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Speaker 1: Good morning. It's Friday, the eighteenth of August in London.

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Speaker 1: This is the Bloomberg Daybreak Ero podcast. I'm Stephen Carroll.

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Speaker 1: Coming up today, China's state owned developers worn of major

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Speaker 1: losses as fears of contagion grow arm. The Chip Designer

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Speaker 1: lines up twenty eight banks for the biggest listing of

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Speaker 1: the year, and Goldman Sachs goes on a hiring spree

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Speaker 1: to plug regulatory gaps. Let's start with a roundup of

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Speaker 1: our top stories. China's state owned property developers are warning

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Speaker 1: of widespread losses, fueling concerns that the crisis in the

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Speaker 1: property sector is deepening. A Bloomberg analysis of corporate filings

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Speaker 1: found that almost half of the state owned enterprise builder's

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Speaker 1: warrant of preliminary losses in the first half of the

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Speaker 1: year are great at China Bonds reporter louretted Chen says

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Speaker 1: the data shows the increasingly systemic nature of China's housing slump.

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Speaker 2: Of course, the first wave to fall is the private developers,

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Speaker 2: but then they will eventually spread to these state owned

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Speaker 2: developers in the prime of China's property sector. Really, these

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Speaker 2: state owned developers aren't the most profitable companies and now

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Speaker 2: I think they're just heard by a drop in valuations

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Speaker 2: and you have to see them cutting on their asset values.

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Speaker 1: Loretta Chen says the lasses will reduce the ability of

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Speaker 1: these firms to take on unfinished projects left by defaulted

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Speaker 1: private sector firms. The growing gloomer and China's property sector

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Speaker 1: comes as the country's central bank delivered its strongest ever

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Speaker 1: pushback against a weaker yuan in a bid to target

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Speaker 1: currency bears. Now two years after its first defaulted China's

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Speaker 1: Evergrand Group filed for Chapter fifteen bankruptcy protection in New York.

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Speaker 1: Bloomberg's Charlie Pallett has the story, it's.

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Speaker 3: A move that protects its American assets from creditors while

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Speaker 3: it works on a restructuring deal elsewhere. The Chinese Homebuilders

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Speaker 3: Chapter fifteen petition references restructuring proceedings being carried out in

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Speaker 3: Hong Kong and the Cayman Islands. Its Scenery Journey unit

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Speaker 3: also filed for Chapter fifteen protection, along with affiliate Tianji Holdings.

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Speaker 3: International debt restructuring deals sometimes require a Chapter fifteen filing

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Speaker 3: in the course of finalizing a transaction. In New York,

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Speaker 3: Charlie Pellette Bloomberg day Break Europe.

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Speaker 1: Evergrand's three hundred billion dollars in liabilities mean the restructuring

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Speaker 1: is likely to have broad implications for China's financial system.

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Speaker 1: The company's initial default in December twenty twenty one helped

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Speaker 1: set off an initial wave of concerns around China's property

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Speaker 1: sector that has kept growing, where growing bond route has

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Speaker 1: led Bank of America strass Just to war investors that

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Speaker 1: five percent yields are likely to be the new normal.

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Speaker 1: That view's been echoed by Black Rock and Pimco, who

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Speaker 1: say the need for further rate hikes will likely push

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Speaker 1: long term yields even higher. Charlie Jemison, Bond's CIO at

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Speaker 1: Jameson Cootz, says the moves are likely to have wider implications.

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Speaker 4: There is a cause and effect to this, and so

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Speaker 4: as yields rise and we go to refund treasuries, those

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Speaker 4: auctions will always clear, and if they have must clear

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Speaker 4: at high yields. It will draw capital from other markets,

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Speaker 4: and we're starting to see equity markets in the like

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Speaker 4: getting the wobbles a little bit under the pretense that

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Speaker 4: yields might remain elevated.

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Speaker 1: Charlie Jemison's warning on stocks comes after last year's brutal

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Speaker 1: treasuries market saw the deepest losses since at least the

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Speaker 1: early nineteen seventies. That upward pressure is now being exacerbated

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Speaker 1: by increased US federal spending, creating a flood of new

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Speaker 1: debt sales to plug America's ever growing deficit. Silicon chip

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Speaker 1: designer ARM has lined up twenty eight banks to help

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Speaker 1: underwrite its initial public offering. The lead banks in ensuring

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Speaker 1: the deal include Barclay's, Goldman Sachs and JP Morgan. The

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Speaker 1: company will seek to raise eight to ten billion dollars

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Speaker 1: in what would be the biggest IPO of the year.

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Speaker 1: A fresh bout of US regulatory scrutiny is setting off

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Speaker 1: a hiring spree at Goldman Sachs. More from Bloomberg's Doug Krisner.

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Speaker 5: Where told Goldman is enlisting several hundred new staffers to

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Speaker 5: help address concerns from US banking regulators, although it's unclear

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Speaker 5: what deficiencies the firm is seeking to address. Last year,

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Speaker 5: Goldman's effort to build out a new consumer bank was

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Speaker 5: said to have set off questions from the FED, but

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Speaker 5: the plan has largely been abandoned. Some managers blame the

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Speaker 5: failure for inviting regulatory attention, but to be fair, regulators

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Speaker 5: routinely question large financial firms. Goldman executives privately described growing

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Speaker 5: pressure from the Fed over the past year in New York.

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Speaker 5: I'm Doug Prisoner, Bloomberg day Break Europe.

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Speaker 1: Here in the UK, Racy Snax government says banks and

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Speaker 1: building societies could be fined for not protecting the public's

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Speaker 1: access to cash. The Financial Conduct Authority has new powers

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Speaker 1: to ensure banks maintain access to cash without fees. Under

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Speaker 1: the latest plans, people in businesses also need to be

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Speaker 1: within three miles of an ATM. Economic Secretary Secretary to

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Speaker 1: the Treasury Andrew Griffith wants everyone to be able to

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Speaker 1: access cash easily, including those living in rural areas.

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Speaker 6: One of the ways that we set up these banking

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Speaker 6: hubs is that they only kick in after bank branches

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Speaker 6: have closed, so they're not they're not predating, they're not

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Speaker 6: causing the closure. But they are really good backstop for communities,

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Speaker 6: for local high streets.

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Speaker 1: That was the Economic Secretary to the Treasury, Andrew Griffith.

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Speaker 1: It's the latest example of the Conservative Party taking action

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Speaker 1: on an issue that resonates with its core voter base,

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Speaker 1: many many of whom are older and live in the countryside.

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Speaker 3: Well.

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Speaker 1: Another story that caught my eye this morning Britain's gambling

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Speaker 1: more during wet weather last month. This according to a

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Speaker 1: note from Deutsche Bank analyst Simon Davies, who says that

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Speaker 1: during last month's near record rainfall in the UK, spending

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Speaker 1: on gambling rows by six point four percent. This followed

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Speaker 1: a six point six percent year on year decline in

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Speaker 1: jude when and dry weather encouraged money towards going out

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Speaker 1: towards outdoor leisure instead. Simon Davies, citing data from Deutsche

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Speaker 1: Bank's DBDIG unit which the lender uses, says uses alternative

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Speaker 1: statistics and artificial intelligence to provide investments solutions. So, though

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Speaker 1: you have of the wet weather driving people, perhaps back

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Speaker 1: to the bingo holes as well. Let's go back to

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Speaker 1: the latest on the story around China, though, and efforts

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Speaker 1: by Chinese policymakers to cam market fears about the economy,

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Speaker 1: People's Bank of China setting its most forceful fixing guidance

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Speaker 1: ever for the U one. This as Boomberg has tallied

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Speaker 1: a growing list of state owned property developers warning of

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Speaker 1: widespread losses. Boomberg opinion columnist Daniel Mass joins us now

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Speaker 1: for more. Daniel, great to have you with us. Let's

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Speaker 1: start with the PBOC action that we've seen to shore

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Speaker 1: up do U want? This is the latest in a

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Speaker 1: series of steps taken by the Central Bank this week.

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Speaker 1: How should we interpret these moves when looked at as

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Speaker 1: a whole.

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Speaker 7: I'm not sure that pboc's position on the yuan has

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Speaker 7: changed significantly since we spoke a couple of days ago.

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Speaker 7: What you're referring to is the daily fix, the range

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Speaker 7: at which the PBOC prefers to see the yuan fluctuate.

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Speaker 7: Let's remember this is not a free flowing currency like

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Speaker 7: the euro, or the dollar, or the yen or the

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Speaker 7: British pound. PBOC has given the yuan scope to fluctuate.

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Speaker 7: But hey, big brothers always there. Authorities are comfortable with

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Speaker 7: the yuan weakening. It has to reflect some market forces.

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Speaker 7: It has to reflect perceptions of the relative strength of

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Speaker 7: the yuan versus other major currencies, principally the US. They

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Speaker 7: don't want to see a free fall, they don't want

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Speaker 7: to see speculative pressure for a huge drop building up

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Speaker 7: so they are allowing it to gently drift blower or

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Speaker 7: drift weaker, depending on the precise language you wish to use.

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Speaker 7: I don't get the sense that that stance has changed significantly.

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Speaker 1: Okay, that's very interesting to think about it in the

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Speaker 1: week that we've had the rate costs and several other

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Speaker 1: steps taken by the PBOC as well. But this is

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Speaker 1: at the same time that we have worries in the

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Speaker 1: property sector multiplying now state owned developers. According to this

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Speaker 1: Bloomberg tally, eighteen of the thirty eight state owned property

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Speaker 1: developers warning of lass as in the first half of

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Speaker 1: the year. How much of a concern is that.

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Speaker 7: Well, we've known the property sector is in dire shape.

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Speaker 7: It feels like, given everything that's been said and written

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Speaker 7: about evergrand in the past couple of years, the bankruptcy

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Speaker 7: filing in the US you referred to, almost seems like

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Speaker 7: a sort of a quaint footnote. We know the property

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Speaker 7: sectors in trouble. If we're getting some quantifiable numbers from

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Speaker 7: the private sector filings, then that's good because in other

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Speaker 7: ways China is closing off access to economic data. You'll

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Speaker 7: recall earlier this week they said they would suspend publication

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Speaker 7: of youth unemployment data. Just so happens that that data

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Speaker 7: showed most recently a very high level of youth unemployment.

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Speaker 7: Would they have suspended it if it were showing a

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Speaker 7: very low level?

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Speaker 1: More broadly, what should we be taking away from this

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Speaker 1: week's events and the China, Chinese economy, and what does

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Speaker 1: it mean then for the rest of the world.

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Speaker 7: You know, it's interesting in the past week, it's like

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Speaker 7: the rest of the world has woken up to what

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Speaker 7: we've been talking about and writing about regarding the Chinese

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Speaker 7: economy for some months. It's almost like something snapped last

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Speaker 7: week and then Joe Biden's been dissing the Chinese economy.

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Speaker 7: Janet Yellen and her deputy have been voicing concern, but

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Speaker 7: in more circumspect tones. I think the crystallizing event from

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Speaker 7: a hard data front were publication of figures Wednesday last

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Speaker 7: week showing that China was in deflation rather than having

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Speaker 7: weak inflation, showing a lack of demand. Prices actually fell,

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Speaker 7: not just screw at a slower pace, actually fell. So

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Speaker 7: it's like there was a scarlet d painted on China's

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Speaker 7: back and that just seemed to galvanize a growing body

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Speaker 7: of opinion. The Chinese economy was not in great shape,

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Speaker 7: but since then it seems to have like burst forth

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Speaker 7: into consciousness. Paul Krugman wrote about it a couple of

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Speaker 7: days later. Now everyone's joining in. It looks like there's

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Speaker 7: a bull market for bad news from China.

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Speaker 1: Just tells us we should be reading more of your columns.

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Speaker 1: Daniel mas Bimberg opinion columnists, thank you so much, which

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Speaker 1: for joining us with that analysis. Up next, Labor rows

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Speaker 1: back on workers' rights and lifting the lid on Mosk's SpaceX.

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Speaker 6: Now the paper review on blue Bird Daybreak Europe, the

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Speaker 6: news you need to know from today's papers, and.

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Speaker 1: Lean Garrins is with us in studio with the details

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Speaker 1: of those stories. Morning to you, Leanne. Let's start in

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Speaker 1: the Financial Times. The headline there Labor rows back on workers'

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Speaker 1: rights to blunt Tory anti business claims. Stephen, good morning

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Speaker 1: to you.

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Speaker 8: So once again we see the battle lines being drawn

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Speaker 8: between Labor and the Conservatives ahead of the election, which

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Speaker 8: we do expect next year. So let's get into the

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Speaker 8: nitty gritty details Labour's watering down plans to strengthen workers' rights,

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Speaker 8: says Keir Starmer, really tries to woo corporate leaders and

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Speaker 8: discredit the claims from the Conservative government that is party

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Speaker 8: is antique business. The newspaper says during Labour's forum, which

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Speaker 8: happened over in Nottingham last month, a pledge to boost workers'

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Speaker 8: rights has been diluted. The FT has seen an article

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Speaker 8: about this in Seen Paperwork and says Labour's twenty twenty

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Speaker 8: one pledge to create a so called single status of

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Speaker 8: worker for all but the self employed, regardless of the

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Speaker 8: sector they work in, the wage they earn, all their

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Speaker 8: contract type, has now been delayed and apparently they are

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Speaker 8: rethinking the whole policy. Labour says it's not pushing this

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Speaker 8: worker policy. Instead, they are consulting on the proposal within

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Speaker 8: themselves and that is where they are.

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Speaker 1: At the moment.

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Speaker 8: The party has also clarified its position on probation for

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Speaker 8: new recruits, confirming a future Labor government would continue to

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Speaker 8: allow companies to dismiss staff during a trial period, something

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Speaker 8: they were debating now. A move away from these new

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Speaker 8: worker policies comes ahead. As I said, of a battle

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Speaker 8: of support of business leaders before the general election, Conservative

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Speaker 8: ministers looking to highlight what they see as a contradiction

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Speaker 8: between Labor's policies and Starmer's efforts to really impress the

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Speaker 8: corporate chiefs. We know they've been on a charm offensive.

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Speaker 8: Tory ministers and MPs worry that Labor is getting away

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Speaker 8: with harmful policies but under the umbrella of a friendly rhetoric.

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Speaker 8: So once again a piece really showing how things are

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Speaker 8: playing out ahead of that next election. And Stephen, we

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Speaker 8: also had Jeremy Corbyn on our podcast.

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Speaker 1: Yeah, I mean, I suppose very much from a different

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Speaker 1: point of view as to where Kirs Starmer is taking

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Speaker 1: the Labor Party. Jeremy Corbyn saying that he wanted to

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Speaker 1: see more radical social policy from the Labor Party. That's

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Speaker 1: perhaps not very surprising, but this is illustrating the dilemma

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Speaker 1: within the Labor Party as well as to the party

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Speaker 1: is trying to make itself more electable and moving to

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Speaker 1: the center and making sure that there aren't clear you

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Speaker 1: know that they have I suppose a stake also when

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Speaker 1: winning over business leaders and painting itself as the party

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Speaker 1: of business as it's tried. So yeah, interesting to see

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Speaker 1: that FT reporting on the subject the Wall Street Journal

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Speaker 1: lext Lean the headline there behind the curtain of Elon

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Speaker 1: Musk's secretive SpaceX.

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Speaker 8: Yes, indeed, so this is all about revenue growth and

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Speaker 8: rising costs within SpaceX. SpaceX generated one point of five

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Speaker 8: billion dollars in revenue in the first quarter of this year.

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Speaker 8: The private company also generated fifty five million dollars in profits. Now,

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Speaker 8: the slim earnings came after two years of significant losses

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Speaker 8: for Elon Musks SpaceX. It's actually pouring a huge amount

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Speaker 8: of money into a rocket at the moment that is

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Speaker 8: really plagued with difficult technical issues. SPA Stephen privately owned,

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Speaker 8: keeps its details about its finances pretty much under wraps,

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Speaker 8: so this story is unusual. The Wall Street Journal getting

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Speaker 8: a full look at some of the company's recent results

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Speaker 8: is not the normal when it comes to a private company.

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Speaker 8: But the company apparently is growing rapidly when the Wall

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Speaker 8: Street Journal has done this deep dive and was valued

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Speaker 8: at roughly one hundred and fifty billion dollars during a

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Speaker 8: recent employee stock sale, putting it on par with things

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Speaker 8: like intell and Disney. But we must say many people

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Speaker 8: with Stakes and SpaceX have no idea how much money

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Speaker 8: the company makes all losses, and they see it basically

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Speaker 8: as a long term debt.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 1: stories making news from London to Wall Street and beyond.

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Speaker 1: play Bloomberg eleven thirty. I'm Stephen Carol. Join us again

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