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Speaker 1: Good morning.

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Speaker 2: I'm Stephen Carroll.

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Speaker 3: And I'm Caroline Hetger. Here are the stories that we're

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Speaker 3: following today.

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Speaker 1: Bloomberg has learned that UBS is planning to cut more

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Speaker 1: than half of Credit Swie's forty five thousand strong workforce.

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Speaker 1: The job losses will start next month and focus on bankers,

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Speaker 1: traders and support staff, and Credit Swee's investment bank in London,

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Speaker 1: New York and some.

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Speaker 2: Parts of Asia.

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Speaker 1: Our Wall Street correspondent Chnalie Bassek breaks down how these

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Speaker 1: cuts will happen.

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Speaker 4: The way that this will be done, according to people familiar,

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Speaker 4: is three rounds of job cuts this year, with the

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Speaker 4: first round expected by the end of July and two

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Speaker 4: more rounds tentatively planned for September and October. So certainly

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Speaker 4: through October through the end of the year, there will

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Speaker 4: be kind of a lot of communication with staff, plus

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Speaker 4: probably a lot of conversations across Wall Street and global finance.

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Speaker 1: Chanalie Bassek says UBS intends to reduce the total combined

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Speaker 1: headcount of one hundred and twenty thousand by about thirty percent.

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Speaker 1: The Swiss lander wants to save a end six billion

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Speaker 1: dollars in staff costs. It looks to solidify its now

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Speaker 1: completed credit Sueeze takeover will be joined in a moment

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Speaker 1: for more on this story by Bloomberg's Zurich based reporter

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Speaker 1: Marion Halftermeier, who broke the story.

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Speaker 3: Jeffries has reported a twenty six percent plunge in investment

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Speaker 3: banking revenue amid a global slump in deal making. More

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Speaker 3: on that from Bloomberg's Charlie Pellett.

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Speaker 2: It pulled down profit for the period. Investment banking revenue

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Speaker 2: declined to five hundred ten million dollars in the period

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Speaker 2: ending May thirty first, that fell short of the six

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Speaker 2: hundred sixty three million dollar average estimate of analysts in

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Speaker 2: a Bloomberg survey. Jeffries says the results were quote consistent

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Speaker 2: with a significant decline in global mergers and acquisitions volume.

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Speaker 2: Jeffrey's earnings offer a look into how Wall Street performed

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Speaker 2: during a period of turmoil as several regional banks collapsed

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Speaker 2: into government receivership in New York. Charlie Pellett Bloomberg Daybreak.

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Speaker 1: Europe, more than ten thousand US bagged bank jobs have

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Speaker 1: been cut this year. Some of the biggest productions were

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Speaker 1: at Goldman Sachs and Morgan Stanley. They've both trimmed more

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Speaker 1: than three thousand jobs each, with more rounds of cuts expected.

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Speaker 1: Alison Williams, a senior analyst for Bloomberg Intelligence focused on

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Speaker 1: global investment banks and asset managers, says firms are playing

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Speaker 1: catch up with the market.

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Speaker 5: It's a tough environment. We're seeing broadly across the industry.

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Speaker 5: Investment had count coming down, and that had count. I

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Speaker 5: would say it is not a foreid indicator so much

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Speaker 5: as catching up to the significant DECLINEY saw on investment

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Speaker 5: banking revenues last year down fifty percent. This year, there

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Speaker 5: was hopes that we would get some kind of rebound.

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Speaker 5: We're seeing things studying at pre pandemic levels, so really

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Speaker 5: soft levels.

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Speaker 1: That's Bloomberg Intelligence is Alison Williams there, who added that

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Speaker 1: it's a tough market for job applicants as investment banks

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Speaker 1: face one of the weakest years in the last decade.

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Speaker 3: Nvidia led declines in shares of US chip makers in

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Speaker 3: late US trading after the Walls feature reported that Washington

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Speaker 3: could soon close loopholes in the sale of powerful chips

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Speaker 3: to China. Mona from Bluebeg's Doug Krisna.

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Speaker 6: The chips are those used to train AI models, and

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Speaker 6: the restrictions are aimed at containing China's technological rise, but

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Speaker 6: the move would clearly dent sales, and Vidia gets nearly

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Speaker 6: twenty percent of its revenue from China. Its chips are

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Speaker 6: vital to the development of generative AI models such as chachipt.

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Speaker 6: This year in Nvidia produced less capable chips below thresholds

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Speaker 6: requiring a license from the Commerce Department to export to

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Speaker 6: China or other countries of concern, but Washington is now

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Speaker 6: weighing action as soon as next month to expand the

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Speaker 6: curbs to include those lower powered semiconductors. In New York,

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Speaker 6: I'm Doug Prisoner Bloomberg Daybreak.

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Speaker 1: Europe underlying inflation needs to be firmly in retreat before

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Speaker 1: the European Central Bank can consider pausing rates. That's according

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Speaker 1: to Governing canceled member Pierre Wunsch, speaking to Bloomberg, the

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Speaker 1: hawkish Belgian Central Bank chiefs that a September pause is possible.

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Speaker 7: We need core to go down and we have only

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Speaker 7: one reading of CORE by July, so the likelihood that

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Speaker 7: that reading would completely change the perspective we have on

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Speaker 7: Core is relatively limited, but we have three readings of

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Speaker 7: core before September, so that's wait. If it goes down,

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Speaker 7: it goes down, maybe we can pose.

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Speaker 1: They comment by Pierre Runch on the sidelines of the

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Speaker 1: ECB's annual forum in CenTra, come after President Christine Legard

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Speaker 1: warned that peak rates are still some way off well.

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Speaker 3: In other ECB news, Italian Prime Minister Georgia Maloney's government

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Speaker 3: has selected ECB executive board member Fabio Panetta as the

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Speaker 3: next Bank of Italy governor. The Italian head of state

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Speaker 3: will need to approve the selection before Panetta can take

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Speaker 3: up his role at the end of October, when current

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Speaker 3: Governor Ignacio Visco steps down.

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Speaker 1: And almost half of UK home sellers were forced to

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Speaker 1: cut their prices by more than five percent last month,

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Speaker 1: according to the property portal ZUPLA. The new data comes

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Speaker 1: as surging mortgage costs put a strain on the market.

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Speaker 1: ZUPLA says about fifteen percent of sellers accepted at least

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Speaker 1: ten percent off their initial asking price, with discounting at

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Speaker 1: its most widespread since twenty eighteen. Despite the reductions, the

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Speaker 1: firm reports the average house prices are still higher than

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Speaker 1: a year ago. But that momentum is slowing sharply.

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Speaker 8: Okay, those are a few of our top stories this morning.

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Speaker 3: So rising interest rates here in the UK, this is

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Speaker 3: the back job the Chances meeting companies to put pressure

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Speaker 3: on them to pass on any cost cuts to UK

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Speaker 3: consumers and for banks to pass on high interest rates

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Speaker 3: to savers even as we're seeing those cracks in the

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Speaker 3: mortgage market.

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Speaker 1: Yeah, this look, this is an area that the government

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Speaker 1: has little power to actually compel change, but they are

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Speaker 1: looking to exert some of their political pressure on the

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Speaker 1: banks at a time when we're looking at inflation being

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Speaker 1: high for some fourteen months now. Blueberg Economics, as we

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Speaker 1: were reporting, changed its outlook for the UK economy. They're

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Speaker 1: now forecasting a recession starting from the fourth quarter of

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Speaker 1: this year if rates hit five point seventy five percent,

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Speaker 1: which is worth pointing out is lower than what the

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Speaker 1: markets are expecting Bank of England rates to go to.

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Speaker 3: Yeah, it's a bit of a difficult backdrop and this

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Speaker 3: will perhaps be the foundation of my conversation tomorrow. I'm

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Speaker 3: hosting a panel for the City UK tomorrow. The title

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Speaker 3: of the panel driving Economic Growth in a stable and

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Speaker 3: Resilient Economy that's the title.

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Speaker 1: It's just a small challenge for you to undertake.

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Speaker 3: Yeah, very interesting people will be participating though, Gareth Davies,

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Speaker 3: who's the Exchequer Secuy to the Treasury, Julia Hoggart of course,

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Speaker 3: CEO of the LUDS of Stock Exchange, Chris lay From,

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Speaker 3: Marsh mcclennan, and Tina Lee who's the CEO of Deutsche

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Speaker 3: Bank for the UK and Ireland. Now. The one bright

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Speaker 3: spot and I want to add this in, of course,

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Speaker 3: is the signing of the Memorandum of Understanding on Financial

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Speaker 3: Services between the UK and the EU. So that happened yesterday,

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Speaker 3: so I want to layer that in too. So I

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Speaker 3: really hope that you'll listen into the panel which we're

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Speaker 3: going to bring you live tomorrow morning at nine point

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Speaker 3: thirty am from the Q two Center in London, and

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Speaker 3: earlier in the morning we'll have a lot of guests

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Speaker 3: running up to that panel to sort of give us

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Speaker 3: more details of whether the UK is right now economically,

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Speaker 3: politically and for financial market.

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Speaker 1: Look, this is the moment to be having that conversation

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Speaker 1: when we're looking at the strains on the economy and

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Speaker 1: the challenges being faced by businesses here at such a

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Speaker 1: pivotal time for the UK, so that will be really

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Speaker 1: compelling coverage we're expecting from the City UK conference tomorrow.

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Speaker 1: Let's get more though, First on the news from UBS

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Speaker 1: today their plans to cut huge numbers of workers from

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Speaker 1: Credit Suite after the emergency takeover earlier this year. Bloomberg's

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Speaker 1: Mari and Heal Tomaara broke this story. She joins US

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Speaker 1: Now Live from Central Zurich for more. Good morning to you, Mary,

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Speaker 1: and the Credit sue workforce is forty five thousand people

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Speaker 1: who is most likely to be affected by these cuts

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Speaker 1: and when good.

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Speaker 9: Morning, Yes. So what we understand with my colleagues who

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Speaker 9: helped me and broke the news across the world is

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Speaker 9: that the most affected individual at least in the first

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Speaker 9: round of cuts, will be those in the investment, banking

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Speaker 9: and trading divisions. So you're thinking about your dealmaker, advisors

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Speaker 9: and your traders as well as the support functions around there,

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Speaker 9: so the people doing the administrative tasks that helps those

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Speaker 9: businesses function, and that's going to be happening as soon

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Speaker 9: as July, and then we expect a few more rounds

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Speaker 9: this year as well, which may then start to touch

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Speaker 9: other parts of the.

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Speaker 3: Business, Marian, good morning. Are these numbers surprising?

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Speaker 9: Not necessarily, We were expecting in the tens of thousands,

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Speaker 9: you know, anywhere between twenty and forty thousand, just given

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Speaker 9: the size of the two businesses and the overlap that

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Speaker 9: there is in both their investment banking divisions, their wealth

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Speaker 9: management divisions and as well as the domestics Swiss business.

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Speaker 1: Marion, We've been reporting you and other colleagues around the

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Speaker 1: world have been reporting about high profile departures from Credit

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Speaker 1: Suite since the bank's been experiencing troubles of a recent

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Speaker 1: month running up to the merger UBS and afterwards as well.

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Speaker 1: Do we have any idea how many people have already

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Speaker 1: left the bank since the merger was announced, so in.

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Speaker 9: Summer marks recently, I think it was this mod the

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Speaker 9: last month UBS is the CEO Sergio Manti actually mentioned

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Speaker 9: that he had seen that ten percent of Credits staff

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Speaker 9: had left since the merger in March, so that's about

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Speaker 9: five thousand people. We know that there were a lot

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Speaker 9: of departures before March the merger in March, just over

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Speaker 9: the last couple of years, As you mentioned, there were

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Speaker 9: a lot of mismanagement issues, losses in different parts of

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Speaker 9: the business that have caused people to see writing on

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Speaker 9: the wall and want to leave before it and stuff

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Speaker 9: like this.

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Speaker 3: Okay, what about the Swiss business? What changes can we

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Speaker 3: expect there now?

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Speaker 9: So we're still waiting for the final decisions as to

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Speaker 9: whether or not they will integrate the two domestic Swiss businesses.

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Speaker 9: There's been a lot of controversy around that Swiss politics

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Speaker 9: and Swist economy about whether or not it would be

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Speaker 9: too big and therefore have too much mark a chair.

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Speaker 9: But the base case is what the UBSCO has said,

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Speaker 9: is that they do plan to integrate them and keep

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Speaker 9: the business. So for the moment, any job cuts, from

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Speaker 9: our understanding, would exclude those businesses until we have a decision,

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Speaker 9: which should be in the third quarter of this year.

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Speaker 1: Okay, an absolutely fascinating story and we appreciate your time

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Speaker 1: bringing is the details this morning. That's Bloomberg's Marry and

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Speaker 1: have tomorrow their reporting live from Zurich this morning.

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Speaker 3: Up next phoning it in and what a CEO taps

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Speaker 3: out so most James look cut join us now for

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Speaker 3: a look at what is in the newspapers. Good morning, James.

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Speaker 3: The Guardian has an exclusive on greedflation on your phone contract.

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Speaker 10: Yes, now, I mean we've been talking all week about

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Speaker 10: sort of what is driving that UK CPI figure, what

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Speaker 10: is driving up sales and increasing that it might be

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Speaker 10: about businesses and what that means to the government with

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Speaker 10: Jeremy had meeting with regulators today and the Chance is

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Speaker 10: expected to try and ask them to lay down the

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Speaker 10: law and start pushing. So it's almost in the Guardians

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Speaker 10: wanting to have a story saying that phone contracts that

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Speaker 10: are going up the most in thirty years, and they

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Speaker 10: call this greenflation. Now, I want to put a bit

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Speaker 10: of skepticism here because a lot of these contracts are

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Speaker 10: tied to CPI. So CPI is the highest in thirty

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Speaker 10: forty years. It's not surprising the phone crunt that's going

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Speaker 10: up for the highest than thirty four years. But here's

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Speaker 10: where get things interesting. Over the pandemic, the company's added

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Speaker 10: a three point nine percent search arge that would go

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Speaker 10: up every year as well. Because inflation was near zero.

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Speaker 10: They've kept that. So actually you're looking at inflation of

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Speaker 10: in some of these contracts of say fourteen percent, the

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Speaker 10: highest in a virgin money, oh two seventeen percent because

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Speaker 10: they use RPI which is quite a sneaky way of

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Speaker 10: adding on house price inflation, which normal CPI baskets don't count. Now,

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Speaker 10: Chris Pike, the head of Digital markets at Fidera's, is

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Speaker 10: quoting the piece saying this is not the sort of

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Speaker 10: stuff that should be happening in the competitive market. And

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Speaker 10: he's leading to the fact that this three point nine

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Speaker 10: percent is uniform across all six largest networks, and he

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Speaker 10: said that's not really competing for the best customers. That

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Speaker 10: seems to be like tacit collusion in his view, and

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Speaker 10: I'm quoting him. Spokespersons for BT three, Virgin Media two

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Speaker 10: and Vodafone all say that while they understood consumers were

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Speaker 10: under pressure, they face their own increases in costs and

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Speaker 10: need to put up prices to continue investing in improving services.

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Speaker 10: That's in the Guardian this morning.

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Speaker 1: Yeah, I mean, look, it was a fascinating discovery for

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Speaker 1: me as I re entered the UK phone market that

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Speaker 1: this was normal practice because in other major parts of

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Speaker 1: Europe it's not, certainly my experience in Frances that prices

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Speaker 1: don't go up on your contracts while you're while you're

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Speaker 1: staying at the same company.

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Speaker 3: Well, having said that I think this is also highlighted

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Speaker 3: much more recently, you know, something of the last kind

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Speaker 3: of year or two I think in particular. But yes,

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Speaker 3: let's see whether the CMA with the FCA, who were

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Speaker 3: all attending that meeting with the chance that whether they

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Speaker 3: succumb you know, to the.

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Speaker 8: Pressure, whether they can actually do anything about it.

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Speaker 1: Well, let's go next, James to the Financial Times and

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Speaker 1: Sky News reporting to on a flood of bad news

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Speaker 1: coming out of tames Water.

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Speaker 10: Yes, I mean the CEO of Thames Water, Sarah Bentley,

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Speaker 10: has resigned with im effect last night. I mean, I

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Speaker 10: have the pressure that's up in front of me and

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Speaker 10: it does not give a reason, and the Sky News

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Speaker 10: and FT are reporting on it and pushing that story

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Speaker 10: further to look at how this could be a major,

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Speaker 10: major problem. I mean, Thameswater serves fifteen million customers across London.

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Speaker 10: That is a quarter of Britain's population. And it's not

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Speaker 10: been without financial words. It has been find multiple times

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Speaker 10: in the past few years for seward's leaks and overcharging customers.

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Speaker 10: The company has not paid a dividend for the last

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Speaker 10: six years. There are a range of issues and it

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Speaker 10: is currently struggling with fourteen billion pounds in debt, and

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Speaker 10: this comes as it is coming under pressure to refinance,

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Speaker 10: and not only to refine, so then invest that money

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Speaker 10: in trying to fix its infrastructure. Because of what this

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Speaker 10: comes back to, this regulator story does have price controls.

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Speaker 10: Unlike off Gem on the telecoms operators, water companies can't

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Speaker 10: generate additional income. It all comes back to bonds and

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Speaker 10: nearly one point four billion pounds of Thames Water's bonds

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Speaker 10: mature by the end of next year. That's what Sky

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Speaker 10: point out. So the FT then points out though that

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Speaker 10: any financial collapse here, which they say is a serious

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Speaker 10: possibility they've talked to ministers, are apparently war gaming. This

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Speaker 10: scenario could have a domino effect and lead other water

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Speaker 10: companies to topple. And that's what one chief executive of

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Speaker 10: another water company told the FT in December. Off What

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Speaker 10: warned it was concerned over the financial resilience of Thameswater,

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Speaker 10: Yorkshire Water, SCS Water and Portsmouth Water.

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Speaker 3: Yeah, and of course Thames Water is owned by you

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Speaker 3: know a lot of different pension funds. They've got to

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Speaker 3: come up with their business plan between twenty for twenty

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Speaker 3: twenty five, twenty thirty, So that's the next Also another

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Speaker 3: big crunch point coming.

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Speaker 10: And when we talk about sort of corporate distress coming

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Speaker 10: in this market with inflation, I will point out that

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Speaker 10: more than half the water sector's debt on average is

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Speaker 10: inflation linked.

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Speaker 1: So that's off work for a water off come for telecoms.

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Speaker 1: Off jam is the energy regulator. Thanks listeners for getting

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Speaker 1: they're off some mixed up this morning. Let's go next

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Speaker 1: to the Wall Street Journal James and a word on

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Speaker 1: Elon Musk.

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Speaker 10: Yes, they have a pretty bombshell of a story which

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Speaker 10: starts with the line I'm just going to quote it

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Speaker 10: and for Elon must takes Kessamin Sergei Brinn sometimes enjoys

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Speaker 10: magic mushrooms. It's that it and it drigs into this

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Speaker 10: idea of Silicon Valley. It has become a home for

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Speaker 10: recreational drug use. Micro dosings is often known. A lot

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Speaker 10: of CEOs say it helps with them retain focus. Elon

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Speaker 10: Musk responded to the story in a tweet saying he

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Speaker 10: believed Kessman is a better way to deal with depression.

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Speaker 10: I have to say at this point these substances are illegal,

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Speaker 10: and medical experts will tell you that self medicating is

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Speaker 10: not a good idea because it can slide into abuse

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Speaker 10: and it is fascinating now. Or that means, for say,

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Speaker 10: corporate governance, that you have a CEO who publicly says

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Speaker 10: that he believes that this is a better way to

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Speaker 10: deal with depression, and the Wall Street Journal site that

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Speaker 10: they have close sources close to him who say that

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Speaker 10: they've seen him take it at parties.

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Speaker 7: Wow.

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Speaker 8: Okay, that's a staggering story, isn't it.

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