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Speaker 1: This is Bloomberg Daybreak Euroup for this Tuesday, the sixteenth

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Speaker 1: of May in London. Coming up today. Running out of steam,

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Speaker 1: China's recovery worries mount as data disappoints. Not paying off

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Speaker 1: UK wage rises are set to keep the Bank of

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Speaker 1: England on edge and higher for longer. The Fed's bossed,

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Speaker 1: it tells Bloomberg Radio. There's still a way to go

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Speaker 1: on inflation.

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Speaker 2: CEO, pay packages for Hugh Pills. Sorry for inflammatory remarks,

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Speaker 2: and the rise and rise of casual workwere those are

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Speaker 2: the stories we're looking at in today's papers. And I'm

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Speaker 2: leanne Gerrins.

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Speaker 1: Plus taxing times one in five Brits are to start

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Speaker 1: paying the forty percent rates.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The Business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 3: and everywhere you get your podcasts.

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Speaker 1: Good morning, I'm Caroline Hepka. Let's get into our top stories.

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Speaker 1: China's consumer spending and industrial activity grew at a slower

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Speaker 1: pace than expected in April. The data adds to science

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Speaker 1: that the economic recovery in the country is losing momentum.

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Speaker 1: Industrial production rows five point six percent from a year earlier.

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Speaker 1: That is significantly lower than the ten point nine percent

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Speaker 1: a Bloomberg survey of economists had forecast. JP Morgan's chief

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Speaker 1: China economists he Bin Ju, says that the numbers are

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Speaker 1: a cause for concern.

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Speaker 4: Today's depa is a big miss ip. I find them

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Speaker 4: most surprising because if you look at the esport data,

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Speaker 4: very much in line expectation, so that tells you that

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Speaker 4: domestic demand there's a major bottleneck. We're losing the recurri

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Speaker 4: momentum very quickly.

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Speaker 1: Iman Ju there also points out that the figures look

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Speaker 1: better than the reality, given that parts of China were

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Speaker 1: in lockdown this time last year. The UK will release

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Speaker 1: its latest batch of labor market data today. Another hot

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Speaker 1: wage print will do little to ease policymakers' worries. Bloomberg

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Speaker 1: Economics forecast that total pay growth excluding bonuses will rise

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Speaker 1: to six point eight percent year on year. That is

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Speaker 1: up from six point six percent previously. The data comes

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Speaker 1: as former Bank of England governor Mervin King warns central

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Speaker 1: banks against making precise forecasts on inflation. He spoke to

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Speaker 1: bloombergs Alex Steel and Guy Johnson.

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Speaker 5: The circumstances of a pandemic and what threed happening in

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Speaker 5: Ukraine mean that it is foolish to try to pretend

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Speaker 5: that one could forecast accurately. And I think that the

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Speaker 5: point forecasts of GDP growings and inflation, I mean inflation

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Speaker 5: will be three point one percent whatever that that's far

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Speaker 5: too precise. We do not know about for refusion to

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Speaker 5: make those forecasts. What we need to do is to

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Speaker 5: identify risks.

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Speaker 1: Mervin King also pointed out that inflation figures in no

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Speaker 1: way anti dissipate where the future prices might go. The

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Speaker 1: Bank of England lifted rates by twenty five basis points

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Speaker 1: at its May meeting to four and a half percent,

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Speaker 1: and economists are forecasting at least one more hike. Two

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Speaker 1: Federal Reserve officials are raising the prospect of a pause

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Speaker 1: in US hikes. Chicago's Austin Goolsby says that his May

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Speaker 1: vote is going to be a close call, and Atlanta

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Speaker 1: FED president Raphael Bostik told Bloomberg Radio that businesses are

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Speaker 1: starting to feel the crunch.

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Speaker 6: If I had to have a vote right now, I'd

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Speaker 6: probably vote to hold. But as you noted, we got

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Speaker 6: two more inflation readings. We have a jobs number of

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Speaker 6: jobs report that's got to come out. There's a lot

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Speaker 6: more information we're going to have as to what's going on.

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Speaker 1: In a separate CNBC interview, boss Stick said that he

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Speaker 1: doesn't expect rate cuts until well into twenty twenty four.

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Speaker 1: Traders disagree. They're betting that the central Bank will begin

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Speaker 1: cutting later this year. Now, I mentioned US Treasury Secretary

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Speaker 1: Janet Yellen. She says that the debt ceiling standoff is

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Speaker 1: already hurting the economy, and her warning is backed by

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Speaker 1: the Securities in Exchange Commission Chair Gary Gensler. He says

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Speaker 1: that treasury prices are already shifting.

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Speaker 7: We've already seen some pricing stress around short term bills,

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Speaker 7: treasury bills and the like, a little bit of changes

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Speaker 7: in the actually the sovereign credit to fought swap spreads.

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Speaker 7: But if we were to go over the X day,

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Speaker 7: I think that you'd see breakdowns off through the market.

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Speaker 1: Well, that X date that Gensler talked about there refers

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Speaker 1: to the moment that the US defolds. President Biden meets

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Speaker 1: with his Republican counterparts later today to try and resolve

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Speaker 1: the impasse. However, how Speaker Kevin McCarthy says, quote, we

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Speaker 1: are nowhere near reaching a conclusion in the talks to

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Speaker 1: raise the debt ceiling. One in five tax payers will

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Speaker 1: be paying a higher rate of in come tax by

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Speaker 1: twenty twenty seven as a result of a stealth raid

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Speaker 1: by the Prime Minister Rishisunak. This, according to new analysis

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Speaker 1: Bloomberg's U and POTS reports, now an.

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Speaker 8: Extra two and a half million people we're paying tax

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Speaker 8: at forty percent or more on some of their earnings

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Speaker 8: if income tax thresholds remain frozen. That's the warning from

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Speaker 8: the Institute for Fiscal Studies. Rishisunac's government is currently planning

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Speaker 8: a six year freeze to thresholds, pulling people into higher

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Speaker 8: tax bans as wages rise, a phenomenon known as fiscal drag.

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Speaker 8: The IFS says that higher rates OFCOM tax used to

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Speaker 8: be reserved only for the wealthiest, but by twenty twenty seven,

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Speaker 8: it says, about one in four teachers and one in

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Speaker 8: eight nurses can expect to face them. The report estimates

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Speaker 8: a third of the expected record fall in household InCom

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Speaker 8: this year is likely to be a result of this

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Speaker 8: tax policy. In London. I'mune pots Booberg Daybreak Europe.

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Speaker 1: Meanwhile, the Prime Minister has pledged support for a coalition

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Speaker 1: to help provide Ukraine with a fleet of Western made

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Speaker 1: fighter jets. However, rishisunac stopped short of promising actual aircraft.

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Speaker 1: The Prime Minister also committed to giving Ukraine more attack

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Speaker 1: drones and air defense systems.

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Speaker 9: All right, we are here for the long term. We

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Speaker 9: remain steadfast in wanting to defend Ukraine, not just now

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Speaker 9: to reclaim its rightful territory, but also to ensure that

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Speaker 9: Ukraine has a mean to defend itself into the future

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Speaker 9: as well.

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Speaker 1: Now soon, I've made the comments doing a surprise visit

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Speaker 1: by his Ukrainian counterpart to the uk Vlodimir Zelenski. Kiev

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Speaker 1: is seeking additional supplies of weapons from allies as it

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Speaker 1: prepares for a counter offensive against Russian forces in the country. Right,

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Speaker 1: those were a few of our top stories for you

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Speaker 1: this morning. Look, I think the story around guilt is

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Speaker 1: actually really important to note. There's a really nice piece

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Speaker 1: on the terminal this morning by Bloomberg's Marcus Ashworth. The

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Speaker 1: points to this fact that there is a flood of

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Speaker 1: guilt supply and it's coming to the four this week

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Speaker 1: with the forty year guilt sale today, because of course

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Speaker 1: it's beginning to overwhelm investors, simply because of the about

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Speaker 1: face that we've seen. The Bank of England has turned

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Speaker 1: from being the largest net buyer in the last decade

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Speaker 1: of gilts to becoming now an active seller. And perhaps

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Speaker 1: that is too quick for markets to digest. Remember, the

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Speaker 1: ten year UK guilt yield is three point eight percent,

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Speaker 1: so quite a few notches hard than the US equivalent

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Speaker 1: at about three and a half percent. And also we've

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Speaker 1: underperformed German bo so I think that Guilt Cell this

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Speaker 1: morning will be quite interesting to watch. On a slightly

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Speaker 1: lighter note, though, Martha Stewart on the front cover of

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Speaker 1: Sports Illustrated, do you know that the Queen of Domesticity

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Speaker 1: and Cooking, of course, is eighty one, the oldest swimsuit

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Speaker 1: model ever to grace the cover. I don't know what

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Speaker 1: this says about representation. Perhaps the older women are coming

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Speaker 1: more to the four, she told the Today's Show on Monday.

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Speaker 1: For me tis a testament to good living, and all

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Speaker 1: of us should think about good living, success for living,

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Speaker 1: and not about aging. There you go and moto for

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Speaker 1: us all to live by this morning. Right Aside from that, though,

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Speaker 1: on a more serious note, let's go back to the

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Speaker 1: China data, shall we. It disappointed this morning, sluggish consumer

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Speaker 1: spending and industrial activity growth. So let's discuss with our

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Speaker 1: economic editor for Greater China, James Maker, who joins me

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Speaker 1: live on Beijing this morning. James, thanks so much for

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Speaker 1: your time. So China's reopening energy, then it really does

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Speaker 1: look to be fading. Is the problem problem more domestic

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Speaker 1: or is it more global?

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Speaker 10: It's both. I mean, I think the main problem is

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Speaker 10: a domestic economy is that is slowing and is not

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Speaker 10: growing as fast as people had expected. Part of the

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Speaker 10: reason for that is that global demand is also quite

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Speaker 10: slished this year. You're seeing Chinese exports in April falling

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Speaker 10: back to you know, not growing very quickly. So you

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Speaker 10: know there is a summer effect and you know slowing

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Speaker 10: global demand. You know the writing interstrates you're seeing in

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Speaker 10: Europe and America are having some effect. But it really

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Speaker 10: is domestic weakness story. I think. You know, housing market

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Speaker 10: is still in contraction. You know, retail sales is not

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Speaker 10: growing very particularly strongly, and also industrial airport really weakened

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Speaker 10: that much weak and expect it. So all those things combiny.

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Speaker 10: I mean that you know that surprising on the downside

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Speaker 10: today from the Chinese, From the Chinese.

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Speaker 1: Data, yeah absolutely, I mean the retail sales rose eighteen

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Speaker 1: point four percent, but that was a lot less than expectations.

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Speaker 1: Industrial production five point six percent. So look, what do

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Speaker 1: you think authorities are going to do? Are they going

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Speaker 1: to add more monetary easing? The PBOC made a move

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Speaker 1: on Monday for long term liquidity, but will there be more?

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Speaker 10: I mean, the interesting thing the PBOC brought out their

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Speaker 10: first quarterly Monetary Policy Statement yesterday afternoon, which is kind

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Speaker 10: of like the you know, like most of the central

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Speaker 10: banks do it every month or what have you. The

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Speaker 10: pocs are four times a year, and it was there's

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Speaker 10: a split in how people are reading that statement. They

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Speaker 10: did drop this phrase that they've used since the twenty

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Speaker 10: twenty one about not flooding the economy is stimulus, and

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Speaker 10: some economists and some analysts are taking that as a

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Speaker 10: sign there is going to be much more monetary stimulus

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Speaker 10: coming down the pipeline. But they also had a new

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Speaker 10: section in the policy statement about how the PBOC has

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Speaker 10: been keeping monetary policy stable, has been keeping interest rate

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Speaker 10: policy stable, sort of emphasizing the fact that they're trying

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Speaker 10: to thread this middle line between too much and too little,

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Speaker 10: and a lot of people also, a lot of different

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Speaker 10: analysts took that as a sign they're going to be very,

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Speaker 10: very reticent to add monetary stillness. So it's very you know,

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Speaker 10: the views of what the PBOC is going to do

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Speaker 10: are split at this time. Our understanding, you know, from

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Speaker 10: what we've seen, they've been trying to add some liquidity

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Speaker 10: to financial markets, but they haven't you know, they haven't

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Speaker 10: been really aggressive in the past through the pandemic, they

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Speaker 10: haven't been aggressive in monetary policy, and we've seen no

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Speaker 10: kinds of real change in that. So really then it's

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Speaker 10: down to the fiscal authorities, to the government. What are

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Speaker 10: they going to do to try and help the housing market,

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Speaker 10: What are they going to try and do to help

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Speaker 10: retail sales and private consumption to bounce back. Yeah.

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Speaker 1: Absolutely, I mean, also you've got to think about how

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Speaker 1: sustainable the recovery is and what those policy makers will

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Speaker 1: do about one particular red flag, which is youth unemployment.

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Speaker 1: We've talked about this in the past, but it's hits

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Speaker 1: another record high twenty point four percent.

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Speaker 10: Right, we're not looking at levels of you know, Spain

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Speaker 10: during the during the global financial crisis of you know,

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Speaker 10: the thirty forty percent of young people out of work,

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Speaker 10: but twenty percent is a record high, as you say,

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Speaker 10: and it's actually it's probably going to get worse as

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Speaker 10: we go into the year because most Chinese university students

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Speaker 10: graduate in June and then they join the labor market.

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Speaker 10: When they join, they start looking for work or they

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Speaker 10: you know, and the ones that haven't been unifying work

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Speaker 10: at that point go become unemployed. So you know, this

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Speaker 10: may actually get a lot worse. Yes, yeah, the second

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Speaker 10: half of year, unless they economy picks up. There's little

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Speaker 10: to think that that's going to be a swift improvement

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Speaker 10: as numbers and you know, lots of young unemployed people

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Speaker 10: is not what any government wants to see, especially in China.

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Speaker 10: I think there's maybe twelve million university graduates joining the

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Speaker 10: workforce in during this year, which, wow, huge number of

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Speaker 10: people you need to find jobs for.

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Speaker 1: Yeah, it's mind boggling. Is there twelve million people graduating

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Speaker 1: in the summer? James, thank you so much for being

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Speaker 1: with us. Love to have you on the program? That

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Speaker 1: is Bloomberg's Economic editor for Greater China, James Meger. Now

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Speaker 1: coming up next, CEO pay packages fall. Hugh pill says

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Speaker 1: sorry for inflammatory remarks and the rise and rise of

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Speaker 1: casual workwere.

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Speaker 3: Now the paper review on blue Bird Daybreak Europe, the

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Speaker 3: news you need to know from today's papers, and.

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Speaker 1: Joining me in the studio of Bloomberg's le Anne Garren's

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Speaker 1: I'm not alone this morning. Thanks for coming in and

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Speaker 1: talk to us. The Wall Street Journal has the headline

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Speaker 1: CEO pay packages fell sharply in twenty twenty two, the

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Speaker 1: first decline in a decade.

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Speaker 2: Caroline will never let you walk alone on this show.

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Speaker 2: We will always come and join you at some point. Yes,

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Speaker 2: now let's get into this Wall Street Journal story, Caroline.

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Speaker 2: This really digs into the changes made to the way

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Speaker 2: CEO pay packages are now calculated over in the US.

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Speaker 2: So this is something that we're really going to hone

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Speaker 2: in on. Historically, companies have reported executive pay as it

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Speaker 2: was valued when they received the pay packet, But now

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Speaker 2: companies are really charting gains and losses in the stock

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Speaker 2: awards that make up much of the pay packages for

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Speaker 2: the CEOs. Now this is the first time this year

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Speaker 2: this is happening, and now we are seeing those new

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Speaker 2: figures come through. Hence why things have fallen sharply. So

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Speaker 2: numbers show that in twenty twenty two, about two thirds

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Speaker 2: of top executives at S and P five hundred companies

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Speaker 2: ended the year with smaller pay packages, and some one

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Speaker 2: hundred and forty CEOs actually earned more money than they

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Speaker 2: did expect. And this is all according to Wall Street

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Speaker 2: Journal analysis. They've been breaking down the numbers in light

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Speaker 2: of these changes to the way data is processed. Now

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Speaker 2: the latest disclosures show new measure of pay for the

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Speaker 2: three months in most recent years highlights how much CEO

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Speaker 2: pay can really fluctuate with market tides and other factors.

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Speaker 2: So this is the why we're seeing these SMP five

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Speaker 2: hundred top executives earn less money because things are being

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Speaker 2: calculated differently and obviously volatility in the markets making things

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Speaker 2: more difficult.

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Speaker 1: Yeah, look, I think it's a really interesting move, isn't it.

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Speaker 1: It's trying to get more clarity actually what the value

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Speaker 1: of pay packages is and sort of trying to I guess,

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Speaker 1: mark to market the pay packets. But this is a

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Speaker 1: weird year in which to do it. Yes, absolut lastly

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Speaker 1: would have been as well, given that a lot of

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Speaker 1: stocks have done badly, you know, in terms of yeah,

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Speaker 1: the economics show done that we've seen. Let's see in

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Speaker 1: good years what those pay packets look like. Okay, let's

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Speaker 1: move on though and talk about the time. So the

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Speaker 1: back of England's Hugh Pill is sorry for inflammat trye remarks.

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Speaker 1: What were those inflammatory remarks.

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Speaker 2: O Hugh Pill? He said, Britain's need to accept they

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Speaker 2: are poorer as a result of high inflation. But listen, Caroline,

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Speaker 2: sometimes it's difficult to say sorry and to own up

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Speaker 2: to your mistakes. But he's done just that. And I

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Speaker 2: wonder if it's because his remarks caused basically tidal waves,

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Speaker 2: so didn't it. People were pretty outraged by what he

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Speaker 2: had to say, accepting they were poorer because of high inflation.

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Speaker 2: His comments were even criticized by Andrew Bailey. Now that

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Speaker 2: was a rare move from the governor of the Central Bank.

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Speaker 2: But remember he told people not to accept bonuses. So

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Speaker 2: I'm just wondering if this just slightly rings out of touch.

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Speaker 2: But listen, he said that he is sorry, he was

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Speaker 2: should have used different language. And you know, like I said,

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Speaker 2: widely criticized across political spectrum.

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Speaker 1: He was, but saying saying sorry and that I should

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Speaker 1: have used better language is not denying, you know, the

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Speaker 1: economic point that he was trying to make, which is

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Speaker 1: that if we all push for higher wages, prices will

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Speaker 1: continue to go up and that makes the inflation picture worse.

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Speaker 11: But one of the.

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Speaker 2: Strikes still going on was some you know sectors still

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Speaker 2: pushing for more pay. And that's basically yes.

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Speaker 11: The underlying tone.

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Speaker 1: There, Okay, headline in the Financial Time says work and

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Speaker 1: we can wardrobes? Do we need boundaries?

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Speaker 2: Do we? Absolutely not? And I don't know why. This

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Speaker 2: story is interesting but also annoyed me a little bit, Caroline.

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Speaker 2: We've completely moved on from having two different wardrobes. We

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Speaker 2: no longer need a walk work law. In my mind,

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Speaker 2: a work wardrobe's gone and a casual wardrobe's gone. It's

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Speaker 2: all just mixed in now. But listen, Emma Jacob's writing

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Speaker 2: for the Ft, such a great piece. She says it's

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Speaker 2: annoying her. She wants distinction.

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Speaker 11: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 11: stories making news from London to Wall Streets and beyond.

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Speaker 11: You can also listen live each morning on London DAB Radio,

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Speaker 11: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 1: Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.

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Speaker 1: I'm Caroline Hipka.

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Speaker 11: And I'm Stephen Carroll. Join us again tomorrow morning for

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Speaker 11: all the news you need to start your day right

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Speaker 11: here on Bloomberg day Break Europe m