WEBVTT - Fed Cut Delay Likely, Yentervention & Sunak's Comeback Bid

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<v Speaker 1>This is the Bloomberg Daybake podcast, available every morning on Apple,

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<v Speaker 1>Spotify or wherever you listen. It's Wednesday, the first of

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<v Speaker 1>May in London. I'm Caroline Hipkip.

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<v Speaker 2>And I'm Stephen Carroll. Coming up today. Expectations grow that

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<v Speaker 2>the Federal Reserve will today signal a delay to rate cuts.

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<v Speaker 1>Japan's yen tovention fizzles in the face of dollar strength.

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<v Speaker 2>Plus Sunak's comeback bid. The Prime Minister does his best

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<v Speaker 2>to avoid a catastrophic result in tomorrow's local elections.

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<v Speaker 1>Let's start with a roundup of our top stories.

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<v Speaker 2>The Federal Reserve is expected to hold rates today and

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<v Speaker 2>signal no plans for cuts in the near future. Bloomberg

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<v Speaker 2>Economics also believes Charge your Own Pal will adopt a

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<v Speaker 2>notably more hawkish tone in his comments following the decision.

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<v Speaker 2>The expected hawkish pivot comes after a series of hotter

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<v Speaker 2>than expected inflation and economic data led traders to unwind

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<v Speaker 2>bets on multiple cuts in the coming months. The former

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<v Speaker 2>Reserve Bank of India governor Ragor and Rajan says FED

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<v Speaker 2>policymakers got ahead of themselves at recent meetings.

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<v Speaker 3>The fact that we are in a very uncertain world

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<v Speaker 3>that we've switched from soft landing to hard landing to

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<v Speaker 3>no landing and back. I think that would suggest a

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<v Speaker 3>little bit of caution when the FED tries to predict

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<v Speaker 3>the future, and it should, I mean, with hindsight, have

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<v Speaker 3>basically stayed with the We will know when enough is

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<v Speaker 3>enough and we can start cutting, but right now we're

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<v Speaker 3>not going to make strong predictions.

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<v Speaker 2>Ragora Rajan also hinted that the FED may need to

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<v Speaker 2>raise rates in future if data continues to come in

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<v Speaker 2>hotter than expected. We'll bring you the right decision live

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<v Speaker 2>here on Bloomberg at seven pm London time, with chargerown

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<v Speaker 2>Pals press conference thirty minutes later.

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<v Speaker 1>Interest rates remaining high in the US will continue to

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<v Speaker 1>drive strength in the dollar. On Monday, that appears to

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<v Speaker 1>have forced Japanese authorities to intervene to pop up the

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<v Speaker 1>yen for the first time since twenty twenty two. Bank

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<v Speaker 1>of Japan accounts analyzed by Bloomberg suggests intervention did take place.

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<v Speaker 1>Bloomberg's Garfield Reynolds says failing to step in could have

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<v Speaker 1>left authorities with a number of problems.

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<v Speaker 4>With the reverse argument would be what they hadn't intervened,

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<v Speaker 4>and you were starting from one hundred and sixty or

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<v Speaker 4>more yen per dollar, then who knows where you could

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<v Speaker 4>end up. One hundred and seventy would come into play

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<v Speaker 4>pretty rapidly, and that's the sort of thing that would

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<v Speaker 4>have a lot of impact on Japan's economy, on the

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<v Speaker 4>political situation.

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<v Speaker 1>Garfield Reynolds, speaking there on Bloomberg Television, recent yen swings

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<v Speaker 1>might be an indicator of worse to come, as the

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<v Speaker 1>Federal Reserve looks unlikely to cut interest rates during today's

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<v Speaker 1>policy setting meeting. Pressure on the currency could build even

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<v Speaker 1>further if fedchaed your own power takes that hawkish tonally

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<v Speaker 1>mentioned this evening, New.

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<v Speaker 2>York City police serage down to Columbia University's campus overnight,

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<v Speaker 2>arresting pro Palestinian demonstrators who'd barrow caided themselves into a building.

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<v Speaker 2>According to reports, dozens of people were detained and loaded

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<v Speaker 2>onto busses as chance continued, sir, who do you protect?

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<v Speaker 5>Sir?

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<v Speaker 6>Who do you protect? Sir?

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<v Speaker 2>Those were protesters at the scene, chanting. Their university leaders

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<v Speaker 2>said in a statement that they were left with no

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<v Speaker 2>choice but to call authorities. After Columbia's own security personnel

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<v Speaker 2>were forced out of the building. The police action capped

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<v Speaker 2>two weeks of rising tention at the university, which some

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<v Speaker 2>more than one hundred arrests. On April eighteenth.

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<v Speaker 1>Chancellor Jeremy Hunt has publicly criticized the UK regulators plans

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<v Speaker 1>to name and shame companies that it's investigating in a

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<v Speaker 1>rare political intervention. Hunt said that he hopes the Financial

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<v Speaker 1>Conduct Authority will relook at their decision after an industry backlash.

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<v Speaker 1>The Financial Watchdog says that firms and consumers would benefit

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<v Speaker 1>from knowing which issues are in the watchdog's sites, but

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<v Speaker 1>the FCA says that plans are still at the consultation stage.

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<v Speaker 2>Amazon's cloud unit posted its strongest sales growth in a year.

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<v Speaker 2>The first quarter results are assigned. Businesses are starting to

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<v Speaker 2>spend more on tech projects, partly driven by AI demand.

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<v Speaker 2>Bloomberg's Ed Ludlow explains.

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<v Speaker 7>The strategy is basically to be a place where other

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<v Speaker 7>companies who are interested in AI can build whatever software

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<v Speaker 7>it is they want on aws's platforms.

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<v Speaker 2>Ludlow ads are the company's fifteen point three billion dollar

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<v Speaker 2>operating profit is also down to CEO Andy Jase's cost

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<v Speaker 2>cutting program. Despite that Amazon's main e commerce business slightly

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<v Speaker 2>missing analysts estimates as consumers tried to save money.

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<v Speaker 1>And here in the UK, Isshsunak has urged supporters to

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<v Speaker 1>take part in the quote greatest comeback in political history,

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<v Speaker 1>as he trails badly behind in the polls. Bloomberg understands

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<v Speaker 1>that the Conservative leader attempted a rallying speech. Party campaign

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<v Speaker 1>is ahead of local elections tomorrow. Bloomberg's James Orcock has.

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<v Speaker 5>More since the nineteen nineties, if the opposition had been

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<v Speaker 5>ahead in the polls by more than five percentage points

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<v Speaker 5>a year out of the general election, they've taken over government.

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<v Speaker 5>Labor are currently twenty points ahead. So when Rischie Sunak

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<v Speaker 5>talks about the greatest comeback, that is the political gravity

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<v Speaker 5>he's trying to overcome. His remarks are also a tacit

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<v Speaker 5>admission of the electoral clobbering is expected to take in

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<v Speaker 5>Thursday's local elections, which some Conservatives think may then be

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<v Speaker 5>used to try and to seat him in London. James

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<v Speaker 5>Orcock Bloomberg Radio.

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<v Speaker 1>Well, in the moment, we're going to look ahead to

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<v Speaker 1>the federal reserve rate decision and also to tomorrow's local elections.

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<v Speaker 1>In England and Wales that James was discussing. But of

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<v Speaker 1>course there's always a few stories that have caught Ri

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<v Speaker 1>on the Bloomberg terminal this morning, and I think this

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<v Speaker 1>one's quite close to home for you, Stephen.

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<v Speaker 7>Yeah.

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<v Speaker 2>As of today, Ireland has no listed companies with the

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<v Speaker 2>female CEO. That's after the CEO of Irish Residential Properties

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<v Speaker 2>Reach PLC, margaretsween You retired yesterday, so she's been replaced

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<v Speaker 2>by a man. There are only thirty one list of

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<v Speaker 2>companies on your next exchange in Dublin, but now none

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<v Speaker 2>of them are led by a woman, and that makes

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<v Speaker 2>Ireland among you member states, only joining Luxembourg as having

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<v Speaker 2>no female CEOs of public firms. Now, the levels across

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<v Speaker 2>the EU aren't particularly high, or should we say across

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<v Speaker 2>the world. Europe is an underperforming in this level either,

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<v Speaker 2>but the lack of gender equality at the top of

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<v Speaker 2>companies listed on Ireland Stock Exchange is, according to the

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<v Speaker 2>thirty Percent Club, exacerbated by the fact that it's dominated

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<v Speaker 2>by traditionally male heavy industries like construction. Now it's worth

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<v Speaker 2>saying that representation on boards is improving. At the end

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<v Speaker 2>of November twenty twenty three. Female board representation was at

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<v Speaker 2>thirty nine percent in Ireland, which is up from eighteen

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<v Speaker 2>percent just five years previously. That's after a number of

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<v Speaker 2>government level steps that have been taken, and there are

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<v Speaker 2>other areas of the Irish economy that do seeta representation

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<v Speaker 2>of women, particularly the startup scene in particular. But then

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<v Speaker 2>Ireland also has the same listings problem that lots of

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<v Speaker 2>other parts of Europe have as well. Out of these

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<v Speaker 2>companies aren't choosing to list on the Stock Exchange in

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<v Speaker 2>Ireland when they are going public, They're choosing to do

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<v Speaker 2>so in the US, a story that we see in

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<v Speaker 2>lots of other parts.

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<v Speaker 1>Yeah, I think it's a very fascinating story and it's

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<v Speaker 1>a really interesting one also about you know, how much

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<v Speaker 1>the goals of government actually seep into business or not.

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<v Speaker 1>So Yeah, a very good story to have a look at.

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<v Speaker 1>On the Bluebig Tunnel this morning.

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<v Speaker 2>Well that's turned back to the Federal Reserve decision. Later,

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<v Speaker 2>officials expected to keep interest rates on hold, but markets

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<v Speaker 2>will be watching to see how your own paler as

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<v Speaker 2>colleagues are reacting to the recent higher than expected inflation data.

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<v Speaker 2>Bloomberg TV anchor Critty Group tos with us to help

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<v Speaker 2>us look ahead to that morning, Critty, can you remind

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<v Speaker 2>us first of all of the key data the FED

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<v Speaker 2>will be considering going into this meeting.

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<v Speaker 8>Well, it's so funny because we should be considering the CPI,

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<v Speaker 8>that's the no brainer rate, even the PCE which kind

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<v Speaker 8>of takes out some of those core costs as well.

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<v Speaker 8>Now they have other pieces of data that they have

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<v Speaker 8>to take into account. This isn't They can't blame it

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<v Speaker 8>on just anomalies. And I think the greatest example of

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<v Speaker 8>this is just within the last twenty four hours, the

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<v Speaker 8>employment costs index over in the States coming in really

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<v Speaker 8>really hot. Now, for those of you who aren't familiar

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<v Speaker 8>with kind of this data set, it's what the name's just.

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<v Speaker 8>An employment cost index is quite literally the kind of

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<v Speaker 8>amalgamation of what costs look like from a more wage

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<v Speaker 8>perspective across the fifty states. Now, this number came in

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<v Speaker 8>hot because wages are rising in the States, and we

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<v Speaker 8>know that we kind of knew that was going to

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<v Speaker 8>happen with a lot of these minimum wage decisions that

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<v Speaker 8>have been made across I think like twenty five states

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<v Speaker 8>or so out of fifty, So we knew that there

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<v Speaker 8>was going to be this push anyway. The problem is

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<v Speaker 8>the numbers came as significantly hotter than we'd expected just

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<v Speaker 8>from those minimum wage increases. So that's where you're starting

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<v Speaker 8>to see a little bit of kind of spooking in

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<v Speaker 8>the markets. And then you saw a real market reaction

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<v Speaker 8>off of that data because it suggests that some of

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<v Speaker 8>the inflationary numbers that we're seeing are not one offs.

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<v Speaker 8>You are seeing the spread across the economy. You're seeing

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<v Speaker 8>it spread across regions more importantly, and that's a really

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<v Speaker 8>important piece of this equation because now the Federal Reserve

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<v Speaker 8>can look at the state and say, this is not

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<v Speaker 8>just goods driven inflation, services driven inflation, and this is

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<v Speaker 8>wage driven inflation, when for years they were really trying

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<v Speaker 8>to combat the inflationary story because weges weren't keeping up.

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<v Speaker 1>Okay, So how likely is that then to play into

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<v Speaker 1>the press conference and into the statement and the decision making.

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<v Speaker 8>Well, I imagine he'll be asked about that in the

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<v Speaker 8>press conference, specifically in terms of what the data points

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<v Speaker 8>he's actually looking at.

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<v Speaker 6>Caroline.

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<v Speaker 8>The very ends, even the very first questions that you

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<v Speaker 8>guys asked me, simply because they are known famously to

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<v Speaker 8>only kind of really zero in on that PCE deflator number.

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<v Speaker 8>So now that they're seeing different pieces of it, is

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<v Speaker 8>this still a commodity driven story? Is this a kind

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<v Speaker 8>of labor market story still? Or do we need to

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<v Speaker 8>look at other pieces of the policy tools? So if

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<v Speaker 8>we're not looking at rate decisions, do we need to

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<v Speaker 8>look at QT for example? Do we need to look

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<v Speaker 8>at what's going on with the treasury? Is election risk

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<v Speaker 8>even relevant to the Fed? They'll say no, but I

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<v Speaker 8>imagine they'll be pressed on it regardless.

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<v Speaker 2>Anythink as that markets'll be watching that.

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<v Speaker 8>For Definitely, the story on the QT is important, but

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<v Speaker 8>I think the treasury may be more important. And there's

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<v Speaker 8>a lot of questions about the deficit story. There's a

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<v Speaker 8>lot of questions, But how that's kind of seeking or

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<v Speaker 8>I should say creeping up? I think is the worth

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<v Speaker 8>of looking for creeping up? The coffe hasn't quite hit yet,

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<v Speaker 8>Bear with me creeping up on a lot of investors

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<v Speaker 8>simply because it has a lot to do with treasury

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<v Speaker 8>supply and it has to do with these buyback announcements. Remember,

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<v Speaker 8>before we get the FED decision, we also get that

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<v Speaker 8>refunding announcement. From the Treasury literally thirty minutes prior. So

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<v Speaker 8>you're going to see the markets be very bouncy this

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<v Speaker 8>morning in terms or this afternoon you say, in terms

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<v Speaker 8>of how they are reacting to what the government is doing.

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<v Speaker 8>But we actually had a guest onm Blomber TV said

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<v Speaker 8>this very eloquently that it might just be Janet Yellen

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<v Speaker 8>who may be more in charge of policy.

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<v Speaker 6>Than j Powell.

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<v Speaker 8>And that seems to be the going concern at least

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<v Speaker 8>in terms of what investors are really watching.

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<v Speaker 1>Yeah. Absolutely, and another piece to that, big reaction expected

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<v Speaker 1>potentially in the s and P at least Film City,

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<v Speaker 1>biggest FED day move, that's the expectation. So it's really

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<v Speaker 1>going to be hotly watched. The decision at seven pm

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<v Speaker 1>London time, the press conference half an hour later, Pritty

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<v Speaker 1>groups of Bloomberg's TV and can thank you so much

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<v Speaker 1>for being with us.

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<v Speaker 2>Well here in the UK, voters will be going to

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<v Speaker 2>the polls tomorrow in England and Wales in local mayoral

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<v Speaker 2>and police and Crime commissioner elections tomorrow, some of which

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<v Speaker 2>are seen as a bellwether for the Conservative Party's prospects

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<v Speaker 2>at a general election. We're expecting later this year with

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<v Speaker 2>the details, We've got Bloomberg's UK correspondent Lizzie Burden with

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<v Speaker 2>us in studio Morning Lizzie. So for the Conservative Party, then,

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<v Speaker 2>what are the key goals that they'll be hoping for.

0:11:28.440 --> 0:11:30.520
<v Speaker 2>What are they going to be looking out for when

0:11:30.600 --> 0:11:33.480
<v Speaker 2>it comes to what could inter be interpreted as a

0:11:33.520 --> 0:11:34.920
<v Speaker 2>win or a big last for them?

0:11:35.040 --> 0:11:37.600
<v Speaker 9>Will you talk about these local elections as a barometer

0:11:37.720 --> 0:11:41.000
<v Speaker 9>for the general There are two elements that define the

0:11:41.040 --> 0:11:44.880
<v Speaker 9>point at which Sunak's team around him and the wider

0:11:44.960 --> 0:11:48.959
<v Speaker 9>party will lose hope of staying in power beyond the general.

0:11:49.000 --> 0:11:51.880
<v Speaker 6>First of all, do the Conservatives.

0:11:51.160 --> 0:11:54.160
<v Speaker 9>Lose half of the just under a one thousand seats

0:11:54.160 --> 0:11:57.199
<v Speaker 9>that they won in twenty twenty one across local councils?

0:11:57.640 --> 0:12:02.040
<v Speaker 9>And secondly, do they hold on to Andy Street, the

0:12:02.080 --> 0:12:05.120
<v Speaker 9>Tory mayor in the West Midlands and Ben Houchin, the

0:12:05.200 --> 0:12:08.480
<v Speaker 9>Tory mayor in Tees Valley, because those two mayors really

0:12:08.520 --> 0:12:13.400
<v Speaker 9>represent the party's ability to compete in labor facing areas. Now,

0:12:13.400 --> 0:12:16.000
<v Speaker 9>the latest yug of polling actually suggests that bit Street

0:12:16.040 --> 0:12:18.880
<v Speaker 9>and Houchin are going to cling on and that would

0:12:18.920 --> 0:12:22.840
<v Speaker 9>be a major victory for Rishi Sunak because it would

0:12:22.920 --> 0:12:26.040
<v Speaker 9>calm the nerves about the general election being some sort

0:12:26.080 --> 0:12:27.120
<v Speaker 9>of extinction event.

0:12:27.920 --> 0:12:30.520
<v Speaker 6>But on point one, this could still be a bloodbath

0:12:30.520 --> 0:12:32.679
<v Speaker 6>for the Conservatives. M okay.

0:12:33.480 --> 0:12:36.560
<v Speaker 1>Will the local election result then put Labor on course

0:12:36.600 --> 0:12:39.640
<v Speaker 1>to win the general election? How much of a kind

0:12:39.640 --> 0:12:41.600
<v Speaker 1>of wind in the sales of what is already a

0:12:41.679 --> 0:12:43.360
<v Speaker 1>pretty speedy Labor boat.

0:12:43.600 --> 0:12:46.360
<v Speaker 6>Yeah, very much on that course already, aren't they.

0:12:46.400 --> 0:12:50.240
<v Speaker 9>Sunak's really failed to put a dent in Labour's twenty

0:12:50.280 --> 0:12:53.960
<v Speaker 9>point pole league, despite the fall in inflation and the

0:12:54.000 --> 0:12:55.480
<v Speaker 9>turnaround in growth.

0:12:56.200 --> 0:12:57.760
<v Speaker 6>His advisors say.

0:12:57.600 --> 0:13:00.960
<v Speaker 9>That last week was his best in off, But the

0:13:01.040 --> 0:13:03.640
<v Speaker 9>problem is he hasn't been able to sustain a positive

0:13:03.679 --> 0:13:07.200
<v Speaker 9>news cycle since getting the keys to number ten, and

0:13:07.280 --> 0:13:10.720
<v Speaker 9>therefore he's failed to placate the right wing of his party.

0:13:11.160 --> 0:13:13.360
<v Speaker 9>Even when he's been preaching to the choir, you know,

0:13:13.400 --> 0:13:18.319
<v Speaker 9>with policies like deporting asylum seekers to Rwanda, he still

0:13:18.360 --> 0:13:21.160
<v Speaker 9>hasn't managed to keep the likes of Penny Mordant happy.

0:13:21.800 --> 0:13:26.880
<v Speaker 9>And while he's had this ongoing failure to launch, at

0:13:26.880 --> 0:13:29.360
<v Speaker 9>the same time, the opposition Labor leader Kirs Starmer, has

0:13:29.520 --> 0:13:33.440
<v Speaker 9>just had another boost because Scotland's first Minister Humsa Yusuf

0:13:33.960 --> 0:13:38.240
<v Speaker 9>has resigned. Now north of the border, Labour's only managed

0:13:38.280 --> 0:13:39.400
<v Speaker 9>to get one seat in the.

0:13:39.360 --> 0:13:41.840
<v Speaker 6>Twenty fifteen and twenty nineteen general.

0:13:41.559 --> 0:13:47.160
<v Speaker 9>Elections, but now with the SMP pretty much rudderless, things

0:13:47.200 --> 0:13:50.320
<v Speaker 9>are looking up for Labor in Scotland and it means

0:13:50.320 --> 0:13:53.240
<v Speaker 9>that the path to Downing Street for kir Starmer looks

0:13:53.320 --> 0:13:56.360
<v Speaker 9>even clearer, and it seems it's going to run through Scotland.

0:13:57.320 --> 0:14:00.800
<v Speaker 2>Could these local election results be a cat lists though

0:14:00.840 --> 0:14:04.280
<v Speaker 2>for the Tory Party actually ousting Richie Sunak as their leader.

0:14:04.679 --> 0:14:08.520
<v Speaker 9>Well, Sunak's critics on the Tory right are really going

0:14:08.600 --> 0:14:12.280
<v Speaker 9>to use any bad result in these local elections as

0:14:12.320 --> 0:14:15.280
<v Speaker 9>evidence to argue the only way to win the general

0:14:15.960 --> 0:14:19.960
<v Speaker 9>is to change leader, because otherwise they'll have a total wipeout.

0:14:20.560 --> 0:14:23.960
<v Speaker 9>But even if he does get hammered in these local elections,

0:14:24.000 --> 0:14:27.400
<v Speaker 9>he could actually stay in number ten because remember, there's

0:14:27.400 --> 0:14:31.480
<v Speaker 9>no obvious candidate to replace him and the Conservatives are

0:14:31.480 --> 0:14:34.720
<v Speaker 9>already on their third prime minister since Boris Johnson won

0:14:34.760 --> 0:14:35.400
<v Speaker 9>the twenty.

0:14:35.200 --> 0:14:36.400
<v Speaker 6>Nineteen general election.

0:14:37.400 --> 0:14:41.280
<v Speaker 9>The thing is, Conservative party rules mean that the rebels

0:14:41.440 --> 0:14:45.000
<v Speaker 9>only need just over fifty letters from Tory MPs to

0:14:45.000 --> 0:14:47.400
<v Speaker 9>trigger a no confidence vote in the party leader, so

0:14:47.960 --> 0:14:51.720
<v Speaker 9>Richie Sunac cannot take his place for granted.

0:14:51.920 --> 0:14:53.440
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0:14:53.480 --> 0:14:56.320
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