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Speaker 1: Good morning. It's Monday, the twenty first of August in London.

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Speaker 1: This is the Bloomberg Daybreak Europe podcast. I'm Stephen Carroll.

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Speaker 1: Coming up today. As China once again pulls its economic punches,

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Speaker 1: we have a special report on why sijingping is backed

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Speaker 1: away from major stimulus to tackle the economic slow down.

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Speaker 1: Denmark pledges to send F sixteen fighter jets to support

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Speaker 1: Ukraine's ongoing war with Russia. On the wrong time for

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Speaker 1: a right move, UK home sellers slash asking prices. Let's

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Speaker 1: start with a roundup of our top stories. Chinese banks

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Speaker 1: have made a smaller than expected cut to their benchmark

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Speaker 1: lending rate as the country's economy continues to flag. The

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Speaker 1: move is the latest sign of Beijing's determination to steer

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Speaker 1: clear of big stimulus even as deflationary risks grow. Christy Tan,

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Speaker 1: investment strategist at Franklin Templeton, says she believes the government

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Speaker 1: will be forced to ramp up economic support.

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Speaker 2: There are now increasing calls that China may not actually

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Speaker 2: be able to meet is five percent and for your target,

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Speaker 2: I think there will be more policy coordination that will

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Speaker 2: be needed for that confidence to be restored or at

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Speaker 2: least reduce the pessimism in the investors' confidence.

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Speaker 1: As Christy Town mentioned, there are a number of banks

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Speaker 1: have don greater they're forecasts for the country. JP Morgan,

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Speaker 1: Barclays and Morgan Stanley all now believe that China won't

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Speaker 1: hit it's five percent annual growth target. The Netherlands and

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Speaker 1: Denmark have agreed to send F sixteen fighter jets to Ukraine.

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Speaker 1: It's the first time NATO members have offered the US

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Speaker 1: made planes to Kiev, with Copenhagen committing to sending nineteen

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Speaker 1: of the fourth generation fighters. Speaking at a Dutch air

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Speaker 1: base in Eindhoven, President Vladimir Zelenski says the jets will

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Speaker 1: be deployed once Ukrainian pilots complete their training.

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Speaker 3: We understand the number of jets we can use in

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Speaker 3: the future, nearest or not. It depends on the sudation

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Speaker 3: and on the experience of our pilots and preparing special

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Speaker 3: infrastructure also for jet.

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Speaker 1: That's Ukraine's President Vladimir Zelenski. Both Denmark and the Netherlands

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Speaker 1: agreed the move after receiving the required approval from US

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Speaker 1: Secretary of State Anthony Blincoln. Strike action at natural gas

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Speaker 1: facilities in Australia could begin as early as the second

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Speaker 1: of September if new talks on pay and conditions failed

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Speaker 1: to resolve the disputes, as well as negotiations with Woodside

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Speaker 1: Energy Group. Ballots are also taking place on potential walkouts

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Speaker 1: by workers at Chevron facilities. Any outages could threaten around

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Speaker 1: ten percent of the global supply of LNG. UK property

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Speaker 1: sellers have cut asking prices at the fastest pay so

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Speaker 1: far this year. Bloomberg's John steppec says soaring interest rates

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Speaker 1: are weighing on the market.

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Speaker 4: I struggled to see how prices weren't full followed because

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Speaker 4: massive issue, which is the interest rates have gone up

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Speaker 4: so much. Does a stalemate going on? But the longer

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Speaker 4: that continues, the longer that you know, the more I

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Speaker 4: think that would tough to resolve in favor of the

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Speaker 4: buyers rather than the salees, because you know, if you

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Speaker 4: want to move, then at some point you're going to

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Speaker 4: have to accept that. Well, people just don't have to

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Speaker 4: buy input anymore.

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Speaker 1: That's boombrogs John Steppeck. The data from the right Move

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Speaker 1: website says the one point nine percent drop in asking

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Speaker 1: prices is worth around seven thousand pounds off the average

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Speaker 1: property asking price Right Moves measure is now fifteen percent

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Speaker 1: below pre pandemic levels in twenty nineteen. That reflects a

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Speaker 1: drop both in buyer interest and the ten percent fall

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Speaker 1: and the number of properties on the market. A data

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Speaker 1: breach at Tesla has affected more than seventy five thousand

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Speaker 1: people as the league's been blamed on insider wrongdoing. Boombogs

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Speaker 1: Ed Maxter has the story.

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Speaker 5: The data breach included employee related records appearing to be

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Speaker 5: current or former employees of Tesla. Foreign media outlet named

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Speaker 5: Handles Blatt informed Tesla in May that it had obtained

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Speaker 5: the confidential information. It says the two former Tesla employees

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Speaker 5: misappropriated the information and violation of Tesla's IT security and

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Speaker 5: data protection policies, and then shared it with the media outlet.

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Speaker 5: Tesla has reportedly cooperated with law enforcement and external forensics

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Speaker 5: experts and says it will continue to do so. I'm

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Speaker 5: at Baxter Bloomberg Gay Break Europe.

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Speaker 1: Donald Trump is skipping debates with other Republican twenty twenty

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Speaker 1: four election candidates. The former president says his polling justifies

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Speaker 1: not appearing on stage with rivals. Many of those challenges

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Speaker 1: are critical of Trump's record, including his former Vice president

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Speaker 1: Mike Pence.

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Speaker 6: I would have preferred that these matters be left to

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Speaker 6: the judgment of the American people. I mean, no one's

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Speaker 6: above the law. But with regard to the president's future,

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Speaker 6: my hope is when we get to that debate stage,

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Speaker 6: and I'm still kind of hoping maybe he'll come, is

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Speaker 6: that we could really have a debate about the challenges

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Speaker 6: facing the American.

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Speaker 1: People instead of facing off against Mike Pence. Trump is

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Speaker 1: expected to be interviewed by Tucker Carlson. Those are your

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Speaker 1: top stories this morning on the markets. The MSCIS Pacific

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Speaker 1: indexes two tenths of one percent lower, eurostocks, fifty futures

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Speaker 1: are a tenth of one percent higher, and the ten

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Speaker 1: yure treasure yield is three basis points higher at four

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Speaker 1: point two nine percent. With those are the top stories

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Speaker 1: and a check on the markets for you. Looking at

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Speaker 1: some of the stories around on Bloomberg this morning, it's

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Speaker 1: a really fascinating story that could change the face of

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Speaker 1: Cargo and how one of the world's largest in fact,

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Speaker 1: the world's largest agricultural trader, Cargo, has been trying out

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Speaker 1: a prototype ship that allows it to reduce its fuel

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Speaker 1: consumption by using giant sales. Now these are sales made

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Speaker 1: of steel and composite glass, but they're called wind wings.

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Speaker 1: And the Pixus Ocean Vessel, which is an eighty thousand

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Speaker 1: ton bulk carrier from Cargo, is using this technology. It's

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Speaker 1: a trial cargo set, as if it works well, it

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Speaker 1: could add it to as much or as many as

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Speaker 1: ten more of its vessels, but it could reduce the

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Speaker 1: vessel's fuel use by roughly a fifth. So it's just

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Speaker 1: completed its first journey from Singapore using that technology, which

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Speaker 1: allows it to save fuel but could be something very

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Speaker 1: interesting to watch in terms of the carbon impact of

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Speaker 1: sea freight. So that story around Cargill this morning one

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Speaker 1: of the ones that caught my eye on the Bloomberg terminal.

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Speaker 1: Let's turn though, to get more details on the latest

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Speaker 1: news out of China where banks have made this smaller

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Speaker 1: than expected to cut to their benchmark lending rates. This

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Speaker 1: after the string of disappointing economic data that we've seen

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Speaker 1: in recent weeks showing the Chinese economy slowing down but

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Speaker 1: also further strains in the property and financial sectors there.

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Speaker 1: In the past, such bad news has resulted in big

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Speaker 1: stimulus from Beijing, but is that approach changing. Our senior

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Speaker 1: economy reporter Tom Hancock joins us now for more from

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Speaker 1: Hong Kong. Tom, great to have you with us. Given

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Speaker 1: the signs of a slowing economy that we've seen in China,

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Speaker 1: why haven't we seen more stimulus?

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Speaker 7: Well, I think there are two major reasons. So the

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Speaker 7: first is that if you're looking at the economy from

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Speaker 7: Beijing and you're seeing the fact that, first of all,

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Speaker 7: services consumption is really rebounding very fast from last year.

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Speaker 7: You know, I was in Shanghai not long ago, and

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Speaker 7: males are packed and so on, and that's such a

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Speaker 7: huge contrast from last year when lockdowns were common across China,

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Speaker 7: and so that naturally boosts growth and gets you closer

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Speaker 7: to the five percent target that Beijing has. And then secondly,

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Speaker 7: it also sees that there's very rapid growth and all

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Speaker 7: kinds of new economy sectors like eves and solar panels

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Speaker 7: and microchip investments, so there's a lot of boom going

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Speaker 7: on in some Chinese industrial sectors. So that really helps

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Speaker 7: you get quite close to that five percent. And then

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Speaker 7: the last thing is that Beijing has said for years

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Speaker 7: and it's clearly serious about it. It wants to move

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Speaker 7: away way from reliance on the property sector as a

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Speaker 7: driver of growth. And so that's why Beijing is happy

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Speaker 7: or accepting to see declines in property sales and construction.

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Speaker 7: It wants a bit of floor under them and make

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Speaker 7: sure they're not too rapid. But it's about this changing

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Speaker 7: growth model.

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Speaker 1: Really, all that being said, could something still change if

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Speaker 1: the trajectory that we've seen continues. Is there a level

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Speaker 1: at which we could actually see Beijing do more?

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Speaker 7: Yes, of course, because I spoke about these different parts

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Speaker 7: of the economy as if they're separate from each other,

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Speaker 7: but of course there's interconnection. So if you've got a

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Speaker 7: weak property sector, that can hit household wealth and therefore confidence,

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Speaker 7: and that can reduce in time services spending, and so

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Speaker 7: you've got that motor being undermined. And if the property

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Speaker 7: downturn starts to take too much wind out of the

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Speaker 7: rest of the economy and it looks like that five

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Speaker 7: percent growth target, it's really going to be missed by

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Speaker 7: a large margin. I think we'll see more action from

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Speaker 7: Beijing to use its own balance sheet, to use the

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Speaker 7: central government balance sheet and the central banks balance sheet

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Speaker 7: to inject money into the economy. But we're probably not

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Speaker 7: at that point yet.

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Speaker 1: What does this mean for China's economy if we're pivoting

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Speaker 1: away from the traditional I suppose push and pull that

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Speaker 1: we've become used to over recent years of bad data

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Speaker 1: meeting more stimulus.

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Speaker 7: Well, I think the base case is that China's growth

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Speaker 7: is going to be slower over the next decade than

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Speaker 7: it was over the previous decade. If you think about

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Speaker 7: pre pandemic average growth of about seven percent over that decade,

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Speaker 7: and coming to the next decade, it's going to be

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Speaker 7: growth of about four percent. It's probably a more reasonable

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Speaker 7: base case. If you don't have a rapidly expanding property sector,

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Speaker 7: that's still going to be faster than any major advanced economy.

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Speaker 7: So that's really a lot of global growth. It's going

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Speaker 7: to be, you know, something that is possibly more sustainable.

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Speaker 7: But we can't rule out as well that this transition

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Speaker 7: has a tail risk of going wrong and then you

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Speaker 7: do end up with some kind of stagnation. I think

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Speaker 7: that's a tail risk as worth thinking about, but it's

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Speaker 7: probably not the base case. The base case is slower

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Speaker 7: and probably more sustainable growth.

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Speaker 1: What does this mean for the rest of the world. Then,

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Speaker 1: as China transitions to this, as you say, slower and

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Speaker 1: more sustainable growth model.

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Speaker 7: For the rest of the world. I mean, the key

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Speaker 7: thing is about commodity demand. So you know, China has

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Speaker 7: been the marginal consumer of commodities like iron ore from

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Speaker 7: around the world, and you know that growth is really

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Speaker 7: just not going to be there. It's going to be

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Speaker 7: growing very slowly or maybe even declining. But as I said,

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Speaker 7: there's also this strength in kind of the new industrial

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Speaker 7: sectors making evs and solar panels and stuff, so a

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Speaker 7: different set of commodities is going to be still demanded.

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Speaker 7: And also as Chinese household consumers get richer, they're going

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Speaker 7: to want more kinds of varied food stuff, some whatever,

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Speaker 7: so they're gonna be demanding consumer goods from the rest

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Speaker 7: of the world too. Obviously, a big caveat is that

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Speaker 7: China is the world's biggest a producer of consumer goods,

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Speaker 7: so a lot of that can be got domestically, but

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Speaker 7: not all of it. And that's why you know, a

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Speaker 7: luxury companies still do very well in China, and you

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Speaker 7: know hotel brands, foreign hotel brands are expanding in China,

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Speaker 7: restaurant chains all this kind of thing.

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Speaker 1: Tom Hancock, our senior economy reporter in Hong Kong, thanks

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Speaker 1: so much for joining us with the details of that story.

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Speaker 1: It's today's Bloomberg Big Take. You can find it online

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Speaker 1: and on the terminal by Ani Big Take as the

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Speaker 1: function on the terminal article title run at Cold while

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Speaker 1: shooting Ping is letting China's economy flail. Thanks to Tom

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Speaker 1: Hancock for the details of that up Next City Group

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Speaker 1: considers major overhaul and prime pain for the Lionessa's Now

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Speaker 1: the paper review on blue Bird Daybreak Europe the news

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Speaker 1: you need to know from today's papers, and Bergsley and

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Speaker 1: Gerins joins us with the details of those stories, England's

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Speaker 1: defeat at the hands of Spainleyanne and the Women's World

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Speaker 1: Cup Final dominating a lot of Monday's front pages.

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Speaker 8: Yeah, absolutely, Stephen, And if you have a look over

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Speaker 8: the front pages today, there's a lot of photographs of

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Speaker 8: the Lionessa's as that World Cup Final did draw to

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Speaker 8: an end. Over in Australia, even the Financial Times features

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Speaker 8: an image from the World Cup Final, highlighting and arresting

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Speaker 8: picture of England players embracing and they basically standing next

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Speaker 8: to their Spanish opponents doing the same thing, but obviously

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Speaker 8: very joyful after winning. The Guardian chooses a striking aerial

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Speaker 8: shot of the England players and supporters staff arm in

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Speaker 8: arm in a post match huddle, with the headline Pride

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Speaker 8: and a page that's superimposed in the center, and the

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Speaker 8: Sun has actually chosen a picture of battered but unbowed

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Speaker 8: defender Alex Greenwood. Now, yesterday she had an elbow accidentally

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Speaker 8: in her eye while she was playing and basically she

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Speaker 8: got all wrapped up, all bandaged up, carried on and

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Speaker 8: you just see her being comforted by her teammate midfielder

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Speaker 8: Kira Walsh. So lots of pictures of the Lioness's covering

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Speaker 8: the front pages today, commiserations but were all still proud

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Speaker 8: as basically how we can sum up in a nutshell.

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Speaker 1: Yeah, definitely and great to get that view of what

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Speaker 1: the papers are saying about this this morning. That's kind

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Speaker 1: of the Financial Times. Nextly and City considers overhaul that

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Speaker 1: would hand more power to chief Jane Fraser.

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Speaker 8: Yes, exactly, and this is an exclusive from the newspaper

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Speaker 8: and the City Group CEO Jane Fraser is reported to

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Speaker 8: be considering a plan to disband the bank's biggest division

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Speaker 8: into three primary business segments. So according to the ft,

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Speaker 8: the plan would affect the Institutional Clients Group, which would

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Speaker 8: actually be split into Investment and Corporate banking, Global Markets,

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Speaker 8: and transaction Services. Now, the Institutional Clients Group, Stephen, generated

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Speaker 8: nearly three quarters of the bank's net profits last year,

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Speaker 8: so doing really well for the bank, so why are

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Speaker 8: they considering doing this now. The internal discussions came after

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Speaker 8: the bank announced that Paco Yabara, who runs the ICG unit,

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Speaker 8: would leave by the middle of next year after thirty

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Speaker 8: six years with the bank, so really long standing, successful career.

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Speaker 8: No replacement has actually been named, and people familiar with

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Speaker 8: the deliberations and discussions say the bank is not actually

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Speaker 8: actively looking for someone at the moment now. If this

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Speaker 8: is adopted, it would mark the biggest over in nearly

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Speaker 8: fifteen years. Another thing, if the units are separated, which

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Speaker 8: is what's been touted, the people who are running those

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Speaker 8: units will stay in place, so the current heads, but

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Speaker 8: they will report directly to Jane Fraser, so that will

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Speaker 8: give a more control day to day of the banking unit.

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Speaker 8: So there we are a big move for what city

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Speaker 8: is possibly considering to do.

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Speaker 1: Okay, yeah, very interesting that story in the Final Times

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Speaker 1: and then in the Times Lean the headline their pension

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Speaker 1: surplus is to be targeted.

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Speaker 8: Yeah, this is an interesting one because nothing's happening yet.

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Speaker 8: This is all a speculative piece that's in the Times.

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Speaker 8: This is all up for consideration at the moment. But

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Speaker 8: like I said, nothing coming to light yet. But list

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Speaker 8: of companies could be allowed to take out as much

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Speaker 8: as fifty billion pounds from their traditional staff of pension schemes.

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Speaker 8: And this will only happen if the government goes ahead

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Speaker 8: with that rad called pension reform, which was outlined by

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Speaker 8: Jeremy Hans Mansion House speech which happened in July, which

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Speaker 8: we did cover. Now the Chancellor is considering a whole

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Speaker 8: string of proposals, but nothing as of yet until everything's finalized.

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