WEBVTT - Fed Downshift And Bank Earnings Bonanza

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<v Speaker 1>This is Bloomberg day Break here for this Thursday, the

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<v Speaker 1>second of February in London. Coming up today, Eight down,

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<v Speaker 1>two to go. The faed's Powell calls for a couple

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<v Speaker 1>more rate hikes, taking it to the bank. We have

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<v Speaker 1>earnings from Deutsche Bank, Santander and Nordea. Danny's debt albatross

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<v Speaker 1>conglomerate spirals into crisis as Barnes hitter stress levels, VP

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<v Speaker 1>scales back. It's renewables, push women running UK water and

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<v Speaker 1>job coaches in GP surgeries. Those are the stories we're

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<v Speaker 1>looking at in today's newspapers. And I'm Leanne Geron's plus

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<v Speaker 1>the bonds that bind us Barclay's looks at boosting fixed

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<v Speaker 1>income trader bonuses by as much as fifteen That's all

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<v Speaker 1>straight ahead on Bloomberg Daybreak Europe on DAB Digital Radio,

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<v Speaker 1>London Bloomberg eleven three oh New York Bloomberg, Washington, d

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<v Speaker 1>C Bloomberg one oh six one, Boston Bloomberg nine sixties,

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<v Speaker 1>San Francisco cyrus XM Channel one nineteen and around the

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<v Speaker 1>world Don Bloomberg Radio dot Com and var the Bloomberg

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<v Speaker 1>Business Set. Good morning. I'm Stephen Carroll and I'm Caroline Hick. Here.

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<v Speaker 1>All the stories that we're following today fed chief to

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<v Speaker 1>your own. Powell says at least a couple more rate

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<v Speaker 1>rises will be needed to get inflation under control. His

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<v Speaker 1>comments come after the Central Bank raised rates by twenty

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<v Speaker 1>five basis points. Speaking after the announcement, Pal sought to

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<v Speaker 1>remind markets that high inflation is still a problem. I

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<v Speaker 1>would say that our focus is not on short term moves,

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<v Speaker 1>but on sustained changes the broader financial conditions, and it

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<v Speaker 1>is our judgment that we're not yet in a sufficiently

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<v Speaker 1>restrictive policy stance. Despite Powell's caution, markets took his message

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<v Speaker 1>to be more dovish, with stocks and treasuries both surging.

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<v Speaker 1>The rate decision came after US job vacancies unexpectedly jumped

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<v Speaker 1>at the end of last year. The number of available

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<v Speaker 1>positions climbed to a five month high of just over

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<v Speaker 1>eleven million in December. Let's turn to some of the

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<v Speaker 1>bank earnings we have out this morning, starting with Deutsche

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<v Speaker 1>Bank fourth quarter fixed income sales and trade sales and

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<v Speaker 1>trading revenue coming in as a miss one and a

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<v Speaker 1>half billion euros for the fourth quarter. The estimate had

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<v Speaker 1>been for one point six billion euros pre tanks profit

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<v Speaker 1>also coming in below estimates seven hundred and seventy five

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<v Speaker 1>million euros. The estimate had been for one point to

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<v Speaker 1>five billion. Net revenue figures the fourth quarter also a

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<v Speaker 1>miss six point three two billion euros. The estimate had

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<v Speaker 1>been for six and a half billion euros. So after

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<v Speaker 1>Deutsche Bank, let's look at Santander, which is the reported

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<v Speaker 1>net income for the fourth quarter of two point to

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<v Speaker 1>nine billion euros. That was a beat on the average

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<v Speaker 1>analyst estimates. Santander targeting double digit revenue growth in twenty

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<v Speaker 1>twenty three and interestingly non performing loans. The ratio of

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<v Speaker 1>that in the fourth quarter was three point zero eight percent,

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<v Speaker 1>so actually lower than the estimate for Santander. Noordia, however,

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<v Speaker 1>was a beat for their net interest income for the

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<v Speaker 1>fourth quarter, up thirty one percent from a year earlier

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<v Speaker 1>to one point six four billion euros. That's driven by

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<v Speaker 1>rising loan aolumes, better deposit margins at the largest lander

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<v Speaker 1>in the Nordic region and a couple of others. I

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<v Speaker 1>and G reporting a pre tax profit for the fourth

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<v Speaker 1>quarter also that beat average analysts estimates, and then in

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<v Speaker 1>terms of the money manages w dw S full year

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<v Speaker 1>net outflows come in actually above estimates nineteen point nine

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<v Speaker 1>billion euros, so that in terms of the earnings this morning,

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<v Speaker 1>turning to other news, more than a hundred billion dollars

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<v Speaker 1>has now been wiped off gout mcdonni's beleaguered empire. The

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<v Speaker 1>deepening stock ride comes as some of the conglomerates dollar

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<v Speaker 1>bonds plunged to distress levels. Speaking in a pre recorded

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<v Speaker 1>video address to investors, Danny gave a bullish assessment of

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<v Speaker 1>the group's financial position. The fundamentals of our company are

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<v Speaker 1>very strong. Our balance it is healthy and assets robust.

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<v Speaker 1>Our IMMEDIATEA levels and gas rows have been very strong.

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<v Speaker 1>Was the markets tabulas we will review over capital market streity.

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<v Speaker 1>Mcdanie's comments come after the Indian time icon was forced

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<v Speaker 1>to pull a two point four billion dollar share sale

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<v Speaker 1>by his flagship company, even though it was fully subscribed.

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<v Speaker 1>The value of A Danny Enterprises has fallen by so

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<v Speaker 1>much that investors and the offering would have been sitting

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<v Speaker 1>on immediate glasses of more than thirty Now. Meta shares

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<v Speaker 1>swored after the bell in the US as fourth quarter

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<v Speaker 1>revenue beat expectations. The social media Jiant also announced that

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<v Speaker 1>it's boosting its share buy back program by forty billion dollars.

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<v Speaker 1>CEO Mark Zuckerberg believes the company is entering a phase

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<v Speaker 1>change focused on efficiency. I just think we're in we've

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<v Speaker 1>entered somewhat of a phase change for the company where

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<v Speaker 1>we just grew so quickly for like the first eighteen

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<v Speaker 1>years of the company's growth, and it's it's very hard

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<v Speaker 1>to really crank on efficiency while you're growing that quickly.

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<v Speaker 1>So that was Zuckerberg. He's focused on efficiency. Comes after

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<v Speaker 1>Meta announced that it would be cutting eleven thousand jobs

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<v Speaker 1>in November. Barclays is weighing an increase in the bonus

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<v Speaker 1>pool for its fixed income trading division, the store even

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<v Speaker 1>Bloomberg's Charlie Palace. The unit is expected to produce record

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<v Speaker 1>revenue after twenty two's wild market swings. Sources say the

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<v Speaker 1>British Bank is considering boosting the overall incentive compensation for

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<v Speaker 1>fixed income traders by as much as fifteen percent. Sources

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<v Speaker 1>say equities trading, which suffered from a decline in derivatives

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<v Speaker 1>activity last year, might see its overall compensation pot trop

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<v Speaker 1>as much as ten percent. According to the sources, like

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<v Speaker 1>other Wall Street firms. Barclay's is considering cutting bonus pools

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<v Speaker 1>for their investment bankers by as much as fort amid

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<v Speaker 1>a deal making slump in New York. Charlie Palett Bloomberg

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<v Speaker 1>Daybreak Europe. Okay, those are a few of our top

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<v Speaker 1>stories this morning. But on a very busy day for

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<v Speaker 1>central bank decisions, there's also going to be a big

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<v Speaker 1>focus about trading, of course, on the big lenders. I mean,

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<v Speaker 1>we just went through rattle through frankly a lot of

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<v Speaker 1>the earnings reports. Just let's focus in there on Deutsche Bank.

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<v Speaker 1>So the whole idea was that the fixed income sales

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<v Speaker 1>and trading revenue would be the thing that lifted Deutsche

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<v Speaker 1>Bank this quarter. But it is actually a miss um.

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<v Speaker 1>Even though the outlook is quite interesting from Deutsche Bank

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<v Speaker 1>that their credit loss provisions are at the low end

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<v Speaker 1>for the year ahead, but it's that fixed income issue

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<v Speaker 1>that I think is going to be quite interesting and

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<v Speaker 1>also cost control at Deutsche Bank. Yeah, and that has

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<v Speaker 1>been one of the issues that we haven't watching out

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<v Speaker 1>for with Deutsche Bank. I mean, there is a point

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<v Speaker 1>of contrast here with the other set of bank results

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<v Speaker 1>that we've had because We've had a series of beats

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<v Speaker 1>from a lot of the big lenders over the past

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<v Speaker 1>few days. So so Deutsche is standing out with a

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<v Speaker 1>miss on both pre tax provits and net revenues as well.

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<v Speaker 1>When we look at the outlook then for the year too,

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<v Speaker 1>they're seeing three revenue nine billion euros. They had previously

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<v Speaker 1>seen over twenty eight billion euros. So that is a

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<v Speaker 1>slight improvement on the outlook from Deutsche Bank as well.

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<v Speaker 1>And we're of course getting more details of this as

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<v Speaker 1>an mergers on the on the latest from Deutsche Bank. Yeah.

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<v Speaker 1>Absolutely so. In terms of the newspapers, BP scaling back

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<v Speaker 1>is renewables push, women running UK water and job coaches

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<v Speaker 1>in GP surgeries. Now the paper review on blue birdday

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<v Speaker 1>Break Europe. The news you need to know from today's papers.

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<v Speaker 1>Bloom Berks Leon Garons joins us now with the details

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<v Speaker 1>of those stories. Lean, let's start with the Wall Street Journal.

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<v Speaker 1>It has the headline VP ceo plays down renewables push

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<v Speaker 1>as returns BLA. Yes, indeed, Stephen, good morning to you.

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<v Speaker 1>So Bernard Looney, the CEO of VP, is said to

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<v Speaker 1>be rolling back elements of the oil giants high profile

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<v Speaker 1>push into renewable energy, and according to the Wall Street Journal,

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<v Speaker 1>he is disappointed with the returns from some of the

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<v Speaker 1>renewable investments that have been made by BP, and it

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<v Speaker 1>says Looney plans to place less emphasis on ec G

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<v Speaker 1>goals going further, and what he's trying to do is

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<v Speaker 1>clarify that these targets aren't distracting from the ability of

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<v Speaker 1>the company to actually make a profit. And according to

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<v Speaker 1>the paper, Looney believes BP needs to do more to

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<v Speaker 1>convince their shareholders of its strategy to maximize profits in

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<v Speaker 1>areas where the company does have a competitive advantage, and

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<v Speaker 1>this is including its legacy oil and gas operations that

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<v Speaker 1>we know them so well for And a spokesman for

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<v Speaker 1>the CEO declined to comment to the Wall Street Journal.

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<v Speaker 1>And BP does report its earnings next week, and they

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<v Speaker 1>have been pretty good the last earnings that we've seen

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<v Speaker 1>from BP, and this is obviously due to the rising

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<v Speaker 1>energy prices, but once again, really interesting, seems to be

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<v Speaker 1>slightly moving away from e c G and renewable energy

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<v Speaker 1>to focus on profits. That's a big debate, isn't it

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<v Speaker 1>in the energy sphere. But before we get the BP

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<v Speaker 1>results this morning, we get the Shell fourth quarter of

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<v Speaker 1>results out actually at seven am, so that will also

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<v Speaker 1>be interesting. The expectations to see profits dip at Shell,

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<v Speaker 1>but no interesting on BP and versus renewables. The headline

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<v Speaker 1>in the Times, well, this is kind of a little

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<v Speaker 1>bit related. Seven Trent appoints all women top leadership team.

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<v Speaker 1>Tell me about this utility? Yes, indeed, So this is

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<v Speaker 1>the water company Caroline, which is based up in Coventry

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<v Speaker 1>and it's now making boardroom history. It will become the

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<v Speaker 1>first company in the foot see one hundred to appoint

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<v Speaker 1>in all women leadership team with a female chief executive

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<v Speaker 1>chairwoman and also chief of Financial officer. So all of

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<v Speaker 1>this comes as Helen Miles as set to become the

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<v Speaker 1>CFO in July, along with the CEO of Live Garfield

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<v Speaker 1>and the chairwoman Christine Hodginson and a majority of boards

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<v Speaker 1>and foot see one hundred companies, Caroline as still waited

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<v Speaker 1>in favor of men. Of course, the number of women

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<v Speaker 1>in senior roles has actually been growing and we have

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<v Speaker 1>discussed this on the show a lot, and the water

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<v Speaker 1>industry has actually been the best sector for female executives

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<v Speaker 1>to rise to the top. And we know the CEO

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<v Speaker 1>of Thames Water, Southwest Water and soon Northwest Water. They

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<v Speaker 1>all going to be women. However, Denise Wilson, she's the

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<v Speaker 1>chief executive of the foot See Woman Leaders Group, says,

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<v Speaker 1>even though we're making massive strides in the right direction,

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<v Speaker 1>there is still a long way to go and we

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<v Speaker 1>must bear that in mind. But this seems to be

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<v Speaker 1>boardroom history, Caroline for all the ladies. I don't know,

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<v Speaker 1>I would quite like the idea of walking working in

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<v Speaker 1>a not that I don't like Stephen, but yeah, absolutely, Look,

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<v Speaker 1>I'll just chirping. There are only seven female CEOs in

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<v Speaker 1>the whole foot See one hundred and actually the progress

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<v Speaker 1>in terms of getting more women into the c suite

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<v Speaker 1>has really kind of been quite stagnant over the past

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<v Speaker 1>five years, but on a lot of metrics. But leangoes,

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<v Speaker 1>thank you. That's a very interesting story. At one more

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<v Speaker 1>from Lean the Telegraph job coaches as GP surgeries to

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<v Speaker 1>push unemployed over fifties back to work. What's that about.

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<v Speaker 1>I'm going to try to tell you what it's all about.

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<v Speaker 1>This as part of the government's plan to plug gaps

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<v Speaker 1>in the labor workforce. We do know it's super tied

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<v Speaker 1>and also reduce economic inactivity among the over fifties here

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<v Speaker 1>in the UK. Now, the Telegraph says, is the ideas

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<v Speaker 1>using GP surgeries to get these coaches in to help

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<v Speaker 1>people in this age group and give them advice on

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<v Speaker 1>finding work and really getting back into the working world.

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<v Speaker 1>And doctors would also be able to refer patients who

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<v Speaker 1>want to help find work and also advice you know

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<v Speaker 1>where to go. Sometimes that first leap isn't it is

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<v Speaker 1>knowing where to go and how to go about it.

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<v Speaker 1>The paper says ministers are actively looking at policy as

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<v Speaker 1>Work and Pension Secretary Miles Stride is leading a review

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<v Speaker 1>into how to entice unemployed fifty to sixty year old

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<v Speaker 1>back into the workforce. And this is really as the

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<v Speaker 1>UK is the only major developed country to have suffered

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<v Speaker 1>a sustained rise in economic inactivity in this age group

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<v Speaker 1>since the start of the pandemic. And I did remember

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<v Speaker 1>seeing a headline recently saying get off the golf course

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<v Speaker 1>and get into work. I'm not sure everyone's going to

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<v Speaker 1>want to agree with that, and there have been trials

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<v Speaker 1>of this idea. A government back to pilot in South

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<v Speaker 1>Yorkshire where GP referred patients for work support had a

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<v Speaker 1>fifty percent success rate out of five thousand people, which

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<v Speaker 1>suggests that maybe people are ready to go back into

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<v Speaker 1>the workforce, but they just need that little leg up

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<v Speaker 1>and these job coaches are basically designed to do that. Okay,

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<v Speaker 1>Lean and thank you very much that review the newspapers. Now,

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<v Speaker 1>a couple more interest rate hikes are on the way,

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<v Speaker 1>but Jerome Powell says that the disinflation process has started

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<v Speaker 1>as markets price in rate cuts of fifty basis points

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<v Speaker 1>by the end of the year from the FED. Attention

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<v Speaker 1>today is shifting to the ECB and the Bank of

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<v Speaker 1>England who make their decisions. So let's have a think

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<v Speaker 1>about this. Bring in our chief rates correspondent Garfield Reynolds

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<v Speaker 1>to digest during Power first the Garfield Good Morning Pal

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<v Speaker 1>says that there's more work to do, but the markets

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<v Speaker 1>did not seem to hear that. What should we take

0:13:26.960 --> 0:13:30.800
<v Speaker 1>away from the FED decision yesterday? Markets teams who have

0:13:30.800 --> 0:13:32.880
<v Speaker 1>decided that the more work that needs to be done

0:13:33.000 --> 0:13:36.360
<v Speaker 1>is preparation for rate cuts, which j Power did his

0:13:36.520 --> 0:13:40.280
<v Speaker 1>best to rule out the difficulty that the FED was

0:13:40.320 --> 0:13:42.680
<v Speaker 1>always going to face, though once it slowed its pace

0:13:42.720 --> 0:13:45.800
<v Speaker 1>of hikes and signal that it was close to the

0:13:45.920 --> 0:13:49.280
<v Speaker 1>end of its hiking cycle, which he definitely signaled is

0:13:49.320 --> 0:13:53.400
<v Speaker 1>that then markets would rush to price that the next

0:13:53.440 --> 0:13:55.880
<v Speaker 1>part of the cycle when the FED would turn around

0:13:55.920 --> 0:13:59.240
<v Speaker 1>and loosen policy. And in fact, there are a couple

0:13:59.280 --> 0:14:05.000
<v Speaker 1>of things that Chappou said which encouraged that. He talked

0:14:05.000 --> 0:14:08.240
<v Speaker 1>a lot about disinflation and the idea that he could

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<v Speaker 1>see some disinflationary impulses coming through, so that was a

0:14:13.640 --> 0:14:17.200
<v Speaker 1>red rag to the bond and stockballs as it were.

0:14:17.640 --> 0:14:22.560
<v Speaker 1>He also he did be emphasized he has been keen

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<v Speaker 1>to emphasize this all along, but still he did emphasize

0:14:26.280 --> 0:14:29.320
<v Speaker 1>his expectation they can manage a soft landing, and a

0:14:29.400 --> 0:14:34.000
<v Speaker 1>soft landing is seen as meaning that they do not

0:14:35.200 --> 0:14:38.520
<v Speaker 1>go so far with tightening that they crashed the economy.

0:14:38.920 --> 0:14:42.400
<v Speaker 1>So his insistence on that was taken by markets as

0:14:42.440 --> 0:14:45.280
<v Speaker 1>being Okay, they're going to go one or two more

0:14:45.320 --> 0:14:50.560
<v Speaker 1>times after this, maybe one, maybe none. And you know,

0:14:50.680 --> 0:14:53.640
<v Speaker 1>the most immediate and interesting response was the ways swamp

0:14:53.720 --> 0:14:57.920
<v Speaker 1>markets priced for two rate cuts in the second half

0:14:58.080 --> 0:15:00.560
<v Speaker 1>of this year, which is not at all something that

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<v Speaker 1>how you'll put on the table in his comments, but

0:15:05.280 --> 0:15:09.440
<v Speaker 1>the markets look through that. This is Bloomberg Daybreak Europe,

0:15:09.480 --> 0:15:12.240
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