Speaker 1: This is Bloomberg Daybake here for this Monday, the sixth
Speaker 1: of March in London. Coming up today, growing pains, China's
Speaker 1: five percent growth target offers little relief for the global economy.
Speaker 1: There is a question about the future of the franchise,
Speaker 1: the parting words of Paris Associates CIO, as they reportedly
Speaker 1: sell their entire credit suite stake making ends meet. The
Speaker 1: Chancellor looks to cap energy prices and freeze fuel duty
Speaker 1: in next week's budget, showing out elsewhere, burning through billions,
Speaker 1: and a twenty four million dollar question for CEOs. Those
Speaker 1: are the stories we're looking at in today's papers. I'm
Speaker 1: James Walcock Plus. Is London at risk of losing it's luster?
Speaker 1: Brexit blues hit the capital's investment appeal. That's all straight
Speaker 1: ahead on Bloomberg Daybreak Europe. The Business Views you need
Speaker 1: to start your day in just one fifteen minute podcast
Speaker 1: on Apples, Spotify, the Bloomberg Business app and everywhere you
Speaker 1: get your podcasts. Good morning. I'm Lizzie Burden and I'm
Speaker 1: Caroline Hike. Here are the stories that we're following today.
Speaker 1: China has set its economic growth target for the year
Speaker 1: at a round five percent. The goal was announced during
Speaker 1: the National People's Congress that began on Sunday. Bloomberg's China
Speaker 1: Economy of editor Jill Disis says it's a conservative target.
Speaker 1: They want to be able to hit their target. I think,
Speaker 1: you know, somewhere around five percent gives a Beijing quite
Speaker 1: a lot of room to work with. But they also
Speaker 1: want to They don't want to overstimulate the economy. They
Speaker 1: kind of want to keep things on track, and ultimately,
Speaker 1: I think what Beijing is looking for this year is
Speaker 1: economic growth that's really going to be driven by a
Speaker 1: rebound in demand. We'll be getting more of Jill's thoughts
Speaker 1: in just a few minutes time. Economists had expected a
Speaker 1: more ambitious target of above five percent in the wake
Speaker 1: of rebounding consumer spending. Premier Leka Chang also said the
Speaker 1: government will work to prevent what it calls the unregulated
Speaker 1: expand of the property market. Now, Harris Associates has reportedly
Speaker 1: sold its entire Staking Credit suiss, ending a decades long relationship.
Speaker 1: The investment firms. CIO David Hero told The Financial Times
Speaker 1: that quote, there is a question about the future of
Speaker 1: the franchise. Those comments follow an interview with hero In
Speaker 1: that Bloomberg did last August, in which he had this
Speaker 1: warning for the Swiss Lander, but you can't keep doing
Speaker 1: the same thing as they've been doing over the last
Speaker 1: decade and get zero results. They have to put an
Speaker 1: end to it. At some point. They either have to
Speaker 1: fix it or to look for other options. That was
Speaker 1: Harris associates CIO David hero speaking to Bloomberg's Fancy and
Speaker 1: Laqua last August. Harris was the biggest shareholding Credit Suiss
Speaker 1: for many years and halved it's ten percent holding towards
Speaker 1: the end of twenty twenty two to five percent. San
Speaker 1: Francisco FED President Mary Daily says rates need to head
Speaker 1: higher and stay there for longer. In a speech Atton
Speaker 1: University on Saturday, she had this to say. It's clear
Speaker 1: there is more work to do in order to put
Speaker 1: this episode of inflation high inflation behind us. Further policy
Speaker 1: tightening maintained for a longer period will likely be necessary.
Speaker 1: Well Daily doesn't vote on policy this year, she is
Speaker 1: part of the fomc's meetings and Discussions. Federal Reserve chair
Speaker 1: During poll heads to Capitol Hill this week, where he's
Speaker 1: expected to echo her view that more hikes are needed now.
Speaker 1: With just over a week to go to the UK budget,
Speaker 1: the chance of Jeremy Hunt faces a range of competing pressures,
Speaker 1: but economic think tanks have warned that there's very little
Speaker 1: headroom for permanent giveaways. Bloomberg Samuel Etienne reports strikes, the
Speaker 1: cost of living crisis and a dangerously tight labor market
Speaker 1: all calling for physical support. There are no easy answers
Speaker 1: for a cast strapped chancellor. Although UK borrowing is running
Speaker 1: well below official forecasts, a Resolution Foundation and IFS are
Speaker 1: warning the government not to consider policies like fuel duty
Speaker 1: or a drop in corporation tax. One think tank estimates
Speaker 1: a state will need five billion pounds just to top
Speaker 1: up public set to wages by two percent this year.
Speaker 1: In London Samuelettian, Bloomberg, Daybreak, Europe SoftBank's arm is seeking
Speaker 1: to raise at least eight billion dollars in a US
Speaker 1: initial public offering. According to Reuters, the British chip designers
Speaker 1: expected to confidentially submit paperwork for its IPO in late April.
Speaker 1: Companies have been choosing to list outside the UK as
Speaker 1: higher liquidity, larger access to capital, and better sentiment all
Speaker 1: prove more attractive than going to London Stock Exchange. Okay,
Speaker 1: those are a few of our top stories for you
Speaker 1: this morning. So we've got the budget that comes up
Speaker 1: next week. We also have the routers reporting around ARM
Speaker 1: eight billion dollars expected to be raised by soft Bank.
Speaker 1: But ARM is not going to list in London obviously,
Speaker 1: is going to list in the United States. I think
Speaker 1: that is a key blow. And there's a big piece
Speaker 1: kind of science and technology and innovation that is supposedly
Speaker 1: going to be part of the budget next week. Yeah,
Speaker 1: the aims to make Britain as science superpower by the
Speaker 1: end of the decade. It's Caroline. I think it might
Speaker 1: be a case of closing the stable door after the
Speaker 1: horse has bolted. You've seen armscrh. But maybe I'm being
Speaker 1: a little too gloomy here. Yeah. Absolutely, I think that
Speaker 1: you can't and shouldn't count London out. But having said that,
Speaker 1: it won't be very viassuring that. Also on the terminal
Speaker 1: of this morning, City is planning a new trading floor,
Speaker 1: not in London but in Paris, doubling the number of
Speaker 1: traders that they have in Paris. Yes, they've said London
Speaker 1: is still the main hub, but apparently they're going to build, Yeah,
Speaker 1: a much bigger office. And also I thought this was
Speaker 1: quite interesting. It's not going to be the ros and
Speaker 1: rows of trader desks. It's going to be pods, circular desks. Oh,
Speaker 1: the post pandemic world, Caroline, Well, it'll be interesting to
Speaker 1: see whether that development comes up in the discussions between
Speaker 1: Emmanuel Macon and Richie Sunac when the British Prime Minister
Speaker 1: heads across the channel for discussion as later this week
Speaker 1: on Friday, can they reset relations with this windsor framework
Speaker 1: in the bag? Oh, this is this Franco British summit
Speaker 1: that is taking place. I hope you're going to be
Speaker 1: there on the ground. I have the playing that you
Speaker 1: might be okay up next shelling out elsewhere, burning through
Speaker 1: billions at a twenty four million dollar question for CEOs.
Speaker 1: Now The Paper review on blue Bird day Break Europe.
Speaker 1: The news you need to know from today's papers. Well, Carolina,
Speaker 1: as I say, fresh from what looked like a pretty
Speaker 1: good week for Rishie Sonak, he's planning to continue diplomacy
Speaker 1: pushes with France's President Emmanuel mccron later this week. The Guardian,
Speaker 1: The Times and The Mail all lead on the proposed
Speaker 1: small boats changes that might come from that meeting, and
Speaker 1: James Wolcock joins us in the studio Bright and Early
Speaker 1: for a deeper look into some of the business stories
Speaker 1: in the news today. James, let's start off by talking
Speaker 1: about the interview in The Times with Shell's CEO. Yes, Lizzie,
Speaker 1: I mean I want to put an application for a
Speaker 1: pod where they go away. But Shell, it's the UK's
Speaker 1: largest company, which made a record forty billion dollars last year,
Speaker 1: so it's all the more worrying that their new boss
Speaker 1: wealth to one that said Britain is less attractive and
Speaker 1: investment destination for both the US and Europe because the
Speaker 1: UK is failing to match them on his green energy subsidies. Now.
Speaker 1: So this is fascinating because the UK is always stressed.
Speaker 1: By leaving the EU, it could have be standing on
Speaker 1: its own two feet, yet now it finds itself caught
Speaker 1: between two juggernauts, the US on one side with three
Speaker 1: hundred and seventy billion dollars incentives and the EU on
Speaker 1: the other side saying they will match any incentives that
Speaker 1: go to companies that aren't European. The UK and the
Speaker 1: middle is sort of pushing for this free market ideology.
Speaker 1: Grant Chaps in Davos called it dangerous. That's the UK
Speaker 1: Business Secretary. But so the question now is that is
Speaker 1: an ideological problem. Can they economically back it up? The
Speaker 1: other thing I find fascinating here, it's worth pointing out
Speaker 1: this is a large, multi billion dollars oil company that's
Speaker 1: talking about going green and is pushing to try and
Speaker 1: carbon neutralize, and its big push to try and be
Speaker 1: at the four front of the green transition. The big
Speaker 1: fear the Shell is saying is they would like to
Speaker 1: invest in the UK, but if there's no money there,
Speaker 1: they will get left behind. And the one thing I
Speaker 1: want to sort of tease out here is that so
Speaker 1: one said that the energy profits levy, the windfall tax
Speaker 1: to your government is putting on profits, is disincentivizing investment.
Speaker 1: Now that is completely different to what the previous CEO,
Speaker 1: Bernard Looney says. So it's not all sort of you know,
Speaker 1: black and white here. There is some layers of gray
Speaker 1: mixed into. Okay, the ft are talking about a US
Speaker 1: tech cash crunch. M Now, what is fascinating. Obviously we've
Speaker 1: been talking about arm Carolina, but it's not all sort
Speaker 1: of golden sunsets and uppitlets sort of valleys up over
Speaker 1: in the US. There is a big trap here that
Speaker 1: the ft are reporting on. And the way it goes
Speaker 1: is you go to the US, you look for a
Speaker 1: higher evaluation, you get it, and then you get a
Speaker 1: load of cash and a lot of these sort of
Speaker 1: big tech companies then burned through that cash and the
Speaker 1: ft have run through the company's filings of the ninety
Speaker 1: one companies that have reported last year and they burned
Speaker 1: through twelve billion dollars. And the trap is now interest
Speaker 1: rates are up. If you need a lot more cash
Speaker 1: because you're still a developing company, how do you get it?
Speaker 1: And you could be caught into extreme cost cutting. You
Speaker 1: could be snapped up by private equity, or you could
Speaker 1: take out a pricey loan. One of their sort of
Speaker 1: global auditors they spoke to you for the piece, summed
Speaker 1: it up very well. Often when you were private, these
Speaker 1: kind of things would be sort of behind closed doors
Speaker 1: and could be done quite sort of gently. Now they're
Speaker 1: having to face public markets when maybe their products wouldn't
Speaker 1: be quite as ready as if they were, say an
Speaker 1: emerging company to three decades ago. And finally, James the
Speaker 1: Wall Street Journal has an interesting story about changes to
Speaker 1: the way we talk about CEO pay. So normally, Lizzie,
Speaker 1: when we talk to CEO pay, you get a snapshot,
Speaker 1: you get here's their current salary and maybe here's a bonus.
Speaker 1: But a lot of this is now being tied up
Speaker 1: in stocks and shares. That's how a lot of them
Speaker 1: make their money. And so the SEC, the US regulator,
Speaker 1: has said, actually, we would like to see your compensation
Speaker 1: actually paid, and you're calculating how much you're going to
Speaker 1: get back in stocks and shares. Now, for Olivier the Push,
Speaker 1: who is the CEO of the oil field services company Slumberge,
Speaker 1: that is a twenty four million dollar difference. He has
Speaker 1: paid a lot more when you take into account the
Speaker 1: booming oil stocks. And if you go the other way,
Speaker 1: the fastened out new equity awards for their CEO downiel
Speaker 1: floor and is he lost nearly half his value because
Speaker 1: of their tanking shares. So it's an interesting new way
Speaker 1: that the SEC is sort of looking to calculate these things.
Speaker 1: It's often been used by private ants for a very
Speaker 1: long time, but it's intertantly how traders might react to
Speaker 1: sort of having that big number in bold next to
Speaker 1: the company's results. Yeah, I mean, I think the idea
Speaker 1: has always been that it takes a long time, you know,
Speaker 1: depending on when those stocks and shares you know where, Yeah,
Speaker 1: when you take them effectively over time, how much they're
Speaker 1: actually worth in reality. So yeah, I think that's quite
Speaker 1: fascinating that there might be a big red number attached
Speaker 1: to these CEOs. Thank you so much, James Orcott there
Speaker 1: with a look at the newspapers are really a very
Speaker 1: interesting round up. Let's also turn our attention though to
Speaker 1: what happened over the weekend. China has set an annual
Speaker 1: growth target of around five percent, rather than above that level.
Speaker 1: The national budget was released on Sunday, suggests that fiscal
Speaker 1: support will be restrained. Joining us now Aisboomberg's China Economy
Speaker 1: editor Jill Dices, Jill, good morning, Thank you so much
Speaker 1: for being with us. The key takeaways them from China's NPC,
Speaker 1: these sort of political in quotes gathering over the weekend. Yes, um, well,
Speaker 1: you know we'll start with the growth target and I'll
Speaker 1: also just remind you that it's the NPC is going
Speaker 1: to continue through this week where I think we're going
Speaker 1: to see a lot more changes, including you know, maybe
Speaker 1: some big shakeups at the high political you know, executive
Speaker 1: levels where she's probably going to president. She is probably
Speaker 1: going to consolidate as power more and sell some more allies.
Speaker 1: But what we've seen already is that that growth target
Speaker 1: that you mentioned in quite conservative, probably signaling that there's
Speaker 1: not going to be a ton of stimulus coming out
Speaker 1: of China this year, and we're seeing that kind of
Speaker 1: reflected into commodity markets. Right. It's doesn't seem like China
Speaker 1: is prepared toduce growth through you know, real estate, infrastructure,
Speaker 1: those kinds of things, and instead it is probably going
Speaker 1: to rely more on this consumer driven recovery that's already underway.
Speaker 1: So what we've seen out of some data, especially in February,
Speaker 1: is that spending is really picking up now that they've
Speaker 1: dropped all those COVID controls. COVID zero's gone. People are
Speaker 1: you know, finally able to leave their houses and spend
Speaker 1: more money again. Um. And it seems like that's probably
Speaker 1: where China is gonna, you know, hope that that growth
Speaker 1: picks up. So yeah, I think probably a bit disappointing,
Speaker 1: um that this this target wasn't more aggressive, um. But
Speaker 1: that does kind of indicate that uh, um, you know,
Speaker 1: it's it's it's we're going to be better than last year,
Speaker 1: but not is uh you know, not extremely strong. But Jill,
Speaker 1: they missed the target last year. So I wonder how
Speaker 1: much of a case of under promising and over delivering
Speaker 1: this is trying to restore Beijing's credibility and also how
Speaker 1: much the hangover effect will be for international investors who
Speaker 1: are hoping to be boosted by Chinese recovery. Oh yes,
Speaker 1: I mean absolutely this is on the minds of everybody
Speaker 1: in Beijing. Like Beijing does not like missing their targets whatsoever.
Speaker 1: Last year, as you mentioned, it was a pretty big
Speaker 1: miss um. So I guess what this target does do
Speaker 1: is it gives them more flexibility. I mean, if you
Speaker 1: say around five percent, um. You know, China also does
Speaker 1: that thing a lot of the time where it's like, oh,
Speaker 1: like we'll give you a range of where we want to, um,
Speaker 1: you know, how we want growth to perform, all that
Speaker 1: kind of stuff. And I think that, um, this at
Speaker 1: least shows that if you know, the economy does grow
Speaker 1: by five point five percent this year, maybe even you know,
Speaker 1: six percent of things really really pick up, then you know,
Speaker 1: they'll they'll certainly um uh you know, they'll certainly match that.
Speaker 1: But yeah, I think that ultimately it's it's it's just
Speaker 1: kind of shows that maybe, UM, China is also probably
Speaker 1: a bit worried about what those international risks are looking like.
Speaker 1: I mean, you know, as growth kind of drops off elsewhere,
Speaker 1: is demand is waning in places like the US and Europe. Um,
Speaker 1: you know, exports uh, major major contributor to the Chinese
Speaker 1: economy is probably not going to do um, you know,
Speaker 1: it's probably gonna underperform this year. UM. These officials are
Speaker 1: looking out for those kinds of effects too, UM. And
Speaker 1: I think that that's probably presenting some some risks that
Speaker 1: they're concerned about as well. He also did mention the
Speaker 1: shake up that could come in terms of those top
Speaker 1: roles under she the regulatory overhang. Those also quite crucial.
Speaker 1: Is she's sort of industry by industry crackdown. Actually overall
Speaker 1: does that continue? Yeah, we'll see. I think we've been
Speaker 1: getting some conflicting ideas about what exactly that's going to
Speaker 1: look like. UM. Now premiere La Kishang. He gave his
Speaker 1: final address as a premiere yesterday, talking about the GDP
Speaker 1: targets and the government work report, and he kind of
Speaker 1: you know, suggested that you know, they're going to be
Speaker 1: regulating real estate for example, Um, they don't want to.
Speaker 1: They want to prevent like unregulated expansion of the market. Um.
Speaker 1: But ultimately, you know, was saying that they wanted to
Speaker 1: boost market expectations and confidence for private businesses for example,
Speaker 1: which I think investors have traditionally taken at least over
Speaker 1: the past couple of years as a sign that oh,
Speaker 1: maybe they're maybe they're easing off the crackdown. But at
Speaker 1: the same time, I think back to last week when
Speaker 1: President she was talking about, you know, um, wanting to
Speaker 1: roll up plans for deepening structural reform and you know,
Speaker 1: tightening things for the financial sector and you know, exercising
Speaker 1: more control over technology and stuff. So it does seem
Speaker 1: like there is some element of that regulatory overhang that's
Speaker 1: still existing there. So I don't know that we're done
Speaker 1: with that quite yet, but it does seem that at
Speaker 1: least the government understands that they need to strike some
Speaker 1: kind of a balance between you know, boosting that confidence
Speaker 1: that the market house and them. But then also what
Speaker 1: are they whatever they're doing with the regulatory sector. This
Speaker 1: is Bloomberg Daybreak Europe, your morning brief on the stories
Speaker 1: making news from London to Wall Street and beyond. Look
Speaker 1: for us on your podcast feed every morning, on Apples, Spotify,
Speaker 1: and anywhere else you get your podcasts. You can also
Speaker 1: listen live each morning on London Dab Radio, the Bloomberg
Speaker 1: Business app, and Bloomberg dot Com. Our flagship New York
Speaker 1: station is also available on your Amazon Alexa devices. Just
Speaker 1: say Alexa play Bloomberg eleven thirty. I'm Caroline Hitka and
Speaker 1: I'm Lizzie Burden. Join us again tomorrow morning for all
Speaker 1: the news you need to start your day right here
Speaker 1: on Bloomberg Daybreak Europe