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Speaker 1: Good morning. It's Tuesday, the eighth of August here in London.

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Speaker 1: This is the Blueberg Daybake podcast. I'm Caroline Hepki.

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Speaker 2: And I'm Stephen Carroll. Coming up today. UK politicians hit

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Speaker 2: back at HSBC over a week on China comments.

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Speaker 1: Maloney's surprise, Italy's government agrees a new tax on banks extra.

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Speaker 2: Profits and a shock exit at Tesla, the electric carmakers

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Speaker 2: CFO quits after thirteen years in the job.

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

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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 in Duncan Smith says Europe's biggest bank has an

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Speaker 2: awful lot to answer for. But former Business Secretary Vince

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Speaker 2: Cable says the HSBC executive had a point when he

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Speaker 2: said the UK was weak for following the US position

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Speaker 2: on China.

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Speaker 3: I think he does, yes, I mean a very good

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Speaker 3: example of it. And one eyed personal who was involved

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Speaker 3: in government is the issue of Huaweh. Effectively, the Americans

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Speaker 3: said no and we had to cave in, deferring accessively

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Speaker 3: to pressure from the United States. It's unhelpful to the

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Speaker 3: UK and not in our interests.

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Speaker 2: And you can hear that full interview with Vince Cable

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Speaker 2: on the Bloomberg UK Politics podcast Foreign Tacatory James Cleverly. Meanwhile,

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Speaker 2: it's currently trying to rearrange an official visit to China

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Speaker 2: after it was postponed from July.

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Speaker 1: Now, China's exports fell for a third consecutive month in July.

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Speaker 1: Bloomberg's Brian Curtis has more from Hong.

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Speaker 4: Kong export slump fourteen and a half percent from a

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Speaker 4: year earlier. That's the worst decline since February of twenty twenty.

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Speaker 4: Imports contracted twelve point four percent, more than double estimates

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Speaker 4: now left a trade surplus of eighty point six billion

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Speaker 4: dollars for the month. It's a double whammy for the economy.

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Speaker 4: Global demand is weak and so is domestic consumption. There's

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Speaker 4: a plethora of issues here, sagging business and consumer confidence,

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Speaker 4: a deflating property market, and a government that is wary

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Speaker 4: of large scale stimulus in Hong Kong. Brian Curtis Slomberg

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Speaker 4: Day Break.

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Speaker 2: Europe turning next to Moodies, which has downgraded ten US

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Speaker 2: banks as rising interest rates continued to squeeze lenders. Firms

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Speaker 2: that had ratings caught include Capital One, Bank of New York,

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Speaker 2: MELON and PNC. Financial Moodies pointed to hire funding costs,

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Speaker 2: potential regulatory capital weaknesses, and rising risks tied to commercial

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Speaker 2: property loans as reasons for the downgrade.

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Speaker 1: Now sticking with banks, the Italian government has approved a

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Speaker 1: surprise charge on extra profits to fund tax cuts and

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Speaker 1: support mortgage borrowers first time mortgage borrows. In particular, the

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Speaker 1: financial charge was slipped into a package of other measures,

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Speaker 1: including the grant of additional taxi licenses and foreign investment.

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Speaker 1: Prime Minister Georgia Maloney's unexpected move could bring over two

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Speaker 1: billion euros into state coffers. Italian bank profits surged in

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Speaker 1: the first half of rising interest rates boosted income from lending.

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Speaker 2: Here in the UK, wet weather is damping retail demand

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Speaker 2: as people see no reason to restock their summer wardrobes.

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Speaker 2: The latest figures from the British Retail Consortium show an

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Speaker 2: increase of just one point five percent in the four

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Speaker 2: weeks to the end of July. That compares with growth

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Speaker 2: of two point three percent in the same month last year.

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Speaker 2: At the BRC's director of Insight, Chris Hamer says spending

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Speaker 2: was depressed by damp weather.

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Speaker 5: Fewer shoppers are going onlined by their goods. They're returning

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Speaker 5: to the stores, but the wet weather from in July

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Speaker 5: really put shoppers off buying clothing and appliances to keep

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Speaker 5: cool like we saw last last year.

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Speaker 2: That was the BRC's Chris Hamer speaking there I. Meanwhile,

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Speaker 2: food sales were brighter as consumer confidence recovers from its

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Speaker 2: lowest point last summer. Sales rose by eight point four

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Speaker 2: percent over the three months to July, above annual growth

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Speaker 2: of seven point eight percent.

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Speaker 1: Now, Tesla's chief financial officers is stepping down after thirteen

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Speaker 1: years at the electric vehicle maker. Zachary Kirkcorn has been

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Speaker 1: a prominent voice for the company with shareholders and just

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Speaker 1: one of four executive officers at the firm. Kathy Woods

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Speaker 1: Arc Fund is a major investor in Tesla. Speaking to Bloomberg,

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Speaker 1: she says 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.

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Speaker 7: It's a tough, tough job.

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

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Speaker 6: for Zach.

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Speaker 1: Despite Kathy Woods comments, the surprise shakeup has raised new

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Speaker 1: questions about succession in the top ranks of Elon Musk's company.

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Speaker 1: Tesla shares fell one percent in New York after the announcement,

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Speaker 1: but Musk maybe too concerned. The stock price has more

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Speaker 1: than doubled so far this year.

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Speaker 2: I was sticking with news from the world's richest man.

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Speaker 2: Elon Musk's brain implant company, Neuralink, has raised two hundred

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Speaker 2: and eighty million dollars in new funding. The startup aims

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Speaker 2: to develop a digital device which can be inserted into

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Speaker 2: human skulls and interact with the brain. Neuralink recently received

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Speaker 2: approval from the US Food and Drug Administration to begin

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Speaker 2: conducting human clinical trials. Mosk hopes the implanted chips will

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Speaker 2: be able to augment brain power and allow humans to

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Speaker 2: compete with AI. Those are some of our top stories

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Speaker 2: on the program this morning.

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Speaker 1: Absolutely, the Q and A that was held between the

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Speaker 1: Bank of England's chief economist Hupil and MPs yesterday is

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Speaker 1: quite interesting. I think it'll be quite striking here in

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Speaker 1: the UK, where we've become to some extent accustomed to

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Speaker 1: very stiff competition amongst the supermarket retailers, and a lot

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Speaker 1: of the time in a falling price or price cuts

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Speaker 1: have been particularly notable, not of late, of course, given

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Speaker 1: a food price in inflation, but the Bank of ing,

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Speaker 1: this cheap economist is saying, effectively, we might see a

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Speaker 1: slowdown in the rate of food price inflation, but we're

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Speaker 1: not going to see cuts anytime soon. I think that

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Speaker 1: was the most remarkable thing out of that Q and A.

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Speaker 2: Yeah, I mean it's a Hugh Pill has quite frequently

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Speaker 2: had to deliver quite on popular messages from the Bank

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Speaker 2: of England and on the broader outlook for the UK

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Speaker 2: economy as well, and this is yet another one, is

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Speaker 2: that he's essentially saying prices have been going up and

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Speaker 2: they're not going to come down.

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Speaker 4: Yeah.

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Speaker 1: Look for food price inflation is at seventeen point three

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Speaker 1: percent in June. He's talking about the Bank of England

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Speaker 1: expecting a faulter around ten percent or below by the

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Speaker 1: end of the year that is ten percent food price inflation.

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Speaker 1: So yeah, it's still pretty staggering story for the UK.

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Speaker 2: Yeah, very cold comfort there from those comments from Hugh pill.

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Speaker 2: Let's get more now on the controversy around the comments

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Speaker 2: by HSBC's head of Public Affairs. But the UK's approached

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Speaker 2: relations with China, despite shared cauper Coles saying that his

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Speaker 2: comments were of a personal nature, they've drawn criticism from

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Speaker 2: some prominent politicians. Member Exchames Wilcock is with us now

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Speaker 2: for more on this story. James, good morning to you.

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Speaker 2: So we heard from Ian Duncan Smith a little bit earlier.

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Speaker 2: He's among those as criticized HSBC. What have these politicians

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Speaker 2: have been saying?

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Speaker 8: Well, I mean so a lot of China Hawk's Conservative Party.

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Speaker 8: Ian Duncan Smith in particular has called this kind of

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Speaker 8: the worst kind of apologism because this AHSBC employee was

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Speaker 8: a former diplomat and he's saying that in many ways,

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Speaker 8: this is kind of putting aside all the human rights

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Speaker 8: atrocities that China has committed. And Ian Duncan Smith is

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Speaker 8: won to make that point because since twenty twenty one

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Speaker 8: he has been sanctioned by China for speaking against human

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Speaker 8: rights abuses Indian Jang. So for him, he sees this

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Speaker 8: as this kind of view of a large international bank

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Speaker 8: that is putting aside these kind of issues with China

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Speaker 8: for the sake of its bottom line.

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Speaker 1: Yeah, okay, so Ian Duncan Smith. Yeah, and shared Coper Coles.

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Speaker 1: I mean he's had jobs, you know, in the British

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Speaker 1: diplomatic service in place like Saudi Arabia and Afghanistan and

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Speaker 1: lots of interesting places. The UK Politics podcast yesterday we

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Speaker 1: spoke to the former Business Secretary Vince Cable. He's a

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Speaker 1: former Liberal Democrat leader of course, who took quite a

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Speaker 1: different view.

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Speaker 8: Yes, it was a fascinating to you, Caroline, because Vince

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Speaker 8: pointed out that take Huawei an example where we as

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Speaker 8: the UK have to make difficult decisions. We look at

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Speaker 8: the risks of weighing up involving with someone like China,

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Speaker 8: we come to a compromise that Vince said it is

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Speaker 8: as someone who was involved in that decision. The US

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Speaker 8: then came in and said, actually that's a very big

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Speaker 8: natural securitist and then we stepped down. So he say, actually,

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Speaker 8: in his view, the former diplomat who works at HSBC

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Speaker 8: has a point and that we as the UK need

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Speaker 8: to be able to come to our own decisions about

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Speaker 8: these things, look at the risks and make a view.

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Speaker 8: And he referred to the sort of comments been as

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Speaker 8: paranoia and this argument that we are looking for spies

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Speaker 8: under our beds everywhere. So it's this argument about weighing

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Speaker 8: up the risks, the benefits and costs. And to say,

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Speaker 8: go back to Indougars Smith's comments, whether these are human

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Speaker 8: rights abuses or business decisions.

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Speaker 2: Now these were as Sherid Carbercils has put as comments

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Speaker 2: of a personal nature, but nonetheless it's dragged HSBC into

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Speaker 2: this controversy. What does it mean for the bank?

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Speaker 8: Well, I mean this points to the international nature of

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Speaker 8: ahs of PC and the difficulties that any international bank

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Speaker 8: faces and trying to balance these kind of risks. HBC

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Speaker 8: is located in London, Europe's largest bank and at times

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Speaker 8: has been a big hero for Britain. I mean, look

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Speaker 8: at SVB just this year it was the bank riding

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Speaker 8: to the government's rescue and bearding the things out. And

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Speaker 8: it's got massive European growth compared to its European peers,

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Speaker 8: but that growth is often tied to its massive age

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Speaker 8: of success. It's underwritten by the dollar by the US,

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Speaker 8: so it has to balance all these competing forces as

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Speaker 8: it delivers for its returns. So it's shelled as in Europe,

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Speaker 8: whilst those then balancing the countervailing political pressures it gets

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Speaker 8: from European politicians.

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Speaker 6: Yeah.

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Speaker 1: Absolutely, an immensely difficult position and sort of nuanced one

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Speaker 1: that they have to hold. James, thank you so much

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Speaker 1: for being with us this morning and discussing. Yeah, all

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Speaker 1: of the fallout around these HSBC comments that happened over

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Speaker 1: the summer in what was a closed door meeting for

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Speaker 1: which this particularly executive apologized, I mean he apologized you

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Speaker 1: for any offense that he had caused. And also you

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Speaker 1: did try to say that these are his personal views

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Speaker 1: rather than those either of the bank or actually of

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Speaker 1: his other significant role, which is as the British as

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Speaker 1: the chief of the British China Chamber of Comments, I think.

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Speaker 2: The Business Council. Yeah, and HSBC has also said in

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Speaker 2: a down statement again that these were the personal views

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Speaker 2: of mister kraiber Cole's too as well. Up next, METO

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Speaker 2: shifts towards commercial AI and the era of ultra cheap

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Speaker 2: stuff comes under a threat.

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Speaker 8: Now the paper review on blue Bird Daybreak Europe.

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

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Speaker 1: Fully Masie and go and joins us. Now for more.

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Speaker 1: Let's start with the Financial Times Leanne this headline Meta

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Speaker 1: disbands protein folding team in shift to Worldward's commercial AI.

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Speaker 7: What's this about, Caroline, Good morning to you.

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Speaker 9: Yes, this is an exclusive from the Financial Times, and

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Speaker 9: they're saying that Meta has axed this team that was

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Speaker 9: using artificial intelligence to create the very first database of

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Speaker 9: protein structures. So a group of about a dozen or

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Speaker 9: so scientists were employed by Meta on a project.

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Speaker 7: Called esm fold.

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Speaker 9: Let me just give you a brief outline of what

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Speaker 9: it does, which trains basically a large language model capable

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Speaker 9: of processing vast amount of biological data to predict to

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Speaker 9: predict protein structures. It's a bit of a mouthful. I'll

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Speaker 9: get there in the end. But those involved in the

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Speaker 9: team said the scientific project was really in place to

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Speaker 9: develop new drugs and treatments when it came to our

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Speaker 9: health and look at different structures that we do have.

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Speaker 9: But the move has actually been canceled, according to the

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Speaker 9: Financial Times. And basically what they're saying is this shows

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Speaker 9: the desire of Meta to now abandon this research and

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Speaker 9: really concentrate on AI projects that will generate bigger revenue.

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Speaker 9: And as we know, so many of the tech companies

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Speaker 9: are investing hugely in artificial intelligence. And the CEO Mark

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Speaker 9: Zuckerberg also said earlier it's a year of efficiency for Meta.

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Speaker 9: We do know that Meta has undergone significant restructuring in

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Speaker 9: recent months. That has been something that the company has

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Speaker 9: been focused on.

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Speaker 7: But now we know they've acced this.

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Speaker 9: Massive team that's behind these protein protein structures.

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Speaker 2: Yes, really interesting story there from Metal. Let's go to

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Speaker 2: the Telegraph next. Lee on the energy price cap keeping

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Speaker 2: bills artificially high. This is warning from the think tank.

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Speaker 9: Yes it is indeed so the center right think tank,

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Speaker 9: the Center for Policy Studies says the government is effectively

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Speaker 9: set the market price for energy, and the new report

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Speaker 9: claims off gems energy price cap is actually costing us

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Speaker 9: money and it's also driving up inflation. So what they

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Speaker 9: want is minister ministers to basically at the limits and

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Speaker 9: allow market rates to dictate prices.

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Speaker 7: So they are arguing that the price.

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Speaker 9: Cap prevents us everyone the people from accessing cheaper deals.

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Speaker 7: They're keeping it high.

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Speaker 9: And the cap sets the maximum price energy companies can

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Speaker 9: charge households per unit of energy, and it is based

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Speaker 9: on the wholesale cost of power.

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Speaker 7: But the thing is it's only.

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Speaker 9: Reviewed every three months, so basically, if there's a change

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Speaker 9: in the wholesale cost, the households aren't getting the benefit

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Speaker 9: of that. And economists are blaming the price cap for

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Speaker 9: prolonging the pain that we're seeing in Britain because it

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Speaker 9: just takes too long for the wholesale price changes to

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Speaker 9: really filter through into home and for homes to benefit

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Speaker 9: and also have that extra money to spend in the economy.

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Speaker 9: So really criticism from the Center of Policy Studies Caroline

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Speaker 9: and Stephen about the energy price cap keeping our bills

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Speaker 9: artificially high.

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Speaker 6: Yeah.

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Speaker 1: Absolutely, Look, this was always inevitable, wasn't it. I mean,

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Speaker 1: this was the whole argument that we had at the

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Speaker 1: beginning when energy prices suddenly soared, is that the price

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Speaker 1: cap and the review that off GM does the regulator

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Speaker 1: in the UK, it only happens every few months, as

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Speaker 1: six months, and I think they then brought it down

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Speaker 1: to three months in order to try to overcome this issue.

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Speaker 1: You know that the prices were you know that it's

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Speaker 1: a delayed effect basically of everything. So now you know,

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Speaker 1: on the way up we had it and now we

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Speaker 1: have it on the way back down as well when

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Speaker 1: it comes to prices. Okay, the Wall Street Journal has

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Speaker 1: the story the era of ultra chiefs cheap stuff is

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Speaker 1: under threat.

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Speaker 7: Under threat, Yes it is, Caroline.

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Speaker 9: Just imagine we've become so used to things so as

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Speaker 9: well and consumers, we've almost become accustomed to inexpensive goods.

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Speaker 9: And this is basically what the Wall Street Journal is saying.

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Speaker 9: It's saying factories across Asia are now really struggling to

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Speaker 9: attract young workers. So the disappearance of the ultra cheap

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Speaker 9: Asian factory labor is emerging as the latest test of

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Speaker 9: the globalized manufacturing model. I find this really fascinating what

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Speaker 9: the FT's saying. And basically, in response to this crisis,

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Speaker 9: to try and attract young people into the factories, you know,

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Speaker 9: factories across Asia have had to do lots of different things.

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Speaker 7: They've had to increase wages.

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Speaker 9: They've had to also improve cafeteria areas to attract people

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Speaker 9: free coffees, and build kindergartens within the company's for children

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Speaker 9: so that their parents can come to work and the

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Speaker 9: knock on effectedness. As the toy and game maker has

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Speaker 9: Bro they are of saying that they shortages in Vietnam

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Speaker 9: and China, they've had to push up their costs of goods.

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Speaker 9: The Barbie maker Mattel, I'm sure Barbie's really back in

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Speaker 9: fashion again since the movie.

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Speaker 7: They also grappling with higher costs, and Nike.

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Speaker 9: Which makes most of its shoes in Asia, also flagged

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Speaker 9: in June that its product costs have gone up because

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Speaker 9: of higher labor expenses.

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

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 1: I'm Caroline Hipka and.

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