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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg day Break Euroup podcast, available every

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Speaker 2: morning on Apple, Spotify or wherever you listen. It's Tuesday,

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Speaker 2: the thirteenth of February. I'm Stephen Carroll and.

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Speaker 3: I'm Lizzie Burden. Coming up today. Stronger than expected UK

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Speaker 3: wage data leads traders to reduce Bank of England rate

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Speaker 3: cut bets.

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Speaker 2: Chip designer arms stock rises by twenty nine percent in

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Speaker 2: a single day and nearly doubles in less than a

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Speaker 2: week plus.

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Speaker 3: Pushing for a pause, the US President says he's actively

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Speaker 3: working on a six week ceasefire between Israel and her mass.

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Speaker 2: Let's start with a roundup of our top stories.

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Speaker 3: UK wage growth slowed less than expected in the fourth quarter,

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Speaker 3: underscoring the case for the Bank of England to wait

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Speaker 3: before cutting rates. Wages excluding bonuses rose by six point

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Speaker 3: two percent from a year earlier, down from an upwardly

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Speaker 3: revised six point seven percent in the third quar Petro Tagger,

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Speaker 3: director at Mangreep UK, says the figures suggest the labor

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Speaker 3: markets not calling fast enough to satisfy worries of a

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Speaker 3: wage price spiral.

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Speaker 4: What we have seen is a continuation of the trends

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Speaker 4: over the past twelve months. Wage growth has remained quite sticky,

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Speaker 4: which puts inevitable pressure on organizations to pay more to

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Speaker 4: attract the right workers. On the surface, it's fairly flat,

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Speaker 4: it's fairly calm, but it's what lies beneath for me

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Speaker 4: is the important aspect of the data.

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Speaker 3: And indeed Tag's analysis is reflected in the market reaction,

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Speaker 3: with traders scaling back bets on cuts this year.

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Speaker 2: Well Andrew Bailey says capital rules are not responsible for

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Speaker 2: low UK bank valuations, but he remains puzzled as British

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Speaker 2: lenders trade below their book values. The Bank of England

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Speaker 2: governor was giving a speech in the East Midlands and England,

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Speaker 2: saying that he believes that more reforms are needed to

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Speaker 2: protect banks from runs like the one that broke Silicon

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Speaker 2: Valley Bank UK last year. Bailey also dismissed UK recession

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Speaker 2: concerns that any slowdown will be shallow.

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Speaker 3: It's been just over four years since the UK officially

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Speaker 3: left the European Union, some economists say the country is

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Speaker 3: still suffering the consequences. Bloomberg's tewa adabaioharst the details.

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Speaker 5: Brexit shrank the British economy. That's according to economists at

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Speaker 5: Goldman Sachs, who say the UK has fallen significantly behind

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Speaker 5: similar nations thanks to the decision. Their research found the

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Speaker 5: country's real GDP has underperformed by about five percent. Reduced

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Speaker 5: international trade and fewer migrants are included on a list

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Speaker 5: of side effects that have contributed to the long term

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Speaker 5: cost of the move. According to the Bank, Goldman's conclusion

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Speaker 5: is broadly in line with other estimates about the drawbacks

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Speaker 5: of Brexit. In London, Tea Addubayo Bloomberg.

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Speaker 2: Radio shares in arm have risen again, extending a three

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Speaker 2: day rally. The stock swords by twenty nine percent, closing

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Speaker 2: it a record on Monday, with the chip designer almost

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Speaker 2: doubling in value thanks to the artificial intelligence boom. Bloomberg's

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Speaker 2: Karl Masser It says the gains are being stoked by

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Speaker 2: the firm's projections.

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Speaker 6: That was fueled by that revenue forecast that the company

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Speaker 6: put out specifically that far far exceeded the average of

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Speaker 6: analyst estimate, so it's interesting. There wasn't anything specific today,

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Speaker 6: but investors continuing that three day jump to more than

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Speaker 6: ninety three percent in ARMS, so pretty remarkable.

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Speaker 2: Bloomberg Chief national correspondent Karl Masser there. The jump comes

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Speaker 2: after a blockbuster earnings report which showed AI spending is

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Speaker 2: boosting sales for ARM other big beneficiaries in the sector,

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Speaker 2: including Nvidia, who sales tripled thanks to its AI accelerator chips.

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Speaker 3: Now to the geopolitics, negotiators from Israel, the US, Egypt,

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Speaker 3: and Qatar are expected to resume talks in Cairo later

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Speaker 3: to discuss a pause in fighting and the release of

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Speaker 3: hostages being held by Hamas in Gaza. The discussions come

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Speaker 3: as President Biden says he's pushing for a six week

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Speaker 3: pause in the conflict.

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Speaker 7: The United States are working on a hostage deal between

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Speaker 7: Israel and which would bring a median and sustained period

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Speaker 7: of common to Gaza for at least six weeks, which

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Speaker 7: we could then take the time to build something more endurance.

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Speaker 3: Biden's comments were his most detailed yet about the ongoing

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Speaker 3: negotiations between Israel and Hamas, which the US is helping

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Speaker 3: to facilitate. On Monday, Israeli forces launch strikes on the

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Speaker 3: city of Rafa in the southern Gaza Strip, where more

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Speaker 3: than a million people have sought shelter from the fighting.

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Speaker 3: Many refugees fled the north of the territory after Israel

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Speaker 3: launched its retaliatory campaign against Hamas for the group's October

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Speaker 3: seventh attack.

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Speaker 2: Elon Musk has told US Republican senators that quote, there

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Speaker 2: is no way in hell that Russian President Vlasimir Putin

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Speaker 2: could lose the war on Ukraine. The billionaire CEO of

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Speaker 2: Tesla and SpaceX made the comments on x spaces, part

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Speaker 2: of his social media platform. Muska had expressed similar sentiments before,

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Speaker 2: doubting Ukraine's ability to win the war and mocking Ukrainian

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Speaker 2: President Vladimir zelenski requests for aid. His views contrast strongly

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Speaker 2: with President Biden and Senate Republican leader Mitch McConnell, who

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Speaker 2: argue that aiding Ukraine's defense against the Kremlin is in

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Speaker 2: America's interest.

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Speaker 3: And finally, city groups warning that the market needs to

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Speaker 3: price in the risk of future federal reserve hikes. Strategists

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Speaker 3: at the bank say traders should now be hedging the

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Speaker 3: risk of a very brief easing cycle followed by rate increases.

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Speaker 3: The analysis from the lenders economists come as FED Governor

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Speaker 3: Michelle Bowman said she doesn't see the need to cut

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Speaker 3: at the moment.

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Speaker 8: I think it's too soon to have an expectation that

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Speaker 8: for to measure or project when and how much I

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Speaker 8: think we might be lowering the policy rate. I think

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Speaker 8: the progress that we're making on inflation is very positive.

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Speaker 3: Bowmen's comments come ahead of the today US inflation print

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Speaker 3: out at one thirty pm London time. That data is

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Speaker 3: expected to show that price rises slowed to two point

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Speaker 3: nine percent year on year in January, and it'd be

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Speaker 3: the first reading below three percent since March twenty twenty one. Well,

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Speaker 3: in a moment, we're going to get more analysis on

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Speaker 3: that UK Job's data, But first we're going to have

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Speaker 3: to talk about Taylor Swift again because it seems that

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Speaker 3: her presence at the Super Bowl boosted those viewing figures

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Speaker 3: to hit a US TV record one hundred and twenty

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Speaker 3: three million. Is the number? Pretty stonking stuff.

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Speaker 2: Yeah, really interesting to see an increase in that as well.

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Speaker 2: There's often conversations around the declining television audiences, particularly for

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Speaker 2: big live events, but the fact that there's an increase,

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Speaker 2: a seven percent increase, and perhaps you know, attributable to

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Speaker 2: the presence of Taylor Swift, perhaps to do with the

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Speaker 2: streaming options that may being made available because it was

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Speaker 2: across CBS on live television but also on Paramount Plus

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Speaker 2: as well. I did try to look for a European

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Speaker 2: COUNTERPOI to the story, which obviously the first thing you

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Speaker 2: would think of Lizzie is the Eurovision Song content, which

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Speaker 2: is one of the most which is the biggest live

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Speaker 2: audience event for television that's annual, that's actually on the

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Speaker 2: way down. That's partly because of Russia's exclusion from the

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Speaker 2: contest and does it not being broadcast in Russia. So

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Speaker 2: one hundred and sixty two million people watch the Erosion

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Speaker 2: Time Contest final live last or live unstreamed last year.

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Speaker 2: That have come down from about one hundred and eighty

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Speaker 2: three million in twenty twenty one. But perhaps a trend

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Speaker 2: that interesting to compare in terms of television audience habits.

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Speaker 3: Okay, they just need Taylor as a guest star. Well,

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Speaker 3: let's get to some more serious numbers now. We've had

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Speaker 3: the latest reading on the UK labor market this morning,

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Speaker 3: which growth slowing less than expected in the last three

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Speaker 3: months of the year, but the unemployment rate also falling

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Speaker 3: unexpectedly our chief UK economist, Dan Hansen joins us Now

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Speaker 3: for more. Dan, what's your read on this? You've got

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Speaker 3: Torson Bell at the Resolution Foundation saying the big picture

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Speaker 3: is positive, but the market reading this hawkishly, pairing back

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Speaker 3: their bets on rate cuts in twenty twenty four. What's

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Speaker 3: your take?

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Speaker 9: Well, yeah, I mean, I guess it's finds which way

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Speaker 9: you cut it. I mean in terms of sort of

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Speaker 9: living standards and the like. Towson's absolutely right. We've got real,

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Speaker 9: real wages rising here in the UK, but obviously from

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Speaker 9: an inflation perspective, and I think the key thing here

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Speaker 9: is inflation over a medium over the medium term and

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Speaker 9: the idea that it might settle at two percent, which

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Speaker 9: is what the Bank of England really is aiming for here.

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Speaker 9: I think the market reaction is probably about right in

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Speaker 9: that this was a sort of hawkish report. If you

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Speaker 9: like you had, as you've mentioned, they're faster than expected.

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Speaker 9: You had to slow down in wage growth, but it

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Speaker 9: wasn't as significant as people as expected. And we've got

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Speaker 9: this unemployment rate that's extremely low at three point eight percent.

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Speaker 9: But there are some lingering questions about the quality of

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Speaker 9: the ONS data. If you look at broader survey measures,

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Speaker 9: there are sort of stronger signs that the labor market

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Speaker 9: is loosening. But I think all in all, I think

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Speaker 9: for us at least, it's that wage growth number, the

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Speaker 9: fact that wage growth isn't slowing quite as much as

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Speaker 9: people expected. And the thing on the horizon now is

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Speaker 9: that national living wage increase, which is the big thing

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Speaker 9: that we're going to be watching with the wage figures,

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Speaker 9: whether that sort of derails this disinflationary process we've got

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Speaker 9: in the wage figures at the moment.

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Speaker 2: In April, because the markets markets have paired their bets

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Speaker 2: on where they see the Bank of England cutting rates

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Speaker 2: this year, you know, down to kind of around seventy

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Speaker 2: seventy seven basis points the last time I looked at

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Speaker 2: this year with the first looking most likely now in August.

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Speaker 2: Do you see this reading having material effect or how

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Speaker 2: do we put it together with what we're expecting in

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Speaker 2: terms of the inflation numbers tomorrow.

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Speaker 9: Yeah, I mean, I think what's going to be really

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Speaker 9: I think you've got to look through it slightly through then.

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Speaker 9: I'm not saying this is noise, but there's going to

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Speaker 9: be a two bits of this over the first half

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Speaker 9: of the year. You've got the first quarter where I

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Speaker 9: think you will, particularly with the inflation figure tomorrow, we

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Speaker 9: might get a bit of a setback there. We're expecting

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Speaker 9: a slight rise, but I think the band of uncertainty

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Speaker 9: around it is pretty big in terms of where that

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Speaker 9: inflation number could land. But I think a lot of economists,

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Speaker 9: including our ourselves, are looking to that second quarter where

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Speaker 9: we think inflation will really drop and quite significantly. And

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Speaker 9: now the question is is, well, whether the bank will

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Speaker 9: put significant weight on that or whether it's just going

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Speaker 9: to continue to wait that little bit longer for the

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Speaker 9: wage numbers to come off and also core inflation to

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Speaker 9: come down as well, because that's going to take longer

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Speaker 9: to come down than the headline rate of inflation, because

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Speaker 9: the head drop in the headline rate is about energy prices.

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Speaker 9: So I think there are there are question marks, but

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Speaker 9: it's sort of a bit of holding your nerve here

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Speaker 9: with them with the narrative, because I think it will change,

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Speaker 9: and it will change going into the spring, and there

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Speaker 9: will be a question marks particularly as well. I know

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Speaker 9: Bailey dismissed the sort of appeared to dismiss the point

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Speaker 9: about recession yesterday but that if that narrative builds in

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Speaker 9: the press, it's got an election probably this year, that's

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Speaker 9: going to be really difficult for the bank. It's going

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Speaker 9: to be a difficult one for them to navigate.

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Speaker 3: Yeah, and you mentioned the uncertainty in estimates around all

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Speaker 3: this day. That of course is leading to volatility in

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Speaker 3: the markets. But a huge factor in that when it

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Speaker 3: comes to the jobs data is how unreliable it has

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Speaker 3: been because of the flaws in the labor force survey.

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Speaker 3: How much caution are you treating the data with? When

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Speaker 3: is it likely to improve and other private surveys that

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Speaker 3: we should actually watch more closely.

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Speaker 9: Yeah, So to answer your question directly, a lot of caution.

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Speaker 9: I find it quite difficult to believe the labor market

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Speaker 9: tightened over the second half of last year, which is

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Speaker 9: what the data currently shows, when the economy was maybe

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Speaker 9: an very mare technical technical recession, but definitely stagnating flatlining.

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Speaker 9: Other in terms of other indicators to look at, I mean,

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Speaker 9: in terms of surveys, one thing we look at is

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Speaker 9: the KPMG REX survey quite a lot of detail, and

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Speaker 9: that's something that the Bank of England places a lot

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Speaker 9: of focus on, not only on the on the sort

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Speaker 9: of quantity side of the labor markets, so what's going

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Speaker 9: on with unemployment, employment participation, but also in terms of wages,

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Speaker 9: which shows there's a promising picture there on the wages

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Speaker 9: side as well. So it goes to the point that

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Speaker 9: the Bank has made in its minutes and in its

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Speaker 9: guidance for quite a few months now that it's looking

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Speaker 9: at a broad range of data. And I think, just

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Speaker 9: to answer your question directly, there's a lot you should

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Speaker 9: treat the official data, at least at the moment with

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Speaker 9: quite a bit of caution. It should improve in the

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Speaker 9: first begin to improve in the first half of this year,

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Speaker 9: but the big point will be in September when the

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Speaker 9: new LFS survey comes out. But that's obviously an awful

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Speaker 9: long time to wait to know exactly what's going on

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Speaker 9: with the labor market.

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Speaker 2: Okay, I TFUK economist Dan Hansen, thank you very much.

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Speaker 3: Okay, from the economics to the geopolitics, let's go to

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Speaker 3: the Middle East now. The push by the United States

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Speaker 3: for a prolonged pause in fighting in Gaza of at

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Speaker 3: least six weeks to allow the release of more hostages.

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Speaker 3: Our Amia News director Rosalin Matheson joins us for analysis ross.

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Speaker 3: What else do we know about this plan?

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Speaker 1: Well, all we know about the plan is that laned

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Speaker 1: by the US President Joe Biden last night, is the

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Speaker 1: time being that he would prefer for what he calls

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Speaker 1: a pause in the fighting, and that's for six weeks.

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Speaker 1: There's been lots of different plans floating around with different

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Speaker 1: time frames anywhere from a couple of weeks to four

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Speaker 1: or five months, depending on who's compiling it. And then

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Speaker 1: but the elements of the plan are really the key

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Speaker 1: beyond the time frame, and that is the question of

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Speaker 1: what's involved, particularly, you know, is it on an understanding

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Speaker 1: that it leads to a permanency spire in the fighting?

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Speaker 1: And what happens to the Israeli troops in the meantime?

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Speaker 1: Do they withdraw partially from the Gaza Strip or do

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Speaker 1: they need to withdraw fully from the Gaza Strip? And

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Speaker 1: those seem to be really the sticking points in all

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Speaker 1: of this. So regardless of whether it's it's sort of

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Speaker 1: six weeks or four months, there are more fundamental problems

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Speaker 1: in these negotiations towards a pause. But at least we

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Speaker 1: do know the conversations about it. At least are ongoing following.

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Speaker 2: These reports of the meeting of CIA, Massad, Egyptian and

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Speaker 2: Katari officials today, are the fact that there are conversations

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Speaker 2: being had like that an indication of progress towards an agreement.

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Speaker 2: How should we read into them?

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Speaker 1: Well, there's been quite a few rounds of talks that

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Speaker 1: have involved Egypt, KATA, the US and Israel, and then

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Speaker 1: obviously messages being passed on to Hamas back and forth

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Speaker 1: through those third parties. So there's been quite a constant

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Speaker 1: flurry of these meetings going on, and they've often involved

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Speaker 1: the CIA and Mossad, particularly to share intel around the

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Speaker 1: location of the Israeli hostages who are remaining in the

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Speaker 1: Gaza streep. We know there's quite a few of them,

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Speaker 1: but they're exact whereabouts are unclear, and so this is

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Speaker 1: probably about the best detail about what if there is

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Speaker 1: a c spire, what an operation you know, to get

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Speaker 1: those hostages out, perhaps in exchange for Palestinian prisoners in

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Speaker 1: Israeli jails, what that would look like logistically, So at

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Speaker 1: least even when they're sort of arguing over the terms

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Speaker 1: of the agreement, they're trying to understand the logistical challenges

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Speaker 1: of it.

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Speaker 3: Also, so you've got the Hour of Nations trying to

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Speaker 3: weigh on Humas. Is Joe Biden actually having any cut

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Speaker 3: through with Netanyahu by the looks of things.

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Speaker 1: Well, it doesn't appear so, or certainly at least publicly,

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Speaker 1: and you can see the level of frustration within the

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Speaker 1: US administration. There are all sorts of reports, unverified of course,

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Speaker 1: that Joe Biden is sort of talking quite angrily about

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Speaker 1: the Israeli Prime minister behind the scenes in private meetings

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Speaker 1: with his own officials, expressing exasperation about it, which is

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Speaker 1: essentially that the US is pressing Israel to slow down

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Speaker 1: it's war in the Gaza strip. But the Israeli Prime

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Speaker 1: Minister says, well, no, our goals are quite clear. We

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Speaker 1: want to eradicate Hamas and we haven't done that yet

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Speaker 1: and we haven't gotten the hostages out, so we're going

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Speaker 1: to continue regardless. Particularly contentious is this idea of a

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Speaker 1: full ground offensive, you know, near the in Rafa, near

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Speaker 1: the border with Egypt.

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