents found at his Floridair estate. The

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Speaker 2: former US president appeared in court in Miami, where he

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Speaker 2: pleaded not guilty to thirty seven charges related to mishandling

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Speaker 2: sensitive files. Speaking to supporters after the court appearance, Trump

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Speaker 2: called the prosecution a sham.

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Speaker 8: Threatening me with four hundred years in prison for possessing

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Speaker 8: my own presidential papers, which just about every other president

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Speaker 8: has done, is one of the most outrageous and vicious

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Speaker 8: legal theories ever put forward in an American court of law.

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Speaker 2: Trump is trying to turn his second indictment in ten

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Speaker 2: weeks into a fresh opportunity to garner support for a

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Speaker 2: White House comeback. The former president currently leans his nearest

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Speaker 2: primary challenger, Round DeSantis by over thirty points, with Republicans.

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Speaker 1: Od Asset Management is shutting its Swan Fund and gating

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Speaker 1: two other funds after redemption request surge. The Hedge Fund

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Speaker 1: made the decision as that moves to contain a crisis

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Speaker 1: triggered by the publication of sexual assault allegations against its founder.

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Speaker 1: Crispin od Odi himself denies all the allegations against him.

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Speaker 1: Od Asset Management says that it will redeem those who

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Speaker 1: have invested in the Swan Fund by the fourth of September.

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Speaker 2: The chip maker AMD has given a preview of an

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Speaker 2: AI accelerator it believes will rival the offering from market

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Speaker 2: leader in Vidia. Boombergs Charlie Palett has the story.

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Speaker 9: Out of presentation in San Francisco, AMD showcased its upcoming

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Speaker 9: line of artificial intelligence processors, aiming to help data centers

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Speaker 9: handle a crush of AI traffic and challenging video's dominance

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Speaker 9: in the market. The company's Instinct MI three hundred series

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Speaker 9: will include an accelerator that can speed processing for generative AI,

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Speaker 9: the technology used by chat GPT and other chatbots. Like

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Speaker 9: much of the chip industry, AMD is racing to meet

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Speaker 9: booming demand for AI computing. In New York Charlie Palette

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Speaker 9: Bloomberg Daybreak Europe.

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Speaker 1: British retailers need to go further to improve diversity in

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Speaker 1: their leadership. That's according to a new report co authored

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Speaker 1: by the British Retail Consortium, which found that women are

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Speaker 1: still underrepresented at senior levels. Out of more than two

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Speaker 1: hundred businesses surveyed, only thirty we're found to have female

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Speaker 1: chairs or less than twenty five percent to have female

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Speaker 1: CEOs or CFOs. The industry is one of the largest

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Speaker 1: employers in the UK and is largely led by men.

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Speaker 2: Those are some of our top stories on the program

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Speaker 2: this morning. Very interesting report there by the Regish Retail

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Speaker 2: Consortium highlighting that imbalance, given that the sector overall in

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Speaker 2: the UK employees about half of the workforce are women.

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Speaker 2: But it's just those positive women and leadership roles in

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Speaker 2: top retailers.

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Speaker 1: Yeah, absolutely, it's the more poorly paid roles. Yeah. So

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Speaker 1: that diversity story is very important. But there are a

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Speaker 1: couple of really fascinating reads on the terminal this morning.

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Speaker 1: I mean, I think perhaps that diversity story goes to

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Speaker 1: what Adrian Waldridge is talking about.

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Speaker 4: He has a long read out on the Terminal this morning.

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Speaker 1: If you want a controversial issue to raise with your colleagues.

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Speaker 4: I think it's the question of the moment. He talks

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Speaker 4: about that.

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Speaker 1: We live in an age of goody goodie businesses, that

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Speaker 1: companies where their compassion on their sleeve, but that actually

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Speaker 1: being quote bad can give you competitive advantage. And he's

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Speaker 1: not necessarily talking about bad in a kind of moral sense,

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Speaker 1: but he's talking about kind of anti woke businesses. In

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Speaker 1: the finance industry, these twenty anti esg funds that focus

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Speaker 1: uniquely on making money rather than any other consideration that

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Speaker 1: you know may be important in wider life, but just

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Speaker 1: focusing on making profits.

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Speaker 4: I think that is a huge debate.

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Speaker 1: How much do we need to work, how much do

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Speaker 1: we need to focus on making money versus all of

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Speaker 1: the other issues that you know, shareholders, investors might care about.

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Speaker 2: Yeah, and also employers or employees rather in a question

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Speaker 2: that you know, we're talking about the tight labor market

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Speaker 2: in the UK. Here at the moment a question of

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Speaker 2: do what sort of companies people want to work for

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Speaker 2: and how much that influence their decisions about where they

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Speaker 2: want to grow their career and invest and utorately ultimately

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Speaker 2: add to the value of the business. As well to

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Speaker 2: the part of the market as well. What are the

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Speaker 2: examples cited by Adrin Waldridge And that piece is Michael O'Leary,

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Speaker 2: the CEO Rhiner and his often outspoken comments of calling

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Speaker 2: people stupid for not printing out their boarding passes, and

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Speaker 2: whether that kind of feeds into a particular vision of

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Speaker 2: how he runs his business as well. Another story that

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Speaker 2: caught my eye as well, how much money do you

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Speaker 2: need to feel rich? Well, apparently in America two point

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Speaker 2: two million dollars.

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Speaker 4: Two point two million dollars.

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Speaker 5: Is how much.

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Speaker 2: It's how much people feel that they need to have

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Speaker 2: to be considered wealthy. This is a survey from Charles Schwab.

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Speaker 2: So interestingly, of the people who were surveyed, almost half

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Speaker 2: of them so that they already feel wealthy today, even

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Speaker 2: though they're net worth is much less, not two bout

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Speaker 2: two million dollars, it's about half a million dollars. So

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Speaker 2: there's also a generational question here, feeling wealthy most common

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Speaker 2: amongst millennials and Gen Z compared to Gen ACT baby boomers,

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Speaker 2: who are less likely to feel well.

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Speaker 1: Really, but that's that's strange, isn't it, Because you would

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Speaker 1: have thought baby boomers who are older obviously have more

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Speaker 1: wealth accumulated over time.

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Speaker 2: But yeah, perhaps, Yeah, is it a question of earning

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Speaker 2: potential as much as right how much you have in your.

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Speaker 1: Faship prospects rather than what may be coming in your pension.

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Speaker 4: Yeah, very interesting.

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Speaker 1: Okay, that's a nice story to focus on as well

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Speaker 1: this morning. Let's send our attention, though, too, to the

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Speaker 1: choices that face the Federal Reserve today. Majority of economists

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Speaker 1: expect the US Central Bank to pause for the first

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Speaker 1: time in fifteen months, and our markets report of value

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Speaker 1: tight tet US just sat down in the studio with

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Speaker 1: us for more. Does the Fed have sufficient cause for

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Speaker 1: pause after yesterday's headline CPI number, which slowed to four percent.

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Speaker 10: The CPI yesterday came broadly in line. If anything, it

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Speaker 10: was slightly slightly hot in the core, but it was

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Speaker 10: a bit dismissed because it was driven by used cars

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Speaker 10: and that was an anomaly. We know it's going to fade,

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Speaker 10: So in some way, yesterday's print does open the door

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Speaker 10: for the FED to pause today. There were no really

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Speaker 10: surprises for the Fed to be worried about, and you

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Speaker 10: can just say that the Fed has really tried to

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Speaker 10: pause so many times over this hiking cycle, and they

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Speaker 10: might finally get away with it today. So watch that

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Speaker 10: decision comes at seven pm London time.

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Speaker 2: Talk us to the market reaction that we saw to

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Speaker 2: that CPI print of the signals that are being sent

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Speaker 2: now ahead of the meeting today.

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Speaker 10: There was a relief rally in treasuries, almost a sigh

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Speaker 10: of relief that we didn't get a hot print and

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Speaker 10: there's no there's not going to be any last minute

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Speaker 10: change in signaling for what they're going to do today.

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Speaker 10: So equities had a good session, ended in the solidly

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Speaker 10: in the green, and then treasuries had a very bizarre

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Speaker 10: price action. They rallied initially, yields went lower initially, and

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Speaker 10: then almost an hour later you started this one way

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Speaker 10: track sell off. The yields shooted higher, and many people

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Speaker 10: were very befuddled on why that happened in the treasury market.

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Speaker 10: But essentially the one argument that I see that makes

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Speaker 10: sense is for some reason yesterday the fixed income market

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Speaker 10: woke up to the fact that higher for longer might

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Speaker 10: actually be here, and it moved to price out almost

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Speaker 10: all of the cuts that we had in twenty twenty three,

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Speaker 10: even added some added some hikes later in the year.

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Speaker 10: It seems like a very bizarre time for the market

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Speaker 10: to all of a sudden wake up and think that

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Speaker 10: what the Fed's been telling us, this higher for longer

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Speaker 10: message might actually be true. But they chose yesterday afternoon

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Speaker 10: to do it, and it shut two year yields and

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Speaker 10: five year yields around twelve basis points higher one time.

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Speaker 10: So it was quite a brutal, brutal move.

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Speaker 1: Yeah, what should we be watching out for then when

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Speaker 1: it comes also to the dot plot and the expectations

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Speaker 1: for where rates go. I mean that's also going to

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Speaker 1: play into that.

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Speaker 4: Isn't it.

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Speaker 10: Yeah, exactly, Now that we know that the pause is

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Speaker 10: almost certain, it's all going to be about the guidance

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Speaker 10: they give.

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Speaker 4: The big way they do that is.

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Speaker 10: Through their dot plot, which shows where they estimate the

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Speaker 10: terminal rate by the end of this year and the

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Speaker 10: end of next year, for example. But the risk here

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Speaker 10: is that they do shift higher that they want to

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Speaker 10: communicate Hey, I'm pausing, but I'm still going to give

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Speaker 10: a hawkish message that we are in a tightening bias.

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Speaker 10: The confusion just is going to be on how much

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Speaker 10: higher are they going to shift? Because right now the

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Speaker 10: old dots, the dots we got March show that the

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Speaker 10: terminal rate is roughly where we are, that they don't

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Speaker 10: need a hike anymore. So will that dot plot reflect

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Speaker 10: one more hike needed or two more hikes needed. Two

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Speaker 10: more hikes needed would be quite a hawkish message from

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Speaker 10: the Fed That would cause, I would think, a pretty

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Speaker 10: brutal risk off move. The other thing that they could

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Speaker 10: try to do is move the terminal rate for next

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Speaker 10: year higher, almost saying that maybe we're at sufficiently restrictive,

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Speaker 10: but I'm going to stretch out the period of time

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Speaker 10: at which I want to stay restrictive. That could also

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Speaker 10: be another message. The other risk, though, is that we

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Speaker 10: know that there's been a lot of debate, open debate

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Speaker 10: versus the hawks and the doves recently, for the first

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Speaker 10: time this cycle, you could actually see those dots just

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Speaker 10: widen out, almost showing that very vividly that there is

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Speaker 10: some debate at the FOMC about what to do next.

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Speaker 10: I think the market might not like that too much,

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Speaker 10: knowing that the Fed themselves there's some warring between the

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Speaker 10: hawks and the doves. But we'll see today the market

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Speaker 10: is very excited. Seven PM is the decision. Seven thirty

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Speaker 10: is when Powell takes the podium.

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Speaker 2: Okay, and we will be covering that of course, for

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Speaker 2: you aren't Bloomberg Radio Valery t I Teller market supporter,

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Speaker 2: Thank you very much. Up next, most successful hedge fund

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Speaker 2: ever bets on China and cracks in Goldman Sacks.

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Speaker 5: Now the paper review on blue Bird Daybreak Europe. The

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Speaker 5: news you need to know from today's papers, So.

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Speaker 1: Makes James Wilcock joins us now with a look at

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Speaker 1: what's in the newspapers. The Financial Times have an interview

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Speaker 1: with Cichanel's Ken Griffin Good morning.

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Speaker 3: Good morning, and it's an interesting one, isn't it, Carolyn,

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Speaker 3: because we've been tracking American CEOs. Moving back to Sharon,

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Speaker 3: this interview was done in Hong Kong, so Jamie Diamond

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Speaker 3: went a few weeks ago. Elon Musk's all returned to

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Speaker 3: China recently. It's part of this growing trend. Now Ken

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Speaker 3: Grifford is not just a nobody. He runs a fifty

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Speaker 3: four billion dollars in asset firm and it's arguably the

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Speaker 3: most successful hedge fund ever after they rate in sixteen

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Speaker 3: billion in profits last year. So when he says us

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Speaker 3: growth and a soft landing in America is at least

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Speaker 3: in part dependent upon growth in China. Coming back and

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Speaker 3: goes one further and says our economist, the in house

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Speaker 3: new for Citadel is that it will do the Chinese

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Speaker 3: company will do better than forecast. And his argument is

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Speaker 3: now the poit Bureau of the Chinese executives at the

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Speaker 3: top of the leadership over there now have growth firmly

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Speaker 3: on the political agenda. And so he says he expects

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Speaker 3: policy to move in tandem with that that political priority.

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Speaker 3: It wasn't just a broad international rending interfuwy. He also

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Speaker 3: talked about renewables. Now it's fascining because you may notice

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Speaker 3: about Citadel, one of their big strengths is they are

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Speaker 3: good at weather reporting. And you know this is a

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Speaker 3: personal interest of mine. They made that sixteen billion dollar

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Speaker 3: profit in part of having extremely good commodities forecasting. They

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Speaker 3: hired back in I think the early twenty tens a

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Speaker 3: twenty strong meteorological team. The other hedge funds simply didn't

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Speaker 3: have to predict the weather.

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Speaker 4: Wow.

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Speaker 3: And so when he says Europe isn't ready for a

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Speaker 3: cold snap, they got lucky last year. At any point

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Speaker 3: it could come back and they still haven't fully adapted.

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Speaker 3: It's worth paying attention.

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Speaker 2: Okay, let's go next to the Wall Street Journal. Goldman

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Speaker 2: Sachs has a partner problem. The paper says, so.

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Speaker 3: It's interesting you were talking about Adrian Wildridge and bad

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Speaker 3: companies and how things are run and goody goody two shoes.

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Speaker 3: Goldman has always had an interesting management structure. It was

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Speaker 3: always run by the partners. And then what has changed

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Speaker 3: recently is by the time the new CEO, David Solmon

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Speaker 3: Knew he came in twenty eighteen, came in, that has

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Speaker 3: moved to a more CEO star structure, where you have

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Speaker 3: the CEO at the top managing the business. And this

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Speaker 3: has come sort of changes over time, especially the big

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Speaker 3: public listing. And to give you a stake of where

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Speaker 3: that comes in. If you look at say the equity,

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Speaker 3: the sort of four hundred and twenty plus partners had

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Speaker 3: you had that being in two thousand, they had about

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Speaker 3: sixty two percent of the bank shares. By the time

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Speaker 3: Solomon took over in twenty eighteen, that was four percent.

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Speaker 3: So they have a lower and lower stake. Now when

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Speaker 3: you see what the Wall Street Journal talking about former

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Speaker 3: CEOs complaining about Solomon's DJing in some ways, that's an

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Speaker 3: upset at how they are being increasingly shut out of

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Speaker 3: the process, and the partners increasingly feel like some of

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Speaker 3: Solomon's forays into consumer banking aren't working in that they

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Speaker 3: have less control over their own personal fiefdoms. And so

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Speaker 3: the Wall Street Journal had this fascinating long and read

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Speaker 3: looking at how the business the bank has changed over time,

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Speaker 3: the corporate governments is changing over time, and how partners

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Speaker 3: upset with that is culminating kind of all these kind

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Speaker 3: of potshots coming out of the CEO.

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Speaker 1: Yeah, that's really interesting, isn't it. Then just lastly, the

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Speaker 1: Times tracking a growing uproar over Libel.

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Speaker 3: So we cover the story a few weeks back. It's

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Speaker 3: all about Andy Verity's book that's being serialized in The

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Speaker 3: Times called Rigged, which talks about how he argues at

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Speaker 3: the time the Bank of England senior government figures were

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Speaker 3: allegedly putting pressure on the bankers who were rigging the

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Speaker 3: interbank rates, because the argument was if the interbak rates

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Speaker 3: stayed high, it looked like government interventional wasn't working. Now,

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Speaker 3: the Times latest Lord Tyree, who led the inquiry into

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Speaker 3: this at the time has written to The Times saying

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Speaker 3: we need to look again at this, saying that he

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Speaker 3: expressed concerns the Treasure Selec Committee was misled when it

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Speaker 3: investigated the mythlation of interest rates back in twenty twelve.

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Speaker 3: Not just him, this letter was co signed by David

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Speaker 3: Davis from Brexit Secretary and John McDonell, the Format Labour

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Speaker 3: Show chancellors. That's a bipartisan to use the American term

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Speaker 3: agreement over that. Now whether that will be rapid as

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Speaker 3: an open question, but it certainly is interesting that Verity's

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Speaker 3: reporting is now being backed by people who are leading

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Speaker 3: the inquiry at the time.

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Speaker 2: This is Bloomberg Daybreak Europe. You're a morning brief on

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Speaker 2: the stories making news from London to Wall Streets and beyond.

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Speaker 4: I'm Caroline Hepker and.

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Speaker 2: I'm Stephen Carol. Join us again tomorrow morning for all

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Speaker 2: the news you need to start your day right here

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Speaker 2: on Bloomberg Daybreak. Europe