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Speaker 1: Good morning.

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Speaker 2: It's Tuesday, the eighth of August here in London. This

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Speaker 2: is the Bloomberg Daybreak you at podcast. I'm Caroline Hepka and.

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Speaker 3: I'm Stephen Carroll. Coming up today, Maloney Surprise Italy's government

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Speaker 3: agrees a new tax on banks extra.

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Speaker 2: Profits, Moody's down grades ten US banks as boring costs rise.

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Speaker 3: And UK politicians hit back at HSBC over a week

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Speaker 3: on China comments. Let's start with the round of our

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Speaker 3: top stories.

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Speaker 2: The Italian government has approved a surprise tax on bank profits.

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Speaker 2: The levy was slipped into a package of other measures,

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Speaker 2: including the granting of additional taxi licenses and foreign investment.

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Speaker 2: The Deputy Prime Minister, Matteo Selvini says that the new

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Speaker 2: tax will apply to forty percent of what he described

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Speaker 2: as extra profits. Italian news agency Answer says that it

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Speaker 2: could bring in over two billion euros. Italian banks profits

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Speaker 2: surge in the first half of the year as rising

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Speaker 2: interest rates boosted income from lending.

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Speaker 3: Moody's has downgraded ten US banks as rising interest rates

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Speaker 3: continue to squeeze lenders. M and T Bank at Webster

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Speaker 3: Financial were among those affected. Moody's pointed to higher funding costs,

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Speaker 3: potential regulatory capital weaknesses and rising risks tied to commercial

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Speaker 3: property loans as reasons for the downgrade. It also warned

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Speaker 3: that may downgrade major lenders, including Bank of New York,

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Speaker 3: Mellon and State Street, is part of a sweeping look

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Speaker 3: at mounting pressures on the industry.

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Speaker 2: UK politicians have rounded on HSBC after the bank's head

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Speaker 2: of public affairs criticized Britain's China policy. Former Conservative Party

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Speaker 2: leader Ian Duncan Smith says that Europe's biggest bank, Quote

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Speaker 2: has an awful lot to answer for. Speaking to Bloomberg Radio,

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Speaker 2: the former Business Secretary Vince Cable says that the HSBC

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Speaker 2: executive had a point when he said that the UK

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Speaker 2: was weak for following the US position on China.

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Speaker 4: I think he does, yes, I mean a very good

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Speaker 4: example of it. One eyed personally who was involved in

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Speaker 4: in government. It is the issue of Huawei actively in

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Speaker 4: the Americans said no and we had to cave in

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Speaker 4: deferring accessively to pressure from the United States. It's unhelpful

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Speaker 4: to the UK and not in our interests.

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Speaker 2: You can hear that full interview with the former Liberal

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Speaker 2: Democrat leader Vince Cable on the Bloomberg UK Politics podcast

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Speaker 2: The Foreign Secretary. Meanwhile, James Cleverly is currently trying to

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Speaker 2: rearrange an official visit to China after it was postponed

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Speaker 2: from July.

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Speaker 3: China's exports fell for a third consecutive month in July.

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Speaker 3: Bloomberg's Brian Curtis has more from Hong Kong.

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Speaker 5: Exports slump fourteen and a half percent from a year earlier.

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Speaker 5: That's the worst decline since February of twenty twenty. Imports

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Speaker 5: contracted twelve point four percent, more than double estimates. That

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Speaker 5: left a trade surplus of eighty point six billion dollars

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Speaker 5: for the month. It's a double whammy for the economy.

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Speaker 5: Global demand is weak, and so is domestic consumption. There's

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Speaker 5: a plethora of issues here, sagging business and consumer confidence,

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Speaker 5: a deflating property mark, and a government that is wary

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Speaker 5: of large scale stimulus in Hong Kong. Brian Curtis, Bloomberg

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Speaker 5: day Break.

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Speaker 2: Europe Now two earnings news. Glencore has reported a steep

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Speaker 2: drop in first half profits and slashed returns to shareholders

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Speaker 2: as disappointed demand from China increasingly ways on commodity prices.

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Speaker 2: The mining and trading giant reported first half court earnings

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Speaker 2: of nine point four billion dollars, announcing a one billion

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Speaker 2: dollar dividend top up and a one point two billion

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Speaker 2: dollar stock buyback. Though still one of its best ever performances,

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Speaker 2: the numbers are the latest sign that last year's blockbuster

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Speaker 2: returns in the sector have begun to fade.

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Speaker 3: Here in the UK, wet weather has dampened retail demands.

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Speaker 3: The latest figures from the British Retail Consortium showed increase

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Speaker 3: of just one point five percent in July. That compares

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Speaker 3: with growth of two point five percent for the same

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Speaker 3: month last year. Director of Insight the BRC, Chris Hammer,

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Speaker 3: says spending has been depressed by the British weather.

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Speaker 1: Fewer shoppers are going online to by their goods. They're

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Speaker 1: returning to the stores, but the wet weather from in

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Speaker 1: July really put shoppers off buying clothing and appliances to

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Speaker 1: keep cool like we saw last year.

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Speaker 3: The BRC's Chris Hammer does point to gains in groceries,

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Speaker 3: food sales rising by eight point four percent, above the

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Speaker 3: twelve month average growth of seven point eight percent. This

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Speaker 3: is the Bank of England's chief economist says supermarket prices

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Speaker 3: may never drop Hupela's warning that substantial declines on global

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Speaker 3: food markets may only slow price inflation rather than causing

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Speaker 3: prices to fall.

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Speaker 2: Tesla's chief financial officer is stepping down after thirteen years

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Speaker 2: at the electric vehicle maker. Zachary Kirkcorn has been a

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Speaker 2: prominent voice for the company with shareholders and one of

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Speaker 2: only four executive officers at the firm. Kathy Woods Arc

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Speaker 2: Fund is a major investor in Tesla. Speaking to Bloomberg,

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Speaker 2: she said that she expects a seamless transition.

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Speaker 6: We will miss him, but his successor has been with

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Speaker 6: Tesla right underneath him since twenty eighteen, So he was

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Speaker 6: put through the fires. Remember in twenty eighteen, nineteen, many

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Speaker 6: analysts were saying that Tesla was going bankrupt, and so

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Speaker 6: he's been there. He's gone through the fire, and you know,

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Speaker 6: it's a tough job. It's a tough, tough job. So

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Speaker 6: I guess thirteen years was a really good run for

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Speaker 6: Zech Well.

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Speaker 2: Despite Kathy Woods comments, the surprise shakeup has raised new

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Speaker 2: questions about succession in the top ranks of Elon Musk's company.

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Speaker 2: Tesla chares felt one percent in New York after that announcement,

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Speaker 2: but Musk won't be too concerned, as the stock price

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Speaker 2: has more than doubled so far this year.

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Speaker 3: Those are some of our top stories on the program

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Speaker 3: this morning. Interesting to watch. We have just gotten the

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Speaker 3: first prints at there's Italian banks after that news yesterday

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Speaker 3: from the Italian government uncradit shares down five point four

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Speaker 3: percent in Tesla San Paolo and six percent, Banker generally

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Speaker 3: down two point eight percent as well as we are

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Speaker 3: seeing this news of this new tax on what the

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Speaker 3: Italian government has described as extra bank profits, weighing on

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Speaker 3: those shares at the open.

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Speaker 2: Absolutely this also it was a surprise move by Italian politicians.

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Speaker 2: It seemed to be a sort of late night event,

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Speaker 2: a little bit similar to what happens in the UK

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Speaker 2: when we go into recess for parliament. You know, everything

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Speaker 2: happens in those last few hours. So I want to

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Speaker 2: bring in Bloomberg's managing editor for EMEA Finance and Investing,

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Speaker 2: Tom Metcalf. Tom, good morning, Thank you so much for

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Speaker 2: being with us. There are a few interesting bank stories

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Speaker 2: to talk about, but I first want to talk about

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Speaker 2: this idea of a windfall tax in Italy. How significant

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Speaker 2: is this? Just before Italian delegates and politicians go on

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Speaker 2: holiday for the summer.

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Speaker 7: Yeah, I know, very significant and big surprise in a

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Speaker 7: negative way for the SEC and not just initially but

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Speaker 7: also the wider banks both all but yeah, the big

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Speaker 7: Italian banks, the unicredits down basically as much as six

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Speaker 7: point five percent at the open, which gives you indication

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Speaker 7: of how this is being received. I don't think it

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Speaker 7: was expected. And it's really interesting because obviously it comes

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Speaker 7: against the backdrop all those earnings where we were just

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Speaker 7: talking about how how much money these banks making off

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Speaker 7: the higher rate environment, and now it looks like the yeah,

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Speaker 7: sort of Rome is looking to sort of take a

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Speaker 7: piece of that, and about two billion of people are

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Speaker 7: expecting this text to raise.

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Speaker 5: Yeah.

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Speaker 3: Interesting. I'm looking at the latest research from Bloomberg Intelligence

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Speaker 3: on this front time, saying that Italian landers net income

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Speaker 3: for this year could be cut by about ten percent

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Speaker 3: by this extraordinary tax that's been proposed by the Italian government.

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Speaker 3: And as you point out, those shares falling in those

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Speaker 3: Italian banks, although they're all up significantly for the year,

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Speaker 3: UniCredit shares year to date up sixty one percent in

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Speaker 3: Testas and Palalo shares up by fifteen percent, So it

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Speaker 3: could be something very significant for the Italian banking sector

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Speaker 3: more broadly.

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Speaker 7: Yeah, no, definitely, so it'd be really interesting how it

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Speaker 7: unvolves over the day. Obviously, people are right now reacting

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Speaker 7: to this, so we're getting analyst notes coming out and saying, hey,

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Speaker 7: this is what we expect the impact to be. And

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Speaker 7: you know, I think the medly interesting thing is does

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Speaker 7: this sort of spread beyond Italy? You know, obviously we've

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Speaker 7: seen prepper here in the UK about this concept of

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Speaker 7: how much sort of these higher interest rates banks are

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Speaker 7: passing back to each sabers and this will certainly be

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Speaker 7: making bankers you know where there's in Germany, the UK,

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Speaker 7: France probably a bit more nervous today.

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Speaker 2: Yeah, no, absolutely that there was Alessandra Spaciale, who is

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Speaker 2: BUI actually if I think in Rome for Bloomberg, you know,

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Speaker 2: he had a peace out only a few days ago

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Speaker 2: or earlier this year anyway, talking about this idea of

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Speaker 2: maybe a bank wind full tax being discussed. At least

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Speaker 2: that was in Lallar Republica. But yes, it's certainly been

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Speaker 2: a surprise to find that it has come to prefer

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Speaker 2: tuition and is hitting share prices for Italian banks.

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Speaker 5: This morning.

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Speaker 2: Look Tom, whilst we've got you this morning, having bank

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Speaker 2: win full taxes are what it's hugely important, but also

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Speaker 2: the relationship between Europe's biggest lender HSBC, China and the UK.

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Speaker 2: I wonder if you can give us your view on this.

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Speaker 2: There is a growing riff. There has been for a

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Speaker 2: number of years a sort of spat internally in the

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Speaker 2: Conservative Party about what attitude to take towards China and investment,

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Speaker 2: and the former Conservative leader Ian Duncan Smith is amongst

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Speaker 2: those who has severely criticized for HSBC for the comments

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Speaker 2: that were made by its head of public Affairs in

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Speaker 2: this closed door event that happened a bit earlier this

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Speaker 2: summer that Blomberg has reported that the UK's approached the

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Speaker 2: relations with China you know that we're following the US

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Speaker 2: and that the UK should not do that. In Duncan

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Speaker 2: Smith was quite forceful in rejecting that idea. What do

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Speaker 2: you make of this row over the role.

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Speaker 7: Of eight Yeah, I think it really shows just what

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Speaker 7: a tricky position in HSBC is in right, it kind

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Speaker 7: of has obviously makes most of its money in Asia,

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Speaker 7: but it's listed in London, big UK bank as well

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Speaker 7: and of course it is utterly dependent as well on

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Speaker 7: access to sort of dollar clear and you know, which

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Speaker 7: comes back to Whattington. So you know, it's kind of

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Speaker 7: got these three elements to sort of navigate, you know,

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Speaker 7: all all frankly Western banks affagis if they want to

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Speaker 7: do business in China, but very it's particularly pointed just

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Speaker 7: because of how much of the business is out there

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Speaker 7: in Hong Kong. And I think you know, my dedake

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Speaker 7: and all this is, you know, these comments from effectively

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Speaker 7: their head of Government Affairs probably reflects you know what

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Speaker 7: you know, many in the bank maybe think, but but

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Speaker 7: don't want to say out loud in terms of you know,

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Speaker 7: there's definitely frustrations with sort of how the UK is

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Speaker 7: kind of navigating it relatedship with Beijing, and obviously is

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Speaker 7: an atospec's interest that relationship as friendly as possible. So

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Speaker 7: but obviously, you know, if you're a positive and in

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Speaker 7: the UK it's an absolutely probably coorous for some constituents

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Speaker 7: and it's easy to sort of as the inductors this

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Speaker 7: point out is you know, could we really be so

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Speaker 7: you know, doing such close tuies with the country where

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Speaker 7: you know, we share quite a few differences.

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Speaker 3: Okay, Tom, Thank you very much. Our managing editor for

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Speaker 3: EMEA Finance and Investing, Tom Metcalfe. Their up next, Meta

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Speaker 3: shifts towards commercial AI and the era of ultra cheap

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Speaker 3: stuff comes under threat. Now the paper review on blue

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Speaker 3: Bird Daybreak Europe.

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Speaker 7: The news you need to know from today's.

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Speaker 2: Papers, fans, and Garin's joins us. Now let's start with

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Speaker 2: the Financial Times. Meta disbands protein folding team and shift

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Speaker 2: towards commercial AI. What's at the heart of this story,

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Speaker 2: Leanne so Caroline.

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Speaker 8: In a nutshell, Meta has axed a team that was

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Speaker 8: using artificial intelligence to predict protein structures. Now, this is

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Speaker 8: really a sign, according to the Financial Times, that the

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Speaker 8: big social media giant is really shifting away from scientific

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Speaker 8: projects it's been looking into for years, and that's in

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Speaker 8: favor of building AI products because they basically just generate

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Speaker 8: more cash. So about a dozen scientists working on the

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Speaker 8: EESM fold a project that was ended this spring, have

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Speaker 8: been let go, so no longer in that sort of

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Speaker 8: scientific project mode that they were really concentrating on. We

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Speaker 8: know that Meta wanted to be very much at the

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Speaker 8: forefront of this. The protein project was lauded by those

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Speaker 8: involved in the development of new drugs and treatments, and

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Speaker 8: the CEO, Mark Zuckerberg. I think it's clear that we

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Speaker 8: can say he has said it's going to be the

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Speaker 8: year of efficiency for Meta. It's undergone the significant restructuring

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Speaker 8: in recent months, and it's really trying to focus on

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Speaker 8: profit and change. Meta created an open source data basically

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Speaker 8: that allowed scientists to retrieve protein structures relevant do they

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Speaker 8: work to make things easier? There are concerns now by

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Speaker 8: academics that in the long term Meta won't absorb the

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Speaker 8: cost to keep the database running. So that's something that

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Speaker 8: could happen in the future, but right now acting the

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Speaker 8: scientific project in favor of the big cash making AI products.

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Speaker 2: Yeah, the scientists are wired about what it means for

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Speaker 2: them if they don't have the sort of computing power

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Speaker 2: of these big firms behind them.

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Speaker 8: Anyway, interesting because you remember Caroline a few years ago,

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Speaker 8: it was always about the scientists, wasn't it. That's where

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Speaker 8: we saw a lot of these social media companies moving towards.

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Speaker 8: But the shift to commercial AI has really just really

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Speaker 8: taken over.

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Speaker 3: Lee and let's go to the Telegraph. Next, energy price

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Speaker 3: cup keeping bills artificially high. That's a warning from the

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Speaker 3: Thing Time.

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Speaker 8: Yeah, it is actually and it's from the center right

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Speaker 8: thing tank, the Center for Policy Studies, and a new

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Speaker 8: report claims that off gems energy price cap is actually

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Speaker 8: costing us more money and driving up inflation. Okay, so

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Speaker 8: basically what happens is the price cap sets the maximum

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Speaker 8: price energy companies can charge us households per unit for energy,

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Speaker 8: and it's based on the wholesale cost of power and stephn.

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Speaker 8: This has actually reviewed every three months and currently limits

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Speaker 8: the monthly bill for a typical household at two thousand

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Speaker 8: and seventy four pounds. But basically there's a big argument

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Speaker 8: coming out now they want ministers to ax the limit

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Speaker 8: and allow market rates to dictate the prices because they

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Speaker 8: say there's a three month lag, it's not filtering through,

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Speaker 8: so wholesale prices are dropping, but we're still paying the

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Speaker 8: original amount that was more.

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Speaker 2: Yeah, but this is the whole argument that we had

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Speaker 2: going into the crisis, right the off GM the regulator

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Speaker 2: in the UK only we've used the prices every few

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Speaker 2: months and so we knew that this issue was going

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Speaker 2: to happen at the time it happened. When the government

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Speaker 2: tried to intervene to keep prices down. Yeah, it's kind

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Speaker 2: of no surprise, is it coming. Maybe it needs to

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Speaker 2: be more frequent, but anyway, the regulators yes, every so often.

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Speaker 8: Yeah, no surprise, Caroline. But once again the center right

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Speaker 8: think tank, the Center for Policy, really drawing in on

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Speaker 8: the fact that this is keeping inflation artificially high and

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Speaker 8: it's not going to the consumer. It's not benefiting.

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Speaker 3: Time for quick word in the story in the Wall

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Speaker 3: Street journally around the area of ultra cheap stuff is

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Speaker 3: under threat.

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Speaker 8: And you know why that is because factories basically in

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Speaker 8: Asia are struggling to attract young workers, Steven, which is

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Speaker 8: bad news for us, the Western consumer, because why we're

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Speaker 8: so used to buying inexpensive goods. So what they are

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Speaker 8: trying to do in response to this crisis in Asian

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Speaker 8: factories is they trying to increase wages for their staff.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 2: I'm Caroline Hepka and.

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