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Speaker 1: This is Bloomberg dabahre for this Wednesday, the seventeenth of

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Speaker 1: May in London. Coming up today, Don't bang on it.

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Speaker 1: Wall Street gets a China reality check, not quite dancing

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Speaker 1: on the ceiling. Biden and McCarthy voice cautious optimism on

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Speaker 1: a debt deal. Paper profits Ubs gets a thirty five

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Speaker 1: billion dollar gain from its credit.

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Speaker 2: SUEEE takeover closer cooperation on cross channel migration. The CBI

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Speaker 2: looks to rebuild trust and Starmer said we should build

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Speaker 2: on the Greenbelt. Those other stories we're looking at in

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Speaker 2: today's papers, and I'm Leanne Gerns.

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Speaker 1: Bus lawmakers look to shift the odds on crypto. MP's

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Speaker 1: call for trading and digital currencies to be regulated just

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Speaker 1: like gambling.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App,

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Speaker 3: and every way you get your podcasts.

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Speaker 1: Good morning, I'm Caroline Hitka. Let's go to our top stories.

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Speaker 1: US banks have spent billions of dollars trying to stake

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Speaker 1: acclaim on China's sixty trillion dollar financial market, but a

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Speaker 1: Bloomberg investigation has found that many are now quietly scaling

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Speaker 1: back their ambitions. Bloomberg's Valerie ty Tell has the full story.

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Speaker 4: Wall Street giants are cooling on the world's second largest

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Speaker 4: economy as they factor in rising geopolitical risk. Goldman Bank

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Speaker 4: of America and JP Morgan are among those cutting exposure,

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Speaker 4: new ventures and headcounts in China. Liz Trust is currently

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Speaker 4: in Taiwan is just the latest sign of the growing friction.

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Speaker 4: The former UK Prime Minister framed the divide as a

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Speaker 4: clash of civilizations.

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Speaker 5: You here in Taiwan know what the threat is. It's

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Speaker 5: tyranny instead of freedom. It's control not choice. It's arbitrary

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Speaker 5: decisions made rather than proper justice.

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Speaker 4: Despite Trust's comments on control, China recently moved to allow

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Speaker 4: foreign firms full ownership of financial services, yet that hasn't

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Speaker 4: stopped raids on consultancies conducting due diligence for global investors

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Speaker 4: in London. Valerie Titel Bloomberg Daybreak Europ.

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Speaker 1: Now, the debt seating talks are ramping up in the

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Speaker 1: US after a meeting between President Biden and the House

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Speaker 1: Speaker McCarthy. The latest round of negotiations will feature a

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Speaker 1: narrower group of people in the hopes that it yields

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Speaker 1: a deal to avert an unprecedented US default. While there

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Speaker 1: is still clear water between the two sides, the President

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Speaker 1: says that he's cautiously optimistic.

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Speaker 6: We just finished another good, productive meeting with our congressional

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Speaker 6: leadership about a path forward to make sure that America

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Speaker 6: does not to fall on his debt. There's still work

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Speaker 6: to do, but I made it clear to the Speaker

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Speaker 6: and others that will speak regularly over the next several days,

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Speaker 6: and the staff is going to continue meeting daily to

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Speaker 6: make sure we do not befall.

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Speaker 1: Biden's comments were echoed by Kevin McCarthy, who says that

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Speaker 1: a deal is possible within days, although both sides are

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Speaker 1: still far apart. The Treasury says that the country could

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Speaker 1: default as soon as the first of June if the

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Speaker 1: debt ceiling is not lifted. After ten months of consecutive

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Speaker 1: rate rises, Divisions are starting to emerge between Fed policymakers

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Speaker 1: on when to stop the Chicago Fed President Austin Goulesby

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Speaker 1: to Bloomberg's Michael McKee that it was the strangest business

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Speaker 1: cycle in history.

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Speaker 7: Inflation is down and continues to make progress. It's not

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Speaker 7: as fast as we wanted it to or we expected

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Speaker 7: it to be, and therein lies the that's thenbe the

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Speaker 7: of the issue of can you get it down more

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Speaker 7: without starting a recession? Because we have a dual landing,

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Speaker 7: we got to look at employment and inflation.

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Speaker 1: Austin Goolesby is a voting member on the FOMC this year,

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Speaker 1: as is the New York Fed chief John Williams and

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Speaker 1: the Dallas President Lourie Logan. They all say that coming

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Speaker 1: data is going to be extremely important as the central

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Speaker 1: Bank tries to assess if it has done enough to

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Speaker 1: tame inflation. UBS says that its emergency takeover of Credit

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Speaker 1: SUEEE could boost its bottom line by thirty five billion

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Speaker 1: dollars this quarter, as well as the massive accounting gain.

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Speaker 1: UBS says that it is projecting billions in potential legal

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Speaker 1: and regulatory costs. The booster profits comes from negative goodwill,

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Speaker 1: at which many investors consider an accounting quirk.

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Speaker 8: So that on UBS and just.

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Speaker 1: Lastly here in the UK, crypto trading should be regulated

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Speaker 1: like gambling. That's according to the Treasury Select Committee. Blomberg's

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Speaker 1: U and POTS reports.

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Speaker 9: Now investigating crypto assets like bitcoin should be treated like gambling.

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Speaker 9: That's the view of MPs on the Treasury Select Committee.

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Speaker 9: The Cross party group has strongly recommended the changes for

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Speaker 9: retail investors, warning that cryptos are highly volatile and have

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Speaker 9: quote no intrinsic value. The proposal comes after a month's

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Speaker 9: long inquiry and Ron's counter to the government stated plan

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Speaker 9: to regulate digital coins like traditional financial services, dated from

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Speaker 9: HMRC shows around ten percent of UK adults hold or

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Speaker 9: have held crypto assets. The reports also criticized the government

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Speaker 9: for spending public resources on supporting cryptoactivities and single out

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Speaker 9: a plan now scrapped by the Royal Mint for an

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Speaker 9: NFT in London. I'm you in pots Bloomberg day Break Europe.

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Speaker 1: Those are a few of our top stories for you

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Speaker 1: this morning. I also thought that it was quite interesting

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Speaker 1: that the regulator, the FCA, is talking about how many

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Speaker 1: more Britons are in difficulty because of loans and rising inflation.

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Speaker 1: So they've picked out that there are ten point nine

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Speaker 1: million people who have found it tough to meet their

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Speaker 1: obligations i e. Bills and credit card payments, So the

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Speaker 1: number of people struggling to pay those has risen by

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Speaker 1: forty percent. So the FCA has issued quite a number

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Speaker 1: of reminders to banks to try to treat customers fairly

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Speaker 1: if they run into difficulties. But I think those figures

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Speaker 1: are pretty staggering that so many people now are finding

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Speaker 1: it very difficult in the last three to six months

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Speaker 1: actually to meet their obligations. This is you contrast it

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Speaker 1: to another story that we have on the terminal. The

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Speaker 1: gap between rich and poor countries has widened so much.

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Speaker 1: Given COVID, it now takes twelve and a half million

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Speaker 1: dollars to be amongst Monaco's wealthiest. Compare that to the US.

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Speaker 1: You just need five point one million to be in

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Speaker 1: the top one percent to make the cut there. But

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Speaker 1: the research by night Frank shows just how much different

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Speaker 1: countries are showing that widening gap between rich and port nations. Anyway,

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Speaker 1: a few stories that I found of interest this morning.

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Speaker 1: Let's move on, though, and talk about Bloomberg's Big Take today,

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Speaker 1: which tackles I think the biggest issue in global finance

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Speaker 1: and geopolitics today, which is the role of China. Wall

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Speaker 1: Street firms seem to be giving up on any hope

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Speaker 1: of significant inroads into China's financial markets quite remarkable, let

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Speaker 1: alone hoping for any outsized profits. Only two years ago,

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Speaker 1: foreign funds started to call China uninvestable.

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Speaker 8: But President Shijinping.

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Speaker 1: Seemed to want to lure them back with market friendly reforms.

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Speaker 1: Now Wall Street seems to be waking up to a

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Speaker 1: souring business climate. China's state owned enterprises dominate in domestic banking, insurance,

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Speaker 1: asset management. Joining me now to discuss is our Bloomberg

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Speaker 1: opinion columnists Shuly ren Sally, Good morning.

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Speaker 8: Lovely to have you on the program.

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Speaker 1: You've written in depth about this issue in such interesting ways.

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Speaker 8: But it does seem that Wall Street is.

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Speaker 1: Sort of has been nursing this hope about China for

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Speaker 1: a long time, and now they're finally giving up on that.

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Speaker 8: Do you think that's true?

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Speaker 10: I think that's largely true. I mean, look at a

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Speaker 10: decade ago, twenty fourteen, right, that was when Ali Baba

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Speaker 10: when public in New York, where the twenty five billion

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Speaker 10: dollars capitalies I was one hundreds and millions of investment

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Speaker 10: banking fleees. So they've been trying to get the China

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Speaker 10: business since then, since basically twenty fourteen, twenty fifteen and

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Speaker 10: it seems like the business is not coming their way,

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Speaker 10: and it's very unfortunate. Like if you look at like

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Speaker 10: a China's star market, it actually is the world's busiest

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Speaker 10: IPO market right now. I mean, we know us there

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Speaker 10: are no IPOs, but in China this year alone, we

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Speaker 10: see over one hundred deals and they're raising more than

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Speaker 10: twenty five million, twenty five billion in IPO money. But

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Speaker 10: they're Wall Street thanks, They're just not getting any of

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Speaker 10: that business.

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Speaker 1: But I suppose you know, you see the latest crackdowns

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Speaker 1: on consulting firms now also on capital flows of our

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Speaker 1: online brokerages. I mean you've written a piece recently, you

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Speaker 1: know that seems so prescient. Don't bother investing in China

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Speaker 1: unless you are Chinese. I mean, the difficulties are quite clear,

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Speaker 1: aren't they to foreign investors.

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Speaker 10: Yeah, Like, let me just talk about like IPO. If

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Speaker 10: you're IPO bans, you have to do diligence right, and

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Speaker 10: the government makes investment bankers personally responsible if the company

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Speaker 10: turns out to be a complete flop. But the kind

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Speaker 10: of companies that go public in China these days are

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Speaker 10: these so called industrial tech companies that do like I

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Speaker 10: mean semiconductors, smart manufacturing and these kind of companies. They

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Speaker 10: can be for due purposes right, commercial and possibly in military.

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Speaker 10: And it's very hard for Wall Street foreign banks to

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Speaker 10: go in and say, Okay, I'm going to do due diligence,

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Speaker 10: I don't know, facial recognition software or robotics. It's very tough.

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Speaker 10: So basically it's the mainland Chinese banks doing this kind

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Speaker 10: of work.

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Speaker 1: What does it mean truly to have China now increasingly

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Speaker 1: in its own financial bubble?

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Speaker 10: I think as long as the presence continues with this

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Speaker 10: industrial push. Basically at this point, the only domestic banks,

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Speaker 10: especially SOE banks, are there to finance this industrial push

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Speaker 10: because for everyone else there is the danger of you know,

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Speaker 10: infringing upon China's national security, security risk or whatever they

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Speaker 10: call it.

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Speaker 8: I mean.

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Speaker 1: Having said that, of course, Will Street has spent years

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Speaker 1: in these joint partnerships, but Wall Street expertise isn't needed

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Speaker 1: any longer, not so much.

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Speaker 10: I mean, some Wall Street banks have done very well,

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Speaker 10: like UBS, they had a joint venture with China for

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Speaker 10: many years, right, and they have done a lot of

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Speaker 10: trade flows through the Hong Kong stock connect. They have

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Speaker 10: done well, But the problem is all these Wall Street banks.

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Speaker 10: They have hired very, very aggressively, so now they have

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Speaker 10: to pair back quite aggressively too. It's not unlike what

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Speaker 10: we saw with the big tech companies. If you hire

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Speaker 10: to aggressively in the past, when the reality does not

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Speaker 10: turn out as well, you have to lay off a

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Speaker 10: lot of people too.

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Speaker 1: Absolutely, And last thought, Shirley, what it means for Europe

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Speaker 1: and the UK then, I mean we've largely talked about,

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Speaker 1: you know, the relationship between the world's two biggest players,

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Speaker 1: but there are others, you know. I mean, perhaps in

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Speaker 1: the UK is a minno in comparison, but I mean

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Speaker 1: I think worth understanding. What are the implications then for

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Speaker 1: businesses out of Europe the UK. Europe's tried to position

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Speaker 1: itself differently to the US visa v Beijing.

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Speaker 10: I mean, Beijing definitely likes Europe more than the US,

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Speaker 10: and they do some of the technologies, especially in Germany,

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Speaker 10: and they hope that they can import some of the technologies.

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Speaker 10: But I do think Europe is working a very tight rope. UK,

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Speaker 10: for instance, has been talking about, you know, warming up

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Speaker 10: its relations with Hong Kong in recent weeks, right, But

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Speaker 10: me being based in Hong Kong. I just feel like

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Speaker 10: the Hong Kong economy is working closer and closer to China,

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Speaker 10: and we don't really need that much of collaboration with

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Speaker 10: UK anymore.

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Speaker 1: Okay, Suley, thank you so much for being with me

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Speaker 1: this morning. Okay Salient points Blomberg Opinion Commerce. Judy ran

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Speaker 1: on our big take then today tackling well one of

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Speaker 1: the biggest issues in global finance and geopolitics, the relationship

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Speaker 1: between the US and China when it comes to a

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Speaker 1: big banking business. Coming up next, closer cooperation on cross

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Speaker 1: channel migration. The CBI looks to rebuild trust and kiss

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Speaker 1: Starmer says we should build on the green belt.

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Speaker 3: Now the paper review on Bluebird Daybreak Europe the news

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Speaker 3: you need to know from today's papers.

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Speaker 8: So the Guardian has the headline.

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Speaker 1: The CBI points at Chief People Officer as it aims

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Speaker 1: to quote rebuild trust. Leanne Goens is with me this morning,

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Speaker 1: so we followed, obviously, the travails of the Confederation of

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Speaker 1: British Industry, the biggest lobby group in the UK.

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Speaker 2: What's the latest, Yes, indeed, Carolineton, we'll start off with

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Speaker 2: that one at the moment. So Elizabeth Wallace, a former

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Speaker 2: head hunter for back Rock, has actually joined the Confederation

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Speaker 2: of British Industry as the Chief People Officer.

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Speaker 8: As you just.

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Speaker 2: Said, now the scandal hit CBI has made this appointment

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Speaker 2: and this is in an attempt to overhaul the Lobby

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Speaker 2: Group's internal culture after the series of sexual misconduct allegations.

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Speaker 2: We have spoken about a lot in the newspaper Review

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Speaker 2: and this was first reported by the Guardian newspaper and

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Speaker 2: now they're bringing this news to us. Now Wallace will

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Speaker 2: take up the new role as part of the Executive

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Speaker 2: Committee and she will report on workplace conduct and cultural

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Speaker 2: issues directly to the board. Now we know that the

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Speaker 2: CBI also has a new directed General, Raine and Newton Smith,

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Speaker 2: and she says the new role for Wallace will be

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Speaker 2: integral to reforming our people's strategy. So this is all

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Speaker 2: about reform and we know that this is really important

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Speaker 2: for the Lobby Group because more than fifty large businesses,

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Speaker 2: including the likes of John Lewis and Natt West, have

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Speaker 2: suspended or canceled their membership in the last month after

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Speaker 2: the Guardian's publication of a series of allegations of sexual misconduct.

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Speaker 2: So a big turnaround here for the lobby group. That

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Speaker 2: is what they're looking for.

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Speaker 8: Yeah, OLiS attempting to do that.

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Speaker 1: The Financial Time says the UK and EU agreed to

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Speaker 1: collaborate over cross channel migration. This is a real flash

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Speaker 1: point in UK politics.

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Speaker 8: Yeah, I couldn't agree with you more.

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Speaker 2: The EU and UK will collaborate on curbing irregular migration

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Speaker 2: across the English Channel and really, Caroline, in a further

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Speaker 2: sign of warming relations after years of post Brexit tensions,

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Speaker 2: So Brussels and London will negotiate a deal to exchange

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Speaker 2: intelligence expertise and also personnel, and this will really be

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Speaker 2: to combat smugglers. After six months of deadlock over the plans.

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Speaker 2: So Rishie Sunak Urshela vonderlyon. They've both welcomed the idea

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Speaker 2: of London working with Frontext now that's the EU Border Agency.

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Speaker 2: And this all happened at a meeting on this sidelines

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Speaker 2: of the Council of Europe so at Caroline, which is

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Speaker 2: in Iceland. So Rishie Snak was there and this appears

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Speaker 2: to be what he's saying. We also saw him talking

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Speaker 2: there yesterday in Iceland and he said he's pushing four

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Speaker 2: reforms to court orders which have blocked deportation flights to Rwanda,

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Speaker 2: which has been very controversial here once again on the

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Speaker 2: immigration discussion. That is a flashpoint if we really want

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Speaker 2: to look at it that way. But Yesday's announcement Marxist

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Speaker 2: significant step up in europe wide efforts to tackle the

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Speaker 2: problem of migration together.

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Speaker 1: Yeah, I think the Prime Minister is sort of trying

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Speaker 1: to make this a European issue, you know, one that

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Speaker 1: affects all countries rather than just the UK. But I

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Speaker 1: think the big date is going to be the twenty

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Speaker 1: fifth of May, isn't it when we get the independent

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Speaker 1: data or actually on migration flows such as it is. Anyway,

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Speaker 1: let's just end though. On the Times, the headline there

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Speaker 1: kissed Arma Labor will rebuild working class dream of owning home.

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Speaker 1: How much of an appeal will that have to voters?

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Speaker 8: Well, Caroline.

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Speaker 2: The Times leads with this story saying kir Stamer is

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Speaker 2: going to abow to make the Labor Party the house

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Speaker 2: building party by relaxing planning restrictions and really allowing more

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Speaker 2: homes to be built on the green belts. So he's

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Speaker 2: been speaking to The Times interviews in the newspaper, and

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Speaker 2: the Labor leader has taken the sort of chance and

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Speaker 2: the barb to accuse the Conservatives of killing the aspiration

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Speaker 2: of home owning for a whole generation. We know how

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Speaker 2: difficult it is to get on the property ladder. It

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Speaker 2: is tough, and there is a shortage of houses now.

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Speaker 2: He's also warned that house building was on course to

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Speaker 2: fall to its lowest level and that since the Second

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Speaker 2: World War. He said that labor would give local authorities

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Speaker 2: and residents more power to build on the green belts

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Speaker 2: and to meet local housing needs. So that's what he

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Speaker 2: really wants to do. It's a whole reform really when

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Speaker 2: it comes to house building and planning permission. Now, I

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Speaker 2: just have to say one thing, in a super stark

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Speaker 2: contrast to this, a conservative government has really said it's

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Speaker 2: going to pledge to enhance protections for green about land

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Speaker 2: and Bloomberg's Joe Mason, Ellen Milligan, they have a really

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Speaker 2: good story on the Bloomberg terminal today, really interesting, and

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Speaker 2: they're saying that the opposition to more home building really

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Speaker 2: comes largely from conservative MPs in rural seats who are

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Speaker 2: arguing that more development threatens the environment and the whole

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Speaker 2: esthetic of our countryside. So here we see the labor

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Speaker 2: and the Conservative's complete polar opposite when it comes to

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Speaker 2: what to do about the shortage of homes and the

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Speaker 2: dream of owning your own.

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Speaker 8: Yeah.

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Speaker 1: Absolutely, it's a hugely important issue, both in terms of

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Speaker 1: the built environment but also for voters. Thank you so

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Speaker 1: much to Lean Gerins for our newspaper review.

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Speaker 11: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 11: stories making news from to Wall Street and beyond.

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Speaker 8: I'm Caroline Hepka and.

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Speaker 11: on Bloomberg day Break Europe.