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Speaker 1: This is Bloomberg Daybreak CURU for this Friday, the twelfth

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Speaker 1: of May in London. Coming up today.

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Speaker 2: We live in hope the Boez. Bailey tells Bloomberg he

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Speaker 2: believes the bank is close to a pause.

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Speaker 1: It's going to get worse for banks. Jamie Diamond says

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Speaker 1: the lenders should expect more regulation.

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Speaker 2: Deal or no deal. Biden and McCarthy delay meeting is

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Speaker 2: aids negotiates over the death ceiling.

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Speaker 3: The CBI will emerge from the ruins of scandal, go

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Speaker 3: back to work to get a tax cut, and the

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Speaker 3: secret to a happy marriage, well woman being paid more.

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Speaker 3: Those are the stories we're looking at in today's papers.

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Speaker 3: And I'm Leanne Gerrin's.

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Speaker 1: Plus spreading his wings. Elon Musk is to step down

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Speaker 1: as the CEO of Twitter.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 4: and everywhere you get your podcasts.

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Speaker 2: Good morning, I'm Stephen Carroll.

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Speaker 1: And I'm Caroline Hetger. Here are the stories that we're

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Speaker 1: following today.

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Speaker 2: Bank of England Governor Andrew Bailey says rates are now

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Speaker 2: getting close to their peak. Speaking to Bloomberg after announcing

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Speaker 2: a twenty five basis point hike, Bailey was asked whether

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Speaker 2: the BOE is close to a pause.

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Speaker 5: I'm going to say I hope we are. This is

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Speaker 5: the twelfth consecutive increase in rates. But again I'll be

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Speaker 5: very clear that we will be guided by the effort

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Speaker 5: then as it comes to us.

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Speaker 2: Andrew Bailey was speaking to Bloomberg's Guy Johnson after the

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Speaker 2: BOE raised its benchmark rate to four point five percent,

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Speaker 2: the highest cents two thousand and eight. Markets anticipate the

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Speaker 2: Center Bank may push the base rate to five percent

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Speaker 2: this summer. We'll bring you more of that. Interview with

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Speaker 2: the Bank of England governor in a.

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Speaker 1: Moment struggling US regional banks are about to get hit

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Speaker 1: with more red tape. According to Jamie Dimond, speaking exclusively

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Speaker 1: to Bloomberg's Farci Laqua, the JP Morgan chief said that

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Speaker 1: he expects policymakers to take the wrong lessons from this

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Speaker 1: sear is uppeople you see.

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Speaker 6: To get worse for banks. It just more regulations and

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Speaker 6: more rules and more requirements. Hope, I hope they do

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Speaker 6: it very thoughtfully, because you know if you we love

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Speaker 6: the community banks, the regional banks, we're the biggest banks

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Speaker 6: of those folks, but you know, if you overdo certain rules, requirements, regulations,

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Speaker 6: there's so many community banks tell me they have more

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Speaker 6: compliance people, the loan officers and so at one point

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Speaker 6: and make it harder from the new business.

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Speaker 1: Diamond's warning comes just weeks after JP Morgan stepped in

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Speaker 1: to buy troubled lender First Republic. At the time, Diamond

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Speaker 1: declared that the crisis is over, but those comments did

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Speaker 1: little to quell investor concern, and regional banking shares have

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Speaker 1: since dropped considerably.

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Speaker 2: Our interview with the boss of America's largest lender comes

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Speaker 2: as news emerged the country's biggest banks faced billions of

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Speaker 2: dollars in extra fees to replenish the US Government's Deposit

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Speaker 2: Insurance Fund. The assessment from the FDIC stems from the

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Speaker 2: regulator's decision to ensure all deposits at Silicon Valley Bank

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Speaker 2: and Signature Bank. The FDIC estimates the move cost AIDS

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Speaker 2: Deposit Insurance Fund around fifteen point eight billion dollars now.

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Speaker 1: A meeting between President Biden and the US House Speaker

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Speaker 1: Kevin McCarthy that was due to take place today has

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Speaker 1: been pushed back. According to White House officials, delays signal

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Speaker 1: that the talks between the two sides are making progress.

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Speaker 1: Speaking to Bloomberg, Wally Adiemo, who is the US Deputy

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Speaker 1: Secretary of the Treasury, says that talks are ongoing.

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Speaker 7: We need to raise the debt limit and we're going

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Speaker 7: to make sure we don't default on our debt. But

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Speaker 7: he's happy to have a conversation about what we do

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Speaker 7: in terms of fiscal policy, and that's what they're having

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Speaker 7: a conversation about how we make sure that we're able

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Speaker 7: to bring down our debts and deficits over time. President

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Speaker 7: has a proposal the reduces the debt by three trillion

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Speaker 7: dollars over ten years, and he's happy to have that

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Speaker 7: conversation and saff continue to have that conversation.

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Speaker 1: The President will instead meet with congressional leaders early next week.

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Speaker 1: The Treasury Department has warned that the US could default

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Speaker 1: on payments as soon as the first of June deal

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Speaker 1: cannot be secured.

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Speaker 2: No source of tel Bloomberg. At least eight senior Credit

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Speaker 2: Suisse bankers are leaving the firm for Santander mergers and

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Speaker 2: acquisitions chiefs. Steve Geller is said to be among them.

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Speaker 2: Where told, the moves reflect how Santander is expanding in

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Speaker 2: the United States. Representatives for Credit Suite and Santander declined

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Speaker 2: to comment.

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Speaker 1: So Citizenal's fixed income trading unit outperformed most of its

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Speaker 1: peers in the first quarter. Income from debt and currencies

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Speaker 1: trading at the French bank jump by sixteen percent from

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Speaker 1: a year earlier to eight hundred and ninety million euros,

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Speaker 1: but revenue at SoC gen's equities trading fell eighteen percent

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Speaker 1: from the record first quarter of twenty twenty two. Overall,

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Speaker 1: the Paris based lender saw net income gain almost six

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Speaker 1: percent in the quarter. This is the last earnings report

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Speaker 1: on the CEO, Fredrick Udea, who is stepping down later

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Speaker 1: this month.

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Speaker 2: NBC Universal's head of advertising, Linda Yacarino, is in talks

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Speaker 2: to become Twitter's new CEO, according to The Wall Street Journal.

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Speaker 2: The report comes after Elin Musk tweeter that he's leaving

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Speaker 2: the top job at the social network to become executive

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Speaker 2: chair and CTO, where he'll oversee product, software and system operations.

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Speaker 2: Bloomberg's Ed Ludlow has the details.

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Speaker 8: Boiler musk says in the tweet that the new CEO

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Speaker 8: she will be starting in the role in around six weeks.

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Speaker 8: Musk Hat actually said in February that he may need

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Speaker 8: a year to fix Twitter before handing over the reins

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Speaker 8: to someone else. What he is doing in the second

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Speaker 8: paragraph on the tweet you see on your screen is

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Speaker 8: reiterating something he's done said before that, irrespective of his title,

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Speaker 8: he wanted to be involved on the engineering, product and

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Speaker 8: functionality side of Twitter.

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Speaker 2: Musk bow Twitter for forty four billion dollars last October

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Speaker 2: and at the time said he would only be in

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Speaker 2: charge for a limited time to complete an organizational overhaul.

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Speaker 1: Okay, there's a few of our top stories for you

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Speaker 1: this morning. I think we've got a bit of a

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Speaker 1: theme this week really around travel. Everyone's getting the bug,

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Speaker 1: and apparently so much so the airline are sprucing up

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Speaker 1: first class. First class ticket costs you ten times as

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Speaker 1: much on average as a kind of economy class fair,

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Speaker 1: but now it comes with even more spectacular bells and whistles.

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Speaker 2: Yeah, there's a great piece for arcolic. Danny Lee looking

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Speaker 2: at this, of course, notreda aviation journalist himself. Looking at

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Speaker 2: the luxury that you can have in first class cabins,

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Speaker 2: many hotel rooms, sofas, double beds, desks even and in

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Speaker 2: some cases walk in showers. This is the sort of

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Speaker 2: thing that people are willing to pay those high premia for.

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Speaker 1: Yeah, I think it's kind of staggering. Maybe it's also

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Speaker 1: got something to do with the kind of anti private

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Speaker 1: jets bug because of kind of clubate shade.

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Speaker 2: Well, yeah, and there's certainly a lot more pressure being

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Speaker 2: put on the high profile journeys on private jets, so

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Speaker 2: this doesn't seem like a bad alternative from my point

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Speaker 2: of view.

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Speaker 1: In the back of the plane, well, quantas and left

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Speaker 1: hands are apparently are bringing out these kind of new looks.

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Speaker 1: I mean, they do look pretty splendiferous, you know.

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Speaker 2: Yeah, it's an interesting comment. It's their friend the Liftandra

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Speaker 2: Ceo in that piece by Danny Lee. But yeah, it

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Speaker 2: certainly seems like people are interested in paying the premium

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Speaker 2: to have that's a luxury, particularly on those extra long

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Speaker 2: whole flights traveling to and from Australia being a prime example,

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Speaker 2: and his Zealand. You know, these are the places that

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Speaker 2: people want to have their luxury on those long journeys.

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Speaker 1: Absolutely. Well, let's bring you more from our interview with

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Speaker 1: the Governor of the Bank of England, shall we Adie

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Speaker 1: Bailey has told Bloomberg that the hiking cycle could be

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Speaker 1: near an end so long as inflation weakends. He's been

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Speaker 1: speaking to Bloomberg's Guy Johnson.

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Speaker 5: We're very much going to respond to the evidence as

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Speaker 5: it comes in. We've not given a direction one way

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Speaker 5: or the other, and that's deliberate. I think will now

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Speaker 5: be shaped by the evidence. We expect inflation to come

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Speaker 5: off quite rapidly and the rest of the year obviously

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Speaker 5: we want to see that happen. I think quite a

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Speaker 5: lot of it is in the numbers, as it were,

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Speaker 5: because it's the other side of what happened last year

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Speaker 5: with energy prices particularly, But we want to see the evidence.

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Speaker 9: Okay, keeping more specific on the evidence, what evidence will

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Speaker 9: you be looking for?

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Speaker 5: Well, we put a lot of emphasis on the risk

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Speaker 5: of persistence of inflation. Now what I mean by that is, yes,

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Speaker 5: inflation we think is going to come down rapidly this year,

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Speaker 5: but it's got to go all the way back down

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Speaker 5: to the target, and particularly in the core elements of

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Speaker 5: inflation that the more domestic elements as they respond to

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Speaker 5: some of these huge external shocks that we've had. How

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Speaker 5: that works its way through the system. Now, what I

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Speaker 5: would say, however, is that the news that we've had

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Speaker 5: since we've last met as the NPC, interestingly, has actually

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Speaker 5: not so much really been in those sort of more

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Speaker 5: persistent elements. It's been in some of the more sort

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Speaker 5: of been sort of front the front load elements, food

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Speaker 5: prices particularly, actually the more persistent elements in services prices,

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Speaker 5: and actually the wage setting of the economy has evolved

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Speaker 5: pretty much as we thought it would.

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Speaker 9: Would it be fair to say that you are you

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Speaker 9: are getting close.

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Speaker 5: To the end of the cycle. Well, I'm going to

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Speaker 5: say I hope we are, because this is the twelfth

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Speaker 5: consecutive increase in rates. But again, I'll be very clear

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Speaker 5: that we will be guided by the evidence as it

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Speaker 5: as it comes to us.

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Speaker 9: Do you understand the frustration that the bank appears to

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Speaker 9: be chasing the data, that you continuously appear to underestimate

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Speaker 9: the scale and the duration of the inflation shock, and

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Speaker 9: therefore that every meeting you seem to be wanting to

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Speaker 9: play catch up to the data that you're seeing in

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Speaker 9: front of you.

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Speaker 5: Well, we went to a period where we were giving

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Speaker 5: out a very clear siense of direction actually that that

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Speaker 5: would be further increases and rates as we know, as

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Speaker 5: we thought the evidence would unfold, and we were giving

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Speaker 5: a very clear sense of direction at that point. But

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Speaker 5: as you know, we've we've moved away from that in

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Speaker 5: the last couple of meetings. Storry deliberately because we do

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Speaker 5: now think that not only will it be shaped by

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Speaker 5: the evidence, but we are approaching a point when we

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Speaker 5: should be able to, in a said, to rest in

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Speaker 5: terms of the level of rates. But we haven't seen

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Speaker 5: the evidence yet to give a stronger sense of the reader.

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Speaker 5: So that's why I'm very clear that we have to

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Speaker 5: be evidence driven.

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Speaker 9: The forecast are based on market expectations. You have upgraded

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Speaker 9: the economic forecasts despite the fact that the market is

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Speaker 9: pricing in five percent interest rates. Are you now saying

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Speaker 9: that this is an economy that can take five percent

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Speaker 9: bank rate in a way that it couldn't befall.

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Speaker 5: Well, we've always said that obviously we will have to

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Speaker 5: set rates to achieve the infreshtion target, so you know,

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Speaker 5: and then we obviously take into account the impact that

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Speaker 5: that rate setting has on the economy, because obviously that

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Speaker 5: feeds back into an inflation, So we do that, and

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Speaker 5: in one of the things we're paying a lot of

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Speaker 5: attention to at the moment is the so called transmission

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Speaker 5: mechanism of manitary policy, how those rate rises feed through

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Speaker 5: into the economy. And a particular issue there is that

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Speaker 5: the housing market and the mortgage market has changed very

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Speaker 5: substantially since the bank coming and last raised interest rates,

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Speaker 5: which you have to go back before the financial crisis

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Speaker 5: for so that we have a predominantly fixed rate mortgage

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Speaker 5: market now, and that does change the transmission in terms

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Speaker 5: of this question about how the economy handles rates, we

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Speaker 5: look at all those things.

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Speaker 9: John kind of if it wasn't that long ago that

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Speaker 9: he was talking about the fact that five percent would

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Speaker 9: cause significant distress for mortgage holds, is that no longer?

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Speaker 9: The case is that of your judgments of the situation.

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Speaker 5: It depends on the context of five percent. You can

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Speaker 5: have five percent rates in all sorts of different contexts.

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Speaker 5: And on the financial stability side of our assessment, we

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Speaker 5: do we do a lot of work to what we

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Speaker 5: call stress. It is the system and I'm there, we're

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Speaker 5: looking at higher rates and very stress circumstances. So I

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Speaker 5: would make two points, very positive points here. We currently

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Speaker 5: have a much stronger labor market and what that means

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Speaker 5: is that we've got a lot more people in the employment.

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Speaker 5: Now that's a good thing from the point of view

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Speaker 5: when looking at it from the point of the stress.

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Speaker 5: The second thing I would say is that the impact

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Speaker 5: so far of the disturbances that we've seen in some

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Speaker 5: parts of the world and some parts of the banking system, well,

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Speaker 5: we saw an initial impact on the UK credit conditions.

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Speaker 5: Actually it's not fed free. We're back to where we

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Speaker 5: were that and so far I think very good news

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Speaker 5: that credit conditions in that sense in the UK have

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Speaker 5: not been affected.

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Speaker 1: So that was the Governor of the Bank of England,

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Speaker 1: Andrew Bailey. They're speaking to Blomberg's Guy Johnson.

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Speaker 2: Up next to CBI will emerge from the ruins of scandal,

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Speaker 2: go back to work, to get a tax cut? And

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Speaker 2: the Secret to a happy marriage.

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Speaker 4: Now the paper Review, hon Blue Bird, Daybreak Europe. The

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Speaker 4: news you need to know from today's Paperssicly.

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Speaker 1: Going this morning for more. The headline in The Times

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Speaker 1: a new look CBI will emerge from the ruins of scandal.

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Speaker 1: Vow's boss. This, of course is about the biggest business

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Speaker 1: lobby in Britain, a story that we've been following closely, Liane.

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Speaker 3: We have been following this closely, Caroline, and we have

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Speaker 3: now heard from the new Director General, Rain Newton Smith.

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Speaker 3: She's been talking to the newspaper and she says she

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Speaker 3: vows to build a better CBI with a new look.

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Speaker 3: The Business Lobby Group has actually suspended all policy and

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Speaker 3: membershi activity until a meeting in June, which the papers

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Speaker 3: called extraordinary, following the workplace misconduct scandal, which as you say,

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Speaker 3: we've been covering for months on the show. But Newton

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Speaker 3: Smith says the CBI's membership remains large and diverse despite

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Speaker 3: a tough few weeks. So she's been very optimistic in

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Speaker 3: this article. Writing the time she accepted the CBI's position

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Speaker 3: in a role call of shame and said it was

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Speaker 3: no excuse that some allegations go back a number of

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Speaker 3: years and have only just really come to light. She

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Speaker 3: insists if the CBI did not exist, it would be

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Speaker 3: recreated as it performs a really vital function in speaking

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Speaker 3: up for all businesses right across the economy. But we

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Speaker 3: do know we have seen big businesses suspend their contracts

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Speaker 3: with the lobby group in light of the misconduct scandal.

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Speaker 5: Yeah.

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Speaker 2: Look, and there's a whole question too about you know,

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Speaker 2: the other groups represent business in this country wanting to

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Speaker 2: step into the void that's been left by this limbo

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Speaker 2: around the CBI as well. The British Chambers of Commerce

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Speaker 2: Conference is happening next week and that's another event that

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Speaker 2: brings big business together too. So really interesting to hear

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Speaker 2: the point of view from Rain Newton Smith in the Times.

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Speaker 2: Let's go to the Telegraph next Leanne which says go

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Speaker 2: back to work and we can cut income tax by

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Speaker 2: two p says Maustride.

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Speaker 3: Yes, you are completely right, Moustride. The Working Pensions Secretary

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Speaker 3: Stephen was talking to journalists yesterday and said people need

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Speaker 3: to get back to work to help the economy after

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Speaker 3: the pandemic, saying the workforce was still around four hundred

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Speaker 3: thousand short of the pre COVID levels that we had seen.

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Speaker 3: This is not the first time we've heard this from

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Speaker 3: the government. Remember we did hear it in the budget

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Speaker 3: from Jeremy Hunt. He's just really reiterating a lot of

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Speaker 3: this and now let's crunch the numbers he outlined yesterday.

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Speaker 3: So he said people returning to work will increase the

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Speaker 3: size of the economy by zero point two percent, which

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Speaker 3: will reduce the borrowing requirement by eleven billion pounds, which

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Speaker 3: will be enough to take two percent of the basic

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Speaker 3: rate of tax. I hope you're following all my maths there,

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Speaker 3: but I think it's completely right now. Stride is actually

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Speaker 3: responsible for really boosting employment numbers in our economy at

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Speaker 3: the moment. But we mustn't forget Caroline. He's also there

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Speaker 3: to help the Chancellor Jeremy Hunt have this great flexibility

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Speaker 3: when it comes to setting his autumn and spring budgets

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Speaker 3: that we will see him do. And also one other

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Speaker 3: thing is we've heard from Rishie Sunak that he is

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Speaker 3: a tax cutting conservative and his comments really now show

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Speaker 3: this appetite around the Conservative Party and the Cabinet table

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Speaker 3: to lower the tax burden when you know economic conditions

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Speaker 3: and the Treasury's finances do allow. And of course we

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Speaker 3: heard from Bailey earlier. We saw a rate hike yesterday

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Speaker 3: and it means boring costs are now at their highest

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Speaker 3: level since two thousand and eight. Things are difficult for people.

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Speaker 1: Yeah, I think it's extremely difficult to talk about being

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Speaker 1: a tax cutting prime minister though, when you have the

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Speaker 1: highest rate of tax in more like fifty years since

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Speaker 1: World War Two, depending on how you calculate it. But

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Speaker 1: obviously mals Tried is a key voice. I mean we've

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Speaker 1: had him in the studio here when he was the

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Speaker 1: Chair of the Treasury Committee and now of course as

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Speaker 1: a minister. So yes, he's obviously a very kind of

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Speaker 1: I think considered a very credible voice when it comes

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Speaker 1: to economic policy. But will people listen to that? Get

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Speaker 1: back to work Mantra, I don't know. Having said that,

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Speaker 1: let's talk about this. This is quite an interesting kicker.

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Speaker 1: The Wall Street Journal has this headline, more wives now

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Speaker 1: out earn their husbands, they also stay together longer. Unpack

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Speaker 1: this one.

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Speaker 3: I actually think this is quite a positive story if

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Speaker 3: you're listening on a Friday morning, and it's all down

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Speaker 3: to research that's been going on over in the US.

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Speaker 3: But let's break it down. So marriages and which wives

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Speaker 3: all earn their husbands are not only more common, but

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Speaker 3: now they're actually less likely to end in divorce than

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Speaker 3: in the past. According to The Wall Street Journal. Now

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Speaker 3: researchers Christine Schwarzcraft and Pyla Gondolas Ponds. They scientologists at

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Speaker 3: sorry sociologists' apologies, at two universities over in the US,

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Speaker 3: and they both been breaking down these numbers and they

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Speaker 3: say couples married in the late nineteen sixties and nineteen

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Speaker 3: seventies were actually seventy percent more likely to divorce when

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Speaker 3: they wives earned the same or slightly more. That's huge

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Speaker 3: seventy percent.

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Speaker 1: Yeah, so it's a positive news story versus the sixties

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Speaker 1: and seventies. Yes, you're a woman earning more money you were,

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Speaker 1: you know, your marriage was much more likely to fail.

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Speaker 1: Now that's a bit less like.

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Speaker 3: Yeah, so if you have an improvement, Yes, if you

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Speaker 3: got married in the nineties, the divorce rate for those

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Speaker 3: female breadwinners has dramatically fallen. And the reasons, I wondered

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Speaker 3: what the reasons were. They cultural as well as economic.

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Speaker 3: So our careers as women are really growing. Also, we

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Speaker 3: have more education, we're doing degrees longer, we've got access

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Speaker 3: to all of that. So some of the stigma of

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Speaker 3: lower incomes for husbands is really no longer there like

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Speaker 3: it was probably back in the nineteen sixties and seventies.

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Speaker 3: And also we must remember the higher cost of building

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Speaker 3: a life together has really made it necessary for more

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Speaker 3: couples to come together and maximize their incomes.

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Speaker 2: Yeah, I mean I would be interested to see what

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Speaker 2: this research would be like if you were to start

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Speaker 2: it now and kind of look and see, because I

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Speaker 2: wonder as well how much of its around expectations when

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Speaker 2: people get together and get married, about what they feel

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Speaker 2: like their lives are going.

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Speaker 5: To be like.

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Speaker 3: But I also thought something else in the nineteen sixties

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Speaker 3: and seventies, I look at my parents' marriage, and they

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Speaker 3: got married very young, and now people are getting married

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Speaker 3: a lot older in many senses, and you bring quite

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Speaker 3: a lot of assets to the table at that time too,

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Speaker 3: So things have sort of dramatically changed in the way

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Speaker 3: that people are set up for marriage now. I know,

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Speaker 3: you know. That's something I was just thinking about when

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Speaker 3: I was looking at this story. But once again, very

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Speaker 3: interesting on pay and how we have really evolved.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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