WEBVTT - Daybreak Europe: January 31st, 2023

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<v Speaker 1>This is Bloomberg Daybreak. You for this Tuesday, the thirty

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<v Speaker 1>one of January in London. Coming up today, Banking a

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<v Speaker 1>bigger profits, ubs goes on a share buying binge just

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<v Speaker 1>earnings beat estimates an unwanted Brexit dividend. Bloomberg Economics says

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<v Speaker 1>that leaving the EU is costing the UK a hundred

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<v Speaker 1>billion pounds a year a brighter global picture. The i

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<v Speaker 1>m F raises its growth forecast for the first time

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<v Speaker 1>in a year, scrapping EU legislation, counting the cost of

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<v Speaker 1>a new build, and the London Mayor presses ahead with

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<v Speaker 1>U les. Those are the stories we're looking at in

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<v Speaker 1>today's papers and I'm leanne Garin's plus the high price

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<v Speaker 1>of Musque's Twitter interests social media firm makes its first

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<v Speaker 1>three hundred million dollar payment after Elon's debt fueled buy out.

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<v Speaker 1>That's all straight Ahead on Bloomberg Daybreak Europe on DAB

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<v Speaker 1>Digital Radio London, Bloomberg eleven three oh New York, Bloomberg

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<v Speaker 1>on Washington d C, Bloomberg one, Boston, Bloomberg six, San Francisco,

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<v Speaker 1>syrus XM Channel one nineteen and around the world on

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<v Speaker 1>Blueberg Radio dot Com. And var the Blueberg Business. Good morning,

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<v Speaker 1>I'm Stephen Carroll and I'm Caroline Heitke. Here are the

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<v Speaker 1>stories that we're following today this morning. UBS says it

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<v Speaker 1>plans to buy back more than five billion dollars in

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<v Speaker 1>stock this year. After posting better than expected results for

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<v Speaker 1>the final three months of twenty two, the bank reported

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<v Speaker 1>net income for the fourth quarter of one point six

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<v Speaker 1>five billion. That's a beat on the analyst estimate of

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<v Speaker 1>just under one point three billion dollars. In a bullish

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<v Speaker 1>assessment of the results, UBS CEO Ralph Harmer has said

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<v Speaker 1>the bank's performance proves that their strategy is the right

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<v Speaker 1>one and they're not the only bank reporting today. Car No, absolutely,

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<v Speaker 1>We're just we've had our results from Swedbank fourth quarter

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<v Speaker 1>net interest incomes a beat ten point nine to billion

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<v Speaker 1>Swedish kroner. Estimates had been for nine point four eight

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<v Speaker 1>billion Sweedbanks a full year dividend per share at nine

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<v Speaker 1>point seven five Swedish chronas, so that's actually slightly below estimates.

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<v Speaker 1>And then UniCredit boosting two investor returns to five point

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<v Speaker 1>two billion euros their fourth quarter net income two point

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<v Speaker 1>four six billion euros. That is a big beat on

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<v Speaker 1>the estimated one point zero three billion. Of course, that

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<v Speaker 1>UNI credit had been in focus. The chief executive officer,

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<v Speaker 1>Andrea or Cell had told Bloomberg just earlier this month

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<v Speaker 1>that investors could expect higher payouts, So those results from

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<v Speaker 1>UniCredit for now. The i m F latest economic forecast

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<v Speaker 1>there's only one G seven economy in recession this year, Britain,

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<v Speaker 1>human parts has more. The International Monetary Fund says the

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<v Speaker 1>UK will be bottom of the class this year, and

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<v Speaker 1>his latest forecast, the IMF says Britain will be the

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<v Speaker 1>only G seven economy to shrink in twenty twenty three,

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<v Speaker 1>contracting by no point six percent. It says higher taxes

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<v Speaker 1>and interest rates, along with government spending the strate will

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<v Speaker 1>exacerbate pressures on the cost of living. Taken together that

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<v Speaker 1>saw the IMF downgrade is outlooked by a massive nine

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<v Speaker 1>tenths of apsentage points from its forecast just three months ago. Separately,

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<v Speaker 1>new analysis has found the Brexit it's costing the UK

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<v Speaker 1>economy a hundred billion pounds a year, some four percent

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<v Speaker 1>of g d P. The report by Bloomberg Economics says

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<v Speaker 1>the effects span everything from business investments to the ability

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<v Speaker 1>of companies to hire workers in London immune parts of

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<v Speaker 1>Bloomberg day break Europe. Well, that may be the picture

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<v Speaker 1>in the UK, but there's better news globally. The International

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<v Speaker 1>Monetary Fund has raised its economic outlook for the first

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<v Speaker 1>time in a year. The IMF is now forecasting global

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<v Speaker 1>growth of two point nine percent for the year. That's

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<v Speaker 1>up two tenths of one percent on previous expectations, but

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<v Speaker 1>chief economist Pierre Olivier Garinchas says that inflation is still

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<v Speaker 1>a major concern. The worry is more with what we

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<v Speaker 1>call core inflation that excludes energy and food prices are

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<v Speaker 1>typically more volatile, and this core inflation measures have shown

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<v Speaker 1>more precise and they have not picked yet in many countries,

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<v Speaker 1>and they are still far away from settle bank targets.

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<v Speaker 1>So the job is not done. So the job not done.

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<v Speaker 1>The i m F s cautious optimism, contrast with a

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<v Speaker 1>more die view from the World Bank. The Development Lender

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<v Speaker 1>slashed its growth forecast for most countries and regions earlier

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<v Speaker 1>this month. The sell off and the Danne Group shares

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<v Speaker 1>has continued today, amid allegations of market manipulation. The embattled

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<v Speaker 1>group has now seen some seventy four billion dollars wiped

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<v Speaker 1>off its value in a single week. The route comes

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<v Speaker 1>as a Danne seats to complete a multibillion dollar share

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<v Speaker 1>sale as flagship firm. Bloomberg Markets reporter Annabel Drewler says,

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<v Speaker 1>there are signs it's not going as planned. A Danni

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<v Speaker 1>Group has really been stuck relying on its existing investors,

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<v Speaker 1>and a big portion of that is actually coming from

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<v Speaker 1>the U a E. Because we have International Holding Co,

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<v Speaker 1>which is controlled by a key member of the Emirates

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<v Speaker 1>Royal family. It's going to be investing about four hundred

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<v Speaker 1>million dollars in the share sales that represent about six

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<v Speaker 1>percent of the offering. Annibal drew says that all eyes

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<v Speaker 1>are now on the final outcome of this fundraising Gamdany

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<v Speaker 1>has now slipped out of the world's top ten richest

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<v Speaker 1>people according to Bloomberg's Billionaires Index. And finally, Twitter has

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<v Speaker 1>made its first interest payment of the twelve and a

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<v Speaker 1>half billion dollar alone that was taken out by Elon

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<v Speaker 1>Musk to help with the takeover of the social media firm.

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<v Speaker 1>Paying the estimated three hundred million dollar alone installment was

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<v Speaker 1>seen as a key test for the firm after owner

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<v Speaker 1>Elon Musk warned that the company could go bankrupt since

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<v Speaker 1>his purchase. Twitter has failed to pay millions of dollars

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<v Speaker 1>in rent though, and has been sued by multiple contractors

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<v Speaker 1>over on paid services. So those are top stories this morning.

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<v Speaker 1>Have to say. Looking around, the economic news is money.

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<v Speaker 1>It's not a great day to be Britain as it

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<v Speaker 1>no the only G seven country to shrink this year. Terrible. Also,

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<v Speaker 1>not only is the outlook slashed a massive nine tenths

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<v Speaker 1>of one percent from the October forecast, but also the

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<v Speaker 1>rm fcs are slow recovery in so basically two really

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<v Speaker 1>bleak years for Britain overall stagnation. Jeremy Hunt, who is

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<v Speaker 1>in this building on Friday to deliver a kind of

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<v Speaker 1>big economic address, he suggested that the UK is going

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<v Speaker 1>to do better than the MF expectations, but no, it's not.

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<v Speaker 1>It's not a particularly strong picture for Britain. And then

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<v Speaker 1>to look add to that the Bloomberg Economics report about

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<v Speaker 1>the cost of Briggs at a hundred billion pounds a year.

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<v Speaker 1>It's a very stark figure. You know, four percent the

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<v Speaker 1>economy's four percent. Our economists estimate that it might have

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<v Speaker 1>been that's due to business investment, lagging worker or lagging

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<v Speaker 1>supply of workers in the UK as well. So I mean, look,

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<v Speaker 1>it's it's not it's not a great picture to be

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<v Speaker 1>waking up to this morning, certainly from the economic point

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<v Speaker 1>of view. However, if you are looking to go on holidays,

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<v Speaker 1>things are looking a bit brighter because there are more airlines.

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<v Speaker 1>Airlines are now being told they have to use their

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<v Speaker 1>their slots, the lad slots they have at airports in

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<v Speaker 1>the UK. They had been given some flexibility on the

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<v Speaker 1>rules during the endemic. That means that there will be

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<v Speaker 1>the possibility for airlines to schedule more flights this summer,

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<v Speaker 1>perhaps will avoid travel chaos this summer. Yeah, well maybe

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<v Speaker 1>you need to get away after that. Term what news

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<v Speaker 1>we've just delivered to But look the other thing that

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<v Speaker 1>I've picked out on the Rumberg Ternel this morning that

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<v Speaker 1>you must read. I learned so much from Mehir Sharma,

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<v Speaker 1>Bloomberg opinion columnist senior fellow at the Observer Research Foundation

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<v Speaker 1>in New Delhi about what is happening in India with

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<v Speaker 1>the Adani issue. His columns, he points out that for

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<v Speaker 1>many in India, it's actually less about where the money

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<v Speaker 1>for a Danni investments comes from and much more whether

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<v Speaker 1>they succeed in building these ports and airports and roads

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<v Speaker 1>and railways that a Dani group has sort of specialized in.

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<v Speaker 1>I do encourage you to read the columns that he's

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<v Speaker 1>got out on the Terminal. They'll give you great insight

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<v Speaker 1>into what's happening in India. Yeah, and certainly and where

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<v Speaker 1>a Dannie sits within the sort of Indian psyche as

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<v Speaker 1>well as being this great hope for for so many

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<v Speaker 1>areas of the economy. So yeah, definitely a fascinating read

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<v Speaker 1>on the Terminal. Coming up next, scrapping EU legislation, counting

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<v Speaker 1>the cast of a new build and London's Mayor presses

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<v Speaker 1>ahead with you les now. The paper review on bluebirdday

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<v Speaker 1>Break Europe, the news you need to know from today's

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<v Speaker 1>papers and joining us now has been based Lean Garin's

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<v Speaker 1>to go through the newspapers, starting with the Financial Times,

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<v Speaker 1>which has the headline the UK Review of EU Laws

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<v Speaker 1>expanded after a thousand pieces of legislation added. So this

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<v Speaker 1>is about this phrase bonfar of legislation, isn't it? Yes,

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<v Speaker 1>it is indeed, Caroline, And three years on from Brexit

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<v Speaker 1>and the government's plan to review and revoke all these

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<v Speaker 1>EU laws by the end of this year. Has now

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<v Speaker 1>clearly become even tougher. The Ft says a discovery of

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<v Speaker 1>another one thousand pieces of EU legislation that were found

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<v Speaker 1>in the National archives have now been added to this

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<v Speaker 1>massive pie that needs to be looked over and analyze.

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<v Speaker 1>The plan is to review so much law so quickly.

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<v Speaker 1>This is attracting fierce, fierce criticism, but from lots of

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<v Speaker 1>different places, so from business groups, legal experts, trade unions

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<v Speaker 1>and even environmental groups, so widespread criticism there. However, the

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<v Speaker 1>government standing firm says the review process will maximize the

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<v Speaker 1>benefits of Brexit and test opportunities for reform. And I

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<v Speaker 1>just want to point to one thing in the paper

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<v Speaker 1>article to date, says a new Ipsos Mori pole found

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<v Speaker 1>that forty five cent of people across Britain thought Brexit

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<v Speaker 1>was going to be worse than they expected. Now that's

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<v Speaker 1>up from twenty eight percent in June twenty one, So

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<v Speaker 1>it looks like attitudes are changing too. Yeah, certainly, that's

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<v Speaker 1>something we've seen bearing out and polling for for months now,

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<v Speaker 1>and a really interesting aspect of the attitudes to Brexit

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<v Speaker 1>at the moment let's turn to the Telegraph next. Then

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<v Speaker 1>it says homeowners is twenty two tho pounds as one

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<v Speaker 1>in eight new build homes re sold for a loss.

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<v Speaker 1>I'm sorry if you're listening to this and you did

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<v Speaker 1>buy a new home, but homeowners are twice as likely

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<v Speaker 1>to resell new build homes at a loss, and that's

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<v Speaker 1>compared with older homes. And this is all according to

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<v Speaker 1>data from the estate agents. Hampton's data shows that eighty

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<v Speaker 1>one percent of new build owners who made a loss

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<v Speaker 1>were actually selling a flat and the average loss was

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<v Speaker 1>twenty two thousand pounds. And I hear everyone out there

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<v Speaker 1>asking why, And that's because, as Paula Higgins, founder of

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<v Speaker 1>the Homeowners Alliance lobby group, says, developers sell new builds

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<v Speaker 1>at a massive premium and then all of a sudden

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<v Speaker 1>they become in line with the area. Plus the government's

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<v Speaker 1>helped a buy scheme clearly also inflated the price of flats.

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<v Speaker 1>Hampton says new build flats sold fifty five percent. That's

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<v Speaker 1>a half since the scheme came in back in twenty

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<v Speaker 1>And it wasn't as if people didn't warn that actually

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<v Speaker 1>tinkering again with kind of an incentive to buy support

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<v Speaker 1>for first time buyers. Wasn't just going to put prices up.

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<v Speaker 1>There's the evidence, I thought. I think that's a really

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<v Speaker 1>interesting piece from the Telegraph. Just finally, this is so

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<v Speaker 1>controversial in London, I dare not speak its name. Eulers

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<v Speaker 1>the Guardian. The London Mayor vows suppress ahead with l

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<v Speaker 1>as the Ultra Low Emission Zone plan at the launch

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<v Speaker 1>of a scrappage scheme and it's also divisive in office

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<v Speaker 1>today we mentioned it and I feel like the debate

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<v Speaker 1>went on and on. So Sadi Khan is insisting this

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<v Speaker 1>plan will go ahead in August despite opposition. Caroline and

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<v Speaker 1>Stephen from councils and the public for London Boroughs have

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<v Speaker 1>actually threatened illegal action. Yesterday, the London Mayor said he

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<v Speaker 1>was confident of defending any court case brought against the

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<v Speaker 1>U LESS plans as he launched the scrappage scheme for

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<v Speaker 1>poleting vehicles. The Ultra Low EMISSI next zone is going

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<v Speaker 1>to be expanded to the Greater London boundary and that's

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<v Speaker 1>going to be happening in August. The battle for cleaning continuous.

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<v Speaker 1>Garran's thank you very much. Now there are encouraging signs

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<v Speaker 1>and much of the global economy according to the I

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<v Speaker 1>m F. Bloomberg's Richards Salamash caught up with the Funds

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<v Speaker 1>chief economist Pierre Olivier goren Shah to ask them about

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<v Speaker 1>their forecast. We are looking at is what effectively is

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<v Speaker 1>going to be still a challenging here. I mean, what

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<v Speaker 1>we're projecting for three is two point nine percent growth

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<v Speaker 1>and then rebounding to three point one. These are still

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<v Speaker 1>relatively low growth numbers for the global economy, well below

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<v Speaker 1>what we averaged from two thousand to twenty nineteen, for instance,

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<v Speaker 1>but still it's an upgrade compared to what we were

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<v Speaker 1>expecting back in October. And this is due to resilience. Resilience, resilience.

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<v Speaker 1>We've had more resilient households in the US and businesses

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<v Speaker 1>as well. We've had resilience to the energy crisis in Europe.

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<v Speaker 1>A lot of economies have done better than was initially expected.

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<v Speaker 1>Labor markets have been very very tight in many emerging

0:13:05.400 --> 0:13:08.200
<v Speaker 1>and advanced economies as well. And then in addition to

0:13:08.240 --> 0:13:11.280
<v Speaker 1>all this, you have the reopening of the Chinese economy

0:13:11.559 --> 0:13:15.199
<v Speaker 1>that is promising to give a boost to global activity.

0:13:15.360 --> 0:13:21.600
<v Speaker 1>In h now that resilience Olivier it is making the

0:13:21.720 --> 0:13:25.160
<v Speaker 1>job of center bank is perversely harder here And what's

0:13:25.200 --> 0:13:28.400
<v Speaker 1>your take, Well, there is a little bit of good

0:13:28.400 --> 0:13:31.200
<v Speaker 1>news on the inflation front, but we should not exaggerate it.

0:13:31.520 --> 0:13:34.880
<v Speaker 1>So what we are seeing is that global inflation headline

0:13:34.880 --> 0:13:39.320
<v Speaker 1>inflation has peaked already in and is coming down in

0:13:39.480 --> 0:13:42.840
<v Speaker 1>the vast majority of countries. The worry is more with

0:13:42.880 --> 0:13:46.480
<v Speaker 1>what we call core inflation that excludes energy and food

0:13:46.480 --> 0:13:50.439
<v Speaker 1>prices are typically more volatile, and this core inflation measures

0:13:50.600 --> 0:13:53.719
<v Speaker 1>have shown more persistent and they have not picked yet

0:13:53.760 --> 0:13:56.839
<v Speaker 1>in many countries, and they are still far away from

0:13:56.840 --> 0:13:59.840
<v Speaker 1>settle bank targets. So the job is not done. And

0:14:00.000 --> 0:14:01.920
<v Speaker 1>you are right a point out that more resilience on

0:14:01.960 --> 0:14:05.800
<v Speaker 1>activity could mean more price pressures, could mean that it's

0:14:05.840 --> 0:14:09.040
<v Speaker 1>harder for centle banks to bring down inflation to target,

0:14:09.240 --> 0:14:12.320
<v Speaker 1>and therefore they might need to do more. I think

0:14:12.400 --> 0:14:18.559
<v Speaker 1>that your Busschristina Cristalina Georgieva said. Of course, the the

0:14:18.600 --> 0:14:23.480
<v Speaker 1>COVID which I said, the post COVID zero China is

0:14:23.520 --> 0:14:25.600
<v Speaker 1>going to perhaps to be one of the impetus is

0:14:25.680 --> 0:14:28.600
<v Speaker 1>for growth, as you've just alluded to. But it's also

0:14:28.720 --> 0:14:34.600
<v Speaker 1>could be the next sort of inflation headache as well well. Certainly,

0:14:34.720 --> 0:14:38.200
<v Speaker 1>as the Chinese economy reopens, that's going to put pressure

0:14:38.440 --> 0:14:42.880
<v Speaker 1>on a number of primary commodities markets, energy markets, etcetera.

0:14:43.320 --> 0:14:46.520
<v Speaker 1>But let's keep in mind that even with that China's reopening,

0:14:46.560 --> 0:14:49.480
<v Speaker 1>we are grading China quite a bit. We're projecting five

0:14:49.520 --> 0:14:53.160
<v Speaker 1>point two percent growth in that's Zual point eight percentage

0:14:53.160 --> 0:14:57.720
<v Speaker 1>point upward revision for China for for this year. It's

0:14:57.720 --> 0:15:00.600
<v Speaker 1>still the global economy is slowing down and and in

0:15:00.760 --> 0:15:04.440
<v Speaker 1>terms of the overall demand demand for energy and UH

0:15:04.480 --> 0:15:07.440
<v Speaker 1>and commodities, that is really what is going to be

0:15:07.960 --> 0:15:11.160
<v Speaker 1>the driving force. So China is doing better, but the

0:15:11.240 --> 0:15:15.080
<v Speaker 1>global economy is still cooling off, and in our projections

0:15:15.120 --> 0:15:17.920
<v Speaker 1>we are factoring in that we anticipate we expect prices

0:15:17.960 --> 0:15:21.520
<v Speaker 1>of energy and UH and other commodities to actually decline

0:15:22.080 --> 0:15:25.760
<v Speaker 1>through the year. Now if also highlighted that the risks

0:15:26.040 --> 0:15:32.280
<v Speaker 1>do remain to the downside, Why well, I've mentioned already

0:15:32.280 --> 0:15:35.360
<v Speaker 1>that we are far from having won the fight against inflation.

0:15:35.400 --> 0:15:38.320
<v Speaker 1>There could be a lot more persistence in inflation. We

0:15:38.360 --> 0:15:41.320
<v Speaker 1>have had a few good prints. It's encouraging, it's in

0:15:41.360 --> 0:15:44.680
<v Speaker 1>the right direction. But let's not think that somehow the

0:15:44.760 --> 0:15:47.920
<v Speaker 1>job is done. Far from it. There could be price

0:15:47.960 --> 0:15:51.080
<v Speaker 1>pressures that could be wage pressures. There could be an

0:15:51.120 --> 0:15:55.000
<v Speaker 1>escalation of the war in in in Ukraine that again

0:15:55.480 --> 0:15:58.760
<v Speaker 1>sends energy and commodity prices through the roof. So there

0:15:58.760 --> 0:16:02.680
<v Speaker 1>are a number of factors that could complicate the outlook

0:16:02.800 --> 0:16:07.760
<v Speaker 1>in and I would make potentially a recession more likely.

0:16:07.800 --> 0:16:11.200
<v Speaker 1>Global recession more likely, may require more tightening by central bank.

0:16:11.560 --> 0:16:14.560
<v Speaker 1>We could have also a tightening of financial conditions. So

0:16:14.640 --> 0:16:17.640
<v Speaker 1>far this has not happened too much, but this is

0:16:17.680 --> 0:16:20.120
<v Speaker 1>a new environment. We have to be very vigilant in

0:16:20.240 --> 0:16:23.520
<v Speaker 1>terms of the vulnerabilities in the financial markets, in the

0:16:23.560 --> 0:16:27.400
<v Speaker 1>non bank financial institutions and housing sector. This tightening of

0:16:27.760 --> 0:16:30.960
<v Speaker 1>policy rates by centle bank is something that is really

0:16:31.040 --> 0:16:33.920
<v Speaker 1>changing the environment here and we have to be very careful.

0:16:34.440 --> 0:16:37.120
<v Speaker 1>This is Bloomberg Daybreak Europe, your morning brief on the

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