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Speaker 1: Good morning. It's Friday, the eleventh of August. This is

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Speaker 1: Bloomberg day Break EUROP podcast and Francine.

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Speaker 2: Laqua and I'm Stephen Carroll coming up today. The UK

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Speaker 2: posts an upside surprise on GDP for the month of June.

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Speaker 1: UBS voluntarily ends it's ten billion dollar credit sweet Laws

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Speaker 1: protection agreement.

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Speaker 2: And up to thirty five thousand tiny Chinese hedge funds

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Speaker 2: could close as Beijing announces new regulations for the sector.

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

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Speaker 1: The UK economies even grew more than strong or more

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Speaker 1: strongly than expected in the second quarter. Output bounce back

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Speaker 1: in June, rising by zero point five percent following an

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Speaker 1: ext drum bank holiday for King Charles coronation in may Or.

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Speaker 1: UK correspondent Lizzie Burden says it's an upside surprise for

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Speaker 1: the country's economy.

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Speaker 3: The expectation among economists was for total stagnation. Why have

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Speaker 3: you seen this Well, if you look into the numbers,

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Speaker 3: services growth was driven by it accommodation, food services. So

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Speaker 3: it's somewhat good news for the Prime Minister because of

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Speaker 3: course he's made it one of his top five priorities

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Speaker 3: to grow the economy this year, but the flip side

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Speaker 3: is persistent inflation.

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Speaker 1: Well, our UK correspondent Lizie Burden, they're breaking down the

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Speaker 1: data for US for the quarter, GDP actually rose by

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Speaker 1: zero point two percent, double what the Bank of England

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Speaker 1: had expected.

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Speaker 2: UBS has ended its ten billion dollar agreement with the

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Speaker 2: Swiss government to cover last as tied to the takeover

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Speaker 2: of Credit Suisse. The move is a sign that the

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Speaker 2: stricken Lander's assets may be less troublesome than initially feared,

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Speaker 2: but Bloomberg's EMEA Finance editor Tom Metcalf says it's not

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Speaker 2: yet clear what the bank gains from doing this.

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Speaker 4: The messaging from the bank is very much this is

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Speaker 4: how confident we are on the assets we've required. This

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Speaker 4: is the sign of strength. Purely pragmatically, I'm looking at

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Speaker 4: this going why not would you give up something you've

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Speaker 4: already got. As far as you can tell from the release,

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Speaker 4: there's nothing they're getting back in return, So you know,

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Speaker 4: perhaps it is all about the messaging, but you could

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Speaker 4: also say, oh, does this sort of get them more

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Speaker 4: kind of in a stronger position with the Swiss government

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Speaker 4: will obviously be pretty happy that they can then tout

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Speaker 4: this to the sort of vote population.

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Speaker 2: Tom Metcalf says UBS had originally pushed for the backstop

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Speaker 2: to protect it from losses link to credit suite assets

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Speaker 2: that it wanted to wind down or sell. Shares in

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Speaker 2: UBS now four percent higher on that news.

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Speaker 1: Now once the largest property developer in China by sales,

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Speaker 1: it's become a penny stock am in growing debt concerns.

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Speaker 1: Country Garden has now lost more than ninety three percent

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Speaker 1: of its market value after peaking at fifty billion dollars

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Speaker 1: in twenty eighteen, but tou Ha Cho had a fixed income.

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Speaker 1: Asia Rebecco says, it's easy to read too much into

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Speaker 1: the news.

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Speaker 5: You know, not everything is broken. The propercies side of

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Speaker 5: things is extremely stressed, but these are cyclical elements. Restructuring

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Speaker 5: within this industry has already been happening in the last

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Speaker 5: year in terms of the way it operates. It's a

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Speaker 5: bit unfortunate for our company that has survived, you know,

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Speaker 5: near two years of very difficult, i would say, very

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Speaker 5: difficult circumstances to kind of get to the state.

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Speaker 1: Despite two thou Show's views, well, debt continues to be

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Speaker 1: a problem in other parts of the economy. Beijing says

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Speaker 1: it will allow provincial level governments to raise about one

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Speaker 1: trilliony on that's about one hundred and thirty nine billion

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Speaker 1: dollars via bond sales. The program will in effect bail

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Speaker 1: out weaker issuers, including local government financing vehicles, shifting the

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Speaker 1: debt burden to the state.

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Speaker 2: China's economic problems are quote a ticking time bomb, according

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Speaker 2: to Joe Biden. Speaking at a political fundraiser, the US

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Speaker 2: President said slowing Chinese growth means the country is in

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Speaker 2: trouble and referred to the Communist Party leaders as bad

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Speaker 2: folks Bloomberg. Steven Engels says biden comments will have an impact.

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Speaker 6: This is a comment to donor in a politically charged environment,

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Speaker 6: but the world is small now.

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Speaker 2: Comments like this go far.

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Speaker 6: China will latch.

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Speaker 2: Onto this and use it to their advantage. Steven Angel

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Speaker 2: also pointing out that it's not the first time Biden's

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Speaker 2: off the cuff remarks of undercut efforts to stabilize ties

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Speaker 2: with China. In June, he likened President she to a dictator.

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Speaker 2: Just today after the US Secretary of State and visited Beijing.

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Speaker 1: Now the FED is now increasingly likely to leave interest

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Speaker 1: rates unchanged, that the next meeting. After underlying US inflation

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Speaker 1: rose only modestly. Will core consumer prices excluding food and

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Speaker 1: energy costs increase by zero point two percent in July,

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Speaker 1: the same as June's prints Now, despite that being the

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Speaker 1: smallest back to back rise in more than two years,

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Speaker 1: the San Francisco FED president Mary Daily says the fight

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Speaker 1: is not over.

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Speaker 7: It is not a data point that says victory is ours.

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Speaker 7: There's still more work to do, and the FED is

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Speaker 7: fully committed to resolutely bringing inflation back down to its

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Speaker 7: two percent target.

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Speaker 1: Mary Daily was speaking to Yahoo Finance, and she added

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Speaker 1: that she remains data dependent and won't prejudge future hikes.

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Speaker 1: She does not vote on monetary policy.

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Speaker 2: This year, China's army of hedge funds is bracing for

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Speaker 2: a shakeup that will likely drive thousands of the massive business.

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Speaker 2: Boomberg's Bryan Cursis has more from Hong Kong.

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Speaker 6: New rules are coming as soon as next month. They're

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Speaker 6: expected to force the liquidation of about thirty seven percent

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Speaker 6: of all existing hedge funds, that's about thirty five thousand products.

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Speaker 6: The rules w impose a ten million yuan asset minimum

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Speaker 6: or about one point four million US dollars. The rules

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Speaker 6: would also cap leverage levels and the size of investments

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Speaker 6: in single securities. China wants to professionalize the industry. It's

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Speaker 6: grown sevenfold over the past decade and stands out globally

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Speaker 6: for its large number of players in Hong Kong. Brian Curtis,

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Speaker 6: Sloomberg Daybreak Europe.

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Speaker 2: Those are our top stories on the program this morning.

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Speaker 2: Fan I was looking at one of the stories that

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Speaker 2: I think there's got a lot of people talking in

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Speaker 2: the office this morning. It's some new data showing that

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Speaker 2: gen Z workers, to those defined as being born between

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Speaker 2: nineteen ninety six and twenty twelve, are increasingly searching for

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Speaker 2: less stressful jobs that still pay a reasonable salary. Now

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Speaker 2: that sounds very reasonable to me, but apparently this is news.

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Speaker 2: So the job site adzun has been tracking a surge

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Speaker 2: and clicks on postings on things like office administrator jobs,

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Speaker 2: account managers. Marketing Associates Azuna says these are typically jobs

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Speaker 2: that tend to give more work life balance things like

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Speaker 2: flexible hours, working from home, et cetera, but still pay

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Speaker 2: at least thirty five thousand pounds, and this is being

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Speaker 2: seen as a sort of a generational shift that younger

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Speaker 2: workers are perhaps looking for jobs where they balance their

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Speaker 2: life with their job and they're willing to sacrifice salary

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Speaker 2: for that as well.

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Speaker 1: Yes, I don't know, so I don't know if it's

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Speaker 1: a new thing. I remember doing a panel like fifteen

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Speaker 1: years ago about someone saying like, even if I'm paid,

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Speaker 1: I'd rather be paid less and maybe a work a

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Speaker 1: little bit less. So I don't know whether the pandemic

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Speaker 1: shifted something, whether it's a generational thing, or whether now

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Speaker 1: we just have a word for lazy girl.

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Speaker 2: Right, That's what I can't do. This is the phenomenon which,

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Speaker 2: like I feel quite uncomfortable saying that out loud because

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Speaker 2: I feel like that it's when I just think it's

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Speaker 2: a bit like unnecessarily gendered, when like I could be

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Speaker 2: very lazy. So there's really no needs.

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Speaker 1: Too lazy girl and lazy boy, yeah exactly.

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Speaker 2: Although lazy boys was the chairs, which is part of

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Speaker 2: the problem with that anyway. But I do wonder if

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Speaker 2: there's a broader issue though around of course the cost

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Speaker 2: of living impact too, and the fact that perhaps a

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Speaker 2: lot of these younger workers joining the workforce and saying

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Speaker 2: that the prospect of buying a home for example, seems

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Speaker 2: so unaffordable now comparatively, and maybe that's factoring into their decisions.

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Speaker 2: They're like, well, actually earning proportionally that much more of

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Speaker 2: a salary isn't going to give me a bigger increase

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Speaker 2: to my living standard.

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Speaker 1: Yes, I fully respect work life balance and I think

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Speaker 1: it's great. The thing is that if you do it

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Speaker 1: when you're very young, then you don't really go.

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Speaker 6: Up the ladder.

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Speaker 1: So it's very difficult I guess from maybe you know,

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Speaker 1: earning thirty five thousand to earning double and more if

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Speaker 1: you really perform in the office. I think when you

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Speaker 1: start out you have to bring your energy and maybe

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Speaker 1: just you know, employers just want that energy and can

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Speaker 1: shape you into something.

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Speaker 2: Yeah, and that's good, it'll be really interesting. That's the

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Speaker 2: very balanced points I think you're representing across generations there.

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Speaker 2: Look Okay, So that's one of the stories that caught

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Speaker 2: aar I this morning. But we're also, of course, been

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Speaker 2: very interested in the latest developments around UBS after they

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Speaker 2: announced it ended this agreement with the Swiss government to

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Speaker 2: cover lasses that could incur from the rescue credits. We

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Speaker 2: fran this is a story that you know inside out

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Speaker 2: there at all, all stages of it. And we've been following

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Speaker 2: that story with you, and what did you make of

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Speaker 2: the announcement around this when you saw it this morning?

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Speaker 1: So I think to think there's there's a huge day

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Speaker 1: for UBS, which is August thirty first, where they come

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Speaker 1: out with earnings, and this is really the day where

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Speaker 1: we're expecting a lot of news on mergers. So I

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Speaker 1: have to say, when I saw that headline cross a

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Speaker 1: Bloomberg terminal, it's a little bit odd. Right, So you're

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Speaker 1: August eleventh and you're basically telling everyone gays, we got this.

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Speaker 1: I think what they're trying to say is that they

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Speaker 1: went through the Credi sweet books and they had until

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Speaker 1: June twelfth or mid June to do that, and they

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Speaker 1: haven't found anything.

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Speaker 8: Ugly.

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Speaker 1: Remember, we were worried that they could find some five

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Speaker 1: billion dollar loss because of the risky business, especially booked

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Speaker 1: in the investment bankard that was booked in London. So

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Speaker 1: that's probably not the case. But why do it now?

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Speaker 1: So is it because they want to remove themselves from

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Speaker 1: the political situation in Switzerland? Because their front page news saying,

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Speaker 1: look at UBS, we need to use taxpayer money to

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Speaker 1: fund them they have an election October twenty second, or

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Speaker 1: is it because then August thirty first they have something

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Speaker 1: you know, bigger to announce, and so that puts that

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Speaker 1: distance with the Swiss government.

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Speaker 3: Yeah.

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Speaker 2: I mean it's interesting when we reflect on how key

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Speaker 2: that Swiss government guarantee felt at the time, and we're

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Speaker 2: only talking about March, of course, when it's first announces,

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Speaker 2: and then June when the deal was actually kind of

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Speaker 2: some entered around what that guarantee would look like. To

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Speaker 2: have UBS deciding to end it voluntarily at this date,

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Speaker 2: very interesting to watch. And the shit investors them please

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Speaker 2: shares her up five percent?

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Speaker 1: Yeah, I think they probably seem please because it means

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Speaker 1: that actually there's not that anything too ugly that they

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Speaker 1: bought in crete sweet. I think they had done due

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Speaker 1: diligence before, so it would have been very unlikely that

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Speaker 1: they found themselves with like a deep hole.

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Speaker 2: Right.

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Speaker 1: I bought this and actually I didn't know what was

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Speaker 1: in it. But it also it's a good reminder and

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Speaker 1: we saw that with net West. If a government has

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Speaker 1: a stake in it, or could potentially have a stake,

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Speaker 1: you're going to have political, if not interference, political talk.

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Speaker 1: They're going to weigh in and so that just kind

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Speaker 1: of draws the line. For whatever reason. I think it's

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Speaker 1: maybe bigger than we're seeing, but it draws the line

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Speaker 1: and it just makes you, you know, I think, more independent.

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Speaker 2: Yeah, I mean certainly if you think about, you know,

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Speaker 2: public opinion expressed about banks, if there is a government

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Speaker 2: stake in it is always so much more vociferous because

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Speaker 2: people have literally have a stake in it, so they're

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Speaker 2: they're interested in it as a result, is August thirty

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Speaker 2: first the next important date to be watching here for you.

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Speaker 1: Yeah, August Versus is definitely the date so they come

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Speaker 1: out with earnings. I think we'll also speak to the

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Speaker 1: chief executive there. What surprised me really from the start

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Speaker 1: and that weekend, which I remember, I feel like it

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Speaker 1: was yesterday, but I also feel like it was ten

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Speaker 1: years ago because so much has happened, is that there

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Speaker 1: was a real sense of urgency and I know the term,

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Speaker 1: and moved quick to replace the chief executive. And they've

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Speaker 1: just been moving quick. So the big question mark, apart

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Speaker 1: from how the merger's going, who they're keeping. He's reformed

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Speaker 1: a team around him. This is the chief executive centre Molti,

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Speaker 1: who again knows ubs inside out and frankly he knows

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Speaker 1: credit sweet because he's been trying to beat credit sweets

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Speaker 1: for about, you know, twenty years of his life. Is

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Speaker 1: what happens to the Swiss Bank now their you know,

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Speaker 1: speculation of what they could do with the Swiss Bank.

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Speaker 1: But again this is a political hot potato, and if

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Speaker 1: you remove that linkage with the government, whatever they decided

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Speaker 1: may be easier and more palatable to sell to local media.

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Speaker 6: Yeah.

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Speaker 2: Absolutely fascinating turn in this story, fancy, and we're very

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Speaker 2: lucky to have had you, but purely by coincidence with

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Speaker 2: us in the radio this morning to tell things. Yeah, exactly.

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Speaker 2: Let's turn to other story that from the UK that

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Speaker 2: we're following this morning, and the latest GDP figures that

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Speaker 2: we've had out beating expectations on most metrics. Of course,

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Speaker 2: somewhat of a recovery in the June figures from the

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Speaker 2: Extra Bank Calda we saw in May. We've got Bloomberg's

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Speaker 2: europ economist Anna Andrada with us for more details on

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Speaker 2: this as well. And what stood out to you from

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Speaker 2: this latest collection of data that we got on the

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Speaker 2: UK economy morning?

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Speaker 9: So yeah, so today's data, I mean, I think the

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Speaker 9: biggest surpriss for US was really how strong it came out.

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Speaker 9: June came out at zero point five percent, and then

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Speaker 9: on the quarter that led to two point two percent growth.

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Speaker 9: We had expected a stagnation, and I think the latest

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Speaker 9: date that just really kind of fits this pattern of

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Speaker 9: resilience that we've been seeing, and I think it kind of,

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Speaker 9: you know, supported a bit more our call. You know

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Speaker 9: that the Bank of England is not done hiking yet

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Speaker 9: because you know, there's been there's been speculation that the

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Speaker 9: bo we might be ready to pause. But I think,

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Speaker 9: you know, with the economy running the strong or as

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Speaker 9: resilience and adding to the risks of inflation persistence, then

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Speaker 9: you know it might have the covert to keep going

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Speaker 9: for a little bit longer.

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Speaker 1: And by the way, thank you so much for doings

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Speaker 1: on the podcast. We did a whole like thirty minutes

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Speaker 1: Steven on inflation podcast Inflation. Yeah, this is not self

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Speaker 1: promotion at all, but and it was.

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Speaker 2: It was good.

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Speaker 1: You were basically trying to push back Marcus because he

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Speaker 1: was giving a hard time from the Bank of England

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Speaker 1: and is there danger that actually now we cry victory

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Speaker 1: too soon that because we got GDPs, but do unexpected

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Speaker 1: inflation was lower than the Bank of England to lowers

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Speaker 1: the guard and they mess up.

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Speaker 9: No, I actually wouldn't say so. So I think, I mean,

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Speaker 9: there's there's two things. One is that inflate. The reason

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Speaker 9: why inflation is lower at least you know, over kind

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Speaker 9: of for July at least, it's kind of basic effects

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Speaker 9: from energy and so you know, I wouldn't kind of

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Speaker 9: are kind of at a turning point definitely, but I

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Speaker 9: would still say that it might be a bit lower.

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Speaker 9: But you know, if you have inflation at seven percent,

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Speaker 9: that's still not you know, great for the BOE. And

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Speaker 9: I don't think the bo would kind of the clear

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Speaker 9: victory with inflation that high. Now, the problem here is

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Speaker 9: that inflation might be coming down and it might go back.

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Speaker 9: We think it will reach like five percent by the

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Speaker 9: end of the year. But what the VIWY is doing

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Speaker 9: right now, the kind of you know policy, the interest

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Speaker 9: rates heights that it's doing right now is really to

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Speaker 9: ensure that we get to the two percent further down

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Speaker 9: the line. So I think, you know, the BUE is

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Speaker 9: just kind of focused on that and today's data, yeah,

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Speaker 9: kind of I would say actually the opposite. If today's

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Speaker 9: data had showed that, you know, the economy was weakening,

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Speaker 9: you know, faster than we were expecting, then that might yeah,

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Speaker 9: kind of you know, give the BOE reason to stop.

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Speaker 2: Does this make next week's CPI print all the more interesting? Anam,

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Speaker 2: we're thinking about the bigger picture for the UK kind

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Speaker 2: of me.

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Speaker 9: Yeah, I think, I mean, the focus is definitely on

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Speaker 9: next week's CPI and labor market data. I think the

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Speaker 9: vie Yeah, the view we will be looking at that,

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Speaker 9: and I think that it will be kind of looking

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Speaker 9: at the at the inflation number and that it will

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Speaker 9: remain kind of too high for it to stop.

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Speaker 2: Very much in focus over the next week as well.

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Speaker 2: Anna Andrada, Bloomberg European Economist, thank you so much for

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Speaker 2: joining us on the program with that, and of course

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Speaker 2: you can find that episode of the in the City

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Speaker 2: podcast with that conversation with Anna and Bloomberg Opinions Market

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Speaker 2: Ashworth as well, looking at the broader challenges facing the

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Speaker 2: UK economy. That's available for download now. Up next to

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Speaker 2: UK investment in China, Tech to be reviewed and Women

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Speaker 2: flex their spending Power.

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Speaker 4: Now the paper review on Bluebird Daybreak Europe the news

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Speaker 4: you need to know from today's papers.

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Speaker 2: And Blue berg Ley and Gerrians is with us with

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Speaker 2: the details of these stories. Leanne, let's start with the

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Speaker 2: Times headline there investment in China tech to be reviewed.

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Speaker 8: So, Stephen, this is something we have actually been discussing

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Speaker 8: this week and the government could now be planning to

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Speaker 8: follow in the footsteps of the US and block UK

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Speaker 8: companies from investing in Chinese tech businesses now the time.

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Speaker 8: So some senior ministers are warning Beijing is posing this

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Speaker 8: significant threat to security and this is one of the

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Speaker 8: reasons that the UK could be following close behind America.

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Speaker 8: Earlier this week, Joe Biden says he wants to ban

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Speaker 8: US investment in Chinese businesses developing technology, especially in areas

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Speaker 8: that are critical for things like military or surveillance. The

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Speaker 8: ban includes quantum computing, semiconductors, and some artificial intelligence systems. Now, Stephen,

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Speaker 8: if you cast your mind back maybe a week ago,

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Speaker 8: don't if you remember, but we were talking about this

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Speaker 8: and Joe Biden has actually watered down some of the

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Speaker 8: things he's expecting to bring in to keep those relationship

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Speaker 8: with Beijing pretty positive because it is you know, sort

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Speaker 8: of knowing that the two economies need to work together

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Speaker 8: in many ways.

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Speaker 2: Well indeed, and then we listen to the comments that

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Speaker 2: we heard about have describing the economies of taking time

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Speaker 2: bomb a whole other question and a point we were

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Speaker 2: making a little bit earlier in the program too, about

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Speaker 2: how it's political rhetoric versus the realities of those economic ties.

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Speaker 2: And I want to take us next to the Financial Times.

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Speaker 2: Amazon tracks and targets us to have of a failure

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Speaker 2: to work three days in the office.

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Speaker 8: Yeah, exactly, Stephens. So we have seen a lot of

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Speaker 8: these big companies. It's not just Amazon, right, it's things

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Speaker 8: like Google, Zoom, City Group. They want people back in

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Speaker 8: the office after the COVID pandemic. They're saying three days

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Speaker 8: a week is their expectation for people to come into

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Speaker 8: the office. So basically what they're doing now is they're

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Speaker 8: getting more aggressive on the statistics. So they're watching when

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Speaker 8: you badge in and badge out of the office, and

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Speaker 8: if you're doing it less than three days a week,

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Speaker 8: they're basically sending you an email saying you're just not

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Speaker 8: complying with our hybrid work policy. Where there are you,

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Speaker 8: So they're monitoring things. And I think this is pretty

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Speaker 8: interesting because I think a lot of big companies want

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Speaker 8: everyone back in together brainstorming, having these great ideas. And

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Speaker 8: you know, sometimes Stephen, we learn from each other even

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Speaker 8: if we don't.

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Speaker 2: I learned from you every day, lee Anne. But look,

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Speaker 2: I mean as you say, it's a conversation being had

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Speaker 2: in so many different companies in a moment. We've talked about

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Speaker 2: City Group here in the UK also tracking people's badging

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Speaker 2: in and out of the building as well. Interesting to

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Speaker 2: see where that story goes next. We're going to go

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Speaker 2: to the Wall Street Journal now, Leanne, the summer women

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Speaker 2: flexed their spending power.

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Speaker 8: Yeah, I feel like I'm leaving you out of this story,

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Speaker 8: and I don't want to because I feel like if

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Speaker 8: I wanted to go and watch her Beyondceatia, you would

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Speaker 8: probably come with me. But yeah, you see, I know

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Speaker 8: that at Taylor Swift. But basically the Wall Street Journal

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Speaker 8: is just going for us women flexing our spending power.

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Speaker 8: And what it's saying is that it's calling it the

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Speaker 8: women's multiplier effect. So we are going to like these

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Speaker 8: big events like Beyonce shows, the Barbie movie. We're also

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Speaker 8: going to see Taylor Swift's eras tour, but we're not

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Speaker 8: just doing it in one thing. What we're doing is

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Speaker 8: we're buying all the merchandise.

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Speaker 2: To go with it.

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Speaker 8: So apparently we're off to Barbie, we're buying pink outfits,

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Speaker 8: We're off to Taylor Swift's show, but we're painting our colors,

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Speaker 8: our nails all different colors in homage to this.

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Speaker 2: And then we are just going.

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Speaker 8: All out basically, And this is helping boost the economy

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Speaker 8: in the US. And it's really interesting because in local economies,

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Speaker 8: like I said, really enjoying these benefits. And this was

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Speaker 8: actually highlighted in the FEDS July Beige Book Stephen Believe

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Speaker 8: it or Not, which said Taylor Swift boosted Philadelphia's hotel industry.

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Speaker 2: Is there anything she can't do well? I tell you something.

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Speaker 8: I was singing one of her songs wrong for a

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Speaker 8: couple of months and I loved it.