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Speaker 1: This is the Blueberg Daybake You podcast, available every morning

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Speaker 1: on Apples, Spotify or wherever you listen. It's Thursday, the

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Speaker 1: second of May in London. I'm Caroline Hepkin.

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Speaker 2: And I'm Stephen Carroll. Coming up today, The Federal Reserve

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Speaker 2: chief Jerown Pal says he wants to see more evidence

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Speaker 2: inflation is cooling before moving to cut rates.

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Speaker 1: Traders push back against another suspected yen intervention by the

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Speaker 1: Japanese government.

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Speaker 2: Plus not working out Tesla Pull's internship offers as Musk

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Speaker 2: continues his drive to reduce headcount, Let's.

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Speaker 1: Start with a roundup of our top stories.

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Speaker 2: The Federal Reserve charge your Own Power has downplayed the

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Speaker 2: prospect of further rate hikes while keeping hopes alive for

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Speaker 2: a cut this year. The comments come after officials unanimously

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Speaker 2: decided to leave rates on hold following a slew of

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Speaker 2: data that pointed to lingering price pressures in the US economy.

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Speaker 2: Speaking after the policy announcement, Pal consider that the Fed

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Speaker 2: won't be able to reduce borrowing costs as soon as

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Speaker 2: previously forecast.

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Speaker 3: We do not expect that it will be appropriate to

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Speaker 3: reduce the target range for the Federal funds rate until

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Speaker 3: we have gained greater confidence that inflation is moving sustainably

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Speaker 3: toward two percent. So far this year, the data have

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Speaker 3: not given us that greater confidence. In particular, and as

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Speaker 3: I noted, earlier readings on inflation have come in above expectations,

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Speaker 3: it is likely that gaining such greater confidence will take

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Speaker 3: longer than previously expected.

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Speaker 2: During the press conference, Pile also gave clear guidance that

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Speaker 2: he expects the FAD to keep borrowing costs elevated for longer,

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Speaker 2: rather than raising them again.

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Speaker 3: I do think it's clear that policy is restrictive, and

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Speaker 3: we believe over time it will be sufficiently restrictive. That

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Speaker 3: will be a question that the data will have to answer.

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Speaker 3: I think it's unlikely that the next policy rate move

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Speaker 3: will be a hike.

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Speaker 2: Those remarks from Piles sooths investors who'd worried the Fed

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Speaker 2: might react more aggressively to signs that inflation progress has stalled. However,

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Speaker 2: three straight months of disappointing inflation figures have driven a

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Speaker 2: major repricing of interest rate xctations, with futures markets now

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Speaker 2: showing just one cost this year.

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Speaker 1: A surge in the Japanese and in late New York

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Speaker 1: trading has traders wondering if Japan is intervening in the

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Speaker 1: market again. The Can'tcy moved three percent to hit one

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Speaker 1: hundred and fifty three per dollar before weakening. Blueberg's rates

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Speaker 1: reporter Michael Wilson has been talking to traders who think

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Speaker 1: the state had a hand in the moves.

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Speaker 4: I spoke to a couple of chaps in New York

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Speaker 4: before they went home and that what they described at

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Speaker 4: what they saw was much like what happened on Monday.

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Speaker 4: And you know a situation where you know, Dollian would

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Speaker 4: say around one fifty five, seventy, just pick a number,

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Speaker 4: you know, suddenly office would come in, some of which

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Speaker 4: came from Japanese banks all the way like twenty points

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Speaker 4: through the level, at least ten points through the level. Now,

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Speaker 4: that's not typically how the Japanese banks, you know, clear

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Speaker 4: their business. It does seem predatory in terms of, you know,

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Speaker 4: the effect on the market.

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Speaker 1: Wilson says that we'll only know for sure when the

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Speaker 1: government confirms any FX action. Looking ahead, the likelihood of

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Speaker 1: sharp moves in the market during a looming four day

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Speaker 1: holiday in Japan and also London markets being closed on

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Speaker 1: Monday may also have been a concern for Japan's currency officials.

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Speaker 2: Standard Charters has reported adjusted pre tax profit of two

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Speaker 2: point one three billion dollars for the first three months

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Speaker 2: of twenty twenty four, beating analyst expectations. That's a twenty

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Speaker 2: five percent increase on last year's number. The banks on

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Speaker 2: increased income from corporate and investment banking alongside its wealth

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Speaker 2: and retail divisions.

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Speaker 1: The Federal Reserve and other top us regulators plan on

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Speaker 1: finalizing bank capital rules despite strong pushback from the sector.

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Speaker 1: Bloomberg's Banking regulation reporter Katanga Johnson says that there had

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Speaker 1: been talk of scrapping the plan.

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Speaker 5: Whilst we have been waiting. After regulators said in March

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Speaker 5: that they would make broad material changes to the plan.

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Speaker 5: They waited to see whether that meant withdrawing it, scrapping

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Speaker 5: it all together and putting a new one forward. Agencies

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Speaker 5: will not be scrapping their plan. Instead, they'll be making changes,

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Speaker 5: including in particular market risk and what that particular gapital

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Speaker 5: requirement would be. But the discussions are still ongoing and

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Speaker 5: it could be finalized as soon as August. At least

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Speaker 5: some corners of Washington are pushing for.

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Speaker 1: That Johnson adds that this comes in spite of a

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Speaker 1: FIC lobbying campaign form of the financial world. Under the

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Speaker 1: old proposal, the largest US banks would face about a

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Speaker 1: nineteen percent increase in how much capital they must hold

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Speaker 1: in order to buffer themselves against losses. US administrative law

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Speaker 1: requires any changes don't stray too significantly from what was

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Speaker 1: originally planned.

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Speaker 2: Voters in England and Wales had to the polls today

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Speaker 2: for local elections that could give clues as to the

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Speaker 2: performance of political parties in the upcoming general election. Polling

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Speaker 2: stations are open from seven am to ten pm, with

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Speaker 2: elections in one hundred and seven local authorities and ten

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Speaker 2: mayoral races taking place. Results of our expectors start coming

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Speaker 2: in early on Friday morning, with the count in some

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Speaker 2: areas continuing through to Sunday.

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Speaker 1: The UK is beating the odds and attracting growing foreign

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Speaker 1: direct investment that as its European peers see a decline

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Speaker 1: in new externally funded projects. Bloombergs Tea Adebayo has the details.

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Speaker 6: Foreign direct investment is stalling across Europe. The number of

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Speaker 6: projects is down fourteen percent from its twenty seventeen peak.

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Speaker 6: That's according to consultancy firm Ey, who say the figures

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Speaker 6: should act as a wake up call for the region.

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Speaker 6: But the UK, it seems, is bucking the trend, attracting

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Speaker 6: nine hundred and eighty five FDI projects in twenty twenty three,

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Speaker 6: six percent more than the year before. That number puts

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Speaker 6: the country second in the European Foreign Investment League tables,

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Speaker 6: behind France. A sharp increase in software and IT investment

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Speaker 6: in London could be behind the boost in London. Do

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Speaker 6: you add a Bayo Boomberg Radio.

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Speaker 2: And Tesla is rescinding internship offers just weeks before candidates

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Speaker 2: are due to start. It comes as the firm goes

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Speaker 2: through a series of sweeping job cuts and acted by

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Speaker 2: CEO Elon Musk. Provoking internships isn't likely to save Tesla

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Speaker 2: a lot of money. According to Glassdoor, the automaker typically

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Speaker 2: offers eighteen dollars to twenty eight dollars an hour for

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Speaker 2: the positions. Now, in a moment, we'll dig into what

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Speaker 2: we heard from the Fed charge your own Powell at

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Speaker 2: yesterday's meeting, plus look at the latest moves that we've

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Speaker 2: seen in the Yen. But the story that caught our

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Speaker 2: eye this morning very close to my heart about restaurant bookings.

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Speaker 2: If you think things in London are bad and how

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Speaker 2: foreign advance, you have to try and book to get

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Speaker 2: a place in a restaurant. Our opinion columnist Harod try

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Speaker 2: One has been writing about the latest phenomenon in New York,

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Speaker 2: which is a secondary market for bookings where people are

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Speaker 2: paying to get spots at top eteries that other people

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Speaker 2: have already booked. You make the booking and then you

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Speaker 2: resell it.

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Speaker 1: So you have to be like a ticket master.

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Speaker 2: Or out there online trying to get your place in

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Speaker 2: the restaurant. But Howard's pointed to system that's used at

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Speaker 2: some high end restaurants in Japan, which he says could

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Speaker 2: provide inspirations for others. And this is no first time bookings,

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Speaker 2: So if you want to get in, you have to

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Speaker 2: either be a regular or be invited by a regular.

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Speaker 2: And if you pass muster on your first visit as

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Speaker 2: a guest of somebody who they know and like, then

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Speaker 2: you may be invited to book yourself for your return visit.

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Speaker 2: So the idea is for the restaurants they get a

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Speaker 2: regular clientele. For those who go there, you know, they

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Speaker 2: get to they know what the food is and then

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Speaker 2: the chef and the diners are all happy. That's the

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Speaker 2: idea anyway, But Howard points out that's not really in

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Speaker 2: line with the Western ideal of perpetual growth and the

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Speaker 2: magic escalator of scalability. But it could work for those

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Speaker 2: who want to keep themselves off the radar. There's a

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Speaker 2: great story in the piece, which I won't spoil, about

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Speaker 2: Howard's trip to a restaurant called Sugita and Tokyo, one

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Speaker 2: of those regular only places. Whether or not he gets

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Speaker 2: invited back, you'll have to read the piece to find out.

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Speaker 1: How does one pass muster in a restaurant these days?

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Speaker 1: Not quite sure. I think London's still obsessed with the

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Speaker 1: celebrity chef. In fact, I've I've put a table on

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Speaker 1: Saturday night for one such day.

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Speaker 5: There we go.

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Speaker 1: Read that story on the Blueberg Tournament. A bit of

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Speaker 1: fun for you this morning. Let's get on though, with

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Speaker 1: the business of things out of the US yesterday, gaining

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Speaker 1: confidence that inflation is falling towards the target will take

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Speaker 1: longer than previously expected. That was the message from Jeroam Power,

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Speaker 1: who signaled rates will remain higher for longer, but that

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Speaker 1: a hike is unlikely to be the Fed's next move.

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Speaker 1: Blueberg's TV anchor Kritti Gupta is with us this morning

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Speaker 1: to go over everything that we heard about yesterday from

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Speaker 1: the Fed on the rate path. Was this meeting what

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Speaker 1: you described as nothing Burger, keeping that kind of restauranting theme.

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Speaker 7: I appreciate that you called it nothing burger.

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Speaker 5: I love when Fritz to do that.

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Speaker 7: Yes, in that the cuts or if you say, the

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Speaker 7: rate decision didn't actually move right. They kept a rate steady,

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Speaker 7: so that made a lot of sense. It also reiterated

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Speaker 7: this idea that hikes are not in the near future

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Speaker 7: for the Federal Reserve, and I think that was kind

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Speaker 7: of the changing point for a lot of this press conference,

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Speaker 7: simply because the expectation going into the conference, as we

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Speaker 7: know and as we discussed twenty four hours ago, was

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Speaker 7: simply that there may be a case for a hike.

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Speaker 7: J Powell doing a very good job of throwing cold

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Speaker 7: water on that, saying if the bars even higher, that

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Speaker 7: policy rates are still very restrictive. That hasn't eroded the

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Speaker 7: ability of the tool itself. And that's a really important

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Speaker 7: piece of the equation because one of the arguments that

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Speaker 7: was made in terms of a hike was that maybe

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Speaker 7: things aren't restrictive enough because the US economy is outperforming.

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Speaker 7: That being said, what got really interesting was the really

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Speaker 7: really nerdy piece of QT, and I think that is

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Speaker 7: I found the most fascinating part because of some of

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Speaker 7: the analysis that came out after Basically they're halting the

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Speaker 7: pace of QT the runoff essentially, which means that it's

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Speaker 7: not quite q E, but it has more of a

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Speaker 7: less hawkish effect than it did previously. Obviously, I love

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Speaker 7: what Alberto Gallo or Andromeda Capital said. He says, keeping

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Speaker 7: front end rates high while tapering QT is like pulling

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Speaker 7: the handbrake while pushing the accelerator pedal, So essentially moving

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Speaker 7: kind of the two year yield, which you have seen

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Speaker 7: move in response to kind of this hawkishness and this

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Speaker 7: resilience in the data, while still kind of creating that

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Speaker 7: liquidity and that easing in the back end of the curve.

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Speaker 7: What it does is kind of manipulate the way the

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Speaker 7: curve moves to some extent, kind of jawbone to guide

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Speaker 7: markets where they want to go. That's a pretty big

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Speaker 7: deal when we're talking about whether or not these are

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Speaker 7: early signs of this kind of more easier monetary policy

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Speaker 7: that is coming down the road. When it comes to

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Speaker 7: the actual rate cut, though, that seems me moved further

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Speaker 7: and further.

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Speaker 2: Oh so the question of how do you send a

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Speaker 2: segment to the markets without sending a segment on interest rates?

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Speaker 2: Essentially is what the Fed appears to have don't have?

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Speaker 2: What do the markets look at next?

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Speaker 7: Then the next data point payrolls, I suppose on Friday.

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Speaker 7: What's important to keep about this? Keep about about this idea.

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Speaker 7: I'm gonna get my words right this morning. But basically

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Speaker 7: what you need to keep in mind here is that

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Speaker 7: basically the cuts are now one cut is now priced

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Speaker 7: in forward December. So one of the key pieces here

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Speaker 7: is that does the Fed kind of back themselves into

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Speaker 7: a corner because they are still sticking to this narrative

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Speaker 7: that the inflationary trend is not an acceleration of inflation.

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Speaker 7: It is still on the kind of paths of deceleration. However,

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Speaker 7: they are saying it's taking longer and longer to get

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Speaker 7: to that two percent inflation target, and that's where the

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Speaker 7: concern lies. Where do cuts then go into twenty twenty

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Speaker 7: five that meets with election risk to what extent does

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Speaker 7: payrolls even matter if the FED is going to be

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Speaker 7: sticking to that easier policy.

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Speaker 1: Yeah, okay, so that's on the FED. The other story

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Speaker 1: that was of interest, and we gave you a little

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Speaker 1: snippet of it around the rules for bank capital, which

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Speaker 1: has been a huge deal on Wall Street, and it

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Speaker 1: looks like the whole plans are not going to be scrapped.

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Speaker 1: There's still going to be a drive basically for the

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Speaker 1: banks to hold more capital, especially the kind of larger banks.

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Speaker 1: You know, thoughts on that and when we're going to

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Speaker 1: get the decision as well.

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Speaker 7: Yeah, one of those pieces of significance here is these

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Speaker 7: kind of reserve ratios that were initially going to be

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Speaker 7: bumped up. Was initially a move in response to the

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Speaker 7: Silicon Valley bank story, and it was this idea that

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Speaker 7: you needed more capital to prevent bank runs, to prevent

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Speaker 7: basically these big losses you sar kind of the Archagos

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Speaker 7: deal with Credit Suisse involved as well. So there are

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Speaker 7: a lot of concerns around the fact that some of

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Speaker 7: the big banks could have some sort of GFC two

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Speaker 7: point zero kind of moment. The issue with that, though,

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Speaker 7: is that is also essentially restrictive policy because it means

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Speaker 7: less lending ability into the rest of the economy. The

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Speaker 7: fact that they're pulling back on that and they're not

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Speaker 7: making as stringent of those rules is also a positive.

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Speaker 7: It's stimulative and therefore kind of in that easing camp. However,

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Speaker 7: that could change going into twenty twenty five again because

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Speaker 7: they're going to be reevaluating the story and the banks.

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Speaker 7: Jamie Diamond in particular has come across a lot of pushback,

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Speaker 7: especially on Congress, in terms of just how secure they

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Speaker 7: are in terms of that cushion that they need.

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Speaker 2: Okay, Christy goope to thank you very much, Bimberg TV

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Speaker 2: anchor bringing its details.

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Speaker 1: Now, we've had another suspected currency intervention by Japanese authorities,

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Speaker 1: saw the yen strengthen suddenly before then facing further selling pressure.

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Speaker 1: Our executive editor for Asian Markets, Paul Dobson joins us

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Speaker 1: now for more, just take us through the scale of

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Speaker 1: the moves that we've seen in the Japanese Yeah, and

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Speaker 1: I mean it's the dope fight. The third issue, isn't it?

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Speaker 8: Well a little bit, although the currency market seems pretty

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Speaker 8: willing to take the Japanese authorities on to a certain extent,

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Speaker 8: but what we saw in the last few minutes of

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Speaker 8: the New York trading session was quite a pronounced move

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Speaker 8: again stronger for the yen, about a five yen move,

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Speaker 8: which is typically the sort of impact and scale and

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Speaker 8: scope of change that you would see with an intervention

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Speaker 8: by those authorities looking to give it a little bit

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Speaker 8: of a boost. Based on that, the evidence suggests that

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Speaker 8: it's a second intervention by the authorities this week, a

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Speaker 8: second attempt to stop the yen from continuing with this

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Speaker 8: weakening path. The problem that they face is almost immediately

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Speaker 8: once that was over, the weakening began again, and we

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Speaker 8: already you know, took back at about one percent of

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Speaker 8: those advances that we saw in those last minutes of

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Speaker 8: the New York session, And so it points to this

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Speaker 8: idea that still the trend is very much for a

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Speaker 8: week again, and so the impact or the influence that

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Speaker 8: the authorities can have is is going to be tested

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Speaker 8: at the very least.

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Speaker 2: Does that is that likely to put them off doing

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Speaker 2: it again? Though, Paul, I mean, could we see further

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Speaker 2: interventions like this? Of course, they haven't officially confirmed it,

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Speaker 2: Japan's top currency official telling us that he had nothing

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Speaker 2: to say about whether they'd intervened.

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Speaker 8: Quite right, they haven't confirmed it, although a lot of

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Speaker 8: the data, including a look at the current account that's

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Speaker 8: published about the Bank of Japan, points in that direction. No,

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Speaker 8: I don't think that it's going to deter them from

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Speaker 8: doing it. Now that they've started, it makes it much

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Speaker 8: more likely that they're going to continue on this path

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Speaker 8: until they get the message across. Even if all they

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Speaker 8: can hope is to slow the pace of depreciation of

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Speaker 8: the yen, that's still probably a good reason to get

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Speaker 8: involved at this point, to try to keep the market

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Speaker 8: guessing a little bit, which is part of the reason

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Speaker 8: why there isn't any kind of admission of what the

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Speaker 8: action looks like, keep the market guessing, keep traders a

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Speaker 8: little bit nervous. What they really want, more than anything

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Speaker 8: else is to avoid speculative trading. As they put it,

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Speaker 8: too much money being pushed on a speculative basis against

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Speaker 8: the general sharp moves in the currency over a short

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Speaker 8: period of time to destabilize our financial markets or destabilized

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Speaker 8: price expectations.

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