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Speaker 1: This is Bloomberg Day Break here for this Wednesday, the

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Speaker 1: first of February in London coming up today, closed for

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Speaker 1: a business. Half a million UK workers to strike over

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Speaker 1: pay in conditions harving the hike. The third prepares to

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Speaker 1: downshift from fifty to twenty five, raising the stakes. The

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Speaker 1: Adani Group passes a key test, but Challengers remains stouth taxes,

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Speaker 1: universal music re tuned streaming, and Lotus accelerates towards a

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Speaker 1: US listing. Those are the stories we're looking at in

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Speaker 1: today's papers. And I'm Leanne Karen's plus man versus machine

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Speaker 1: that traders predict an AI revolution for the market. That's

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Speaker 1: all straight ahead on Bloomberg. They break Europe on d

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Speaker 1: A B Digital Radio, London Bloomberg eleven three oh New

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Speaker 1: York Bloomberg one, Washington d C Bloomberg one, O six one, Boston,

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Speaker 1: Bloomberg nine sixties, San Francisco Cyrus XM Channel one nineteen

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Speaker 1: and around the world on Bloomberg Radio, dot com and

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Speaker 1: via the Bloomberg Business Set. Good morning. I'm Stephen Carroll

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Speaker 1: and I'm Caroline Hedger. Here are the stories that we're

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Speaker 1: following today. Nearly half a million British workers go on

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Speaker 1: strike today, the largest industrial action in more than a decade.

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Speaker 1: Most schools and major train stations are closed as key

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Speaker 1: workers demand pay rises. The Schools Minister Nick Gibbs says

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Speaker 1: the walkouts will hurt parents and children. It would be

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Speaker 1: helpful if they could tell their head teachers so that

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Speaker 1: they can plan and also inform parents so that they

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Speaker 1: can plan. So it doesn't helpful either to the children

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Speaker 1: or to the parents or to the school if teachers

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Speaker 1: are not telling their head teachers if they intend to strike.

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Speaker 1: More than half the public believe that Gibb and the

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Speaker 1: rest of the government are doing a bad job of

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Speaker 1: negotiating with unions that according to an Ipsos poll. Here

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Speaker 1: in the UK, inflation and sharpsters to the record or

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Speaker 1: despite the broader measures of price price rises easing, Bloombergs

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Speaker 1: Human Parts has the story. Last month saw prices in

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Speaker 1: was rise at the fastest pace in at least eighteen years,

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Speaker 1: with retailers offering fewer discounts than in the run up

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Speaker 1: to Christmas. The British Retail Consortium said that shop price

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Speaker 1: inflation accelerated to eight percent in the year to January,

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Speaker 1: a record for the indext which started in two thousand

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Speaker 1: and five, and higher than the seven point three percent

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Speaker 1: recorded in December. Food price inflation hits thirteen points eight percent,

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Speaker 1: with sugar, alcohol, and fruit and vegetables all particularly affected

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Speaker 1: as retails struggled with rising costs to strain. It is

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Speaker 1: beginning to show, with Tesco and Asda both recently announcing

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Speaker 1: job cuts. But there's better news from the boss of

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Speaker 1: the UK's biggest dairy producer. The CEO of Arlas says

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Speaker 1: that he expects the cost of milk and butter to

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Speaker 1: drop over the course of this year in London. I'mmu

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Speaker 1: and part spoin Bery Daybreak Europe, so that's for the UK. Meanwhile,

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Speaker 1: the Federal Reserve and its officials looks set to slow

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Speaker 1: the pace of interest rate rises later. Today markets are

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Speaker 1: our pricing in twenty five basis point hike from the Fed,

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Speaker 1: bringing the base rate a range of four and a

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Speaker 1: half to four point seven f Mike Bell, executive director

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Speaker 1: and Global market stresses at JP Morgan Asset Management, says

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Speaker 1: traders need to be wary. I actually think the biggest

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Speaker 1: risk to markets is that we don't get a recession

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Speaker 1: in three the wage growth stays high and the Fed

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Speaker 1: having maybe paused for a bit in March, then in

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Speaker 1: the second half of the other year, they actually end

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Speaker 1: up putting rates up by more than its forecast and

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Speaker 1: aren't able to deliver the rate cuts that the market

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Speaker 1: is expecting for so Mike bell are speaking, while he

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Speaker 1: also told Bloomberg he believes the terminal rate will likely

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Speaker 1: be reached in the coming months. The FED decision will

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Speaker 1: be announced, of course as usual seven pm London time,

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Speaker 1: and we'll be looking at the choices, facing your own

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Speaker 1: power with our Markets Report of Value title in a

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Speaker 1: few minutes. The Danne Groups flagship company has pulled off

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Speaker 1: a two and a half billion dollar equity sale thanks

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Speaker 1: to a surgeon late bids. The offer was fully subscribed

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Speaker 1: on the day, with the institution is making up the

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Speaker 1: bulk of those investing. Bloomberg's Markets reporter Annabel Drewler says

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Speaker 1: the news isn't as positive as it may appear. It's

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Speaker 1: not really good news when you take a look what

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Speaker 1: was missing in the FBO, and that was interest from

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Speaker 1: the retail sale, because that was noticeably weak here individual investors.

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Speaker 1: They only took about ten percent of the shares that

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Speaker 1: were offered to them, even though Danny had actually been

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Speaker 1: hoping to expand its investor base. Alibel d is also

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Speaker 1: noting that sale comes as nearly seventy billion dollars was

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Speaker 1: wiped off the value of the Indian conglomerates and made

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Speaker 1: a short seller's allegations of corporate fit malfeasance. Danny has

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Speaker 1: called the claims calculated security fraud. And finally, research shows

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Speaker 1: that the majority of traders now believe that artificial intelligence

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Speaker 1: will have the biggest impact on financial markets in the

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Speaker 1: coming years. A survey by JP Morgan has found that

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Speaker 1: more than half now believe AI and machine learning will

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Speaker 1: have the most influence on trading over the next three years.

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Speaker 1: That's up a quarter just a year ago. And it

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Speaker 1: comes after the launch of chat GPT, which turbo charged

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Speaker 1: a broader interest in AI technology. And I don't know, Karlin,

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Speaker 1: that you have a very strong interest in chat GPT.

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Speaker 1: After a brilliant column from my Oblan Brig opinion columnist

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Speaker 1: Parmy Olson about this, yeah, absolutely so. Palmy did this

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Speaker 1: test which I think is very useful for me. She

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Speaker 1: attested our chat GPT as a new kind of tutor

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Speaker 1: and all knowing tutor that you can ask to simplify

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Speaker 1: the language, you know, if you want to tutor your

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Speaker 1: your kids. Today's strike day. The schools are shot across

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Speaker 1: England and Wells, or at least most of them, so

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Speaker 1: it's pretty tantalizing. She says. Basically, forget about it, because

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Speaker 1: even though it's an ultra sophisticated AI chat, but it's

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Speaker 1: still got a lot of the answers wrong. Do you

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Speaker 1: remember the search change and asked Jeeves, which was a

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Speaker 1: similar idea. It was asked question and and and a

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Speaker 1: butler Jeeves would answer it for you. Yet yeah, and

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Speaker 1: I didn't always work very well. And I feel like

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Speaker 1: we might be turning into the same sector anyway. Coming

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Speaker 1: up next, stalth taxes said higher earners, Universal Music looks

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Speaker 1: to reach in its streaming model, and Lotus accelerates towards

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Speaker 1: a US listening Now. The paper review on blue birdday

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Speaker 1: Break Europe. The news you need to know from today's

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Speaker 1: papers journing US now has been basically ann gerrans for

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Speaker 1: more now. To start the headline in the Telegraph, the

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Speaker 1: Treasury rakes in an extra twelve billion pounds as stealth

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Speaker 1: taxes hit higher earners. So, of course, the thirty one

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Speaker 1: journey the last day to file your taxes. So now

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Speaker 1: we get an understanding of the bill. Yes, indeed, Caroline

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Speaker 1: and I hope you all did your taxes out there,

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Speaker 1: and as you did, say, stealth taxes are really hitting

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Speaker 1: higher earners and this is harder than actually expected. According

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Speaker 1: to the newspaper, the Office of Budget Responsibility says rising

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Speaker 1: wages has helped the Treasury rake in this extra twelve

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Speaker 1: billion pounds last year and this is all down to

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Speaker 1: the strong jobs market, meaning more people are now paying

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Speaker 1: the forty rate of income tax and the government is

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Speaker 1: really benefiting as employee tax and national insurance revenues are

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Speaker 1: rising sharply here in the UK. And it's not just

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Speaker 1: higher earners helping out. Actually a Caroline, Larger receipts from

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Speaker 1: big banks and also accountancy firms are really allowing the

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Speaker 1: government to borrow far less to plug the gap between

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Speaker 1: tax receipts and also public spending. So there we go,

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Speaker 1: stealth taxes really hitting higher earners harder than expected. Interesting stuff, Okay, lean,

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Speaker 1: let's turn to the Guardian. Next is headline reads Chinese

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Speaker 1: owner of Lotus Technology to list a stake in the

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Speaker 1: US via blank check from what's this all? About Yes, indeed,

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Speaker 1: so Lotus Technology. This is an offshoot of the British

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Speaker 1: sports car brand which was bought by China's Geely back

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Speaker 1: in twenty seventeen. Now it's going to be listing on

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Speaker 1: the NASDAC. The Guardian says the listing will be with

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Speaker 1: a special purpose acquisition vehicle. It's a spack which has

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Speaker 1: a backing from Alviam Mage and it's billionaire founder Bernard

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Speaker 1: h No. Lotus Tech is expected to be valued at

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Speaker 1: five point four billion dollars and this is according to

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Speaker 1: the paper. Remember Gally is owned by the billionaire Lee

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Speaker 1: Schafu and he's also has a stake in another iconic

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Speaker 1: British brand loved by James Bond and many other men.

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Speaker 1: That's Aston Martin Lotus, also with James Bond brand. Has

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Speaker 1: to be said the Lotus cars in the James Bond film.

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Speaker 1: You know, I didn't know what a Lotus car was

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Speaker 1: until this morning. Sorry for my naivety anyone listening out there.

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Speaker 1: It's a lightweight yes, no, no, I don't want one. No,

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Speaker 1: I'm joking. I'd loved one. It's a lightweight sports car

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Speaker 1: handmade in Norfolk in England, and it's been part of

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Speaker 1: the British car scene since, and it's now not listing

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Speaker 1: in London, but it's listing in New York. So this

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Speaker 1: is kind of the Zeke list of the whole story

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Speaker 1: at the time when we've seen really investigates invest how

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Speaker 1: much money in in focusing the company on electric vehicles

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Speaker 1: as well, So that's kind of an interesting move for

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Speaker 1: them too. Yeah, absolutely, I mean I was reading a

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Speaker 1: little bit about this. They basically want to rival Porsche,

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Speaker 1: so it's you know, Lotus has been this kind of

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Speaker 1: very specialist brand, but with the Chinese money, you know,

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Speaker 1: expanding anyway, very interesting cast story Financial Times though the

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Speaker 1: headline there Universal Music in talks with big platforms to

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Speaker 1: overhaul the streaming model. Yes, and ded Caroline. So the

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Speaker 1: world's largest music company is actually said to be in

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Speaker 1: talks with these big streaming giants to overhaul the industry's economics.

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Speaker 1: So they want more money to be going to the artists.

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Speaker 1: Universal is concerned about the number of songs on platforms

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Speaker 1: such as Spotify. Apparently over one hundred thousand new songs

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Speaker 1: I'll be adding to the streaming service Spotify every single day.

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Speaker 1: This is a huge amount, and the industry is also

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Speaker 1: worried a out manipulation of the system where bolts are

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Speaker 1: used to inflate these listening figures, and many musicians say

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Speaker 1: the current system stops them from making an actual living

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Speaker 1: because people aren't buying the records or the hard copies

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Speaker 1: of the CDs as we've seen before, they downloading it

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Speaker 1: on different streaming platforms. And main labels have also complained

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Speaker 1: about the growth of lower quality songs such as ambient

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Speaker 1: sleep tracks. I know some people do use them to

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Speaker 1: go to sleep at night, and obviously they're becoming more

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Speaker 1: and more popular. Well, you know that thing when you

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Speaker 1: get your your list of things from your chosen streaming

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Speaker 1: service at the end of the year of of what

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Speaker 1: you're most listening to, and anyone that has kids, well

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Speaker 1: just hasn't incompletely stuff that they've had to listen to

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Speaker 1: their children. They're kind of saying, well, you know, I

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Speaker 1: don't actually listen to Pepper Peg but a little bit.

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Speaker 1: I love the sound of a fan at night, and

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Speaker 1: obviously energies been expensive, so now now I stream the

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Speaker 1: sound of fan music, so that is definite lay at

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Speaker 1: the top of my list. Yeah, white noise, but once again,

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Speaker 1: a really interesting change for musicians who have been saying

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Speaker 1: for a very long time they're just not making enough money. Okay,

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Speaker 1: I guess, thank you so much for that through the

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Speaker 1: newspapers this morning. Okay, let's turn next to the Federal

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Speaker 1: Reserve meeting. The f o MC meeting, of course and

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Speaker 1: decision comes today. Another down shift in the pace of

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Speaker 1: radars to twenty five basis points widely expected, but from markets,

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Speaker 1: it's all about Jerome's pals opening statement and the tone

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Speaker 1: in his press conference this evening London time. Let's speak

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Speaker 1: to our market supporter Valerie Title, who joins us in

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Speaker 1: the studio for more on this. Very broadly, what's changed

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Speaker 1: since December is meeting. There's been three key shifts that

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Speaker 1: have happened in the US. One is that inflation continues

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Speaker 1: to moderate. That's both in wage inflation and core inflation.

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Speaker 1: That's very important for the Fed. It shows that they're

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Speaker 1: on the right track. Secondly, there's been some broad softening

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Speaker 1: in the data, both in the forward looking sentiment indicators,

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Speaker 1: in some of the hard data, and thirdly complicate it's

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Speaker 1: the Fed a bit. The labor market has continued to

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Speaker 1: be strong at jobless claims are holding up better than expected,

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Speaker 1: and the previous non farm payrolls was a beat. Okay,

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Speaker 1: So that is what has changed. That is what power

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Speaker 1: and others have to take into account. Inflation falling, data softening.

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Speaker 1: So is it time then to sound hawkish and is

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Speaker 1: that how the street is actually leaning now? Well, look,

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Speaker 1: if he did want to come out and sound hawkish today,

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Speaker 1: he could be totally dismissive of this recent drop in inflation,

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Speaker 1: almost kind of doubting it if it can continue because

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Speaker 1: the labor market is so strong, and he could be

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Speaker 1: a bit more aggressive in that kind of language, really

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Speaker 1: declaring that the unemployment rate needs to rise in order

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Speaker 1: or in order for him to almost trust that this

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Speaker 1: inflation is returning to target. And if he did want

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Speaker 1: to surprise dovishly though, um, he could really welcome this,

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Speaker 1: this moderation and inflation, saying that with the backdrop of

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Speaker 1: the weakening in the U S economic data, that this

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Speaker 1: is a welcome development. He could state that he is

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Speaker 1: more data dependent that will probably open the door for

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Speaker 1: a pause and March being likely if the data turns,

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Speaker 1: and he could say things like we are approaching sufficiently

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Speaker 1: restrictive levels. That would be something that would change in

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Speaker 1: the opening statement that would again open the door to

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Speaker 1: a pause in March. So it's really all about is

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Speaker 1: the mayhike still in play or does he lead us

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Speaker 1: to believe that a pause and marches in the cards. Okay, Well,

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Speaker 1: the market is pricing a lot of cuts for the

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Speaker 1: FED later this year, even when they told us they

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Speaker 1: weren't looking to cut it all in three Could we

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Speaker 1: prompt a polish tone then, yeah, so he could. He

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Speaker 1: could push back on this pricing, but I just I

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Speaker 1: think the market won't believe him. The market really needs

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Speaker 1: to see an upside surprise and inflation um or perhaps

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Speaker 1: a stronger labor market data in order for them to

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Speaker 1: believe that they're going to go decently above five percent.

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Speaker 1: So that the bar to really convince the markets that

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Speaker 1: they're going above five percent. It's really hard for pal

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Speaker 1: to do. Verbally, I think the market is more watching

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Speaker 1: if if data surprises, if inflation surprises the other way,

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Speaker 1: that would lead the market to reprice and maybe take

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Speaker 1: out some of these cuts later in the year. Okay,

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Speaker 1: And just one voice, but one that we listened to

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Speaker 1: billion a Jeffrey Gundland talking about suspecting the FED messaging

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Speaker 1: will push back against the pivot narrative and thereby current

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Speaker 1: bond market pricing. You know, he's saying it should be

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Speaker 1: interesting at least that's that's his view. Um, just briefly

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Speaker 1: impact for the European open or at least for tomorrow

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Speaker 1: as well in Europe. How closely will European traders be watching? Well, hugely, hugely.

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Speaker 1: This is going to dictate a lot of of of

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Speaker 1: what happens in the market later this week. But but look,

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Speaker 1: don't forget. We have some key data coming out of

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Speaker 1: the US even before Powell takes the stand. We get

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Speaker 1: some I S M data and more importantly, we get

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Speaker 1: the Jolts data, which is the job openings number. He's

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Speaker 1: referred to this many times in this statement. So if

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Speaker 1: that data comes surprised one way or the other, that

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Speaker 1: conjult markets as well. This is Bloomberg Daybreak Europe, your

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