WEBVTT - UPDATE: UK Inflation Stays In Double Digits at 10.1%

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<v Speaker 1>This is Bloomberg Daybreak you up for this Wednesday, the

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<v Speaker 1>nineteenth of April in London.

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<v Speaker 2>Coming up today, a double digit headache for the Bank

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<v Speaker 2>of England. The UK's inflation rates stays red hot at

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<v Speaker 2>ten point one percent.

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<v Speaker 1>Seven hundred and eighty seven million dollars. Fox settles with

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<v Speaker 1>Dominion over bogus claims that it rigged the twenty twenty

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<v Speaker 1>presidential electure.

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<v Speaker 2>All that glitters isn't Goldman the banks, traders miss out

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<v Speaker 2>on Wall Streets, fixed income boom.

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<v Speaker 3>Top investor details, planters split, HSBC, coinbase plots, a UK

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<v Speaker 3>move and central London house prices take a big hit.

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<v Speaker 3>Those of the stories we're looking at in today's papers.

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<v Speaker 3>And I'm Leanne Gerns.

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<v Speaker 4>Plus we're live at the Bloomberg New Economy Gatesway Europe

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<v Speaker 4>in Ireland, where the ECB's Philip Blane has told us

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<v Speaker 4>he expects another hike in May. I'm Stephen Carroll.

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<v Speaker 5>That's all straight ahead on Bloomberg Daybreak Europe. The business

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<v Speaker 5>news you need to start your day in just one

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<v Speaker 5>fifteen minute podcast on Apple, Spotify, the Blueberg Business app

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<v Speaker 5>and everywhere you get your podcasts.

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<v Speaker 1>Go on for London and Caroline Hepka and Diana Edwards.

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<v Speaker 2>You're listening to Daybreak Europe. That's get to our top stories.

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<v Speaker 2>We start with UK inflation. It has once again defied

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<v Speaker 2>analyst estimates, staying in double digit territory for another month.

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<v Speaker 2>March CPI came in at ten point one percent year

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<v Speaker 2>on year. That's above the estimate of nine point eight percent.

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<v Speaker 2>Jane Foley, head of FX strategy at Rabobank, says the

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<v Speaker 2>data will add to pressure on the Bank of England

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<v Speaker 2>to continue its quickest cycle of interest rate increases in

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<v Speaker 2>four decades.

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<v Speaker 6>It's not just about May and whether or not we're

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<v Speaker 6>going to get an interest rate hike then I think

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<v Speaker 6>that's almost done and dusted already. Is whether or not

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<v Speaker 6>we're going to have to see something else from the

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<v Speaker 6>Bank of England after that, and it is our view

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<v Speaker 6>that we could see two twenty five basis points news

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<v Speaker 6>before the cycle is up in the UK.

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<v Speaker 2>Jane Foley also told us that she viewed the figure

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<v Speaker 2>as a disappointment rather than a surprise. This after the

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<v Speaker 2>Prime Minister Rihi Souona made cutting inflation in half by

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<v Speaker 2>the end of the year a key priority.

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<v Speaker 1>Now Fox News has agreed to pay over three quarters

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<v Speaker 1>of a billion dollars to settle a defamation lawsuit over

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<v Speaker 1>the twenty twenty presidential elections. Dominion accused the USTv network

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<v Speaker 1>of airing bogus claims that it rigged the election against

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<v Speaker 1>Donald Trump. Here is Dominion CEO John Pulis.

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<v Speaker 7>Fox has admitted to telling lies about Dominion that caused

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<v Speaker 7>enormous damage to my company, our employees, and the customers

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<v Speaker 7>that we serve.

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<v Speaker 2>Nothing can ever make up for that.

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<v Speaker 1>The settlement is about half of what the Dominion CEO

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<v Speaker 1>was seeking, but it avoids a potentially embarrassing six week

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<v Speaker 1>trial for Fox. Fox argued that its broadcasts were protected

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<v Speaker 1>as free speech under the US First Amendment.

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<v Speaker 2>Netflix miss Wall Street estimates after adding only one point

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<v Speaker 2>seventy five million new customers in the first quarter, more

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<v Speaker 2>from Bloomberg's Charlie Pellett.

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<v Speaker 8>Investors were expecting two point four to one million new customers.

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<v Speaker 8>Netflix also predicted it will generate lower sales and profit

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<v Speaker 8>in the current quarter than what analysts had forecast. It

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<v Speaker 8>sees new customers in the current period is roughly similar

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<v Speaker 8>to the first quarter, and Netflix will begin cracking down

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<v Speaker 8>this quarter on US viewers who share someone else's account,

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<v Speaker 8>Predicting plans to charge such customers will boost growth in

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<v Speaker 8>the second half of this year. In New York, Charlie

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<v Speaker 8>Pellett Bloomberg Daybreak, Europe.

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<v Speaker 1>Goldman Sachs traders have failed to capitalize on a fixing Compananza.

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<v Speaker 1>The Wall Street JANT was the only major bank to

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<v Speaker 1>post the decline in the division. The first quarter fixed

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<v Speaker 1>income trading revenue dropped seventeen percent. Total revenue also fell

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<v Speaker 1>short of analyst estimates, but CEO David Solomon says that

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<v Speaker 1>the bank is well positioned for the future.

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<v Speaker 9>As we figure today, it appears that the worst of

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<v Speaker 9>the volatility is behind us. While it's impossible predict the

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<v Speaker 9>exact form of market stress will take and we won't

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<v Speaker 9>always execute perfectly, our risk management culture, strong liquidity, and

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<v Speaker 9>robust capital position have allowed us to navigate a complex

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<v Speaker 9>environment while also continuing to actively support our clients.

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<v Speaker 1>Solomon says the events of the first quarter demonstrate the

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<v Speaker 1>resilience of Goldman Sachs and US large financial institutions. Elsewhere

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<v Speaker 1>on Wall Street, Bank of America reported earnings. Traders there

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<v Speaker 1>saw a thirty percent jump in fixed income revenue for

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<v Speaker 1>the quarter.

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<v Speaker 2>The ECB's chief economist says he expects the Central Bank

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<v Speaker 2>to raise rates at next month's meeting. Speaking exclusively to Bloomberg,

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<v Speaker 2>Philip Lane said the size of the move will be

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<v Speaker 2>dependent on data due in the coming week.

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<v Speaker 7>Q one suggests we are seeing a reversal of the

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<v Speaker 7>negative supply shocks that so dominated the Europan economy last year,

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<v Speaker 7>so easing of bottlenecks, much lower gas prices. So what

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<v Speaker 7>I would say from all of that is, as of

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<v Speaker 7>now two weeks away, I think the baseline is that

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<v Speaker 7>we should indeed increase interest rates in May.

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<v Speaker 2>Philip Lane made the comments in an interview with our

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<v Speaker 2>ahead of economic Stephanie Flanders at Bloomberg's inaugural New Economy

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<v Speaker 2>Gateway Europe event in Ireland. Government SAX economists have now

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<v Speaker 2>lifted their forecast for where ECB rates will settle and

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<v Speaker 2>now see a terminal rate of three point seventy five percent.

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<v Speaker 1>While speaking of policymakers, Federal Reserve Bank of Atlanta President

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<v Speaker 1>Raphael Bostic says that he favors one more twenty five

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<v Speaker 1>basis point a rate increase before holding at five percent.

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<v Speaker 1>In the US. Speaking to CNBC, he said that there's

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<v Speaker 1>more work to be done, but added that tighter credit

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<v Speaker 1>conditions may take care of.

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<v Speaker 6>Some of that.

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<v Speaker 1>Speaking elsewhere, the Saint Louis FED President James Bullard is

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<v Speaker 1>calling for two more rate hikes. He told Reuters he

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<v Speaker 1>believes fears of a recession overblown. Bullard and Bostick don't

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<v Speaker 1>have a vote on monetary policy this year, but all

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<v Speaker 1>FED policymakers take part in rate discussions.

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<v Speaker 2>Okay, those are our top stories now. Stephen Carroll is

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<v Speaker 2>not in the studio with me this morning. You would

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<v Speaker 2>have heard his voice at the top of the program,

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<v Speaker 2>though he is with us in spirit. He is in

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<v Speaker 2>Ireland for the Bloomberg New Economy Gateway Europe event. And Stephen,

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<v Speaker 2>good morning to you. Where exactly are you? Not far

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<v Speaker 2>from Dublin, I understand, no.

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<v Speaker 4>About twenty kilometers away from the center of Dublin. I've

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<v Speaker 4>exchanged our London radio studio for a forty six acres

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<v Speaker 4>of parkland in an estate house that powers course. Yeah, yeah, exactly.

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<v Speaker 4>It's a little bit more space, a little bit more scenic,

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<v Speaker 4>I have to say too. We're in next to the

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<v Speaker 4>Sugarloaf Mountain in Wicklow here, which is the Garden of Ireland.

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<v Speaker 4>So we've had a very beautiful morning here so far,

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<v Speaker 4>looking at the sun coming up over the mountain and

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<v Speaker 4>these incredible gardens in this estate house, which settlement dates

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<v Speaker 4>back to the thirteenth century, so it is quite the

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<v Speaker 4>venue for this event where we're talking about bringing together

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<v Speaker 4>both public and private sector leaders to talk about the

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<v Speaker 4>issues facing the European economy. Reglobalization is the umbrell under

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<v Speaker 4>which we're having those conversations, looking at all sorts of

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<v Speaker 4>the different aspects of challenges facing countries in this continent,

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<v Speaker 4>whether it be dealing with technology, dealing with supply chain issues,

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<v Speaker 4>talking about trade barriers, talking about geopolitical tensions, lots of

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<v Speaker 4>broadway discussions. We're starting though with banks. We got Andrea

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<v Speaker 4>Orchell from UNI Credit speaking here in the first event

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<v Speaker 4>in just about an hour's time. But this is the

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<v Speaker 4>first Bloomberg New Economy Gateway event in Europe, so it's

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<v Speaker 4>a regional focus but a pretty broad scope of discussions

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<v Speaker 4>as well.

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<v Speaker 3>Yeah.

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<v Speaker 1>Absolutely, I mean you brought us an interview with the

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<v Speaker 1>Foreign Direct Investment Group in Ireland just earlier this morning.

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<v Speaker 1>We heard a bit of the interview with Philip Lane,

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<v Speaker 1>who is speaking to Bloomberg Stephanie Flanders ahead of this event.

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<v Speaker 1>So there are plenty of people, you know whose views

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<v Speaker 1>are pretty important.

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<v Speaker 4>Yeah, that's right. Look at the conversation from Philip Lane

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<v Speaker 4>was a great way to set up the exchanges we're

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<v Speaker 4>having here today and tomorrow, because he's talking about the

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<v Speaker 4>broader economic environment and saying that they are really sticking

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<v Speaker 4>to looking at what the data shows between now on

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<v Speaker 4>the next DCB meeting. In terms of rate hikes. He

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<v Speaker 4>wouldn't be drawn by Stephanie Flanders as to whether he

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<v Speaker 4>would his baseline would be a fifty basis points hike.

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<v Speaker 4>He said, there will be a rate hike, but the

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<v Speaker 4>size of it will have to be determined by what

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<v Speaker 4>we learn about things like inflation, but also credit conditions

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<v Speaker 4>in the Euro Area, because they have their own lending

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<v Speaker 4>survey that's due out before the next meeting of the ECBs.

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<v Speaker 4>That's something they'll be looking to see. Of course, the

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<v Speaker 4>effect of the collapse of SVB, the termalol that we've

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<v Speaker 4>seen abound, credit sweel and what all of that means

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<v Speaker 4>for the I suppose business environment here in Europe something

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<v Speaker 4>that's top of mind for many of those attending.

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<v Speaker 2>Okay, Stephen, thank you very much being by Stephen Carroll,

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<v Speaker 2>joining us there live from the Bloomberg New Economy Gate

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<v Speaker 2>where you're at. More from Stephen as we go through

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<v Speaker 2>programming this morning onto what is top of mind here

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<v Speaker 2>in London, and that is certainly inflation data. The UK's

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<v Speaker 2>inflation data for March has just been released. Joining us

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<v Speaker 2>now is our Bloomberg UK correspondent Lizzie Burton, who can

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<v Speaker 2>give us the details. So ten more than ten percent.

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<v Speaker 2>We'd expected it to come down to a single digit

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<v Speaker 2>figure and it did not, once again disappointing those at

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<v Speaker 2>the Bank of England and the government.

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<v Speaker 10>What drove this well, it was driven down from last

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<v Speaker 10>month by motor fuels, but it was kept high by

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<v Speaker 10>food and non alcohol drinks. So that's going to be

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<v Speaker 10>really painful for your average bit because of course they

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<v Speaker 10>spend more on essentials as a share of their income.

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<v Speaker 10>In fact, if you look at the annual rate of

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<v Speaker 10>inflation for those goods specifically, it was nineteen point one percent, eyewatering.

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<v Speaker 10>It is the highest since nineteen seventy seven, and interestingly,

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<v Speaker 10>one of the big drivers is bred according to the

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<v Speaker 10>Office for National Statistics, and i've just been digging into

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<v Speaker 10>the most recent speech and first speech actually from Swatti Dingro,

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<v Speaker 10>one of the big doves on the Bank of England's

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<v Speaker 10>Monetary Policy Committee, and she actually used the example of

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<v Speaker 10>a loaf of bread to break down the component parts

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<v Speaker 10>of inflation. She used it to illustrate that actually we're

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<v Speaker 10>underestimating the contribution of imported inflation, as you might expect.

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<v Speaker 10>She's a trade expert, so that was incredibly prescient from her.

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<v Speaker 10>But worryingly for the Bank of England as well, Services

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<v Speaker 10>inflation two unchanged at six point six percent, So this

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<v Speaker 10>is really sticky.

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<v Speaker 1>Yeah it is. What does it mean for the Bank

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<v Speaker 1>of England then, is that rate ry baked in.

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<v Speaker 10>Now pretty much looks like it markets think. So you

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<v Speaker 10>saw after the jobs data yesterday, Goldman Sachs and Bloomberg Economics,

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<v Speaker 10>amongst other economists, changing their calls from a hold to

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<v Speaker 10>a quarter point hike. The jobs data showed that you've

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<v Speaker 10>got strong pay growth, signs of renewed momentum, especially in

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<v Speaker 10>the private sector. So our economist Dan Hansen says, it's

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<v Speaker 10>just impossible to ignore and today's inflation print just bakes

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<v Speaker 10>it in.

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<v Speaker 2>Okay, Lizzie, thanks very much. Bloomberg Sir UK correspondent Lizzie

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<v Speaker 2>Burden with the latest on the UK story up next

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<v Speaker 2>Stop Investor details a plan to splice HSBC. Coinbase plots

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<v Speaker 2>a UK move as the US squeezes crypto and central

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<v Speaker 2>London house prices take a big hit.

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<v Speaker 5>Now the paper review on Bluebird Daybreak Europe. The news

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<v Speaker 5>you need to know from today's papers.

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<v Speaker 1>Okay, let's start update you then with the newspaper roundup.

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<v Speaker 1>On that note, Blue both Leanne Goerens joins me now LeAnn,

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<v Speaker 1>so let's start with the headline then in the time.

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<v Speaker 1>So this is around a story that we've tracked for

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<v Speaker 1>quite a long time. Top Investor details planned to split HSBC.

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<v Speaker 3>Yes, indeed, Caroline, there's been a development, so that's why

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<v Speaker 3>we're talking about it. Yes, yet again HSBC's larger shareholders

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<v Speaker 3>accusing bosses of being closed minded about a breakup of

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<v Speaker 3>the bank. So ping An publicly called for the creation

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<v Speaker 3>of a separately listed Asia business headquartered over in Hong

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<v Speaker 3>Kong in a statement yesterday. That's according to reporting from Bloomberg.

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<v Speaker 3>In a strongly worded statement it was over two thousand words.

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<v Speaker 3>They criticized the British lender. The Chinese insurer says it

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<v Speaker 3>was deeply concerned about HSBC's performance. According to the Times,

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<v Speaker 3>a Chinese insurer also claims that the foot See one

0:11:51.960 --> 0:11:55.440
<v Speaker 3>hundred bank had exaggerated many of the costs and risks

0:11:55.800 --> 0:12:00.679
<v Speaker 3>surrounding its breakup proposals that it had given the bank

0:12:00.920 --> 0:12:05.400
<v Speaker 3>last April. Had emerged that Pingan wanted HSB to HSBC

0:12:05.640 --> 0:12:09.360
<v Speaker 3>to split off its huge Asian division and that was

0:12:09.520 --> 0:12:13.640
<v Speaker 3>really to boost the value for shareholders. But the board,

0:12:13.720 --> 0:12:17.040
<v Speaker 3>led by Mark Tuck and the chairman who's the chairman

0:12:17.080 --> 0:12:20.319
<v Speaker 3>and nol Quinn at CEO hit that publicly arguing that

0:12:20.480 --> 0:12:25.040
<v Speaker 3>the breakup would be complicated also destructive. And I think

0:12:25.200 --> 0:12:28.680
<v Speaker 3>from Bloomberg reporting and from the reporting in the Times today,

0:12:28.720 --> 0:12:32.160
<v Speaker 3>I think it's clear to draw one conclusion that there

0:12:32.240 --> 0:12:37.040
<v Speaker 3>is this fractious relationship between Europe's largest bank and one

0:12:37.120 --> 0:12:40.120
<v Speaker 3>of its most important investors over in Asia.

0:12:40.240 --> 0:12:42.480
<v Speaker 2>Okay, let's go to crypto. The Telegraph has a story

0:12:42.480 --> 0:12:45.400
<v Speaker 2>on this front, Lendley and saying that crypto champion coinbase

0:12:45.480 --> 0:12:48.920
<v Speaker 2>is plotting a UK move as Biden quote punishes tech.

0:12:49.120 --> 0:12:52.360
<v Speaker 3>Yes, indeed, so the Coinbase CEO has floated leaving the

0:12:52.480 --> 0:12:57.080
<v Speaker 3>US of regulatory clarity on crypto just a doesn't improve.

0:12:57.600 --> 0:13:01.960
<v Speaker 3>Now the multi billion dollar crypto exchange coinbases considering this move,

0:13:02.440 --> 0:13:07.000
<v Speaker 3>and he's basically saying that America is dragging its feet

0:13:07.160 --> 0:13:11.280
<v Speaker 3>on crypto regulations. He said, there's failure to bring in

0:13:11.320 --> 0:13:16.040
<v Speaker 3>a regulatory framework for cryptocurrencies and it's hitting the industry,

0:13:16.080 --> 0:13:20.040
<v Speaker 3>which could push things like coinbase to relocate to places

0:13:20.080 --> 0:13:23.760
<v Speaker 3>like here in the UK. And Brian Armstrong actually made

0:13:24.080 --> 0:13:27.559
<v Speaker 3>that warning while in conversation with the former Chancellor George

0:13:27.720 --> 0:13:32.200
<v Speaker 3>Osbourne at the Innovative of Finance Global Summit over in

0:13:32.280 --> 0:13:36.600
<v Speaker 3>the US, once again accusing America of not being quick

0:13:36.679 --> 0:13:40.120
<v Speaker 3>enough when it comes to crypto regulation. He actually said

0:13:40.360 --> 0:13:43.120
<v Speaker 3>that the UK has an advantage over the US because

0:13:43.120 --> 0:13:47.640
<v Speaker 3>the f CEA oversees both commodities and securities, where in

0:13:47.679 --> 0:13:53.160
<v Speaker 3>the States there's a turf battle between the two separate regulators.

0:13:53.200 --> 0:13:57.160
<v Speaker 3>So there we are Coinbase wanting quicker movement on crypto regulation.

0:13:57.640 --> 0:14:01.680
<v Speaker 1>Okay. And the latest when it comes to house prices,

0:14:01.679 --> 0:14:05.120
<v Speaker 1>the Financial Times has a story Central London house prices

0:14:05.160 --> 0:14:08.360
<v Speaker 1>suffer the biggest annual fall since twenty nineteen.

0:14:08.280 --> 0:14:12.960
<v Speaker 3>And Caroline, this is concerning because property values in places

0:14:13.000 --> 0:14:17.560
<v Speaker 3>like Mayfair, Chelsea Kensington actually tend not to suffer from

0:14:17.640 --> 0:14:20.880
<v Speaker 3>rising interest rates in these higher mortgage costs we're seeing

0:14:21.240 --> 0:14:24.440
<v Speaker 3>that's because the market kind of mainly relies on cash

0:14:24.560 --> 0:14:29.040
<v Speaker 3>rich foreign buyers. But speaking to the Ft, the Lonres

0:14:29.240 --> 0:14:33.520
<v Speaker 3>managing directors said, buyers have just become so cautious over

0:14:33.680 --> 0:14:36.600
<v Speaker 3>the concerns of the prices and really that they're going

0:14:36.640 --> 0:14:41.760
<v Speaker 3>to fall even further over the bleak economic outlook. So

0:14:41.840 --> 0:14:45.240
<v Speaker 3>that's what's really concerning things at the moment. And the

0:14:45.400 --> 0:14:48.920
<v Speaker 3>central London property prices have dropped five percent in twelve

0:14:48.920 --> 0:14:52.360
<v Speaker 3>months to March, the largest four in three and a

0:14:52.360 --> 0:14:56.120
<v Speaker 3>half years. But something else that Bloomberg has written a

0:14:56.160 --> 0:14:58.800
<v Speaker 3>story up on today is sales and construction of London

0:14:58.840 --> 0:15:02.840
<v Speaker 3>properties fill thirty in the first quarter from a year

0:15:02.920 --> 0:15:05.720
<v Speaker 3>earlier to the lowes since twenty twelve, and that's from

0:15:05.800 --> 0:15:10.520
<v Speaker 3>data compiled by Mollia London showed. So lots of data

0:15:10.640 --> 0:15:14.160
<v Speaker 3>happening in the housing market, but like we're seeing, you know,

0:15:14.240 --> 0:15:18.680
<v Speaker 3>the wealthy areas really suffering the biggest annual four