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Speaker 1: This is Bloomberg Daybreak Cup for this Friday, the twenty

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Speaker 1: sixth of May in London. Coming up today.

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Speaker 2: On the Hunt, the Chancellor says he's in favor of

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Speaker 2: higher rates, even if it causes a recession.

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Speaker 3: X marks the spot.

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Speaker 1: A US debt deal begins to take shape as the

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Speaker 1: Treasury gets down to its last fifty billion dollars.

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Speaker 2: Not ready for retirement just yet. Asset managers attacker plan

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Speaker 2: to force pensions into a UK growth fund.

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Speaker 4: Guilty secret, the UK fails to guild the lily and

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Speaker 4: giving the extra five percent at home. Those are the

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Speaker 4: stories we're looking at in today's papers. I'm James Orcock Plus.

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Speaker 1: A rising tide lifts all votes except are Kathy Woods

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Speaker 1: flagship funds sold in video just before the stop search.

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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 every way you get your podcasts.

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Speaker 2: Good morning. I'm Stephen Carroll.

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Speaker 1: And I'm Caroline Hitker. Here are the stories that we're

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Speaker 1: following today.

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Speaker 2: The Chancellor of the Exchequer says he would support the

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Speaker 2: Bank of England raising interest rates even further to bring

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Speaker 2: down inflation. Jeremy Hunt adding that he's comfortable with Britain

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Speaker 2: being plunged into recession if that's what it takes to

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Speaker 2: stabilize prices.

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Speaker 6: We will make sure that the government plays its part,

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Speaker 6: the Bank of England plays its part, but it is

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Speaker 6: not a trade off between tackling inflation and recession. In

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Speaker 6: the end, the only path to sustainable growth is to

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Speaker 6: bring down inflation.

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Speaker 2: The Chancellor's remarks follow this week surprisingly strong inflation figures

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Speaker 2: for the UK, which prompted traders to boost bets on

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Speaker 2: BOE rates, hitting five and a half percent. Meanwhile, the

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Speaker 2: Bank of England policymaker Jonathan Haskell is signaling he's likely

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Speaker 2: to support further hikes. Speaking at an event in Washington,

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Speaker 2: the rate setter said it's important to lean against the

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Speaker 2: risk of an inflation becoming embedded.

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Speaker 1: Now, Republican and White House negotiators are understood to be

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Speaker 1: moving closer to an agreement to raise the debt limit.

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Speaker 1: Bluebog has learned that while a deal is not yet

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Speaker 1: in hand, the two sides have narrowed their differences on spending.

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Speaker 1: Speaking two reporters, House Speaker Kevin McCarthy sought to shift

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Speaker 1: blame to Democrats for the ongoing impass.

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Speaker 4: We need to have an agreement that's worthy of the

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Speaker 4: American public.

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Speaker 7: The reason why we're here.

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Speaker 4: We've got more money in any given time coming into

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Speaker 4: our government.

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Speaker 8: But when the Democrats' majority, they.

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Speaker 6: Are now spending more than any time in our history,

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Speaker 6: and our debt is higher than any time in our history.

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Speaker 8: So let's just get this right.

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Speaker 1: McCarthy's comments come as new data shows the Treasury's cash

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Speaker 1: balance has fallen below fifty billion dollars for the first

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Speaker 1: time since twenty twenty one. Janet Yellen says that the

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Speaker 1: government could run out of money as soon as the

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Speaker 1: first of June without a deal back.

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Speaker 2: Here in the UK, fund managers are starting to question

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Speaker 2: if new plans to create a UK Growth Fund clash

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Speaker 2: their duty to deliver returns. Executives at Agon, Aviva and

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Speaker 2: Aberdeen are among those voicing their concerns that the fifty

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Speaker 2: billion pound proposal would be mandatory. The fund has been

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Speaker 2: championed by the City of London's Mayor, Nick Lions, who

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Speaker 2: laid out those plans in our studio last week.

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Speaker 8: We've got four trillion pounds in our pension system, but

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Speaker 8: it's only seven percent invested in understood assets like infrastructure, loans,

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Speaker 8: real estate, private equity, private debt. When you look at

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Speaker 8: the most successful pension systems in the world, that's thirty

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Speaker 8: thirty five percent. In some of the cases of the

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Speaker 8: Canadian pension funds, it's fifty percent in those unlisted asset classes.

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Speaker 8: So we've failed so far to deliver the sort of

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Speaker 8: returns that our policyholders need to give to get proper

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Speaker 8: retirement income.

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Speaker 2: The mayor also hads the City of London Corporation. In

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Speaker 2: response to the criticism, they told us they would prefer

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Speaker 2: a voluntary agreement or a pledge from pension funds to

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Speaker 2: a mandate.

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Speaker 1: Now, UBS and the Swiss government haven't agreed the precise

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Speaker 1: time in terms of state guarantees for the emergency takeover

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Speaker 1: of Credit Suite. Sources say that completion of the deal

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Speaker 1: could be pushed back to June instead of late May.

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Speaker 1: Ubs and the government are also still haggling over the

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Speaker 1: regulatory implications of the takeover, including capital requirements and liquidity rules.

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Speaker 2: JPMorgan Chase notified about one thousand First Republic Bank employees

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Speaker 2: that they aren't being given jobs even temporarily, following its

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Speaker 2: takeover of the failed lender. The story from Bloomberg's Charlie Pallace.

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Speaker 7: Sources say the biggest American bank did offer full time

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Speaker 7: or transitional roles to almost eighty five percent of the

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Speaker 7: nearly seven thousand employees still working at First Republic when

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Speaker 7: it collapsed, while the rest were told they would not

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Speaker 7: get offers. The temporary jobs will be for three, six,

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Speaker 7: nine or twelve months, depending on the position, a spokesperson said.

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Speaker 7: Former First Republic employees who were not offered jobs at

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Speaker 7: JP Morgan Quote will receive pay and benefits covering sixty

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Speaker 7: days and will be offered up package that includes an

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Speaker 7: additional Lumpston payment and continuing benefits coverage in New York

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Speaker 7: Charley Palette, Bloomberg Daybreak Europe.

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Speaker 1: Kathy Woods flagship ETF closed out It's in Nvidia's steak

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Speaker 1: in January, missing out on the stock's recent search. The

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Speaker 1: chip maker of the world's most valuable has added more

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Speaker 1: than half a trillion dollars in market caps since Wood

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Speaker 1: dumped the shares. Wood holds Nvidia across several of her

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Speaker 1: smaller funds, but investors in the flagship our innovation ETF

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Speaker 1: have missed out on in Nvidia's blistering rally.

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Speaker 2: Soos are our top stories this morning, Caroline, Are you

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Speaker 2: planning to do any important shopping at the weekend, bunny

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Speaker 2: chance a fancy watch.

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Speaker 1: A fancy watch on your checkst Probably not, but I

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Speaker 1: know that we track all the data if you do

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Speaker 1: want to buy one. Well.

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Speaker 2: Indeed, this is the story that we are looking at

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Speaker 2: this morning about Bloomberg's subdal watch index down one point

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Speaker 2: four percent in thirty days. We track the most watches.

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Speaker 2: He's are prices for pre owned watches that follow about

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Speaker 2: twenty six percent in a year, So it could be

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Speaker 2: perhaps the moment to go looking. The Rolex Explorer to

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Speaker 2: and the Patac Nautilius are the biggest decliners in that

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Speaker 2: as well, So this could be the moment that perhaps

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Speaker 2: you might want to swoop in there.

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Speaker 1: Yeah, absolutely, And it's listen all the stories abound watches

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Speaker 1: and luxury items are always so well read on the

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Speaker 1: BlueBag terminal, especially on a Friday, so I bet this

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Speaker 1: is going to get loads of hit.

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Speaker 2: Well in case you're looking for a different bargain. Chanel's

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Speaker 2: ten thousand dollars. Handbags probably cost more come September, and

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Speaker 2: this is because the luxury brand etcetera of view prices.

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Speaker 2: They do it twice a year. They've already increased them

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Speaker 2: eight percent in March, so currently.

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Speaker 3: That is much more my streets.

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Speaker 1: Now, why didn't we start with that.

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Speaker 3: Rather than the watches?

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Speaker 2: I like to cast my luxury net broad Yeah.

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Speaker 1: Okay, lovely, thank you for that. Right, let's talk about

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Speaker 1: what's happening here in the UK this morning. So back

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Speaker 1: in January, the Prime Minister laid out five priorities for

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Speaker 1: his government. They were, of course, to half inflation, grow

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Speaker 1: the economy, cut debt, cuts waiting lists in terms of

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Speaker 1: healthcare in the NHS, and stop migrants arriving in the

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Speaker 1: UK in small boats. After this week, though, even the

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Speaker 1: least ambitious of those goals seems tougher to achieve. Our

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Speaker 1: UK correspondent Lizzi Burden joins us now with more. Good morning, Lizzie.

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Speaker 1: So it's not been a terribly good week for Rishi

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Speaker 1: Suna on the economic front. This week's inflation figures casting

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Speaker 1: real doubt on what we all thought was going to

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Speaker 1: be an easy goal halving inflation.

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Speaker 3: Yeah, do you.

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Speaker 9: Remember, only weeks ago, former Bank of England Monetary Policy

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Speaker 9: Committee member Michael Saundlers told us that promising that inflation

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Speaker 9: would have by year end was like targeting that the

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Speaker 9: sun should rise tomorrow. Well it doesn't look like that anymore.

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Speaker 9: We saw this week, as you say, inflation might be

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Speaker 9: back in single digits, but that April figure beat all

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Speaker 9: economists expectations and importantly core inflation rose. So that signifies

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Speaker 9: the stickiness of the price growth problem we have in

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Speaker 9: the UK.

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Speaker 3: Also, a lot of it.

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Speaker 9: Is food, and a third of that, an LSC paper said,

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Speaker 9: is caused by Brexit, and it's going to hit the

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Speaker 9: poorest Brits the hardest because of course they spend proportionately

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Speaker 9: more on food.

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Speaker 3: Now, if you look at the work function.

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Speaker 9: On the terminal, and forgive my accent, I have to

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Speaker 9: spell it for you, WRP, that's you can show you

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Speaker 9: that traders are now pricing a peak rate of five

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Speaker 9: point five percent more than actually by November. So when

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Speaker 9: more than a million homeowners are coming to remortgage later

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Speaker 9: this year, they're going to get a nasty surprise.

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Speaker 2: Is the all accents? Welcome on this program. Look, we've

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Speaker 2: been hearing from the Chancellor talking about the tackling that

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Speaker 2: inflation problem, saying he's comfortable with recession.

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Speaker 9: Yes, well, I think that the Chancellor has to get

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Speaker 9: behind whatever the Bank of England needs to do, because

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Speaker 9: you'll remember last year the doubt that was cast on

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Speaker 9: the Bank of England's independence in the List Trust era,

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Speaker 9: blaming the governor essentially for the inflation problem getting out

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Speaker 9: of control. And so in order to maintain stability and

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Speaker 9: financial credibility for the UK, the Chancellor knows that he

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Speaker 9: needs to support whatever the BOE does and at the

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Speaker 9: moment that looks like it needs to.

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Speaker 3: Keep on raising interest rates.

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Speaker 9: That's what the majority of the MPC are talking about,

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Speaker 9: we heard from Jonathan Haskell yesterday. In order to control inflation,

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Speaker 9: and the reality of that is it means weighing on

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Speaker 9: the demand, perhaps bringing about unemployment, perhaps bringing about recession

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Speaker 9: in order to bring down price growth.

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Speaker 1: Okay. Also we did get out yesterday's net migration figures.

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Speaker 1: That won't help to boost optimism around the idea of

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Speaker 1: reducing immigration in the coaches. Another big political commitment.

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Speaker 9: Yeah, stop the boats was rischisunac's number five priority. We

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Speaker 9: found out this week. You've had a record number of

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Speaker 9: migrants in twenty twenty two. Six hundred and six thousand

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Speaker 9: is the net migration figure. Rishie Sunac said not only

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Speaker 9: that he would stop boats crossing the channel, but he'd

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Speaker 9: bring down migration in general. It's a long standing Tory promise.

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Speaker 9: It was touted as one of the benefits of Brexit,

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Speaker 9: and so this figure, even though it's not as high

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Speaker 9: as some of the estimates that were put out there,

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Speaker 9: we were warned it could be as high as a million.

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Speaker 9: It exposes the divisions within his Conservative party. We've already

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Speaker 9: heard from the Home Secretary, Sella Brahman saying that she

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Speaker 9: wants British people to be picking fruit and driving trucks,

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Speaker 9: and yet you've got many sectors in the UK economy

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Speaker 9: absolutely desperate for foreign labor. You've got this tight labor

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Speaker 9: market adding to those inflation pressures. But I do think

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Speaker 9: that it's important not to get hysterical about these migration numbers.

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Speaker 9: Jonathan Porters, the professor at King's College London who's really

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Speaker 9: an immigration expert.

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Speaker 3: We have him on Bloomberg Radio often.

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Speaker 9: He's said that the narrative that immigration spiraling ever upwards

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Speaker 9: or is out of control is simply false. Many of

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Speaker 9: those students that have come post pandemic that are pushing

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Speaker 9: up the numbers, he says, they're going to leave, run

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Speaker 9: their courses end and work migrations being driven by a

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Speaker 9: demand for staff, which eventually hopefully should eat Yeah.

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Speaker 2: And Lizzie, we were talking yesterday on the UK Politics

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Speaker 2: podcast to count our Public, and they were noting that

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Speaker 2: immigration is quite low down the list of public priorities.

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Speaker 2: Only twenty percent of people listed that as being a priority.

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Speaker 2: The economic concerns the NHS much much higher than that

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Speaker 2: as well. Lizzie Bird and our UK correspondent, thank you

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Speaker 2: for now.

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Speaker 1: Now up next Guilty Secret UK fails to guild the

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Speaker 1: lily and giving the extra five percent at home.

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Speaker 5: Now the paper review on Bluebird, Daybreak, Europe, the news

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Speaker 5: you need to know from today's papers and Bloomberg.

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Speaker 2: Jamieilcock joins us. Now the details of those newspaper stories.

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Speaker 2: James the Ft has found something positive to say about

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Speaker 2: the UK guild market.

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Speaker 4: Surely not yes, surely yes, Steven Happy Friday. Aj bell

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Speaker 4: So Financial Advisors and Wealth Menagement Companies. They are a

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Speaker 4: one billion plus UK market cap company and their CEO

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Speaker 4: has given in a few races. I've been here for

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Speaker 4: sixteen years. I have not seen guilts and fixed income

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Speaker 4: products being bought with anything like the volume that we

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Speaker 4: are seeing right now. And that is all because of

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Speaker 4: UK retail investors who are like following institutional investors and saying, actually,

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Speaker 4: my savings cat hasn't given me nearly enough returns. I

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Speaker 4: should put this into guilts. I'm to throw on extra

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Speaker 4: good news. Michael Summerskill, who is the aj bellco, told

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Speaker 4: The Deadly Mail a different publication that a London listening

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Speaker 4: made massive sense for the company and it has managed

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Speaker 4: to lure US backers over there. So that's a lot

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Speaker 4: of good news for one day, Steve, and I don't

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Speaker 4: know how you can cope. So I'm going to balance

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Speaker 4: you out with a bit of reality from Marcus Ashworth,

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Speaker 4: our Bloomberg opinion columnist. His fear is there may be

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Speaker 4: all this demand, but the supply for guilts is also booming.

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Speaker 4: You are seeing more net government debt issuance in this

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Speaker 4: year than the past cumulative seven years, and the BOE

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Speaker 4: is the only major central bag actively selling its bond holdings.

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Speaker 4: So although there is this big UK retail demand, that

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Speaker 4: that does not mean that the massive amount of supply

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Speaker 4: is necessarily quashed.

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Speaker 1: No, absolutely, but just look at ten year UK real yields,

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Speaker 1: so there are yes and another six basis points to

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Speaker 1: zero point five to seven percent. So actually that's why

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Speaker 1: you've got so much interest, because it's nominal and real

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Speaker 1: yields across the UK curve that are going up. But

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Speaker 1: obviously the macro backdrop is pretty stressful. Meanwhile, The Times

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Speaker 1: have yet another serious challenge to resh you to the

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Speaker 1: next government's business growth plans. This time though it's actually

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Speaker 1: about farmer Yes.

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Speaker 4: So Elo Lilly, the famous US giant, is saying it

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Speaker 4: is putting plans to invest in the UK on hold,

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Speaker 4: while its complaint is there is this scheme called the

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Speaker 4: Voluntary Scheme for Branded Medicines and is effectively a cap

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Speaker 4: on raising medicine prices. One of the good things about

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Speaker 4: the US the UK's massive NHS system is that the

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Speaker 4: gives them massive bargain path for drugs. Some of the

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Speaker 4: farmer companies had been at ozward for some time, so

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Speaker 4: originally when I picked up the story, I thought, oh,

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Speaker 4: this is them complaining about that. But then the problem

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Speaker 4: with this voluntary branded medicine cap is It was an

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Speaker 4: agreement with the government and pharmaceutical companies to only raise

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Speaker 4: branded medicine prices by nominal two percent year on year,

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Speaker 4: and anything above that would have to be taken back

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Speaker 4: as a levee for the government because of the pandemic

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Speaker 4: and massive NHS backlogs. Currently these companies are handing back

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Speaker 4: twenty six point five percent of their revenue back to

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Speaker 4: the government and so this is interested Ileally. Astrosenica blamed

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Speaker 4: this tax specifically for its decision to invest three hundred

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Speaker 4: and sixty million dollars in a manufacturing civilty in Ireland,

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Speaker 4: and this now joins a chorus of business voices Astrosenica,

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Speaker 4: Nigel Wilsm, Lenggland, General Arm obviously and Ineos who are

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Speaker 4: saying that the UK's archaic practices around tax an are

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Speaker 4: holding back its competitive industry. So I gave you one

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Speaker 4: good story and now this one is very much the

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Speaker 4: opposite direction. And I will add finally there's a real

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Speaker 4: cherry on the cake. Life sciences are one of the

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Speaker 4: Chancellor's key five pillars of growth.

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Speaker 2: Okay, well, let's go to The Guardian next. James, following

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Speaker 2: up on our story yesterday about the coming wave of

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Speaker 2: mortgage refinancing.

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Speaker 4: Yes, so I was talking, yes, this even about the

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Speaker 4: coming income shock that the Barkley CEO was talking about.

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Speaker 4: That you have high inflation plus also people refinancing their mortgages. Now,

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Speaker 4: the Guardians today, after they awake of these inflation figures,

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Speaker 4: have been talking to a range of mortgage experts who

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Speaker 4: are saying you should expect these five percent plus fixed

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Speaker 4: rate deals in the coming weeks.

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Speaker 9: Now.

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Speaker 4: They wrote that in the sort of top line of

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Speaker 4: the story, but they said nationwide have already increased their

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Speaker 4: fixed and tracker rates by zero point four to five

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Speaker 4: percent from it today. So it has happened. In the

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Speaker 4: blink of an eye. You are seeing these rates go up. Now,

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Speaker 4: to give you a schense of what this means, a

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Speaker 4: house of when expiring two point nine to nine percent

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Speaker 4: deal on a one hundred and fifty pound mortgage would

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Speaker 4: have to find an extra one hundred and seventy five

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Speaker 4: pounds a month if the replacement was priced at five

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Speaker 4: point one nine percent. Now that is just for the mortgage.

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Speaker 4: That doesn't even count to the fact that then food

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Speaker 4: price increases are nearly twenty percent as well. So this

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Speaker 4: really sets out the sort of the dangers that are

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Speaker 4: coming down A shot for the sort.

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

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