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Speaker 1: Good morning.

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Speaker 2: It's Thursday, the seventh of September here in London. This

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Speaker 2: is the Bloomberg Daybreakurate podcast. I'm Caroline Hepkin.

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Speaker 3: And I'm Stephen Carroll. Coming up today, the UK's Labor

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Speaker 3: Party makes an increasingly aggressive bid to take the mantle

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Speaker 3: of the Party of Business. We'll bring you our interview

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Speaker 3: with the Shadow Business Secretary.

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Speaker 2: Apple's shares full on the news that Chinese officials are

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Speaker 2: bad from using iPhones.

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Speaker 3: At work, and after pumping billions into sports, tourism and movies,

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Speaker 3: Saudi Arabia has now set its sights on a new

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Speaker 3: source of wealth and influence.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 3: The Labor Party is making an increasingly aggressive bid to

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Speaker 3: claim the Conservatives mantle as the Party of Business. Speaking

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Speaker 3: to Boomberg's UK Politics podcast, the Shadow Business and Trade

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Speaker 3: Secretary Jonathan Reynolds was clear on what he believes are

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Speaker 3: the risks for companies.

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Speaker 4: The policy's Labour is offering across the board. When it

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Speaker 4: comes to the economy and to business, it is simply

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Speaker 4: a far more compelling offer than anything the government have

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Speaker 4: put forward. The risk premium for most businesses is a

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Speaker 4: continuation of the Conservative government rather than a change to

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Speaker 4: Labor Party, and we work very hard at that, but

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Speaker 4: obviously we need to continue to not be complacent, to

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Speaker 4: continue that work, to work on the detail which is

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Speaker 4: so important in making these policies work, and will absolutely

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Speaker 4: be continuing to do that.

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Speaker 3: Jarathur Radolds went on to say that Labour's plan for

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Speaker 3: an Industrial Strategy Council would give their plans for businesses

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Speaker 3: in institutional strength and independence if they win power. You

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Speaker 3: can hear that full interview on the latest edition of

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Speaker 3: the UK Politics podcast on Apple, Spotify or wherever you listen.

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Speaker 2: The Bank of England's governor says that UK interest rates

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Speaker 2: are near the peak. Andrew Bailey told MP's previous hikes

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Speaker 2: are still feeding into the economy.

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Speaker 5: Many of the indicators are now moving as we would

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Speaker 5: expect them to move and are signaling that the fall

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Speaker 5: and inflation will continue and as I've said a number

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Speaker 5: of times, I think will be quite marked by the

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Speaker 5: end of the further, I think we are much nearer

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Speaker 5: and at the top of the cycle.

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Speaker 2: The pound fell to a three month low against the

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Speaker 2: US dollar on Bailey's dubvish remarks. The Bank of England

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Speaker 2: governor added that major revisions upwards to official UK GDP

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Speaker 2: growth helped to explain the inflation surprises we've seen in

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Speaker 2: the past year.

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Speaker 3: The US economy and labor market slowed in July and August.

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Speaker 3: The Federal Reserve Beige Book survey of businesses suggest monetary

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Speaker 3: policy is affecting demand. Boston Fed President Susan Collins says

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Speaker 3: that doesn't mean traders should expect rate cuts.

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Speaker 6: This phase of our policy cycle requires patients any holistic

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Speaker 6: data assessment. As we stayed in of course, I expect

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Speaker 6: that we will need to hold rates at a restrictive

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Speaker 6: levels for some time, and while we may be there

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Speaker 6: or even have the key for policy rates, further takening

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Speaker 6: could be warranted depending on data.

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Speaker 3: Susan Colin's addity still expects an economic slowdown. Although the

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Speaker 3: Boston Fed chief doesn't vote this year, she sees rates

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Speaker 3: remaining at high levels for some time well.

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Speaker 2: US regional banks may need to borrow sixty three billion

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Speaker 2: dollars to comply with new capital requirements film regulators. Analysis

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Speaker 2: by Bloomberg Intelligence found that eighteen lenders might now need

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Speaker 2: to raise significant additional debt to abide by the rules,

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Speaker 2: but the research also reveals the extra capital requirement by

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Speaker 2: the Federal Deposit Insurance Corporation and the Federal Reserve might

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Speaker 2: not be enough to prevent future failures.

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Speaker 3: Apple and Stuff at its worst stock decline in a

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Speaker 3: month following news that Chinese government agencies have buyed staff

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Speaker 3: from using iPhones at work. China is the tech giant's

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Speaker 3: largest international market, and the firm also relies heavily on

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Speaker 3: the country as a manufacturing partner. Our chief correspondent Mark

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Speaker 3: German spells out why investors have been spooked by the news.

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Speaker 7: First, it's the Chinese government that doesn't want their employees

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Speaker 7: using these devices. Is there something that's going to happen

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Speaker 7: next in terms of the Chinese consumer being able to

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Speaker 7: buy the Apple devices? Are there going to be limits?

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Speaker 7: There is the Chinese government going to begin clamping down

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Speaker 7: on Apple's ability to sell, offer services, offer retail stores,

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Speaker 7: offer Apple care and support. Right so, there clearly is

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Speaker 7: a potential domino effect that I think investors are more

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Speaker 7: afraid of, rather than just lost sales to Chinese government workers.

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Speaker 3: Mark German also points out that in twenty twenty two,

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Speaker 3: Beijing ordered some agencies and firms to replace foreign branded

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Speaker 3: devices with domestic alternatives within two years.

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Speaker 2: Four casts say that there will be no let up

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Speaker 2: in the current heat wave gripping much of the UK.

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Speaker 2: Temperatures could sort a thirty three degree celsius on Saturday

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Speaker 2: in Britain, while Europe's Earth Observation Agency says that this

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Speaker 2: summer was the warmest on record. Meanwhile, Texas has announced

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Speaker 2: that it's now close to rolling blackouts as sawing temperatures

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Speaker 2: lead to a surge in energy use. The state has

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Speaker 2: declared its first power emergency since a deadly winter storm

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Speaker 2: two years ago, which led to major power cuts. Something

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Speaker 2: a little lighter, So her house wants to crack America.

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Speaker 2: Have you ever been to a saye, her house?

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Speaker 3: I have with somebody else?

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Speaker 5: Was good?

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Speaker 3: I mean special life, Yeah exactly. I mean, look at

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Speaker 3: this is something they're extremely popular in New York. This

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Speaker 3: is one of those kind of British concepts that has

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Speaker 3: worked really really well in big cities in America. But

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Speaker 3: the idea now is they want to expand across the country.

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Speaker 3: Twenty new houses in the America's by twenty twenty five.

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Speaker 3: And it's something that our colleague Sabam Dings has been

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Speaker 3: talking to Andrew Carney, who's the CEO of Soho House

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Speaker 3: about he only took over in November, actually a CEO,

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Speaker 3: which is interesting because he came from Anthropology the fashion

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Speaker 3: brand to Soho House as well, and this is part

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Speaker 3: of the expansion of it. So they want to open

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Speaker 3: in They've launched recently in places like Los Angeles, Miami, Nashville,

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Speaker 3: and Austin in the US, but they're looking now at

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Speaker 3: places that people because people have moved out of the

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Speaker 3: likes of New York and LA during the pandemic. They

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Speaker 3: see a market for Soho Houses elsewhere in the US too.

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Speaker 3: They're also going to try and replicate the success of

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Speaker 3: Soho Farmhouse, which I know our colleagues, including Lizzie Burdon

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Speaker 3: looking out across the studio at the moment, has been

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Speaker 3: to for work. I must point out she went to

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Speaker 3: a conference there that she reported to us from. But

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Speaker 3: they're playing a similar idea in Riinberger, New York as well.

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Speaker 2: So, yeah, this is a sort of great British expert.

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Speaker 2: Well I suppose you're yeah, the rooftop swimming pool at

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Speaker 2: Soho House in New York. Yeah, it's it's yeah, well

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Speaker 2: known for networking and much more.

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Speaker 6: Yeah.

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Speaker 2: Anyway, nice little story about so her house that I

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Speaker 2: thought we'd bring to you. But look to business, shall

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Speaker 2: we because the comments from Labour's shadow Business and Trade

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Speaker 2: secretary about how businesses are viewing should see a risk

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Speaker 2: premium around the Conservatives actually winning the next election. Our

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Speaker 2: UK correspondent Lizzie Burdner's here in studio. Great to have

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Speaker 2: you look. Jonathan Reynolds did an extended interview with us

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Speaker 2: over about twenty minutes, touched on a huge number of

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Speaker 2: topics around Labor's ambitious, as he called it, plan to

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Speaker 2: get the most sustained growth for Britain out of any

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Speaker 2: G seven country if they are elected in the general

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Speaker 2: election that we're expecting in.

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Speaker 1: Well by the end of next year.

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Speaker 2: Your impressions of what he was talking about, I mean,

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Speaker 2: I thought this was really very interesting and quite aggressive

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Speaker 2: positioning for the Labor Party.

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Speaker 4: Yeah.

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Speaker 8: It was a continuation of this smoked salmon and scrambled

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Speaker 8: eggs offensive that they've been on to try and woo

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Speaker 8: the city. So when you asked about what the focus

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Speaker 8: is going to be at Labor Party conference, he said

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Speaker 8: that Labour's going to focus on small business. He said

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Speaker 8: the risk premium for businesses is more about a Tory

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Speaker 8: government continuing rather than a switch to labor. That was

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Speaker 8: the key line for me. But it was also interesting

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Speaker 8: that he said he sees an Industrial Strategy Council operating

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Speaker 8: on the same model as the Office for Budget Responsibility.

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Speaker 8: Now for me on that the OBR is actually incredibly

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Speaker 8: small and some would argue underfunded compared to its international

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Speaker 8: equivalents in the Netherlands for example. And remember it was

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Speaker 8: effectively sidelined at the time of the mini budgets. So

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Speaker 8: do they need to put more weight behind this potential

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Speaker 8: in Strategy council if they want to be serious about

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Speaker 8: the growth picture? Remember as well, Jonathan Reynolds takes in

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Speaker 8: trade into his brief alongside business to mirror Kemy Baidenock,

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Speaker 8: who also has an expanded brief, he shadows her. And

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Speaker 8: the key point was that he wants to improve the

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Speaker 8: relationship with the EU. Obviously, you might say it's good

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Speaker 8: that you pressed him on how he would do that,

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Speaker 8: specifically because I'm sure our listeners want to know. So

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Speaker 8: he said that there would be a healthy mobility of labor,

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Speaker 8: but not quite revisiting freedom of movement. He said that

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Speaker 8: there would be more mutual recognition of professional qualifications. He

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Speaker 8: wants agreement on these health checks, which of course make

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Speaker 8: masses of paperwork for businesses trading across the borders. And

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Speaker 8: finally he said about rejoining horizons this science program ninety

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Speaker 8: six point five billion euros it's worth And indeed it

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Speaker 8: was confirmed in a Bloomberg scoop later on that that's

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Speaker 8: exactly what the Tories are already going to do.

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Speaker 3: That was something that has been talk on going about

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Speaker 3: for quite a long time. How significant is it that

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Speaker 3: that has now been It seems a dune deal.

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Speaker 8: Yeah, only minor details to be ironed out. Our reporters

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Speaker 8: tell us we're expecting an announcement as soon as this week.

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Speaker 8: But this was a major concern. Remember, Britain was one

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Speaker 8: of the biggest beneficiaries of this funding. Before leaving the

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Speaker 8: EU fully in twenty twenty, officials had been in the backdrop,

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Speaker 8: in the background, working on a backup plan called Pioneer,

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Speaker 8: just in case the UK was shut out permanently. It

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Speaker 8: was that important. And so this means that the close

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Speaker 8: ties between Europe's top research hubs and the ones in

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Speaker 8: Britain will be able to properly resume. But it has

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Speaker 8: wider political significance as well. It signifies the improved relationship

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Speaker 8: between the EU and the UK. And I saw that

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Speaker 8: with my own eyes when I was in Paris meet

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Speaker 8: us away from the bromance that is the relationship between

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Speaker 8: Rischi Sunac and Emmanuel Macon. You'll remember that Ursula Vonderlon

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Speaker 8: called Rishie Sunac dear Rishi, and here we have it

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Speaker 8: a manifestation of that warmth in policy we expect. So

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Speaker 8: the Sunac government very clearly aware that this is something

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Speaker 8: important to businesses, important to the science community and labor.

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Speaker 8: It seems, is going to have to do more to

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Speaker 8: distinguish its position on Europe when and if you have

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Speaker 8: progress from the government like this.

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Speaker 1: Yeah. Absolutely.

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Speaker 2: It was a really excellent interview to hear sort of

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Speaker 2: across the waterfront Fomo Carolina.

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Speaker 1: It was really good.

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Speaker 2: And the other thing that I thought was very interesting

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Speaker 2: was on the CMA, the Competition and Markets Authority that

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Speaker 2: actually Reynolds was quite positive on how the CMA had

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Speaker 2: handled the Microsoft activision deal. You know, again another area

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Speaker 2: where the UK wants to be a regulator, but it's

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Speaker 2: dealing with some of the biggest businesses in the world.

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Speaker 2: And you know the CMA has come in for criticism

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Speaker 2: and how it has handled competition in the past, but

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Speaker 2: Reynolds gave it his backing. It would seem thought that

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Speaker 2: was fascinating. Just lastly, there was also of course the

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Speaker 2: Bank of England Governor Andrew Belly, who was speaking to MPs.

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Speaker 2: This is the first week back for parliamentarians and he

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Speaker 2: gave us a little glimpse into a policy around intrust

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Speaker 2: rates in the UK.

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Speaker 8: Yeah, clearly markets reddit as a Dubvish tilt guilts with

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Speaker 8: the outlier in the bond market yesterday, so two year

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Speaker 8: yields declining, the pound falling to its lowest in three months.

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Speaker 8: In response to this testimony from Andrew Bailey, so he

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Speaker 8: said that rates are probably near the top of the

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Speaker 8: cycle because a marked drop in inflation is likely this year.

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Speaker 8: So it's the clearest signal yet that the bank is

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Speaker 8: worried that further tightening could cause an unnecessarily harsh, harsh recession.

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Speaker 8: In other words, we've got to wait for those previous

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Speaker 8: rate hikes to feed through to the economy when people

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Speaker 8: refinance their mortgages. But if there's a pause at the

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Speaker 8: next meeting. The question then becomes when is the bank

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Speaker 8: going to start cutting rates? And if you listen to Bailey,

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Speaker 8: it seemed he supports this idea of a table mountain

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Speaker 8: model that was put forward by the chief economist, Hugh

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Speaker 8: pill in other words, leaving rates high for longer.

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Speaker 3: Okay, Bluzie Bergen are UK correspond and thank you very much?

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Speaker 1: Yeah, absolutely so.

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Speaker 2: That's the Jonathan Reynolds interview and all the comments around

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Speaker 2: the UK interest rate picture from the Bank of England

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Speaker 2: Governor Lizzie Many many thanks. Want to turn our attention though,

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Speaker 2: elsewhere this morning to a key bit of reporting. Saudi

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Speaker 2: Arabia is looking to move its economy beyond well, not

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Speaker 2: just with big investments in sports in tourism, but also

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Speaker 2: to dirty old mining, and our Saudi Arabia Bureau chief

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Speaker 2: Matthew Martin joins us now for more on this subject. Matthew,

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Speaker 2: good morning, thanks for being with us. Why is Saudi

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Speaker 2: Arabia making this big push into mining?

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Speaker 9: Good morning? Yeah, as you say, I mean the Saudi

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Speaker 9: crawn prince of how we've been Salman has been throwing

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Speaker 9: a lot of cash around in various different industries over

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Speaker 9: the past couple of years as part of this plan

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Speaker 9: to diversify the economy, and one of the sort of

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Speaker 9: pillars of that that they've identified now is mining. They

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Speaker 9: the government estimates that there is one point three trillion

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Speaker 9: dollars worth of various different minerals buried in the Saudi

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Speaker 9: deserts which have sat there largely ignored for many decades,

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Speaker 9: just because the oil industry has been so big and

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Speaker 9: so profitable and there hasn't been so much demand for

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Speaker 9: these metals in the past that now they're at this

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Speaker 9: moment where first of all, they want to diversify the

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Speaker 9: economy and find other sources of income beyond oil. But secondly,

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Speaker 9: these commodities, the energy transition accelerates, these commodities are in

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Speaker 9: much higher demand than they have been in the past,

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Speaker 9: so it's much more valuable to time and put some

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Speaker 9: effort into extracting them. And so we're sort of at

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Speaker 9: the beginning stages of this process of trying to attract

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Speaker 9: companies to come in and start to exploit them.

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Speaker 3: Can said Arabia Bias seat at the table for the

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Speaker 3: mining industry in the way that it has in other sectors.

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Speaker 9: Well, I mean, look, it's a good question because it

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Speaker 9: has it has been able to throw its weight around

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Speaker 9: and use the Sovereign Wealth Fund. The pis to you know,

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Speaker 9: make itself very very well known internationally and to become

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Speaker 9: renowned as sort of a big global investor. The mining

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Speaker 9: industry is a bit more difficult because you know, domestically,

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Speaker 9: mindes take a long time to develop. It's you know,

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Speaker 9: if you have the resources, you find the partners that

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Speaker 9: want to develop it, then it's going to be you know,

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Speaker 9: it can be up to ten years to develop some

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Speaker 9: of these things to commercial production. We went out and

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Speaker 9: saw what the biggest exploration block a few weeks ago,

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Speaker 9: which is being developed now, but they're not going to

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Speaker 9: reach the beginning of commercial production for another couple of years.

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Speaker 9: Peak production will be another few years later than that,

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Speaker 9: so it's going to be more toward sort of twenty thirty.

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Speaker 9: So this is a big long term project. On the

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Speaker 9: flip side, though, what one thing that the government can

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Speaker 9: do and is starting to do, is to use the

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Speaker 9: Sovereign Wealth Fund to buy up and invest in mining

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Speaker 9: resources internationally. And I think that's where we're going to

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Speaker 9: see the most sort of the biggest international splash as

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Speaker 9: the government looks to throw its money around in the

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Speaker 9: big global mining projects.

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Speaker 2: Yeah.

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Speaker 1: Absolutely.

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Speaker 2: In terms of the international firms that are coming to Saudi,

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Speaker 2: give us a flavor of the names.

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Speaker 9: Well, what we've seen is that the saudis host to

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Speaker 9: this big mining conference every January, which is now attracting

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Speaker 9: all of the biggest names in the mining industries. The

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Speaker 9: sort of the CEOs of the Glen Calls and the

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Speaker 9: Rio Tinto's and the bhps are all coming in and

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Speaker 9: turning up at the conference. What we're not seeing though,

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Speaker 9: is when the Sauis are doing the auctions of exploration

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Speaker 9: blocks and of mining licenses, is we're not seeing those

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Speaker 9: companies want to come in and bid for them. It's

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Speaker 9: sort of going to some of the more sort of

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Speaker 9: smaller and mid tier firms. So this is perhaps sort

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Speaker 9: of a reflectant of how much the how much the

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Speaker 9: big global miners are still taking a very cautious approach

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Speaker 9: to Saudi's ambitions so far.

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