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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg DAYBA, a podcast available every morning

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Speaker 2: on Apple, Spotify or wherever you listen. It's Tuesday, the

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Speaker 2: thirtieth of April in London.

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Speaker 3: I'm Caroline Hipki and I'm Stephen Carroll. Coming up today.

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Speaker 4: Noel Quinn says he will retire as the CEO of

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Speaker 4: HSBC as the bank announces a multi billion dollar buy back.

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Speaker 2: The US Treasury says it plans to borrow almost a

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Speaker 2: quarter of a trillion dollars by June.

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Speaker 4: And Risky Business two sock Gen traders leave the bank

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Speaker 4: after making undetected bets that could have cost the lender

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Speaker 4: hundreds of millions of dollars.

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Speaker 5: Let's start with a roundup of our top stories.

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Speaker 4: Noel Quinn is stepping down as the boss of HSBC

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Speaker 4: after nearly five years in the role. Quinn now says

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Speaker 4: he plans to pursue a portfolio career, but we'll stay

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Speaker 4: on in the CEO job until a success has found.

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Speaker 4: The board says it's looking both internally and externally for

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Speaker 4: his replacement.

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Speaker 3: The surprise announcement was.

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Speaker 4: Made as HSBC reported a pre tax profit of twelve

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Speaker 4: point sixty five billion dollars, slightly beating estimates. That lender

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Speaker 4: also announced a share buy back of up to three

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Speaker 4: billion dollars, with guidance for the full year unchanged.

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Speaker 2: And in other earnings news, Santander has reported results in

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Speaker 2: the first quarter that fell slightly short of estimates. NETT

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Speaker 2: income at the Spanish lender came in at two point

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Speaker 2: eight five billion euros, just down on the two point

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Speaker 2: eight nine billion that analysts had expected. The bank also

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Speaker 2: reported loan loss provisions slightly below expectations, at three point

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Speaker 2: one to three billion euros.

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Speaker 4: The US Treasury has bumped up its federal borrowing estimate

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Speaker 4: for this quarter by twenty percent to two hundred and

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Speaker 4: forty three billion dollars. The upward move surprise dealers after

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Speaker 4: some had expected a downward revision. It comes as the

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Speaker 4: IMF warned last week the US government spending is on

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Speaker 4: an unsustainable path. Speaking to Bloomberg at the time, Deputy

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Speaker 4: Managing director Gita Gopinath warned that a seven percent deficit

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Speaker 4: can't be sustained.

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Speaker 5: When the US is borrowing that heavily. That causes rays

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Speaker 5: to be that much higher.

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Speaker 6: It has implications for the rest of the world and

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Speaker 6: for corporations and households.

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Speaker 5: In the US.

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Speaker 4: Copperhat's concern is reflected by Wall Street figures like Jamie

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Speaker 4: Diamond and Ken Griffin, who have called the current level

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Speaker 4: of borrowing irresponsible. The Treasury will set out how it

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Speaker 4: plans to raise that money tomorrow.

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Speaker 6: Now.

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Speaker 2: Two traders in Hong Kong have left Sussages General after

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Speaker 2: the bank discovered a batch of risky bets. The incident

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Speaker 2: has raised questions about risk management at one of Europe's

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Speaker 2: biggest banks. Bloomberg's team and a Bio has more.

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Speaker 7: Their transactions could have cost the firm hundreds of millions

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Speaker 7: of dollars in the event of a market downturn, but

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Speaker 7: a slew of risky trades from a couple of employees

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Speaker 7: on Society General's Delta one desk still went undetected. Also

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Speaker 7: say internal risk management systems failed to register the activity

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Speaker 7: because of a glitch related to their timing. This latest

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Speaker 7: slip up at Sociuta General comes more than fifteen years

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Speaker 7: after Jerome Cavil, another Delta one trader, cost the firm

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Speaker 7: five point two billion dollars in London. Tewa Adubai, Blomberg.

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Speaker 4: Radio Scotland's First Minister, Humsey Yusuf, has resigned, leaving the

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Speaker 4: Scottish National Party leaderless months away from a general election.

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Speaker 4: The head of the UK's third largest political party gave

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Speaker 4: a tearful press conference.

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Speaker 8: I'm so blessed for having the opportunity that are afforded

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Speaker 8: to sour Fe to lead my country and who could

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Speaker 8: ask for a better country to lead than Scotland.

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Speaker 4: The fallout from use OF's resignation is likely to benefit

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Speaker 4: the Labor Party. Earlier this month, care Starmer's party narrowly

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Speaker 4: overtook the SMP in Scotland's polls for the first time

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Speaker 4: since the failed Scottish independence referendum a decade ago.

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Speaker 2: Factory activity expanded in eight Pril first second month. Bloomberg's

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Speaker 2: Brian Curtis has more from Hong Kong.

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Speaker 6: The official PMI was fifty point four compared with an

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Speaker 6: estimate of fifty point three. Two positive months in a

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Speaker 6: row isn't all that much, but it is the longest

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Speaker 6: streak in more than a year, and it might suggest

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Speaker 6: sustained recovery. Policy Makers are leaning on manufacturing to offset

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Speaker 6: weak consumption. Analysts say more public spending and a cut

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Speaker 6: in interest rates will likely be needed if China wants

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Speaker 6: to hit its growth target of five percent. Meantime, that's

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Speaker 6: Haishien manufacturing PMI coming in at fifty one point four

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Speaker 6: the non manufacturing reading fifty one point two in Hong Kong.

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Speaker 6: Brian Curtis Bloomberg.

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Speaker 4: Radio Elon Musk's net worth is soaring after it plunged

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Speaker 4: to the lowest level in a year. The entrepreneur added

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Speaker 4: eighteen and a half billion dollars to his fourteen in

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Speaker 4: one day, according to Bloomberg's Billionaires Index. That's after Tesla

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Speaker 4: shares rallied following tentative approval for its driver assistance system

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Speaker 4: in China and the unveiling of plans to introduce a

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Speaker 4: cheaper car as soon as this year. Bloomberg's Charlie Palette has.

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Speaker 9: More In the past five days, the world's third richest person,

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Speaker 9: who's gained thirty seven point three billion dollars in net

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Speaker 9: worth according to the Bloomberg Billionaires Index. That's his largest

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Speaker 9: weekly gain since March of twenty twenty two, just before

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Speaker 9: he agreed to buy Twitter for forty four billion dollars

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Speaker 9: in one of the biggest leverage buyout deals in history.

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Speaker 9: Since then, his fortune has tumbled just as often as

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Speaker 9: it has increased. After a breathtaking ascent in twenty twenty

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Speaker 9: and twenty twenty one in New York, Charlie Pellett Bloomberg Radio.

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Speaker 4: If that's some numbers out from the German airline of

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Speaker 4: Tanza as well, announcing that it will initiate a cost

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Speaker 4: cutting drive at the airline business, which will include freezing

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Speaker 4: projects and it'll also review hiring in some areas. This

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Speaker 4: is after the carrier was forced to pair back its

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Speaker 4: earning's outlook for the rest of the year because of

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Speaker 4: persistent strikes in Germany. So this is due to it's

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Speaker 4: looking at its fullier adjusted EBITDAB at two point two

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Speaker 4: billion euros, that slightly below the estimates. Earlier this month,

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Speaker 4: the airline had cut its annual profit outlook and predicted

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Speaker 4: that its annual profit would fall as the German airline

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Speaker 4: absorbs the financial hit from those strikes.

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Speaker 2: Okay, so those are the latest earnings you need to

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Speaker 2: know about. In a moment, We're going to get more

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Speaker 2: then on the news from HSBC, plus a look at

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Speaker 2: the US public finances with the issue around the treasury

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Speaker 2: and how much more money.

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Speaker 5: It's going to need to raise.

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Speaker 2: But also this story from our colleagues this morning on

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Speaker 2: the Bloomberg terminal, writing about how an increase in the

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Speaker 2: share of equity trading that is happening just in the

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Speaker 2: very last few minutes of the trading day and what

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Speaker 2: that means.

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Speaker 4: Yeah, look, Justina Lie's been writing about this and she

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Speaker 4: talks about how those three hundred and ninety minutes of

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Speaker 4: equity trading, but really only the last ten minutes seems

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Speaker 4: to be what counts. And it's not just in the US.

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Speaker 4: This is increasingly the case in Europe as well. In fact,

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Speaker 4: twenty eight percent of volumes in European equity trading now

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Speaker 4: happens in the closing auction period, and the S and

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Speaker 4: P five hundred it's around a third of training that

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Speaker 4: happens in those last ten minutes. This is data fro

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Speaker 4: Bloomberg Intelligence, but also from the analytics firm big x YT.

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Speaker 3: So the problem here.

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Speaker 4: If you listen to some arguing in the market, is

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Speaker 4: that it's necessarily passive investing causing more problems. You know,

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Speaker 4: these index funds driving the phenomenon because they buy and

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Speaker 4: sell shares at the close. Since the last prices of

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Speaker 4: the day are used to set the benchmarks that they

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Speaker 4: aim to replicate as well.

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Speaker 3: It's you know, this is part of the ongoing argument

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Speaker 3: passive investing.

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Speaker 5: Yeah, but you get it.

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Speaker 2: But if there are no active managers kind of making

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Speaker 2: the decisions on on and examining closely individual businesses, you know,

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Speaker 2: that's the argument at least that perhaps passive investors are

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Speaker 2: looking at the index as a whole and not stock picking.

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Speaker 4: Yeah, we'll get the full picture in both sides of

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Speaker 4: that argument from just in a las piece this morning

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Speaker 4: on that rush to trade at the end of the day.

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Speaker 4: Let's dig into the earning some HSBC now in the

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Speaker 4: needs that the bank CEO Nol Quinn is to retire

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Speaker 4: at Charlie Wells is here with details.

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Speaker 3: Morning to you. Charlie. Is this big surprise then, that

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Speaker 3: Noil Quinn is leaving.

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Speaker 10: Steven This is a huge surprise and it injects a

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Speaker 10: lot of drama into what was expected to be a

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Speaker 10: fairly regular earning season. I mean HSBC has actually been

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Speaker 10: performing fairly well over the past few quarters, and so

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Speaker 10: the question is, you know why this departure and Quinn,

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Speaker 10: you know, was always a sort of unusual, not unusual,

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Speaker 10: but maybe not cut from the cookie cutter mold of

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Speaker 10: a lot of the other leadership at HSBC. His first

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Speaker 10: job was actually digging ditches on a digging holes on

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Speaker 10: a building site, and actually joined at a small bank

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Speaker 10: that was ultimately acquired by HSBC in nineteen ninety two.

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Speaker 10: So really interesting career and drama sort of encapsulated his tenure.

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Speaker 10: You know, he really took over officially in twenty twenty

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Speaker 10: March of twenty twenty, that was the height of the

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Speaker 10: COVID crisis. He really oversaw this bank amidst rising tensions

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Speaker 10: between China and the West, China and Hong Kong. And

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Speaker 10: so he says that he'd like to go on to

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Speaker 10: build a quote portfolio career. Sounds like he wants to

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Speaker 10: maybe focus on some passion projects. Let's see, But the

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Speaker 10: bank is conducting a search and we know that they're

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Speaker 10: looking at both external and internal candidates.

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Speaker 2: Okay, the bank in and of itself also releasing results

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Speaker 2: and another major buyback three billion dollars assign then of

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Speaker 2: the continued sort of bounty of all the higher interest

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Speaker 2: rates that we've seen.

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Speaker 10: Yeah, so you know, HSBC is a bank that is

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Speaker 10: particularly sensitive to interest rates, and so the hope for

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Speaker 10: a lot of analysts had been that maybe we would

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Speaker 10: see some progress for HSBC and trying to move into

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Speaker 10: other business lines. And look, the lines that we're getting

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Speaker 10: out of the earnings are positive. So we're seeing pre

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Speaker 10: tax profit slightly beating estimates. We saw net interest income

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Speaker 10: I'm excuse me, net interest margin meeting beating estimates. And

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Speaker 10: some of the initial analysis that we're getting from HSBC

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Speaker 10: is that there's been a positive story on wealth management.

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Speaker 10: I think another becus will be on transaction banking as

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Speaker 10: we try to see if this bank can diversify away.

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Speaker 10: But one thing that's a little bit disappointing that's coming

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Speaker 10: across is forward guidance for the years looking like it's

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Speaker 10: remaining the same from February. There'd been hope that in

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Speaker 10: a world where interest rates might be staying higher for longer,

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Speaker 10: the bank would have kind of revised that up, but

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Speaker 10: it's looking like it's staying the same at least for now.

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Speaker 9: Yeah.

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Speaker 4: I mean, we're looking at the first share PARTSIS reaction

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Speaker 4: in Hong Kong after shares reopening after the break there

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Speaker 4: up by one point four percent, So interesting to see

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Speaker 4: how investors are parsing the headlines coming out of here,

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Speaker 4: because on one hand we have this change of leadership

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Speaker 4: and the other hand we have they share buy back

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Speaker 4: and the finances. Anything else standing out to you from

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Speaker 4: their earnings report, Charlie.

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Speaker 10: Yeah, you know, I think it really will just be

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Speaker 10: we're seeing that consumer accounts decreased, but you know with

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Speaker 10: the fourth compared to the fourth quarter of twenty twenty three,

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Speaker 10: so that's striking. And I think what's really interesting for

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Speaker 10: this bank is just this kind of pivot towards Asia,

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Speaker 10: and that's something that Quinn, who has announced his retirement today,

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Speaker 10: really focused on. He focused on simplifying the bank on

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Speaker 10: that pivot to Asia and selling a lot of assets

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Speaker 10: in the West. We'll have to see how that comes

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Speaker 10: comes down the line. But the buyback, I think could

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Speaker 10: let's see how that plays out. And shared trading.

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Speaker 2: Okay, very interesting, Johnny, Thank you so much for the

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Speaker 2: reaction and digging into the latest results from HSBC Boomberg's

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Speaker 2: Charlie wells Now, the.

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Speaker 4: US Treasury will need to borrow more money in the

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Speaker 4: current quarter. It's increased its financing needs by forty one

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Speaker 4: billion dollars for the period until June. This as the

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Speaker 4: US deficitis in focus ahead of November's election. Bomber TV

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Speaker 4: anchor Critty Group does with us for more on this story, Creaty,

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Speaker 4: just take us through what has the Treasury said about

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Speaker 4: its financing needs.

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Speaker 1: So it looks like they've ramped up their estimate for

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Speaker 1: federal borrowing to about two hundred and forty three billion dollars.

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Speaker 1: That is a forty one billion dollar excess than the

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Speaker 1: estimates that you had on Wall Street, even within economists

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Speaker 1: within the Treasury as well net net. What you need

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Speaker 1: to know here is that this number came in a

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Speaker 1: little bit hot, but in the broader scheme of things,

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Speaker 1: it's not that hot. So there's been a little bit

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Speaker 1: of kind of mixed messaging around what this actually means

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Speaker 1: in terms of borrowing.

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Speaker 5: There's obviously a lot.

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Speaker 1: Of sensitivity around it, given some of the deficit issues,

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Speaker 1: some of the debt issues. But again, forty one billion dollars,

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Speaker 1: which is a lot for you and I, but for

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Speaker 1: not perhaps not a lot of US government but others.

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Speaker 2: An analyst, you know, talking about it being a rounding era.

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Speaker 2: I mean, that's the flip side of it. What was

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Speaker 2: it tell us though about the state of the US's

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Speaker 2: public finances. Is it actually a cause for market concern?

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Speaker 2: I mean, it's not the same, but obviously if occasionally

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Speaker 2: once heard, you know, a Liz Trust type moment for

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Speaker 2: the US's possibility.

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Speaker 5: I mean, it's a big, big statement.

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Speaker 1: It's a big statement, but not out of the realm

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Speaker 1: of possibility. And I think one of the key things

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Speaker 1: to remember about this number is that this is coming

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Speaker 1: in the context of a buyback announcement that you're going

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Speaker 1: to get later this week as well. So one of

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Speaker 1: the big concerns here is a little bit for the

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Speaker 1: markets at least, less about the actual bottom line of

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Speaker 1: the US Treasury and more about kind of the liquidity

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Speaker 1: circumstances of the US bond market. And that's where this

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Speaker 1: number gets a little bit tricky, because ahead of the

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Speaker 1: FMC decision on Wednesday, you're also going to get that

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Speaker 1: buy back announcement, and right now, based on justice forty

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Speaker 1: one billion dollar excess, there doesn't seem to be a

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Speaker 1: big question about whether the kind of quarterly refunding announcements

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Speaker 1: that you're going to get later on or the even

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Speaker 1: buyback announcements from the Treasury, which we're put in place

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Speaker 1: last year to ensure that market liquidity. Those numbers aren't

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Speaker 1: changing just yet, and no one really expects them to,

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Speaker 1: and those are kind of the bigger ones to watch.

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Speaker 1: The doomsday scenario simply being that if you start to

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Speaker 1: see liquidity cracks the way we did in the middle

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Speaker 1: of last year, even the fall of last year, that

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Speaker 1: would be a bigger kind of hit to not just

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Speaker 1: the US bond market, but global bond markets and by extension,

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Speaker 1: central banks and economies. Then simply just this one for

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Speaker 1: one billion dollars, but that doesn't mean that there isn't

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Speaker 1: enough sensitivity to it. You did see the markets react

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Speaker 1: on what ordinarily a number they ordinarily would not react to.

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Speaker 4: Well, throw it ahead to the what we're going to

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Speaker 4: be hearing from the FAD then for US critty, we

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Speaker 4: you know, are watching obviously to see what the runoff

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Speaker 4: of treasury holdings is from the FAD as.

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Speaker 3: Well we are.

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Speaker 1: And this is all all about kind of the QT

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Speaker 1: policy and right now that hasn't really changed in terms

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Speaker 1: of the selling. They don't actually sell bonds obviously, they

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Speaker 1: kind of let them just roll off their balance sheet

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Speaker 1: and don't engage in buying new ones. This is why

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Speaker 1: the Treasury is so important here because in a way,

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Speaker 1: because the Fed is rolling off these securities in their

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Speaker 1: balance sheet, they're adding more supply onto their market, and

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Speaker 1: they're not introducing kind of this buyer of last resort

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Speaker 1: the treasury market is they're actually recycling some of their

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Speaker 1: They're kind of getting rid of the older maturities bringing

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Speaker 1: on the newer ones. So that mechanism that a lot

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Speaker 1: of people saw as kind of the QI element to

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Speaker 1: the Fed is actually not coming from the Treasury. And

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Speaker 1: that's why the Treasury, I would argue, matters a little

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Speaker 1: bit more, especially ahead of by the way, not just

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Speaker 1: the Federal Reserve, but the election January twenty twenty five,

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Speaker 1: that's the deadline when we have these debt ceiling talks

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Speaker 1: hit us once again.

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