WEBVTT - HSBC Faces Political Pressure & A Shock Exit At Tesla

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

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<v Speaker 1>This is the Blueberg Daybake podcast. I'm Caroline Hepki.

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<v Speaker 2>And I'm Stephen Carroll. Coming up today. UK politicians hit

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<v Speaker 2>back at HSBC over a week on China comments.

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

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<v Speaker 2>Profits and a shock exit at Tesla, the electric carmakers

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<v Speaker 2>CFO quits after thirteen years in the job.

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<v Speaker 1>Let's start with a roundup of our top stories.

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<v Speaker 2>UK politicians have rounded on HSBC after the bank's head

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<v Speaker 2>of public affairs criticized Britain's China policy. Former Conservative Party

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<v Speaker 2>leader in Duncan Smith says Europe's biggest bank has an

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<v Speaker 2>awful lot to answer for. But former Business Secretary Vince

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<v Speaker 2>Cable says the HSBC executive had a point when he

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<v Speaker 2>said the UK was weak for following the US position

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<v Speaker 2>on China.

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<v Speaker 3>I think he does, yes, I mean a very good

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<v Speaker 3>example of it. And one eyed personal who was involved

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<v Speaker 3>in government is the issue of Huaweh. Effectively, the Americans

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<v Speaker 3>said no and we had to cave in, deferring accessively

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<v Speaker 3>to pressure from the United States. It's unhelpful to the

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<v Speaker 3>UK and not in our interests.

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<v Speaker 2>And you can hear that full interview with Vince Cable

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<v Speaker 2>on the Bloomberg UK Politics podcast Foreign Tacatory James Cleverly. Meanwhile,

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<v Speaker 2>it's currently trying to rearrange an official visit to China

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<v Speaker 2>after it was postponed from July.

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

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<v Speaker 1>Bloomberg's Brian Curtis has more from Hong.

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<v Speaker 4>Kong export slump fourteen and a half percent from a

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<v Speaker 4>year earlier. That's the worst decline since February of twenty twenty.

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<v Speaker 4>Imports contracted twelve point four percent, more than double estimates

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<v Speaker 4>now left a trade surplus of eighty point six billion

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<v Speaker 4>dollars for the month. It's a double whammy for the economy.

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<v Speaker 4>Global demand is weak and so is domestic consumption. There's

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<v Speaker 4>a plethora of issues here, sagging business and consumer confidence,

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<v Speaker 4>a deflating property market, and a government that is wary

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<v Speaker 4>of large scale stimulus in Hong Kong. Brian Curtis Slomberg

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<v Speaker 4>Day Break.

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<v Speaker 2>Europe turning next to Moodies, which has downgraded ten US

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<v Speaker 2>banks as rising interest rates continued to squeeze lenders. Firms

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<v Speaker 2>that had ratings caught include Capital One, Bank of New York,

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<v Speaker 2>MELON and PNC. Financial Moodies pointed to hire funding costs,

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<v Speaker 2>potential regulatory capital weaknesses, and rising risks tied to commercial

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<v Speaker 2>property loans as reasons for the downgrade.

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<v Speaker 1>Now sticking with banks, the Italian government has approved a

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<v Speaker 1>surprise charge on extra profits to fund tax cuts and

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<v Speaker 1>support mortgage borrowers first time mortgage borrows. In particular, the

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<v Speaker 1>financial charge was slipped into a package of other measures,

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<v Speaker 1>including the grant of additional taxi licenses and foreign investment.

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<v Speaker 1>Prime Minister Georgia Maloney's unexpected move could bring over two

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<v Speaker 1>billion euros into state coffers. Italian bank profits surged in

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<v Speaker 1>the first half of rising interest rates boosted income from lending.

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<v Speaker 2>Here in the UK, wet weather is damping retail demand

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<v Speaker 2>as people see no reason to restock their summer wardrobes.

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<v Speaker 2>The latest figures from the British Retail Consortium show an

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<v Speaker 2>increase of just one point five percent in the four

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<v Speaker 2>weeks to the end of July. That compares with growth

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<v Speaker 2>of two point three percent in the same month last year.

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<v Speaker 2>At the BRC's director of Insight, Chris Hamer says spending

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<v Speaker 2>was depressed by damp weather.

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<v Speaker 5>Fewer shoppers are going onlined by their goods. They're returning

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<v Speaker 5>to the stores, but the wet weather from in July

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<v Speaker 5>really put shoppers off buying clothing and appliances to keep

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<v Speaker 5>cool like we saw last last year.

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

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<v Speaker 2>food sales were brighter as consumer confidence recovers from its

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<v Speaker 2>lowest point last summer. Sales rose by eight point four

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<v Speaker 2>percent over the three months to July, above annual growth

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<v Speaker 2>of seven point eight percent.

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<v Speaker 1>Now, Tesla's chief financial officers is stepping down after thirteen

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<v Speaker 1>years at the electric vehicle maker. Zachary Kirkcorn has been

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<v Speaker 1>a prominent voice for the company with shareholders and just

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<v Speaker 1>one of four executive officers at the firm. Kathy Woods

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<v Speaker 1>Arc Fund is a major investor in Tesla. Speaking to Bloomberg,

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<v Speaker 1>she says she expects a seamless transition.

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<v Speaker 6>We will miss him, but his successor has been with

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<v Speaker 6>Tesla right underneath him since twenty eighteen, so he was

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<v Speaker 6>put through the fires. Remember in twenty eighteen nineteen, many

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<v Speaker 6>analysts were saying that Tesla was going bankrupt, and so

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<v Speaker 6>he's been there, He's gone through the fire, and you know,

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<v Speaker 6>it's a tough job.

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<v Speaker 7>It's a tough, tough job.

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<v Speaker 6>So I guess thirteen years was a really good run

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<v Speaker 6>for Zach.

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<v Speaker 1>Despite Kathy Woods comments, the surprise shakeup has raised new

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

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<v Speaker 1>Tesla shares fell one percent in New York after the announcement,

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<v Speaker 1>but Musk maybe too concerned. The stock price has more

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<v Speaker 1>than doubled so far this year.

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<v Speaker 2>I was sticking with news from the world's richest man.

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<v Speaker 2>Elon Musk's brain implant company, Neuralink, has raised two hundred

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<v Speaker 2>and eighty million dollars in new funding. The startup aims

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<v Speaker 2>to develop a digital device which can be inserted into

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<v Speaker 2>human skulls and interact with the brain. Neuralink recently received

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<v Speaker 2>approval from the US Food and Drug Administration to begin

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<v Speaker 2>conducting human clinical trials. Mosk hopes the implanted chips will

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<v Speaker 2>be able to augment brain power and allow humans to

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<v Speaker 2>compete with AI. Those are some of our top stories

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<v Speaker 2>on the program this morning.

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<v Speaker 1>Absolutely, the Q and A that was held between the

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<v Speaker 1>Bank of England's chief economist Hupil and MPs yesterday is

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<v Speaker 1>quite interesting. I think it'll be quite striking here in

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<v Speaker 1>the UK, where we've become to some extent accustomed to

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<v Speaker 1>very stiff competition amongst the supermarket retailers, and a lot

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<v Speaker 1>of the time in a falling price or price cuts

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<v Speaker 1>have been particularly notable, not of late, of course, given

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<v Speaker 1>a food price in inflation, but the Bank of ing,

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<v Speaker 1>this cheap economist is saying, effectively, we might see a

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<v Speaker 1>slowdown in the rate of food price inflation, but we're

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<v Speaker 1>not going to see cuts anytime soon. I think that

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<v Speaker 1>was the most remarkable thing out of that Q and A.

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<v Speaker 2>Yeah, I mean it's a Hugh Pill has quite frequently

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<v Speaker 2>had to deliver quite on popular messages from the Bank

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<v Speaker 2>of England and on the broader outlook for the UK

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<v Speaker 2>economy as well, and this is yet another one, is

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<v Speaker 2>that he's essentially saying prices have been going up and

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<v Speaker 2>they're not going to come down.

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<v Speaker 4>Yeah.

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<v Speaker 1>Look for food price inflation is at seventeen point three

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<v Speaker 1>percent in June. He's talking about the Bank of England

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<v Speaker 1>expecting a faulter around ten percent or below by the

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<v Speaker 1>end of the year that is ten percent food price inflation.

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

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<v Speaker 2>Yeah, very cold comfort there from those comments from Hugh pill.

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<v Speaker 2>Let's get more now on the controversy around the comments

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<v Speaker 2>by HSBC's head of Public Affairs. But the UK's approached

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<v Speaker 2>relations with China, despite shared cauper Coles saying that his

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<v Speaker 2>comments were of a personal nature, they've drawn criticism from

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<v Speaker 2>some prominent politicians. Member Exchames Wilcock is with us now

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<v Speaker 2>for more on this story. James, good morning to you.

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<v Speaker 2>So we heard from Ian Duncan Smith a little bit earlier.

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<v Speaker 2>He's among those as criticized HSBC. What have these politicians

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<v Speaker 2>have been saying?

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

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<v Speaker 8>Ian Duncan Smith in particular has called this kind of

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<v Speaker 8>the worst kind of apologism because this AHSBC employee was

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<v Speaker 8>a former diplomat and he's saying that in many ways,

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<v Speaker 8>this is kind of putting aside all the human rights

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<v Speaker 8>atrocities that China has committed. And Ian Duncan Smith is

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<v Speaker 8>won to make that point because since twenty twenty one

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<v Speaker 8>he has been sanctioned by China for speaking against human

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<v Speaker 8>rights abuses Indian Jang. So for him, he sees this

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<v Speaker 8>as this kind of view of a large international bank

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<v Speaker 8>that is putting aside these kind of issues with China

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<v Speaker 8>for the sake of its bottom line.

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<v Speaker 1>Yeah, okay, so Ian Duncan Smith. Yeah, and shared Coper Coles.

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<v Speaker 1>I mean he's had jobs, you know, in the British

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<v Speaker 1>diplomatic service in place like Saudi Arabia and Afghanistan and

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<v Speaker 1>lots of interesting places. The UK Politics podcast yesterday we

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<v Speaker 1>spoke to the former Business Secretary Vince Cable. He's a

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<v Speaker 1>former Liberal Democrat leader of course, who took quite a

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<v Speaker 1>different view.

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<v Speaker 8>Yes, it was a fascinating to you, Caroline, because Vince

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<v Speaker 8>pointed out that take Huawei an example where we as

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<v Speaker 8>the UK have to make difficult decisions. We look at

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<v Speaker 8>the risks of weighing up involving with someone like China,

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<v Speaker 8>we come to a compromise that Vince said it is

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<v Speaker 8>as someone who was involved in that decision. The US

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<v Speaker 8>then came in and said, actually that's a very big

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<v Speaker 8>natural securitist and then we stepped down. So he say, actually,

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<v Speaker 8>in his view, the former diplomat who works at HSBC

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<v Speaker 8>has a point and that we as the UK need

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<v Speaker 8>to be able to come to our own decisions about

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<v Speaker 8>these things, look at the risks and make a view.

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<v Speaker 8>And he referred to the sort of comments been as

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<v Speaker 8>paranoia and this argument that we are looking for spies

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<v Speaker 8>under our beds everywhere. So it's this argument about weighing

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<v Speaker 8>up the risks, the benefits and costs. And to say,

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<v Speaker 8>go back to Indougars Smith's comments, whether these are human

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<v Speaker 8>rights abuses or business decisions.

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<v Speaker 2>Now these were as Sherid Carbercils has put as comments

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<v Speaker 2>of a personal nature, but nonetheless it's dragged HSBC into

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<v Speaker 2>this controversy. What does it mean for the bank?

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<v Speaker 8>Well, I mean this points to the international nature of

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<v Speaker 8>ahs of PC and the difficulties that any international bank

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<v Speaker 8>faces and trying to balance these kind of risks. HBC

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<v Speaker 8>is located in London, Europe's largest bank and at times

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<v Speaker 8>has been a big hero for Britain. I mean, look

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<v Speaker 8>at SVB just this year it was the bank riding

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<v Speaker 8>to the government's rescue and bearding the things out. And

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<v Speaker 8>it's got massive European growth compared to its European peers,

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<v Speaker 8>but that growth is often tied to its massive age

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<v Speaker 8>of success. It's underwritten by the dollar by the US,

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<v Speaker 8>so it has to balance all these competing forces as

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

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<v Speaker 8>whilst those then balancing the countervailing political pressures it gets

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<v Speaker 8>from European politicians.

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<v Speaker 6>Yeah.

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<v Speaker 1>Absolutely, an immensely difficult position and sort of nuanced one

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<v Speaker 1>that they have to hold. James, thank you so much

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<v Speaker 1>for being with us this morning and discussing. Yeah, all

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<v Speaker 1>of the fallout around these HSBC comments that happened over

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<v Speaker 1>the summer in what was a closed door meeting for

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<v Speaker 1>which this particularly executive apologized, I mean he apologized you

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<v Speaker 1>for any offense that he had caused. And also you

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<v Speaker 1>did try to say that these are his personal views

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<v Speaker 1>rather than those either of the bank or actually of

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<v Speaker 1>his other significant role, which is as the British as

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<v Speaker 1>the chief of the British China Chamber of Comments, I think.

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<v Speaker 2>The Business Council. Yeah, and HSBC has also said in

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<v Speaker 2>a down statement again that these were the personal views

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

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<v Speaker 2>shifts towards commercial AI and the era of ultra cheap

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<v Speaker 2>stuff comes under a threat.

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<v Speaker 8>Now the paper review on blue Bird Daybreak Europe.

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<v Speaker 7>The news you need to know from today's papers.

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<v Speaker 1>Fully Masie and go and joins us. Now for more.

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<v Speaker 1>Let's start with the Financial Times Leanne this headline Meta

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<v Speaker 1>disbands protein folding team in shift to Worldward's commercial AI.

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<v Speaker 7>What's this about, Caroline, Good morning to you.

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<v Speaker 9>Yes, this is an exclusive from the Financial Times, and

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<v Speaker 9>they're saying that Meta has axed this team that was

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<v Speaker 9>using artificial intelligence to create the very first database of

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<v Speaker 9>protein structures. So a group of about a dozen or

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<v Speaker 9>so scientists were employed by Meta on a project.

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<v Speaker 7>Called esm fold.

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<v Speaker 9>Let me just give you a brief outline of what

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<v Speaker 9>it does, which trains basically a large language model capable

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<v Speaker 9>of processing vast amount of biological data to predict to

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<v Speaker 9>predict protein structures. It's a bit of a mouthful. I'll

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<v Speaker 9>get there in the end. But those involved in the

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<v Speaker 9>team said the scientific project was really in place to

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<v Speaker 9>develop new drugs and treatments when it came to our

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<v Speaker 9>health and look at different structures that we do have.

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<v Speaker 9>But the move has actually been canceled, according to the

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<v Speaker 9>Financial Times. And basically what they're saying is this shows

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<v Speaker 9>the desire of Meta to now abandon this research and

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<v Speaker 9>really concentrate on AI projects that will generate bigger revenue.

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<v Speaker 9>And as we know, so many of the tech companies

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<v Speaker 9>are investing hugely in artificial intelligence. And the CEO Mark

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

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<v Speaker 9>We do know that Meta has undergone significant restructuring in

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<v Speaker 9>recent months. That has been something that the company has

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<v Speaker 9>been focused on.

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<v Speaker 7>But now we know they've acced this.

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<v Speaker 9>Massive team that's behind these protein protein structures.

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

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<v Speaker 2>the Telegraph next. Lee on the energy price cap keeping

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<v Speaker 2>bills artificially high. This is warning from the think tank.

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<v Speaker 9>Yes it is indeed so the center right think tank,

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<v Speaker 9>the Center for Policy Studies says the government is effectively

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<v Speaker 9>set the market price for energy, and the new report

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<v Speaker 9>claims off gems energy price cap is actually costing us

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<v Speaker 9>money and it's also driving up inflation. So what they

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<v Speaker 9>want is minister ministers to basically at the limits and

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<v Speaker 9>allow market rates to dictate prices.

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<v Speaker 7>So they are arguing that the price.

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<v Speaker 9>Cap prevents us everyone the people from accessing cheaper deals.

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<v Speaker 7>They're keeping it high.

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<v Speaker 9>And the cap sets the maximum price energy companies can

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<v Speaker 9>charge households per unit of energy, and it is based

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<v Speaker 9>on the wholesale cost of power.

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<v Speaker 7>But the thing is it's only.

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<v Speaker 9>Reviewed every three months, so basically, if there's a change

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<v Speaker 9>in the wholesale cost, the households aren't getting the benefit

0:13:47.520 --> 0:13:50.680
<v Speaker 9>of that. And economists are blaming the price cap for

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<v Speaker 9>prolonging the pain that we're seeing in Britain because it

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<v Speaker 9>just takes too long for the wholesale price changes to

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<v Speaker 9>really filter through into home and for homes to benefit

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<v Speaker 9>and also have that extra money to spend in the economy.

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<v Speaker 9>So really criticism from the Center of Policy Studies Caroline

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<v Speaker 9>and Stephen about the energy price cap keeping our bills

0:14:15.360 --> 0:14:16.480
<v Speaker 9>artificially high.

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<v Speaker 6>Yeah.

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

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<v Speaker 1>this was the whole argument that we had at the

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<v Speaker 1>beginning when energy prices suddenly soared, is that the price

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<v Speaker 1>cap and the review that off GM does the regulator

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<v Speaker 1>in the UK, it only happens every few months, as

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<v Speaker 1>six months, and I think they then brought it down

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<v Speaker 1>to three months in order to try to overcome this issue.

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<v Speaker 1>You know that the prices were you know that it's

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<v Speaker 1>a delayed effect basically of everything. So now you know,

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<v Speaker 1>on the way up we had it and now we

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<v Speaker 1>have it on the way back down as well when

0:14:46.600 --> 0:14:49.760
<v Speaker 1>it comes to prices. Okay, the Wall Street Journal has

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<v Speaker 1>the story the era of ultra chiefs cheap stuff is

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<v Speaker 1>under threat.

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<v Speaker 7>Under threat, Yes it is, Caroline.

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<v Speaker 9>Just imagine we've become so used to things so as

0:14:59.840 --> 0:15:04.640
<v Speaker 9>well and consumers, we've almost become accustomed to inexpensive goods.

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<v Speaker 9>And this is basically what the Wall Street Journal is saying.

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<v Speaker 9>It's saying factories across Asia are now really struggling to

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<v Speaker 9>attract young workers. So the disappearance of the ultra cheap

0:15:17.240 --> 0:15:21.680
<v Speaker 9>Asian factory labor is emerging as the latest test of

0:15:21.720 --> 0:15:26.880
<v Speaker 9>the globalized manufacturing model. I find this really fascinating what

0:15:27.000 --> 0:15:31.080
<v Speaker 9>the FT's saying. And basically, in response to this crisis,

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<v Speaker 9>to try and attract young people into the factories, you know,

0:15:35.480 --> 0:15:38.840
<v Speaker 9>factories across Asia have had to do lots of different things.

0:15:39.080 --> 0:15:40.920
<v Speaker 7>They've had to increase wages.

0:15:41.440 --> 0:15:46.480
<v Speaker 9>They've had to also improve cafeteria areas to attract people

0:15:46.600 --> 0:15:52.160
<v Speaker 9>free coffees, and build kindergartens within the company's for children

0:15:52.560 --> 0:15:55.040
<v Speaker 9>so that their parents can come to work and the

0:15:55.120 --> 0:15:58.920
<v Speaker 9>knock on effectedness. As the toy and game maker has

0:15:58.920 --> 0:16:02.240
<v Speaker 9>Bro they are of saying that they shortages in Vietnam

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

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<v Speaker 9>The Barbie maker Mattel, I'm sure Barbie's really back in

0:16:08.920 --> 0:16:11.480
<v Speaker 9>fashion again since the movie.

0:16:11.640 --> 0:16:15.840
<v Speaker 7>They also grappling with higher costs, and Nike.

0:16:15.680 --> 0:16:19.040
<v Speaker 9>Which makes most of its shoes in Asia, also flagged

0:16:19.040 --> 0:16:22.160
<v Speaker 9>in June that its product costs have gone up because

0:16:22.200 --> 0:16:24.239
<v Speaker 9>of higher labor expenses.

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<v Speaker 2>This is Bloomberg Daybreak Europe, your morning brief on the

0:16:28.920 --> 0:16:32.000
<v Speaker 2>stories making news from London to Wall Street and beyond.

0:16:32.280 --> 0:16:36.240
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<v Speaker 1>I'm Caroline Hipka and.

0:16:53.120 --> 0:16:55.800
<v Speaker 2>I'm Stephen Carroll. Join us again tomorrow morning for all

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