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Speaker 1: This is Bloomberg Daybreak curet for this Friday, the seventeenth

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Speaker 1: of March in London. Coming up today, the Three Musketeers, Howell,

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Speaker 1: Yellen and Diamond coordinate thirty billion dollars shore up a

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Speaker 1: First Republic. No credit suis in the bank, Swisslander opposes

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Speaker 1: the idea of a UBS merger max flexibility. The ECB

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Speaker 1: abandons guidance on future rate moves, NHS pay deal, Bentley

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Speaker 1: Boss on electric cars and what NEETs for the World Bank.

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Speaker 1: Those other stories we're looking at in today's papers, and

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Speaker 1: nine leanne Geron's class backs, dot boom boring from the

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Speaker 1: Fed discount window jumped to an all time height, showing

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Speaker 1: a still fragile banking system. That's all straight ahead. On

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Speaker 1: Bloomberg Daybreak Europe, The business news you need to start

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Speaker 1: your day in just one fifteen minute podcast on Apple, Spotify,

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Speaker 1: the Bloomberg Business App and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Stephen Carroll and I'm Caroline Heck. Here

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Speaker 1: all the stories that we're following today. Eleven US banks

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Speaker 1: have agreed to deposit thirty billion dollars with First Republic

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Speaker 1: Bank in a bit to stem the turmoil and regional lenders.

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Speaker 1: Treasury Secretary johnet Yellen, one of the architects of the deal,

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Speaker 1: told the US Senate the banking sector is secure. I

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Speaker 1: can reassure the members of the Committee that our banking

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Speaker 1: system is sound and that Americans can feel confident that

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Speaker 1: third deposits will be there when they need them. This

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Speaker 1: week's actions demonstrate our resolute commitment to ensure that our

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Speaker 1: financial system remains strong and the depositors savings remained safe.

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Speaker 1: Secretary johnet Yellen proposed the idea of a group bank

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Speaker 1: effort on Tuesday during a call, but fed charge your

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Speaker 1: own Powell. Shares of First Republic swung wildly yesterday, plunging

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Speaker 1: by as much as thirty six percent earlier in the

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Speaker 1: day than surging by as much as twenty eight during

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Speaker 1: the trading session. Now, Credit Suis and UBS are opposed

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Speaker 1: to merging, according to sources, despite a momentary reprieve after

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Speaker 1: a liquidity injection of fifty billion Swiss francs, attention has

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Speaker 1: now turned to how Credit Suis wins back its clients

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Speaker 1: as the Swiss Finance World game's potential rescue plans. UBS

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Speaker 1: is reportedly reluctant to take on the risk. A full

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Speaker 1: blown combination would be a reversal of years of too

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Speaker 1: big to fail rules and would raise antitrust concerns in

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Speaker 1: many business lines. The European Central Bank went ahead with

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Speaker 1: a half point planned half point increase and interest rates

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Speaker 1: to three percent. Authorities feared that a smaller hike might

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Speaker 1: trigger panic among investors. President Christine Lagard offered a little

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Speaker 1: way of forward guidance and few clues on what may

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Speaker 1: follow a mid market turmoil That royaled credit suis We

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Speaker 1: are monitoring current market tensions closely and stund ready to

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Speaker 1: respond as necessary to preserve price stability and financial stability

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Speaker 1: in the euro Area. The Euro Area banking sector is

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Speaker 1: resilient with strong capital and liquidity positions. That's ACB President

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Speaker 1: Christine Lagaud. Now the European Center Bank caught its forecast

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Speaker 1: for headline inflation, but is raising the estimate for stronger

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Speaker 1: core inflation in twenty twenty three. A key FED safety

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Speaker 1: valve just hit a record high. Emergency loans from the

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Speaker 1: Fed's discount window jumped to one hundred and fifty three

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Speaker 1: billion dollars in data for the week ending on Wednesday.

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Speaker 1: The spike underlines the fragility in the banking system. The

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Speaker 1: debt reverses half of the balance sheets shrinkage that the

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Speaker 1: FED had actually achieved since it began so called quantitative tightening.

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Speaker 1: In a bid twend months of strikes here in the UK,

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Speaker 1: the government has offered a five percent pay rise to

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Speaker 1: NHS staff in England, including nurses and ambulance workers. There's

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Speaker 1: been little clarification from the Prime Minister about where the

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Speaker 1: money's coming from, though, to fund the new pay offer,

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Speaker 1: we are going to be making sure that we protect

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Speaker 1: all frontline services with fourteen billion pounds of more funding

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Speaker 1: that we announced at the end of last year. No

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Speaker 1: one can doubt our commitment to making sure that the

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Speaker 1: NHS is well funded. That will always remain the case

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Speaker 1: that was actually seen. Acco's insisting the money will not

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Speaker 1: be taken away from frontline services. Unions are recommending members

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Speaker 1: back the deal after nearly two weeks of talks with ministers,

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Speaker 1: raising hopes that the bitter dispute may be coming to

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Speaker 1: an end. Okay, those are a few of our top

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Speaker 1: stories for you this morning. I just want to reflect

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Speaker 1: with you this Friday and what has been ten to

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Speaker 1: twelve extraordinary days in markets we've gone basically full circle

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Speaker 1: in terms of the two year bond yield. We've gone

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Speaker 1: back to the level that we were at pre the

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Speaker 1: January non fund payroll figure. We've had huge bond and

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Speaker 1: effects at volatility. The FED balance sheet is now expanding,

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Speaker 1: and there are all of these question marks about the

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Speaker 1: health of the financial system, and it's it's not really

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Speaker 1: about contagion. It's around whether other banks are going to

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Speaker 1: have the same issue as interest rates rise, you know,

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Speaker 1: whether their liabilities are going to be solid enough. Yeah.

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Speaker 1: In fact, two year yields are now back to where

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Speaker 1: they were before that hot non foreign payrolls figured that

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Speaker 1: we got in January, So it's even reversing further in

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Speaker 1: time than we could have imagined after the events of

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Speaker 1: the past week. As well. On a slightly more selfish note, well,

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Speaker 1: actually not that selfish because it doesn't apply to me,

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Speaker 1: but for people who are traveling this summer in the UK,

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Speaker 1: a warring about your holiday's already? Is that whatever? Thinking

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Speaker 1: about holidays, Caroline, Yeah, okay, we all need one after

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Speaker 1: this week, absolutely, I think so. Passport renewal, I think

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Speaker 1: is what we're getting at. Apparently there's going to be

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Speaker 1: a five week shot. I thought that the nurses striking

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Speaker 1: was perhaps coming to an end, but no. Now we

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Speaker 1: hear news in the UK that the civil servants in

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Speaker 1: charge of yeah, getting you your new passport, they're going

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Speaker 1: to be striking for five weeks starting in eight or so.

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Speaker 1: That means, you know, trying to get it ahead of

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Speaker 1: your summer holiday is going to be more difficult. Something

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Speaker 1: to look forward to. Right, let's turn back to the

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Speaker 1: latest on what's been happening in the banking industry and

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Speaker 1: this deal from eleven US banks are deposit a total

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Speaker 1: of thirty billion dollars and troubled First Republic Bank when

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Speaker 1: going in for at least three months and hope of

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Speaker 1: saving that lender. This is some of the market optimism

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Speaker 1: around credit Sweez's lifeline. They're the big banking story from

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Speaker 1: this week from the Swiss Central Bank fades. We've got

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Speaker 1: our Asia investing team. They are to chen with us

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Speaker 1: for more. Really great to have you with us on

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Speaker 1: the show. What do we know first of all about

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Speaker 1: how these US banks were convinced to step in to

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Speaker 1: help First Republic Well, it does seem that right now

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Speaker 1: the government is taking approach of saving or trying to

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Speaker 1: stem this crisis becoming a bigger, bigger financial crisis and

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Speaker 1: rippling across the entire sector, and which is why it's

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Speaker 1: taking a proactive approach. I think in the invest community

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Speaker 1: we are hearing different voices, not everyone agreeing that this

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Speaker 1: is the approach, but it does seem that markets are

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Speaker 1: reacting um or this is actually helping soothemarket um jitters

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Speaker 1: and market have reacted relatively positive to the news. Okay, yeah,

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Speaker 1: I mean maybe Bill Ackman is who you had in mind,

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Speaker 1: the activists investors saying that it raises more questions that

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Speaker 1: it answers. I mean, how secure does the lender look

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Speaker 1: now in your view, Lily, I think right now the

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Speaker 1: issue with them and then also with SVB is really

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Speaker 1: what really caused SVB to to fall into a crisis

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Speaker 1: was because a liquidity mismatch where versus an actual issue

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Speaker 1: with their their their mortgages, the quality of the mortgages.

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Speaker 1: So I think that it really is a reaction the

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Speaker 1: crisis that we're seeing now as a reaction to the

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Speaker 1: FEDS tightening policy, and it has very interesting implications into

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Speaker 1: how many how many more hikes we're going to seem

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Speaker 1: consensus is right now on the markets that probably instead

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Speaker 1: of the seventy five to ninety basis points hikes, we're

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Speaker 1: going to see somewhere closer to like twenty five. So

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Speaker 1: that is a significant scale back, what it Given that

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Speaker 1: we've the hopes are that this will allay some of

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Speaker 1: the fears around First Republic. Are there other points of

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Speaker 1: vulnerability that we should be worried about? Other other kind

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Speaker 1: of shocks are after effects from the SVB silver Gate

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Speaker 1: signature bank collapses that are being felt elsewhere because this

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Speaker 1: was a story that rolled global markets as well. Yeah.

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Speaker 1: I think the other story that we are tracking very

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Speaker 1: closely obviously is credit sueez and how the bank is

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Speaker 1: dealing with that crisis. JP Morgan was saying earlier today

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Speaker 1: that an acquisition or a tie up between UBS was

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Speaker 1: one possibility. Even though that they got that fifty four

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Speaker 1: billion lifeline, it seems that the outflow has not reversed

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Speaker 1: stand here in Asia and at all East we are

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Speaker 1: still still seeing some of their ultra highth no worth

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Speaker 1: clients pull out money. Yeah, so yeah, I think that

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Speaker 1: is extremely tricky, isn't it in terms of what happens

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Speaker 1: with credit suees. Just in terms of what it means

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Speaker 1: then looking ahead to the Federal Reserve, I suppose that

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Speaker 1: the signals are still very uncertain, but it has been

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Speaker 1: quite a wild ride. On Wednesday, traders were still betting

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Speaker 1: on fifty basis point rate rise from the Fed. Thursday

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Speaker 1: that went to virtually zero, and now it seems to

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Speaker 1: return to twenty five basis points. So it's it's been

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Speaker 1: quite a speedy changes yo yoing in the markets are

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Speaker 1: very uncertain about the path for the FED. Yeah, I

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Speaker 1: think it's sunlight right now based on what we're hearing.

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Speaker 1: It's unlikely that people aren't expecting that the Fed is

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Speaker 1: going to completely do a reverse. Because they do, then

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Speaker 1: it sends out a signal that markets are even worse

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Speaker 1: that people have expected. But the general of feeling out

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Speaker 1: there is that for the rest of the year there

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Speaker 1: is going to be a lot of turmoil, and it's

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Speaker 1: already pressed in the market, this feeling or this expectation

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Speaker 1: that markets are going to be even worse or suffer

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Speaker 1: more turmoil going into the rest of the year. Okay,

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Speaker 1: Lulu Chen, thank you so much for bringing us up

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Speaker 1: to date on all of the various elements of that story. Yeah,

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Speaker 1: there's a fantastic read on the Blue Beg Terminal this

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Speaker 1: morning from John Author's and Isabelle Lee. They go through

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Speaker 1: the chaotic week. It actually goes back to that ten

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Speaker 1: twelve days ago that I mentioned, you know, when there

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Speaker 1: was actually quite a lot of confidence in terms of

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Speaker 1: the path of the FED. It goes through each of

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Speaker 1: the kind of points, the two days of testimony that

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Speaker 1: Jerome Powell gave to then the kind of collapse of

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Speaker 1: SVB and the others, and what has been happening in

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Speaker 1: global markets. So it gives you a kind of point

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Speaker 1: by point guide through March. But I think it's extraordinary

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Speaker 1: that Lulu Chen says now that really markets are prepared

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Speaker 1: a much more volatile end of the year. Yeah. I

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Speaker 1: mean John Arthur is always worth reading at the best

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Speaker 1: of times. In a week like this, definitely worth reading

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Speaker 1: his piece this morning on the terminal. Okay, up next

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Speaker 1: the NHS pay deal, Bentley Barston electric cars and what

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Speaker 1: next for the World Bank. Now the paper review on

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Speaker 1: Blue Birthday break Europe. The news you need to know

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Speaker 1: from today's papers, so bacally I'm going to us here

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Speaker 1: with more details. Good morning, Leanne. So we have some

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Speaker 1: news about the strike action here in the UK that

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Speaker 1: has been so difficult in recent months. A Guardian headline

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Speaker 1: Health union's hail victory after government's new payoffer for NHS

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Speaker 1: staff in England. So, Caroline, we heard about this yesterday,

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Speaker 1: didn't we, And now we're just looking at the nitty

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Speaker 1: gritty of the details. And like you said, it's been

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Speaker 1: a real tough few months, hasn't. It was strikes from

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Speaker 1: NHS workers to train staff, and it's all over paying conditions.

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Speaker 1: The government has made a payoffer of five percent to nurses,

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Speaker 1: middlewives and ambulance workers for the next financial year. Now,

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Speaker 1: according to Bloomberg Reporting, the proposal for NHS workers will

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Speaker 1: also include this one time bonus which is worth two

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Speaker 1: percent of salary for twenty twenty two and twenty three,

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Speaker 1: along with an NHS backlog bonus because of course they

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Speaker 1: work so hard during the COVID pandemic, so this will

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Speaker 1: recognize that, except it is bonuses rather than a pay increase.

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Speaker 1: And that was the sticking point for the government. They

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Speaker 1: were saying, we're not going to just increase everybody's pay,

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Speaker 1: so they've wrapped it up as a bonus for this year.

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Speaker 1: Well that's what's happened, but a lot of people are arguing,

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Speaker 1: aren't they that this is a one off payment. It's

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Speaker 1: not going to help in the future to tackle how

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Speaker 1: inflation has eaten into the pay packets of these workers.

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Speaker 1: Now The Guardian reports that there was questions over whether

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Speaker 1: the Chancellor, Jeremy Hunt is prepared to set aside new

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Speaker 1: money to fund this pay rise, because how the government

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Speaker 1: actually going to do this? And a Treasury source has

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Speaker 1: been telling the newspaper that existing budgets allow for a

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Speaker 1: rise of three point five percent increase and the Department

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Speaker 1: for Health and Social Care would have to pay the rest.

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Speaker 1: Now that would be through cost saving or a bid

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Speaker 1: for more funding in the coming months. Reading between the

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Speaker 1: lines is that cuts to the health servers, and the

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Speaker 1: paper quotes Ben Zaranko, senior economist at the Institute for

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Speaker 1: Fiscal Studies, he's saying there must be a risk that

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Speaker 1: the NHS is asked to make heroic efficiency savings to

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Speaker 1: absorb these costs. And we did here earlier, didn't we.

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Speaker 1: At the top of the show, Rishie Soon actors basically

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Speaker 1: not answering the question of where this money is going

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Speaker 1: to come from. Well, it was the thing that was

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Speaker 1: missing from the budget this week as well. Yes, exactly.

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Speaker 1: So union members will now have to vote on whether

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Speaker 1: to accept the steel. A lot of them have been

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Speaker 1: pushed to do so by their union. And you know

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Speaker 1: how many appointments have been canceled during these strikes, one

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Speaker 1: hundred and fifty thousand, So we must remember that people

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Speaker 1: are also missing creatial appointments. Yeah, I saw that one

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Speaker 1: hundred and fifty thousand number in that story from our

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Speaker 1: Colleigame and Firehouse has been covering all of the strike

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Speaker 1: action here in the UK for Bloomberg as well Leanne

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Speaker 1: and the Financial Times. The Bentley chief says UK is

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Speaker 1: failing to support electric vehicle transition. Yes, indeed, so, the UK,

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Speaker 1: as you said, is falling behind Europe, the US and

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Speaker 1: China in attracting electric investment. Now, this is what the

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Speaker 1: boss of Bentley, Adrian Hallmark, is really warning about. And

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Speaker 1: the luxury brand actually reported the highest profits in its

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Speaker 1: history yesterday. Bentley's operating profit of seven hundred and eight

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Speaker 1: million euros. That's what they made. That's what they reported.

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Speaker 1: That's nearly double the previous year. And do you know

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Speaker 1: why this is really interesting? It's because apparent they've created

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Speaker 1: handstitched seats, which is something that a lot of people

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Speaker 1: would have had a handstitch anyway. Yes, and some new

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Speaker 1: other technology which has come into the car. But what

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Speaker 1: I've realized and I didn't know those actually, but reading

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Speaker 1: here is really interesting. The CEO hit out the government

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Speaker 1: saying it's done nothing to help us as an established

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Speaker 1: carmaker to invest in electric vehicles. So he's basically saying,

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Speaker 1: if you're a startup and you want to invest in

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Speaker 1: green technology, the government will fund you. But if you're

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Speaker 1: an established carmaker who wants to switch over to EV tech,

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Speaker 1: they're not going to fund you and they're not going

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Speaker 1: to help you. And of course we also know that

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Speaker 1: the Inflation Reduction Act is making so many companies look

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Speaker 1: at the US instead. Yeah. No, I think the thing

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Speaker 1: that is interesting, we know that the car industry has

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Speaker 1: been in a disastrous state for a year. Is just

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Speaker 1: interesting now that it's a big boss that is saying

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Speaker 1: it and really pinning it on the government. Leon Let's

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Speaker 1: in the Planta Times for a last piece, and this

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Speaker 1: is from the man who could be the next head

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Speaker 1: of the World Bank. Yes, and this is a really

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Speaker 1: great article to read. Because it talks about how the

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Speaker 1: institution of the World Bank needs to evolve to tackle

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Speaker 1: new challenges threatening the developed world. Aj Banja wants to

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Speaker 1: become the next head of the World Bank, and his

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Speaker 1: argument here is he's saying that there's now climate change

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Speaker 1: pandemics to force migration, which is really eroding previous progress

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Speaker 1: that was made by the World Bank, and now the

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Speaker 1: banks all need to come together, the developed banks of

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Speaker 1: the world, to maximize the impact to help people who

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Speaker 1: really need it across the globe. This is Bloomberg Daybreak Europe.

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Speaker 1: You're a morning brief on the stories making news from

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Speaker 1: played Bloomberg eleven thirty. I'm Caroline Hitka and I'm Stephen Carroll.

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Speaker 1: need to start your day right here on Bloomberg Daybreak. Europe,