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Speaker 1: Good morning. It's Thursday, the sixth of July in London.

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Speaker 1: This is the Bloomberg Daybaku podcast. I'm Caroline Hipkin and.

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Speaker 2: I'm Stephen Carroll. Coming up today. FED policymakers weren't as

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Speaker 2: unified as they first appeared when they opted to pause

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Speaker 2: rate hikes last month.

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Speaker 1: The US Treasury Secretary Janet Yellen visits Beijing today, but

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Speaker 1: will her trip actually change anything between the world's two

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Speaker 1: biggest economies?

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Speaker 2: And get ready for a hard landing. JP Morgan warns

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Speaker 2: that seven percent rates could be on the way in

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Speaker 2: the UK mid figure showing over a third of homes

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Speaker 2: dropped in value in the last six months. Let's start

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Speaker 2: with a round up of our top stories. Federal Reserve

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Speaker 2: officials struck a tenuous agreement to pause rate hikes last month.

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Speaker 2: The minutes from the central Bank's June meeting show that

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Speaker 2: while almost all officials deemed it appropriate or acceptable to

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Speaker 2: keep rates unchanged, some would have supported a quarter point

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Speaker 2: increase instead. For his part, the Federal Reserve Bank of

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Speaker 2: New York President John Williams says the data supports more

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Speaker 2: hike in the future.

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Speaker 3: We can take some time and assess and collect more

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Speaker 3: information and then be able to act knowing that we

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Speaker 3: also or communicated to our projections that we don't think

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Speaker 3: we're done based on what we know.

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Speaker 2: Those comments from FED policymaker John Williams echoed the latest

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Speaker 2: FOMC minutes, in which the majority of right center is

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Speaker 2: backed further tightening. The account also shows some officials think

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Speaker 2: robust gains and payrolls may be overstating the strength of

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Speaker 2: the US labor market.

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Speaker 1: Now. US Treasury Secretary Janet Yellen is heading to China today.

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Speaker 1: It's hoped that she can find areas of common economic

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Speaker 1: ground amid an increasingly turbulent relationship between the world's two

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Speaker 1: biggest economies. Bloomberg Stephen Engel reports from Beijing.

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Speaker 4: US Treasury Secretary Jenna Yellen comes to Beijing with a

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Speaker 4: giant suitcase of issues to discuss with her new Chinese counterparts.

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Speaker 4: The expectations for any meaningful progress will probably be set

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Speaker 4: fairly low, but dialogue itself should be viewed as constructive. Now,

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Speaker 4: export controls by the US on advanced technologies to China,

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Speaker 4: and of course Beijing's own export restrictions on key metals,

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Speaker 4: they are hot topics right now, as America and its

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Speaker 4: allies de risk their exposure too, and some might say

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Speaker 4: over reliance on China. Steven Angle, Bloomberg News, Beijing.

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Speaker 2: The UK's Financial Services regulator says asset managers are putting

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Speaker 2: investors at risk by not adequately monitoring the liquidity of

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Speaker 2: their funds. Following a survey, the FCA says many mutual

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Speaker 2: fund hass did not use their asset management tools and

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Speaker 2: failed to understand the risks of less liquid assets in

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Speaker 2: their portfolios. The UK has seen issues with liquidity, for

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Speaker 2: example in twenty nineteen when Neil Woodford's equity fund was

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Speaker 2: gated following large scale redemptions. The fc eight points out

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Speaker 2: that some firms models assumed they would always sell their

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Speaker 2: most liquid assets firm, and also that managers typically had

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Speaker 2: arrangements in place only to meet large one half redemptions.

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Speaker 1: Meanwhile, major banks are being summoned to a meeting with

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Speaker 1: the Financial Conduct Authority today to discuss how they are

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Speaker 1: passing on interest rate increases to savers. HSBC, NAT West,

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Speaker 1: Lloyd's and Barclays are accused of increasing mortgage rates quickly

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Speaker 1: along with the Bank of England's hikes, but acting more

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Speaker 1: slowly when it comes to savings accounts. Landlord David France

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Speaker 1: says his borrowing costs have swored, but the banks haven't

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Speaker 1: been helpful with his savings.

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Speaker 5: I think they're not playing a fair game and they're

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Speaker 5: putting the rates up really quickly when the Bank of

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Speaker 5: England announced the rate hikes, but they're not passing the

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Speaker 5: same rate increase on quickly enough to save us and

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Speaker 5: people have got cash in the bank.

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Speaker 1: Meanwhile, City Minister Andrew Griffith has written to the FCA

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Speaker 1: urging the regulator to step up its review into how

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Speaker 1: banks treat customers who are also politicians. That comes after

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Speaker 1: the former Brexit Party leader Nigel Farage said that private

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Speaker 1: bank Coots closed his account due to his political views.

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Speaker 2: More than eleven million homes in the UK have dropped

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Speaker 2: in value since the end of last year as higher

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Speaker 2: mortgage costs sit the property market. Estimates from the property

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Speaker 2: portal Zoopla show thirty eight percent of houses lost at

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Speaker 2: least one percent of their value between November and May.

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Speaker 2: That's an average drop of seven seven hundred pounds. It

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Speaker 2: comes after JP Morgan said there's a risk the Bank

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Speaker 2: of England will have to push interest rates as high

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Speaker 2: as seven percent economist to Alan Monks, writing in a

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Speaker 2: note to clients that are hard landing for the UK economy,

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Speaker 2: looks increasingly likely.

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Speaker 1: Meta's Instagram officially unveils threads and app designed as a

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Speaker 1: direct rival to Twitter. Bloomberg's Ed Baxter reports now this launch.

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Speaker 6: Is a most serious threat yet to Elin Musk's struggling Twitter.

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Speaker 6: On threads, users are posting text and links, as well

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Speaker 6: as replying or reposting messages from others unfamiliar.

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Speaker 1: Well.

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Speaker 6: Bloomberg Sarah Fryar says, I you it was a lot

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Speaker 6: like Twitter, and it is getting activity, also allowing existing

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Speaker 6: follower lists and count names to be ported over from Instagram.

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Speaker 6: Sarah says users were looking for an alternative to watch

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Speaker 6: out there without starting over and seems so far to

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Speaker 6: be pleased. In San Francisco, I met Baxter Bloomberg Daybreak Europe.

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

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Speaker 2: admit I've already opened my threads this morning. Well, I

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Speaker 2: had to have a look to see what it was like.

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Speaker 2: Lots of familiar colleagues popping up, but a notable silence

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Speaker 2: from those in the EU because due to data sharing concerns,

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Speaker 2: Mata has paused the rollout of threads in the in

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Speaker 2: the EU for now, so a notable absence from this

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Speaker 2: part of the ecosystem.

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Speaker 1: Yeah absolutely. I think the numbers of how many people

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Speaker 1: sign up in even the first few hours.

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Speaker 2: Yeah, five million, Mark Zuckerberg said, so fairly, fairly interesting

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Speaker 2: to see that interest building in the hours after its launch.

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Speaker 1: Yeah. Absolutely. And then Mark Zuckerberg also posting his first

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Speaker 1: tweet in eleven years.

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Speaker 2: Now, okay, you have to be kind of into internet

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Speaker 2: culture together, but he posted a picture of two spider

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Speaker 2: man's pointing at each other, which is a kind of

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Speaker 2: a well known internet meme.

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Speaker 1: Yes, boss, it is.

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Speaker 4: It is.

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Speaker 2: Yeah, obviously a point to the fact that they're very

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Speaker 2: much challenging each other.

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Speaker 1: Rivals for the same space for all of our eyeballs. Okay,

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Speaker 1: lovely stuff in terms of the detail though. Now on

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Speaker 1: the fed's minutes, our usual stomping ground Stephen June meeting.

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Speaker 1: Of course, they showed some divisions when it comes to

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Speaker 1: the FEMC over the decision to pause interest rates. Of course,

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Speaker 1: is that a pause? We shall see journeys now to discuss.

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Speaker 1: This is our Bloomberg opinniccolumnist day Daniel Moss Daniel, good morning,

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Speaker 1: Thanks so much for your time. Joan Powell has said

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Speaker 1: that the decision to pause in June was unanimous. What

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Speaker 1: stood out for you in the minutes.

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Speaker 7: What stood out for me is the art of compromise.

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Speaker 7: So most people agreed rates need to go higher. The

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Speaker 7: disagreement appears to be the pace at which they increase.

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Speaker 7: So the way you keep everyone on board is pause.

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Speaker 7: Except we're not allowed to call it a pause. We're

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Speaker 7: not even allowed to call it a skip. It's a

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Speaker 7: decision anyway. Maintain the benchmark rate at the level it

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Speaker 7: was at from the prior meeting and sound hawkish. Kick

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Speaker 7: the idea of rate cuts well into the long grass,

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Speaker 7: and that's how.

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Speaker 3: You do it.

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Speaker 7: There's an enormous amount of internal politicking within the Federal

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Speaker 7: Reserve system. These statements are distributed in advance. They don't

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Speaker 7: just get into the room and hash it all out

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Speaker 7: on the day. It's also true that a number of

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Speaker 7: Fed officials in advance of meetings typically talk tough and

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Speaker 7: you think, ooh, there's a dissent coming, get into the room. Ah, well,

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Speaker 7: we'll support the chairman in this instance. There's a lot

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Speaker 7: of that. I saw a lot of that in ten

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Speaker 7: years in DC, believe me.

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Speaker 6: Yeah.

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Speaker 2: The expression in the minutes is almost all policymakers agree

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Speaker 2: that more tightening would be needed this year. The New

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Speaker 2: York Fed's John Williams says the data supports there. Should

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Speaker 2: we expect a more divided FOMC in future meetings?

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Speaker 7: Then it depends what you mean by divided. Do I

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Speaker 7: anticipate seeing say, four published descents in the FOMC statement? No,

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Speaker 7: I do not. Do we expect a bit more shading

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Speaker 7: around the edges? Yes, for sure in the constellation of

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Speaker 7: FED people to listen to. We've talked about this a

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Speaker 7: bit on this show. Williams is ride up there. I

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Speaker 7: would be interested to know where they said almost all supported?

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Speaker 7: Well who didn't? Who were these people?

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Speaker 1: Do? I absolutely so that when it comes to the

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Speaker 1: FRAMC minutes, And of course we've got data coming today

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Speaker 1: and tomorrow for jobs, so again looking to the next

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Speaker 1: FED meeting, that could be very important. But there's another

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Speaker 1: issue that we have to factor in layer in Daniel,

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Speaker 1: which is US China relations in focus because of the

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Speaker 1: treasure sector. Janet Yellen is arriving in Beijing. What should

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Speaker 1: we expect from this trip?

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Speaker 7: I wouldn't expect an enormous amount in terms of deliverables,

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Speaker 7: concrete things. You can say, prior to the visit, the

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Speaker 7: situation was X, and now we know it's X plus

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Speaker 7: one or why or Z. I wouldn't expect that. I

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Speaker 7: also wouldn't expect a lot of movement on things like

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Speaker 7: export controls. That's Gina Raimondo's territory. That's the Department of

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Speaker 7: Commerce rather than Treasury. Keep the communications going. There is

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Speaker 7: a new team in Beijing. These folks don't know each

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Speaker 7: other to the degree that past administrations did. So you know,

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Speaker 7: it's a cliche, but it's true. George Or is always

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Speaker 7: better than war.

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Speaker 2: War interesting stuff. Indeed, could we see this perhaps visit

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Speaker 2: cantering the steps we've seen in recent days with the

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Speaker 2: apparent worsening of China relation exactly on trade issues.

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Speaker 7: You know you're going to see some posturing. Whenever there

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Speaker 7: is a high profile visit, there's a certain amount of

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Speaker 7: domestic posturing that takes place. So, yeah, they need to

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Speaker 7: talk tough. They're not going to give away the store.

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Speaker 7: But if the language behind the scenes is a bit

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Speaker 7: more conciliatory, then all the more reason to sound tough

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Speaker 7: when you're public facing. There are different constituencies in different

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Speaker 7: countries that are powerful and want different things. You know,

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Speaker 7: it's not necessarily the rhetoric in the moment or in

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Speaker 7: the lead up to that you have to focus on.

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Speaker 7: Let's look for some substantive, not necessarily blaring headline like

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Speaker 7: material in the weeks and months that follow.

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Speaker 1: Yeah. Absolutely, let's see. And of course Johnny Yellen, who

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Speaker 1: talked in April about, you know, wanting national security for

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Speaker 1: the US without actually holding China back economically. Can can

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Speaker 1: that sort of message and idea be delivered? Daniel, Thank

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Speaker 1: you so much for being with us this morning. Bloomberg

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Speaker 1: Opinion columnist Daniel moss Up.

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Speaker 2: Next, Britain warned of the big threat from US green

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Speaker 2: subsidies and the end of glass skyscrapers. Now the paper

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Speaker 2: review on Bluebird Daybreak Europe the news you need to

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Speaker 2: know from today's.

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Speaker 1: Papers blue and Gaines joins us for more. This morning,

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Speaker 1: The Financial Times has the headline Breton warned of big

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Speaker 1: threat it faces from US green subsidies. More on this

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Speaker 1: ongoing issue.

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Speaker 8: Good morning, Yes, indeed, Caroline, And this warning actually comes

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Speaker 8: from a key advisor to the Chancellor, Jeremy Hunt. Now

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Speaker 8: he is saying the UK must overhaul the way it

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Speaker 8: tries to secure inward investment. Richard Harrington has been speaking

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Speaker 8: to the FT and he basically said to them Joe

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Speaker 8: Biden's around three hundred and seventy billion dollar subsidy regime

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Speaker 8: for green industries, which we talk about a lot here,

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Speaker 8: called the Inflation a Reduction Act, highlights how rules around

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Speaker 8: global capitalism are really changing and something that Britain needs

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Speaker 8: to step up to. He says, Britain is also facing

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Speaker 8: really stiff competition from not just the US, but also

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Speaker 8: from France, Island and Singapore, and must really increase state

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Speaker 8: support for state industries such as life sciences and green technology.

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Speaker 8: Now Harrington has been leading this review for Hunt on

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Speaker 8: how to boost foreign direct investment in the UK, which

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Speaker 8: has actually been falling in value every year from twenty

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Speaker 8: sixteen to twenty twenty one. This is something that Jeremy

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Speaker 8: Hunt is expected to talk about in his autumn statement

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Speaker 8: how to boost the green subsidies here in the UK.

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Speaker 8: And the review was actually partly sparked by Astrazeneka's decision

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Speaker 8: in February to build a factory in Ireland rather than

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Speaker 8: in Britain and the pharmaceutical company basically said it was

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Speaker 8: because of the UK's discouraging tax rate. But Richard Harrington

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Speaker 8: also refused to blame Brexit and once again looked at

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Speaker 8: the tax rate here in the UK. So this is

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Speaker 8: a very interesting story about how the UK can become

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Speaker 8: more competitive.

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Speaker 1: Okay, Lord Harrington, you're very interesting.

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Speaker 2: Okay, Leanne. Let's go next to the Times. The Times

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Speaker 2: and Rishi Sunac quote fiddling while science burns of a

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Speaker 2: rejoining you use Horizon research program?

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Speaker 8: Yes, indeed, so can the European Union stop the science

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Speaker 8: brain drate? Now? This is the big question that surrounds

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Speaker 8: the story'll be seeing in the Times today. Rishi Sunac

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Speaker 8: has been told to stop fiddling with the UK as

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Speaker 8: science burns by one of the country's top scientists, Sir

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Speaker 8: Paul Nurse. So he's come out and spoken to the Times.

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Speaker 1: Now.

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Speaker 8: This comes as the UK has been offered a draft

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Speaker 8: deal to rejoin the EUS eighty one a billion pounds

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Speaker 8: science research program, which has been called Horizon. Is understood

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Speaker 8: that British and EU negotiations negotiators have really been preparing

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Speaker 8: this proposal that would allow the UK to rejoin the scheme,

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Speaker 8: and many scientists say this is necessary. They calling out

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Speaker 8: for this to happen, and we're seeing this in the

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Speaker 8: piece in the Times. But according to a white hole

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Speaker 8: source in the newspaper, they're saying Suonax prepared to walk

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Speaker 8: away from the deal if it does not offer the

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Speaker 8: value of money.

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Speaker 1: Surely that one has to take that with a massive

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Speaker 1: grain of salt. UK researchers has been excluded from a

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Speaker 1: horizon since twenty twenty. Any scientist that you speak to

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Speaker 1: in the UK is extremely keen to be back into

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Speaker 1: this massive funding program, collaborative funding program that the UK

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Speaker 1: was hugely successful at. And there has been this standoff,

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Speaker 1: as you say, about how much money the UK not

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Speaker 1: necessarily how much money the UK puts in, but actually

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Speaker 1: how much it then extracts in terms of grants and

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Speaker 1: funding out of the project. And the government sort of

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Speaker 1: wants a lot of caveats to make sure that the

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Speaker 1: UK gets out at least what it puts in, or

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Speaker 1: a little bit more than what it puts in in

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Speaker 1: terms of funding. So that seems to be the sticking point.

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Speaker 1: And yet it seems pretty obvious, I would say, from

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Speaker 1: what I read of the research community that the UK

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Speaker 1: needs to.

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Speaker 8: Be in well. Paul Nurs, the director of Francis Crieck

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Speaker 8: Institute in London, Caroline couldn't agree with you more. He

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Speaker 8: writes that membership of Horizon is vital to keep the

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Speaker 8: UK at the forefront of world science. So basically, scientists

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Speaker 8: howling out for this, and we're going to have to

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Speaker 8: see where these negotiations end up. As Caroline says, sticking

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Speaker 8: point is a really on finance app moment.

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