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Speaker 1: This is Bloomberg Daybreak for this Wednesday, the twenty second

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Speaker 1: of February in London. Coming up today, lifting the lid

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Speaker 1: Fed minutes to reveal the extent of support for larger

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Speaker 1: hikes as PMI data drives up yields. An economy at war,

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Speaker 1: we hear from Ukraine's former trade minister as the IMF

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Speaker 1: prepares to provide more cash. Gameover or the next level.

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Speaker 1: Microsoft says it's sixty nine billion dollar activision deal must

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Speaker 1: include call of Juzy sheet and Pink considers Moscow trip,

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Speaker 1: more on the missing Chinese banker and Jeremy Hunt rules

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Speaker 1: out tax cuts. Those other stories we're looking at in

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Speaker 1: today's papers, and I'm Leanne Gern's plus what's happening at

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Speaker 1: Wells Fargo. US regulators investigate the use of unapproved messaging apps.

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Speaker 1: That's on straight Ahead on Bloomberg Daybreak. Europe. The Business

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Speaker 1: News You need to start your day in just one

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Speaker 1: fifteen minute podcast on Apple, Spotify, the Bug Business app,

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Speaker 1: and everywhere you get your podcasts. Good morning. I'm Stephen

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Speaker 1: Carroll and I'm Caroline Heitker. Here are the stories that

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Speaker 1: we're following today. The US markets had their worst day

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Speaker 1: of twenty twenty three yesterday, with the S and P

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Speaker 1: five hundred down by more than two percent and yields

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Speaker 1: up across the curve. That's after stronger than expected PMI

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Speaker 1: data had traders reversing course on their FED pivot bets.

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Speaker 1: Minutes from the Center Bank's latest decision are out later today.

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Speaker 1: Goldman's chief Global Equity Stratus Peter Oppenheimer told Bloomberg that

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Speaker 1: US equities are now far less attractive. You're getting quite

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Speaker 1: a high return in competing assets with much less risk.

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Speaker 1: So overall the biggest market in the world, we're looking

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Speaker 1: at a flat return. We've been preferring non US markets

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Speaker 1: for quite some time. We still do, but even there,

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Speaker 1: the absolute returns we think are willing to be relatively modid.

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Speaker 1: Goldman's Peter Oppenheimer was speaking exclusively to Bloomberg. He joins Morgan, Stanley, J. Morgan,

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Speaker 1: and Bank of America, who've all warned the recovery in

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Speaker 1: stocks may now have gone too far now two geopolitical tensions.

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Speaker 1: President Joe Biden has hit back at Vladimir Putin, saying

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Speaker 1: that Russia can never win the war in Ukraine. Speaking

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Speaker 1: in the Polish capital, Warsaw, hours after the Russian president

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Speaker 1: blamed the West for the conflict, Biden said the war

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Speaker 1: could only have one winner, A dictator Ben Harry building

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Speaker 1: an empire will never be able to ease the people's

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Speaker 1: love of liberty. Brutality will never grind down the wall

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Speaker 1: of the free and Ukraine. Ukraine will never be a

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Speaker 1: victory for Russia. Never. In the speech marking almost one

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Speaker 1: year since the invasion, Biden also said that the US

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Speaker 1: and its allies would announce fresh sanctions against Moscow this week.

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Speaker 1: The IMF says it's prepared to provide sizable economic support

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Speaker 1: for Ukraine and a new loan program. The funder praise

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Speaker 1: Kiev's efforts to transform its economy and boost governance structures.

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Speaker 1: Timothy Milanavov, president of the Kiev School of Economics, It's

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Speaker 1: told us here on Daybreak Europe that Ukraine's made huge

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Speaker 1: progress in tackling corruption. I think the perception is much

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Speaker 1: worse than the reality. Do we have problems in corruption, absolutely,

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Speaker 1: Have we set up an infrastructure to fight it? Absolutely?

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Speaker 1: Do people want to get rid of corruption? Absolutely? Because

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Speaker 1: today every Ukrainian understands that a dollar of rubina is

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Speaker 1: the local currency, is stolen. That simply means less ammunition

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Speaker 1: to the front lines, and that means more people will die.

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Speaker 1: Timothy Milanavov was Ukraine's former Minister of Economic Development and

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Speaker 1: Trade until twenty twenty. Now the leader of Northern Ireland's

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Speaker 1: Democratic Unionist Party, says that elements of Prime ministery she

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Speaker 1: Soon acts post breaks It deal are not acceptable. Jeffrey

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Speaker 1: Donaldson made the criticism after meeting the hardline group of

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Speaker 1: pro Brexit lawmakers from Sunac's Tory party. The Prime Minister

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Speaker 1: is currently trying to win support for his reform to

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Speaker 1: the trade rules for Northern Ireland. Microsoft says any move

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Speaker 1: to carve off popular franchises would be game over for

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Speaker 1: its sixty nine billion dollar deal to buy Activision. Antitrust

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Speaker 1: regulators hand suggested the software giant may need to sell

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Speaker 1: call of duty to allow a market competition. Microsoft president

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Speaker 1: Brad Smith to ol Bloomberg, regulators around the world have

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Speaker 1: a clear choice. We don't see a viable path to

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Speaker 1: sell off the part of this company, Activision Blizzard that

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Speaker 1: makes call of duty. Given that, I think that the

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Speaker 1: alternative is really quite clear. Either the deal gets blocked

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Speaker 1: or gets approved with guardrails. With regulatory controls. Smith's deal

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Speaker 1: is Microsoft's largest ever and one of the thirty biggest

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Speaker 1: acquisitions of all time. The EU, US, and UK of

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Speaker 1: all started procedures that could potentially block the deal. Wells

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Speaker 1: Fargo says that US regulators are investigating its retention of

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Speaker 1: employee communications over unapproved messaging apps. That story enough from

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Speaker 1: bloom Bags Charlie Pellets it is the latest bank to

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Speaker 1: get caught up in an industry wide suite that's already

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Speaker 1: yielded over two billion dollars in fines. Probes by the

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Speaker 1: Securities and Exchange Commission and the Commodity Futures Trading Commission

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Speaker 1: were disclosed in a regulatory filing. Many of Wells Fargo's

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Speaker 1: biggest rivals have already settled with the SEC and CFTC

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Speaker 1: over the matter. JP Morgan Chase agreed to pay two

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Speaker 1: hundred million dollars in late twenty twenty one. A dozen more,

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Speaker 1: including Bank of America, Citigroup, Goldman, Saxon, Morgan Stanley, reached

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Speaker 1: settlements in September in New York. Charlie Pellet Bloomberg Daybreak

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Speaker 1: Europe says our top stories on the program this morning

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Speaker 1: and interesting. One of the stories that start out for

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Speaker 1: me this morning carline is to do with home heating.

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Speaker 1: Not the sexiest of all topics, that has to be said,

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Speaker 1: but look, this is part of the plans that we're

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Speaker 1: seeing in countries all across Europe where they're trying to

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Speaker 1: encourage people to reduce the carbon footprint to their home.

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Speaker 1: Was entially reduced the emissions and the energy needs they have.

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Speaker 1: There is a program in place in the UK to

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Speaker 1: subsidize people to upgrade their boilers. Not that necessarily that interesting,

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Speaker 1: but essentially people aren't taking up the grants that are

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Speaker 1: out there on offer and that's going to leave the

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Speaker 1: UK falling far behind its targets when it comes to

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Speaker 1: reducing emissions in homes. Yeah. Absolutely, and this according to

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Speaker 1: this oversight group of MPs and in the House of Lords,

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Speaker 1: the Climate Change Committee in the UK. Look, I've talked

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Speaker 1: about this issue before. The problem is that the government

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Speaker 1: has tried this scheme a couple of times. They never

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Speaker 1: seem to have enough people to actually install this. The

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Speaker 1: clarity to homeowners hasn't been there and that has been

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Speaker 1: one of the criticism of this House of Lord's panel

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Speaker 1: around this issue. But you're right, it's hugely important. They've

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Speaker 1: also though, talked about hydrogen saying that that isn't a

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Speaker 1: serious option for home heat. So you're sort of at

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Speaker 1: that level of debate here in the UK, still trying

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Speaker 1: to figure out actually what the solution to home heating,

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Speaker 1: which is a massive emitter of pollution in the UK. Yeah,

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Speaker 1: and one of the things that this committee is pointing

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Speaker 1: out is the hydrogen strategy. The ideas in hydrogene homeheating

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Speaker 1: just isn't there yet. It's a good idea down the line,

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Speaker 1: but it's not a serious contender at this point to

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Speaker 1: try to reduce people's carbon footprint from their homes. There's also,

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Speaker 1: though a bigger story I think here, why are we

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Speaker 1: so obsessed with property? Yes, I think individually people in

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Speaker 1: the UK are with their own property prices, but more

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Speaker 1: broadly at industry level, there have been difficulties in property

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Speaker 1: in China. We don't have them to the same ascent

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Speaker 1: in Europe. But Chris Hughes has a great piece this

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Speaker 1: morning about how he says the reckoning has begun for

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Speaker 1: Europe's highly leveraged property companies, the real estate businesses. The

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Speaker 1: rates that have been so popular in the last ten

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Speaker 1: years with low interest rates, he says. He says that

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Speaker 1: that snowball is actually coming. Okay up next, she'ding paying

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Speaker 1: us planning a trip to Moscow are missing? Chinese banker

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Speaker 1: had plans for a poor office and Jeremy Hunt rules

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Speaker 1: out tax cuts. Now the paper review on blue Bird

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Speaker 1: day Break Europe. The news you need to know from

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Speaker 1: today's papers mostly I against us here with the details.

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Speaker 1: So the Wall Street Journal has a story headlining China

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Speaker 1: Shijing Ping plans Russia visit as Putin wage's war in Ukraine. So,

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Speaker 1: of course, as we've seen Biden in the region. Yes, indeed,

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Speaker 1: so we did see Biden both in Ukraine, in Kiev,

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Speaker 1: and then yesterday he was in Warsaw in Poland where

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Speaker 1: he addressed thousands of people, and that was quite a

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Speaker 1: spectacle yesterday. Now the Wall Street Journal is reporting that

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Speaker 1: the Chinese leader Shijinping is preparing to visit Moscow for

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Speaker 1: a summit with Russia's president in the coming months. And

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Speaker 1: this of course comes as Vladimir Putin wages war in

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Speaker 1: Ukraine and really portrays himself as a standard bearer against

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Speaker 1: a US led global order. This is all according to

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Speaker 1: this article in the Wall Street Journal. Now, a potential

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Speaker 1: visit is nothing new. It's actually been floated for months,

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Speaker 1: with Putin telling she during a December video call that

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Speaker 1: he looked forward to welcoming the Chinese leader to Russia

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Speaker 1: in the springtime. Now, China's Foreign Minister Wang Yee said

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Speaker 1: Beijing is willing to work with Moscow to defend both

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Speaker 1: countries national territories. Now, this was during talks with Russia's

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Speaker 1: security chief yesterday. Wang Yee also said relations with Moscow

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Speaker 1: are quote solid as a rock. And Wang Yee has

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Speaker 1: been visiting Russia ahead of the one year anniversary of

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Speaker 1: the war in Ukraine. However, Western capitals, Caroline and Stephen

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Speaker 1: are really expressing skepticism about China's diplomatic initiative. The US

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Speaker 1: has been increasing pressure on China over its stance in Ukraine.

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Speaker 1: And we did here from the Secretary of State Anthony B.

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Speaker 1: Lincoln over the weekend that China was considering providing arms

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Speaker 1: to Russia. Now, this is a step. He warned the

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Speaker 1: country against taking very strong words what he said there.

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Speaker 1: And we do know that it's almost one year since

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Speaker 1: this invasion began, and it's really sent shockwaves through a

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Speaker 1: lot of the global economy and a lot of the world. Okay, Leon,

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Speaker 1: let's turn to the Financal Times next. It has more

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Speaker 1: on this missing Chinese banker that was working to set

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Speaker 1: up a family office in Singapore. Yeah. Absolutely so. This

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Speaker 1: story in the Ft gives us an insight into the

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Speaker 1: months leading up to Bao fans disappearance, which has really

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Speaker 1: sent a chill across business circles in China. According to

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Speaker 1: people with knowledge who have been speaking to the Ft

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Speaker 1: knowledge of his plans, the Chinese investment banker was preparing

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Speaker 1: to move some of his fortune from China and Hong

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Speaker 1: Kong to Singapore in the months before he actually disappeared. Bao,

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Speaker 1: who founded China Renaissance, has transformed the investment bank into

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Speaker 1: one of China's top financial institutions. Now he's one big

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Speaker 1: tech deals from larger Wall Street rivals, and according to

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Speaker 1: the FT, since China's President Xi Jinping has introduced policies

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Speaker 1: that have really hit the tech sector, many wealthy Chinese

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Speaker 1: tycoons have launched family offices in Singapore. So this seems

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Speaker 1: to be something that is growing as people do look

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Speaker 1: to diversify where they are working. A bow. He's been

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Speaker 1: missing now for a month and the company say he

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Speaker 1: is still completely unreachable at this time. Doesn't seem to

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Speaker 1: be any official word on this from any Chinese authorities certainly,

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Speaker 1: but yeah, ue quite interesting. Look. The Telegraph has a

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Speaker 1: story about the UK Jeremy Hunt rules out tax cuts

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Speaker 1: in the upcoming budget. Again, we've heard quite a lot

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Speaker 1: about the budget, haven't we, Caroline, and it's happening next month,

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Speaker 1: and the chancellors feeling the pressure now from concern over

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Speaker 1: to backbenches and also business leaders. It's important to point out,

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Speaker 1: and speaking at a green industry event yesterday in East London,

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Speaker 1: Jeremy Hunt is insisting there is no room for tax

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Speaker 1: cuts in his March budget. Now. He's dismissed suggestions that

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Speaker 1: he had been handed this windful after the government achieved

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Speaker 1: a surprise five point four billion dollars surplus that was

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Speaker 1: back in January. So despite a real improvement in public finances,

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Speaker 1: also energy costs, we've seen them go down, haven't we

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Speaker 1: in the last couple of months. The Chancellor appears to

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Speaker 1: be standing firm that he's not going to ease the

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Speaker 1: tax burden which is at a seventy year high, and

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Speaker 1: he's also under pressure not to lift corporation tax to

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Speaker 1: twenty five percent from nineteen percent. But you're almost standing

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Speaker 1: resolute at the moment where if you have a look

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Speaker 1: at this piece than the telegraph. But you know what

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Speaker 1: you turns I'm not saying are a common but we

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Speaker 1: know you know we're waiting until happen in recent years.

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Speaker 1: That's interesting. Oh yeah, so that's good on the budget

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Speaker 1: of fifteenth Demosh, thank you so much, Leanne Garans. Well,

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Speaker 1: we'll get an insight into the thinking of the Federal

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Speaker 1: reserves last meeting in the minutes which are being published

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Speaker 1: later on today. I mean, while we've seen this renewed

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Speaker 1: surge in treasury yields as traders increasingly fear the Federal

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Speaker 1: Reserve is nowhere near wrapping up its war against inflation,

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Speaker 1: let alone pivoting bond investors. At one point, we're betting

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Speaker 1: on rate cuts in twenty twenty three. For more, let's

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Speaker 1: speak to our chief AGA economics correspondent and a current

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Speaker 1: and what should we be looking forward to and looking

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Speaker 1: out for in these minutes. Well, I think the tone

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Speaker 1: from the minute today will set the kind of debate

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Speaker 1: around whether or not FED is actually serious about moving

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Speaker 1: back towards fifty basis points of hikes in the coming months,

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Speaker 1: or at the very least, failing that, if they say that,

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Speaker 1: look we're going to We're happy to move by smaller increments,

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Speaker 1: but you all need to be ready for FED funds

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Speaker 1: right ending up at a higher peak than everyone thought

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Speaker 1: even at the start of the year. And as you

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Speaker 1: mentioned there, Stephen, coming into the beginning of the year,

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Speaker 1: the whole nartive was global recession, European energy crisis, China

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Speaker 1: was in COVID zero, the US was meant to be

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Speaker 1: heading for our recession, and those sort of that kind

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Speaker 1: of addlicas changed in recent weeks, and inflation and we've

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Speaker 1: had spending in the US continue to surprise in the upside,

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Speaker 1: and therefore the Fed is under pressure to keep raising

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Speaker 1: rates because inflation inflation remains well outside of this two

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Speaker 1: percent target. Okay, last week Levetemesta and James Bullard said

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Speaker 1: that larger hikes were still possible, So there was a

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Speaker 1: kind of flag that went up. But then non voting members,

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Speaker 1: how much support could they have on the committee? Is

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Speaker 1: that something we'll find out for the minutes. Well, yeah,

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Speaker 1: I guess number one, they are non voting as you mentioned,

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Speaker 1: but Jim Bullard, I guess in particular, is a well

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Speaker 1: known hawk, so he's probably expected to be in that

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Speaker 1: end of the spectrum. I think it would be something

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Speaker 1: of a surprise for the FED to turn around and

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Speaker 1: start going from twenty five back to fifty. That maybe

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Speaker 1: would signal that if they've lost control of the trajectory

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Speaker 1: of our policies heading or at least they're panicking a

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Speaker 1: little bit. Sherman Powell has made the point time and

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Speaker 1: again there they're going to watching dada. I think the

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Speaker 1: key takeaway for the Minutes will be that the idea

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Speaker 1: that the FEDER were getting close to a pause, I

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Speaker 1: think it's probably going to have to push back further now.

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Speaker 1: That's just because of what we saw in remember those

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Speaker 1: red hot job numbers that came in for the month

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Speaker 1: of January. We've seen retail spending in the US continue

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Speaker 1: to be very strong, despite what's happened with the interest

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Speaker 1: rates and boring costs over there over the past a

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Speaker 1: year or so. And then of course you have inflation

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Speaker 1: reading itself remaining somewhat elevated, and in fact, in some

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Speaker 1: areas given the change to the methodology, we've seen actually

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Speaker 1: inflation started increase again in sections like clothing for example,

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Speaker 1: even though it had been slowing down last year. So

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Speaker 1: still plenty of concern there, and I think that's causing

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Speaker 1: people who ad just readjust on where the FED is going.

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