Speaker 1: Good morning. It's Tuesday, the eighth of August here in London.
Speaker 1: This is the Blueberg Daybake podcast. I'm Caroline Hepki.
Speaker 2: And I'm Stephen Carroll. Coming up today. UK politicians hit
Speaker 2: back at HSBC over a week on China comments.
Speaker 1: Maloney's surprise, Italy's government agrees a new tax on banks extra.
Speaker 2: Profits and a shock exit at Tesla, the electric carmakers
Speaker 2: CFO quits after thirteen years in the job.
Speaker 1: Let's start with a roundup of our top stories.
Speaker 2: UK politicians have rounded on HSBC after the bank's head
Speaker 2: of public affairs criticized Britain's China policy. Former Conservative Party
Speaker 2: leader in Duncan Smith says Europe's biggest bank has an
Speaker 2: awful lot to answer for. But former Business Secretary Vince
Speaker 2: Cable says the HSBC executive had a point when he
Speaker 2: said the UK was weak for following the US position
Speaker 2: on China.
Speaker 3: I think he does, yes, I mean a very good
Speaker 3: example of it. And one eyed personal who was involved
Speaker 3: in government is the issue of Huaweh. Effectively, the Americans
Speaker 3: said no and we had to cave in, deferring accessively
Speaker 3: to pressure from the United States. It's unhelpful to the
Speaker 3: UK and not in our interests.
Speaker 2: And you can hear that full interview with Vince Cable
Speaker 2: on the Bloomberg UK Politics podcast Foreign Tacatory James Cleverly. Meanwhile,
Speaker 2: it's currently trying to rearrange an official visit to China
Speaker 2: after it was postponed from July.
Speaker 1: Now, China's exports fell for a third consecutive month in July.
Speaker 1: Bloomberg's Brian Curtis has more from Hong.
Speaker 4: Kong export slump fourteen and a half percent from a
Speaker 4: year earlier. That's the worst decline since February of twenty twenty.
Speaker 4: Imports contracted twelve point four percent, more than double estimates
Speaker 4: now left a trade surplus of eighty point six billion
Speaker 4: dollars for the month. It's a double whammy for the economy.
Speaker 4: Global demand is weak and so is domestic consumption. There's
Speaker 4: a plethora of issues here, sagging business and consumer confidence,
Speaker 4: a deflating property market, and a government that is wary
Speaker 4: of large scale stimulus in Hong Kong. Brian Curtis Slomberg
Speaker 4: Day Break.
Speaker 2: Europe turning next to Moodies, which has downgraded ten US
Speaker 2: banks as rising interest rates continued to squeeze lenders. Firms
Speaker 2: that had ratings caught include Capital One, Bank of New York,
Speaker 2: MELON and PNC. Financial Moodies pointed to hire funding costs,
Speaker 2: potential regulatory capital weaknesses, and rising risks tied to commercial
Speaker 2: property loans as reasons for the downgrade.
Speaker 1: Now sticking with banks, the Italian government has approved a
Speaker 1: surprise charge on extra profits to fund tax cuts and
Speaker 1: support mortgage borrowers first time mortgage borrows. In particular, the
Speaker 1: financial charge was slipped into a package of other measures,
Speaker 1: including the grant of additional taxi licenses and foreign investment.
Speaker 1: Prime Minister Georgia Maloney's unexpected move could bring over two
Speaker 1: billion euros into state coffers. Italian bank profits surged in
Speaker 1: the first half of rising interest rates boosted income from lending.
Speaker 2: Here in the UK, wet weather is damping retail demand
Speaker 2: as people see no reason to restock their summer wardrobes.
Speaker 2: The latest figures from the British Retail Consortium show an
Speaker 2: increase of just one point five percent in the four
Speaker 2: weeks to the end of July. That compares with growth
Speaker 2: of two point three percent in the same month last year.
Speaker 2: At the BRC's director of Insight, Chris Hamer says spending
Speaker 2: was depressed by damp weather.
Speaker 5: Fewer shoppers are going onlined by their goods. They're returning
Speaker 5: to the stores, but the wet weather from in July
Speaker 5: really put shoppers off buying clothing and appliances to keep
Speaker 5: cool like we saw last last year.
Speaker 2: That was the BRC's Chris Hamer speaking there I. Meanwhile,
Speaker 2: food sales were brighter as consumer confidence recovers from its
Speaker 2: lowest point last summer. Sales rose by eight point four
Speaker 2: percent over the three months to July, above annual growth
Speaker 2: of seven point eight percent.
Speaker 1: Now, Tesla's chief financial officers is stepping down after thirteen
Speaker 1: years at the electric vehicle maker. Zachary Kirkcorn has been
Speaker 1: a prominent voice for the company with shareholders and just
Speaker 1: one of four executive officers at the firm. Kathy Woods
Speaker 1: Arc Fund is a major investor in Tesla. Speaking to Bloomberg,
Speaker 1: she says she expects a seamless transition.
Speaker 6: We will miss him, but his successor has been with
Speaker 6: Tesla right underneath him since twenty eighteen, so he was
Speaker 6: put through the fires. Remember in twenty eighteen nineteen, many
Speaker 6: analysts were saying that Tesla was going bankrupt, and so
Speaker 6: he's been there, He's gone through the fire, and you know,
Speaker 6: it's a tough job.
Speaker 7: It's a tough, tough job.
Speaker 6: So I guess thirteen years was a really good run
Speaker 6: for Zach.
Speaker 1: Despite Kathy Woods comments, the surprise shakeup has raised new
Speaker 1: questions about succession in the top ranks of Elon Musk's company.
Speaker 1: Tesla shares fell one percent in New York after the announcement,
Speaker 1: but Musk maybe too concerned. The stock price has more
Speaker 1: than doubled so far this year.
Speaker 2: I was sticking with news from the world's richest man.
Speaker 2: Elon Musk's brain implant company, Neuralink, has raised two hundred
Speaker 2: and eighty million dollars in new funding. The startup aims
Speaker 2: to develop a digital device which can be inserted into
Speaker 2: human skulls and interact with the brain. Neuralink recently received
Speaker 2: approval from the US Food and Drug Administration to begin
Speaker 2: conducting human clinical trials. Mosk hopes the implanted chips will
Speaker 2: be able to augment brain power and allow humans to
Speaker 2: compete with AI. Those are some of our top stories
Speaker 2: on the program this morning.
Speaker 1: Absolutely, the Q and A that was held between the
Speaker 1: Bank of England's chief economist Hupil and MPs yesterday is
Speaker 1: quite interesting. I think it'll be quite striking here in
Speaker 1: the UK, where we've become to some extent accustomed to
Speaker 1: very stiff competition amongst the supermarket retailers, and a lot
Speaker 1: of the time in a falling price or price cuts
Speaker 1: have been particularly notable, not of late, of course, given
Speaker 1: a food price in inflation, but the Bank of ing,
Speaker 1: this cheap economist is saying, effectively, we might see a
Speaker 1: slowdown in the rate of food price inflation, but we're
Speaker 1: not going to see cuts anytime soon. I think that
Speaker 1: was the most remarkable thing out of that Q and A.
Speaker 2: Yeah, I mean it's a Hugh Pill has quite frequently
Speaker 2: had to deliver quite on popular messages from the Bank
Speaker 2: of England and on the broader outlook for the UK
Speaker 2: economy as well, and this is yet another one, is
Speaker 2: that he's essentially saying prices have been going up and
Speaker 2: they're not going to come down.
Speaker 4: Yeah.
Speaker 1: Look for food price inflation is at seventeen point three
Speaker 1: percent in June. He's talking about the Bank of England
Speaker 1: expecting a faulter around ten percent or below by the
Speaker 1: end of the year that is ten percent food price inflation.
Speaker 1: So yeah, it's still pretty staggering story for the UK.
Speaker 2: Yeah, very cold comfort there from those comments from Hugh pill.
Speaker 2: Let's get more now on the controversy around the comments
Speaker 2: by HSBC's head of Public Affairs. But the UK's approached
Speaker 2: relations with China, despite shared cauper Coles saying that his
Speaker 2: comments were of a personal nature, they've drawn criticism from
Speaker 2: some prominent politicians. Member Exchames Wilcock is with us now
Speaker 2: for more on this story. James, good morning to you.
Speaker 2: So we heard from Ian Duncan Smith a little bit earlier.
Speaker 2: He's among those as criticized HSBC. What have these politicians
Speaker 2: have been saying?
Speaker 8: Well, I mean so a lot of China Hawk's Conservative Party.
Speaker 8: Ian Duncan Smith in particular has called this kind of
Speaker 8: the worst kind of apologism because this AHSBC employee was
Speaker 8: a former diplomat and he's saying that in many ways,
Speaker 8: this is kind of putting aside all the human rights
Speaker 8: atrocities that China has committed. And Ian Duncan Smith is
Speaker 8: won to make that point because since twenty twenty one
Speaker 8: he has been sanctioned by China for speaking against human
Speaker 8: rights abuses Indian Jang. So for him, he sees this
Speaker 8: as this kind of view of a large international bank
Speaker 8: that is putting aside these kind of issues with China
Speaker 8: for the sake of its bottom line.
Speaker 1: Yeah, okay, so Ian Duncan Smith. Yeah, and shared Coper Coles.
Speaker 1: I mean he's had jobs, you know, in the British
Speaker 1: diplomatic service in place like Saudi Arabia and Afghanistan and
Speaker 1: lots of interesting places. The UK Politics podcast yesterday we
Speaker 1: spoke to the former Business Secretary Vince Cable. He's a
Speaker 1: former Liberal Democrat leader of course, who took quite a
Speaker 1: different view.
Speaker 8: Yes, it was a fascinating to you, Caroline, because Vince
Speaker 8: pointed out that take Huawei an example where we as
Speaker 8: the UK have to make difficult decisions. We look at
Speaker 8: the risks of weighing up involving with someone like China,
Speaker 8: we come to a compromise that Vince said it is
Speaker 8: as someone who was involved in that decision. The US
Speaker 8: then came in and said, actually that's a very big
Speaker 8: natural securitist and then we stepped down. So he say, actually,
Speaker 8: in his view, the former diplomat who works at HSBC
Speaker 8: has a point and that we as the UK need
Speaker 8: to be able to come to our own decisions about
Speaker 8: these things, look at the risks and make a view.
Speaker 8: And he referred to the sort of comments been as
Speaker 8: paranoia and this argument that we are looking for spies
Speaker 8: under our beds everywhere. So it's this argument about weighing
Speaker 8: up the risks, the benefits and costs. And to say,
Speaker 8: go back to Indougars Smith's comments, whether these are human
Speaker 8: rights abuses or business decisions.
Speaker 2: Now these were as Sherid Carbercils has put as comments
Speaker 2: of a personal nature, but nonetheless it's dragged HSBC into
Speaker 2: this controversy. What does it mean for the bank?
Speaker 8: Well, I mean this points to the international nature of
Speaker 8: ahs of PC and the difficulties that any international bank
Speaker 8: faces and trying to balance these kind of risks. HBC
Speaker 8: is located in London, Europe's largest bank and at times
Speaker 8: has been a big hero for Britain. I mean, look
Speaker 8: at SVB just this year it was the bank riding
Speaker 8: to the government's rescue and bearding the things out. And
Speaker 8: it's got massive European growth compared to its European peers,
Speaker 8: but that growth is often tied to its massive age
Speaker 8: of success. It's underwritten by the dollar by the US,
Speaker 8: so it has to balance all these competing forces as
Speaker 8: it delivers for its returns. So it's shelled as in Europe,
Speaker 8: whilst those then balancing the countervailing political pressures it gets
Speaker 8: from European politicians.
Speaker 6: Yeah.
Speaker 1: Absolutely, an immensely difficult position and sort of nuanced one
Speaker 1: that they have to hold. James, thank you so much
Speaker 1: for being with us this morning and discussing. Yeah, all
Speaker 1: of the fallout around these HSBC comments that happened over
Speaker 1: the summer in what was a closed door meeting for
Speaker 1: which this particularly executive apologized, I mean he apologized you
Speaker 1: for any offense that he had caused. And also you
Speaker 1: did try to say that these are his personal views
Speaker 1: rather than those either of the bank or actually of
Speaker 1: his other significant role, which is as the British as
Speaker 1: the chief of the British China Chamber of Comments, I think.
Speaker 2: The Business Council. Yeah, and HSBC has also said in
Speaker 2: a down statement again that these were the personal views
Speaker 2: of mister kraiber Cole's too as well. Up next, METO
Speaker 2: shifts towards commercial AI and the era of ultra cheap
Speaker 2: stuff comes under a threat.
Speaker 8: Now the paper review on blue Bird Daybreak Europe.
Speaker 7: The news you need to know from today's papers.
Speaker 1: Fully Masie and go and joins us. Now for more.
Speaker 1: Let's start with the Financial Times Leanne this headline Meta
Speaker 1: disbands protein folding team in shift to Worldward's commercial AI.
Speaker 7: What's this about, Caroline, Good morning to you.
Speaker 9: Yes, this is an exclusive from the Financial Times, and
Speaker 9: they're saying that Meta has axed this team that was
Speaker 9: using artificial intelligence to create the very first database of
Speaker 9: protein structures. So a group of about a dozen or
Speaker 9: so scientists were employed by Meta on a project.
Speaker 7: Called esm fold.
Speaker 9: Let me just give you a brief outline of what
Speaker 9: it does, which trains basically a large language model capable
Speaker 9: of processing vast amount of biological data to predict to
Speaker 9: predict protein structures. It's a bit of a mouthful. I'll
Speaker 9: get there in the end. But those involved in the
Speaker 9: team said the scientific project was really in place to
Speaker 9: develop new drugs and treatments when it came to our
Speaker 9: health and look at different structures that we do have.
Speaker 9: But the move has actually been canceled, according to the
Speaker 9: Financial Times. And basically what they're saying is this shows
Speaker 9: the desire of Meta to now abandon this research and
Speaker 9: really concentrate on AI projects that will generate bigger revenue.
Speaker 9: And as we know, so many of the tech companies
Speaker 9: are investing hugely in artificial intelligence. And the CEO Mark
Speaker 9: Zuckerberg also said earlier it's a year of efficiency for Meta.
Speaker 9: We do know that Meta has undergone significant restructuring in
Speaker 9: recent months. That has been something that the company has
Speaker 9: been focused on.
Speaker 7: But now we know they've acced this.
Speaker 9: Massive team that's behind these protein protein structures.
Speaker 2: Yes, really interesting story there from Metal. Let's go to
Speaker 2: the Telegraph next. Lee on the energy price cap keeping
Speaker 2: bills artificially high. This is warning from the think tank.
Speaker 9: Yes it is indeed so the center right think tank,
Speaker 9: the Center for Policy Studies says the government is effectively
Speaker 9: set the market price for energy, and the new report
Speaker 9: claims off gems energy price cap is actually costing us
Speaker 9: money and it's also driving up inflation. So what they
Speaker 9: want is minister ministers to basically at the limits and
Speaker 9: allow market rates to dictate prices.
Speaker 7: So they are arguing that the price.
Speaker 9: Cap prevents us everyone the people from accessing cheaper deals.
Speaker 7: They're keeping it high.
Speaker 9: And the cap sets the maximum price energy companies can
Speaker 9: charge households per unit of energy, and it is based
Speaker 9: on the wholesale cost of power.
Speaker 7: But the thing is it's only.
Speaker 9: Reviewed every three months, so basically, if there's a change
Speaker 9: in the wholesale cost, the households aren't getting the benefit
Speaker 9: of that. And economists are blaming the price cap for
Speaker 9: prolonging the pain that we're seeing in Britain because it
Speaker 9: just takes too long for the wholesale price changes to
Speaker 9: really filter through into home and for homes to benefit
Speaker 9: and also have that extra money to spend in the economy.
Speaker 9: So really criticism from the Center of Policy Studies Caroline
Speaker 9: and Stephen about the energy price cap keeping our bills
Speaker 9: artificially high.
Speaker 6: Yeah.
Speaker 1: Absolutely, Look, this was always inevitable, wasn't it. I mean,
Speaker 1: this was the whole argument that we had at the
Speaker 1: beginning when energy prices suddenly soared, is that the price
Speaker 1: cap and the review that off GM does the regulator
Speaker 1: in the UK, it only happens every few months, as
Speaker 1: six months, and I think they then brought it down
Speaker 1: to three months in order to try to overcome this issue.
Speaker 1: You know that the prices were you know that it's
Speaker 1: a delayed effect basically of everything. So now you know,
Speaker 1: on the way up we had it and now we
Speaker 1: have it on the way back down as well when
Speaker 1: it comes to prices. Okay, the Wall Street Journal has
Speaker 1: the story the era of ultra chiefs cheap stuff is
Speaker 1: under threat.
Speaker 7: Under threat, Yes it is, Caroline.
Speaker 9: Just imagine we've become so used to things so as
Speaker 9: well and consumers, we've almost become accustomed to inexpensive goods.
Speaker 9: And this is basically what the Wall Street Journal is saying.
Speaker 9: It's saying factories across Asia are now really struggling to
Speaker 9: attract young workers. So the disappearance of the ultra cheap
Speaker 9: Asian factory labor is emerging as the latest test of
Speaker 9: the globalized manufacturing model. I find this really fascinating what
Speaker 9: the FT's saying. And basically, in response to this crisis,
Speaker 9: to try and attract young people into the factories, you know,
Speaker 9: factories across Asia have had to do lots of different things.
Speaker 7: They've had to increase wages.
Speaker 9: They've had to also improve cafeteria areas to attract people
Speaker 9: free coffees, and build kindergartens within the company's for children
Speaker 9: so that their parents can come to work and the
Speaker 9: knock on effectedness. As the toy and game maker has
Speaker 9: Bro they are of saying that they shortages in Vietnam
Speaker 9: and China, they've had to push up their costs of goods.
Speaker 9: The Barbie maker Mattel, I'm sure Barbie's really back in
Speaker 9: fashion again since the movie.
Speaker 7: They also grappling with higher costs, and Nike.
Speaker 9: Which makes most of its shoes in Asia, also flagged
Speaker 9: in June that its product costs have gone up because
Speaker 9: of higher labor expenses.
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 2: stories making news from London to Wall Street and beyond.
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Speaker 1: I'm Caroline Hipka and.
Speaker 2: I'm Stephen Carroll. Join us again tomorrow morning for all
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Speaker 2: on Bloomberg day Break Europe