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Speaker 1: This is Bloomberg Daybreak here for this Thursday, the twenty

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Speaker 1: third of March in London. Coming up today, Hike and

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Speaker 1: see the fed ups for twenty five basis points and

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Speaker 1: bet on an end the banking crisis a game changer.

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Speaker 1: City groups CEO on mobile banking risks to the industry

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Speaker 1: as Yellen rejects a blanket deposit guarantee as easy as

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Speaker 1: ABC for the BOE Central Bank set a high graders

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Speaker 1: and flation data comes in red Heart a homegrown bank

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Speaker 1: run time Toline French and leadership is taxing. Those of

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Speaker 1: the stories we're looking at in today's papers. I'm Jus Allcock.

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Speaker 1: Plus the high price of power Bloomberg finds consumers are

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Speaker 1: footing the bill for traders energy market manipulation. That's all

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Speaker 1: straight ahead on Bloomberg Daybreak Europe. The business Views you

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Speaker 1: need to start your day in just one fifteen minute

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Speaker 1: podcast on Apple, Spotify, the Bloomberg Business App and everywhere

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Speaker 1: you get your podcasts. Good morning, I'm Stephen Carroll and

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Speaker 1: I'm Caroline Hike. Here are the stories that we're following today.

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Speaker 1: The Federal Reserve is raised rates for the ninth straight

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Speaker 1: meeting and hinted there may be more hikes to come.

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Speaker 1: Policymakers voted unanimously for a second straight twenty five basis

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Speaker 1: point hike. The move pushed rates to their highest level

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Speaker 1: since September two thousand and seven and follows an unprecedented

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Speaker 1: year of aggressive tightening and federal reserve charge your own.

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Speaker 1: Powell says he's prepared to go further. We need to

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Speaker 1: raise rates higher, we will, I think for now. Though,

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Speaker 1: we as I've mentioned, we see the likelihood of credit tightening.

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Speaker 1: We know that that can have a you know, an

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Speaker 1: effect on the macroeconomy, on demand, on labor market, on inflation,

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Speaker 1: and we're going to be watching to see what that is.

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Speaker 1: During his press conference, Powell repeatedly said the impact on

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Speaker 1: lending from the banking sector problems isn't yet clear For

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Speaker 1: purposes of our monetary policy tool. We're looking at what's

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Speaker 1: happening among the banks and asking is there going to

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Speaker 1: be some tightening and credit conditions, And then we're thinking

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Speaker 1: about that as effectively doing the same thing that rate

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Speaker 1: hikes do so in a way that substitutes for rate hikes.

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Speaker 1: The Federals Our chair also shared his thoughts on the

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Speaker 1: speed at which events at SVB had unfolded, calling it

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Speaker 1: a very fast run that left them wondering, quote, how

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Speaker 1: did this happen? Now? Reacting to the rate decision, the

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Speaker 1: former New York Fed President Bill Dudley said that the

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Speaker 1: risk of a hard landing for the Federal Reserve has

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Speaker 1: gone up. In an exclusive interview, the now Bloomberg opinion

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Speaker 1: columnists broke down the message that Powell is trying to

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Speaker 1: send to the markets. Basically, the Fed is saying that

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Speaker 1: one uncertain he has gone up a lot. We're not

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Speaker 1: really sure how long the banking system stress is going

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Speaker 1: to last and how severe it's going to be. Number Two,

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Speaker 1: that that stress is going to restrain the economy, and

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Speaker 1: that substitute a little bit for rate hikes. So we're

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Speaker 1: not going to have to do as much as we

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Speaker 1: thought we were going to have to do earlier. Bill

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Speaker 1: Dudley also totally bug It's clear that the Fed believes

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Speaker 1: it's bid to a quell inflation won't deepen the banking crisis.

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Speaker 1: As Jerome Power was speaking to the Press's predecessor, the

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Speaker 1: now Treasury Secretary Janet Yellen, was on Capitol Hill taking

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Speaker 1: questions from lawmakers during her testimony she ruled out an

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Speaker 1: unlimited backstop for bank deposits. It's not something that we're considering.

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Speaker 1: All that I have said is that when the failure

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Speaker 1: of a bank is judged by supermajorities of the FDIC Board,

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Speaker 1: the FED Board, and myself in consultation with the President,

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Speaker 1: when such a failure is deemed to create systemic risk.

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Speaker 1: The comments seemed to be at odds with the Yellen's

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Speaker 1: previous remarks on the matter this week. On Monday, the

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Speaker 1: Treasury Secretary said the US is prepared to take further

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Speaker 1: actions to protect depositors if smaller lenders are threatened well.

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Speaker 1: Yellen and Poal have been at the center of efforts

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Speaker 1: to restore stability to US banking sector after the collapse

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Speaker 1: of some midsized lenders. Now City Group CEO Jane Fraser

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Speaker 1: says that the ability to move millions of dollars with

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Speaker 1: a few clicks is a ce change moment for how

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Speaker 1: lenders respond to the risk of bank runs. Here's what

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Speaker 1: she told Carlisle Group co founder David Rubinstein. It's a

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Speaker 1: complete game changer from what we've seen before. There were

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Speaker 1: a couple of tweets and then listening this thing went

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Speaker 1: down much faster than has appened in history, and greatly.

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Speaker 1: I think the regulators did a good job in responding

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Speaker 1: very quickly, because normally you have longer to respond to this,

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Speaker 1: so they acted with quite a lot of speed given

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Speaker 1: how quickly this happened. Speaking at an Economic Club of

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Speaker 1: Washington event, Fraser also stressed that she believes the string

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Speaker 1: of bank failures are an isolated event. City Group was

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Speaker 1: among eleven banks that provided thirty billion dollars in deposits

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Speaker 1: to First Republic last week in an effort to show

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Speaker 1: up the troubled lender. The Bank of England is today

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Speaker 1: likely to continue the quickest series of rate rises in

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Speaker 1: three decades. Economists and investors anticipate policymakers will raise the

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Speaker 1: benchmark lending rate a quarter point to four point two

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Speaker 1: five percent. Data on Wednesday show that inflation climbed for

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Speaker 1: the first time in four months, solidifying expectations for a hike.

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Speaker 1: Policymakers out the UK Center Bank Or published their decision

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Speaker 1: at twelve o'clock today, and just finally, the Prime Minister

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Speaker 1: Rishi soonac cemented his leadership by passing his Brexit deal

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Speaker 1: with a near five hundred vote majority. Sunac won convincingly

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Speaker 1: despite predecessors Liz Trust and Boris Johnson turning out to

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Speaker 1: vote against him. It came on a day that Bois

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Speaker 1: Johnson had to defend his conduct to the inquiry into

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Speaker 1: whether he lied to Parliament. I apologize for inadvertently misleading

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Speaker 1: this House, but to say that an idea it recklessly

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Speaker 1: or deliberately is completely unproved. As the evidence shows. The

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Speaker 1: inquiry could see Johnson suspended as an MP and even

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Speaker 1: lose his seat if found guilty. Those are top stories

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Speaker 1: on the program this morning, Karen. I don't know if

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Speaker 1: you've had a chance to dig into today's Big Take

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Speaker 1: reports and absolutely fascinating inside into the energy market here

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Speaker 1: in the UK. The headline customers foot the bill for

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Speaker 1: a trade is manipulating the UK power markets. This is

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Speaker 1: some of what's been going on behind the scenes as

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Speaker 1: we've seen energy prices go up massively for consumers. It's

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Speaker 1: also casting the national gride more to get energy from

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Speaker 1: some of the providers. Yeah, look, this is digging detailed

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Speaker 1: reporting and all the charts and it is an amazing read.

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Speaker 1: So basically, this practice that Bloomberg talks about is really

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Speaker 1: quite widespread. So called balancing mechanism and the ability of

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Speaker 1: energy providers to sort of switch on and off generators

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Speaker 1: and then to charge the grid more in order to

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Speaker 1: then add at peak times extra energy. The regulator calls

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Speaker 1: it a sharp practice. It involves the UK's biggest energy

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Speaker 1: companies sc Uniper, Vittals VPI. They've been using this tactic.

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Speaker 1: But the profits the money from this absolutely enormous and

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Speaker 1: so now it does look like there is the Energy

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Speaker 1: regulator off GEM announcing plans to tighten the rules. But

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Speaker 1: it's also the same issue in Europe apparently, and this

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Speaker 1: has been known for quite some time. So this is

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Speaker 1: another fantastic piece by Gavin Finch and his team. He's

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Speaker 1: well known for digging deep at Blimper, who definitely worth

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Speaker 1: a read this morning as well. Well. Let's turn to

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Speaker 1: the main central banking news of the day. The Federal

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Speaker 1: Reserve pressing ahead of another interest rate hiked Drone Palace

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Speaker 1: as there could be more in store. Central Bank are

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Speaker 1: also saying officials don't expect to be cutting rates this year.

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Speaker 1: Our two rates correspondent Garfield Reynolds joins us now for more. Garfield,

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Speaker 1: the Fed chose fighting inflation over other concerns. How soon

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Speaker 1: might we know if they've made the right decision. We

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Speaker 1: could know as soon as you know this this weekend

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Speaker 1: if there's further banking troubles, which obviously we hope won't

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Speaker 1: be the case. More likely, though, you know, we're going

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Speaker 1: to need to wait for the coming some of the

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Speaker 1: coming data. We've got the PMI surveys and similar coming

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Speaker 1: towards the end of this month. That's going to be key.

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Speaker 1: The next readings on consumer sentiment from a range of

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Speaker 1: different places, that's also going to be important. I mean,

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Speaker 1: those are the sort of soft ish data that tend

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Speaker 1: to give you a faster read on how rapidly a

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Speaker 1: particular event is hurting or helping the economy. So those

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Speaker 1: are things to be looking out for when it comes

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Speaker 1: to trying to judge how much damage has been done.

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Speaker 1: There are also surveys on your credit availability and how

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Speaker 1: banking marriages and they've they'd already been pulling in credit

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Speaker 1: before any of this, But we'll see what happens when

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Speaker 1: the next ones of those come in. The issue, though,

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Speaker 1: is that not a single Fed policymaker on the dot

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Speaker 1: plot is projecting lower interest rates by the end of

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Speaker 1: the year, and the markets are there's a real total

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Speaker 1: divergence between what bond markets think and what the Fed

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Speaker 1: is doing. Yeah, well, I mean bond markets. You have

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Speaker 1: to understand, the dot plots have regularly proved to be

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Speaker 1: wildly out of line with reality. You can say the

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Speaker 1: same for some of the bond market bits as well,

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Speaker 1: So you know, it's it's a kind of a blind

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Speaker 1: ignoring the blind situation going on here. You know, they're

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Speaker 1: both guessing estimating what's going to happen. You know, the

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Speaker 1: bond market has been certainly remember for quite some time

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Speaker 1: that we are heading towards a likely recession with those

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Speaker 1: deeply inverted your longer term yield curves. The question now

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Speaker 1: is how close are we to that? And I think

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Speaker 1: the key for what the bond market is thinking is

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Speaker 1: the bond market saying, well, we think there's about a

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Speaker 1: fifty percent chance the Fed does indeed hike again in May,

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Speaker 1: but if it does, it's then going to cut in June.

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Speaker 1: So they're saying to the Fed, you may have already

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Speaker 1: made a policy era if you hike again, you will

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Speaker 1: have made one. So that's part of the calculation for

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Speaker 1: the bond market. They think the Fed has probably done

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Speaker 1: too much. Hence they're going to have to cut rates

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Speaker 1: by the end of this year. The Fed is saying,

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Speaker 1: we think for now we've done enough, maybe not quite enough,

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Speaker 1: but you don't think we've overdone it, because we don't

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Speaker 1: think that this is going to be a sufficiently dangerous

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Speaker 1: financial crisis that it will bring the economy to its knees.

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Speaker 1: Will get a read on some of that in the

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Speaker 1: next few weeks, and that will perhaps offer some evidence

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Speaker 1: as to which of those two sides is closer to

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Speaker 1: the mark. Okay Garfield, ronalds Our, Chief Rates correspondent, thank

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Speaker 1: you very much for bringing us the latest on that

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Speaker 1: after that decision by the Federal Reserve to press ahead

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Speaker 1: of the quarter point interest rate hike. Now up next,

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Speaker 1: Homegrown bank run, Time to learn French and leadership is taxing?

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Speaker 1: Now the paper review on blue Bird day Break Europe.

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Speaker 1: The news you need to know from today's papers Brooks

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Speaker 1: James wild Cup joins us in the studio with more

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Speaker 1: details on those stories. James starting with The Times writing

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Speaker 1: about what happened to Silicon Valley Bank UK. Yes, Steven,

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Speaker 1: so they pick up on this letter that the Bank

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Speaker 1: of England Governor Andrew Bailey has sent to the Trophy

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Speaker 1: Sy Committee explaining ahead of a hearing next week, what

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Speaker 1: is going on with Silicon Valley Bank UK. And it

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Speaker 1: points out that thirty percent of its total deposit base

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Speaker 1: was withdrawn within a single day a day a day,

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Speaker 1: and that three two point nine billion pounds was able.

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Speaker 1: They were able to pay it all out, but it

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Speaker 1: would not have been capable to keep doing so with

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Speaker 1: the failure of its parents. Now being Bloomberg, I went

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Speaker 1: and pulled out the report and actually got the actual numbers. Now, Caroline,

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Speaker 1: being an extremely expert journalist, you know the definition of

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Speaker 1: liquidity coverage ratio, which is what the bank sets as like, well,

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Speaker 1: how far you should be covering your deposits, which is

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Speaker 1: you should have enough in liquid assets to cover thirty

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Speaker 1: days of outflows. Now, in December twenty twenty one, in

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Speaker 1: the entire month at Silicon Valley Bank UK saw nearly

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Speaker 1: ten billion pounds in withdrawals, so nine point nine billion.

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Speaker 1: By nine am on the tenth of March they'd seen

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Speaker 1: nine point two. By one thirty they had seen an

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Speaker 1: additional seven point eight, by three pm an additional seven

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Speaker 1: point five, and by close ups another seven billion, so

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Speaker 1: you're looking at within hours a whole month, which blows

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Speaker 1: apart the liquidity coverage ratio and adds that point Jane

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Speaker 1: phrase was making earlier in the program that when you

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Speaker 1: do see a run in this modern environment, modern technology

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Speaker 1: changes the game completely. I think that's absolutely amazing. That's

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Speaker 1: so fascinating. Yeah, you're right, this the digital banking is

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Speaker 1: with us, and perhaps yeah, this is the consequent speed.

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Speaker 1: Let's go to the Telegraph next, James. They're staying with

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Speaker 1: their coverage of parts of London's financial sector, moving to Paris. Yes,

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Speaker 1: and what is interesting is they're using Bloomberg data to

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Speaker 1: show it, which is why I picked this one out.

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Speaker 1: They have pulled some Bloomberg data to show the London

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Speaker 1: market is now two one hundred and fifty billion dollars

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Speaker 1: smaller than its French rival, and it's linked. Where the

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Speaker 1: Telegraph do seem to add a bit of value here

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Speaker 1: is they often write up how the europe and the

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Speaker 1: ECB and regulators are putting increasing barriers to traders working

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Speaker 1: out from London in European markets, and they pointed out

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Speaker 1: that the ECB has previously identified fifty six groups of

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Speaker 1: traders who should be doing their jobs in the European Union. Now,

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Speaker 1: I'm previous paper reviews of points out in return that

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Speaker 1: that's often from a risk perspective, but will sure in

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Speaker 1: Bloomberg this morning has pointed out the Golden Sax's partner

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Speaker 1: Lea Janiv is relocating from London to Paris to become

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Speaker 1: the head of Thick there. So this is a real

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Speaker 1: and moving story. And where I think Bloomberg sort of

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Speaker 1: changes to the Telegraph view is this isn't just Paris,

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Speaker 1: and it's weird to make it just a Paris London

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Speaker 1: story because breggs it hasn't made Europe a fragmented financial system.

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Speaker 1: It is not just all based in London. You are

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Speaker 1: seeing shares trading in the Netherlands, corporate lawyers in moving

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Speaker 1: to Frankfurt and Dublin, Milan, Madrid and Water also playing

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Speaker 1: these supporting roles rather than everything moving through London. It's

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Speaker 1: a whole breakup across the picture. Well, that is the

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Speaker 1: great question basically where well we still don't really know

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Speaker 1: where the great financial and banking center in Europe is

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Speaker 1: going to be all indeed, if there will be one

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Speaker 1: coalescing around one or not just lastly, we should soon acts.

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Speaker 1: Tax returns also came out yesterday afternoon. How did the

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Speaker 1: papers write those up? Well, they wrote them up with

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Speaker 1: the numbers. Gauline UK premised that he paid more than

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Speaker 1: four hundred thousand pounds in tax from that financial one year. Now,

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Speaker 1: given the Sunday Times, Rich has estimated he and his

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Speaker 1: wife have a net worth of seven hundred and thirty million.

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Speaker 1: That is a bit of a disparity, although that still

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Speaker 1: makes him one of the richest people in the country.

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Speaker 1: I talked to our Finance with John Steppeck and I

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Speaker 1: followed up on Dan Needle, He's a friend of the

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Speaker 1: show and found of Tax Policy Sociats. They both said

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Speaker 1: these are boring returns, but what is interesting is you

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Speaker 1: compare the capital gains tax paid versus the income tax paid,

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Speaker 1: which is far less, and it built a picture of

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Speaker 1: a soon actor. It gives labor this a tax line.

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Speaker 1: Angela Reynas said, of your income tax burden, there's a

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Speaker 1: lot higher than your capital gains tax burden. And when

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Speaker 1: working people are paying a large amount of money, that

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Speaker 1: could be a difficult issue for Soon Actor thread as

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Speaker 1: one of the wealthiest men in Britain. This is Bloomberg

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Speaker 1: Daybreak Europe. You're a morning brief on the stories making

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Speaker 1: listen live each morning on London Dab Radio, the Bloomberg

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Speaker 1: Say Alexa played Bloomberg eleven thirty. I'm Caroline Hipka and

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