WEBVTT - BoE Turns a Corner And Adani's Wealth Wipeout

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<v Speaker 1>This is Bloomberg Daybreak here for this Friday, the third

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<v Speaker 1>of February in London. Coming up today Bailey's interest gap.

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<v Speaker 1>The BAWI governor tells Bloomberger corner has been turned, but

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<v Speaker 1>there's work to do doubling up. The ECB hikes by

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<v Speaker 1>half a percent and signals the same again. In March,

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<v Speaker 1>a wealth whitefuse gouger M Dannie sees his fortune full

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<v Speaker 1>by close to sixty billion dollars as troubles mount Soon.

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<v Speaker 1>Act rules out massive pay rises for nurses, the risks

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<v Speaker 1>of delaying chip strategy and pre payment meters controversy. Those

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<v Speaker 1>are the stories we're looking at in today's papers. And

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<v Speaker 1>I'm leanne Garon's plus triple A troubles, Amazon, Apple and

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<v Speaker 1>Alphabet get way down by cooling demand. That's all straight

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<v Speaker 1>ahead on Bloomberg Daybreak Europe on DAB Digital Radio, London,

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<v Speaker 1>Bloomberg eleven three oh New York, Bloomberg Washington, d C,

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<v Speaker 1>Bloomberg one oh six one, Boston, Bloomberg nine six, San Francisco,

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<v Speaker 1>cyrus x M Channel one nineteen and around the world

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<v Speaker 1>on Bloomberg Radio dot com and via the Bloomberg Business Set.

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<v Speaker 1>Good morning, I'm Stephen Carroll and I'm Caroline Hitker. Here

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<v Speaker 1>are the stories that we're following today. The Bank of

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<v Speaker 1>England has signaled to the fastest pace of interest rate

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<v Speaker 1>hikes in three decades, maybe drawing to a close. Speaking

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<v Speaker 1>to Bloomberg's editor at large, Francine Laque, the Governor Andrew

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<v Speaker 1>Bailey said, it's too soon to declare victory on inflation.

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<v Speaker 1>We are going to react to the information and the

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<v Speaker 1>evidence that we see. We're not on We're not. We

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<v Speaker 1>haven't pre announced an intention because we have reached a

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<v Speaker 1>point and as I've said for I think we have

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<v Speaker 1>started to turn a corner that's encouraging. There's a long

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<v Speaker 1>way to go and there are a lot of risks. Yesterday, policymakers,

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<v Speaker 1>led by Andrew Bailey, voted seven to two to raise

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<v Speaker 1>the rate to four percent. That's the highest since two

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<v Speaker 1>thousand and eight. However, the bo's latest forecast show that

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<v Speaker 1>inflation is likely to fall sharply this year to around

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<v Speaker 1>four percent from a four decade high of eleven point

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<v Speaker 1>one last October. The central Bank's outlook is for a

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<v Speaker 1>shorter and shallower recession than it projected in November, well

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<v Speaker 1>a fifty basis point hike is a near certainty in March.

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<v Speaker 1>That's according to the ECB president Christine Lagarde. Her comments

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<v Speaker 1>came after the European Central Bank lifted its rates by

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<v Speaker 1>a half a percentage point to two and a half percent.

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<v Speaker 1>Speaking to journalists, Laguards sought to make her position on

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<v Speaker 1>the matter clear. It should be fifty this time around.

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<v Speaker 1>It intended to be fifty in March. Now you will say, well, yes,

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<v Speaker 1>but what about after March? Does that mean that you

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<v Speaker 1>have reached the pinnacle or the peak? No? No, no, no.

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<v Speaker 1>We know that we have ground to cover. We know

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<v Speaker 1>that we are not done. As you heard their Leaguards

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<v Speaker 1>sought underscore that hikes are likely to persist beyond next month.

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<v Speaker 1>That echoed the message from the Fed. Ched your own

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<v Speaker 1>Pal a day earlier, but as with Pal, investors were

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<v Speaker 1>not convince. Your bond's extended gains and European stocks now

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<v Speaker 1>are within striking distance of April run versus April of

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<v Speaker 1>last year. The value of Gajamdani's beleaguered empire has now

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<v Speaker 1>more than halved the one and twenty five billion dollar

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<v Speaker 1>wipeout comes less than two weeks after the accusations of

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<v Speaker 1>fraud by Hindenburg Research. A short seller now veteran emerging

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<v Speaker 1>markets investor, Mark Mobias told Bloomberg his firm didn't participate

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<v Speaker 1>in the Adani stock offering due to concerns over how

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<v Speaker 1>much the conglomerate had borrowed. It's all about debt, and

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<v Speaker 1>company and its associates heavily in debt and that's what

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<v Speaker 1>sort of scares away. That was Mark Mobia speaking to

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<v Speaker 1>Bloomberg Television. The Danni Group has repeatedly denied the allegations

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<v Speaker 1>from Hindenburg, calling their report bogus. Whoever, the growing crisis

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<v Speaker 1>of confidence has seen Gautamadanni's personal fortune dropped by close

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<v Speaker 1>to sixty billion dollars. Now in the tech sector, three

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<v Speaker 1>mega companies have reported earnings. For Apple, it was the

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<v Speaker 1>first dropping courtly revenue in three and a half years.

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<v Speaker 1>The smartphone giant blamed supply snags and softening demand from

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<v Speaker 1>the poor holiday A sales CEO Tim Cook says, it's

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<v Speaker 1>a difficult period for the company as a result of

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<v Speaker 1>a challenging environment. Our revenue was down five percent year

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<v Speaker 1>over year. We remain confident in and focused on the

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<v Speaker 1>long term opportunity well Cook's long term optimism is driven

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<v Speaker 1>by China, where he expects the lifting of COVID restrictions

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<v Speaker 1>to bring back demand. Amazon's earnings didn't quite deliver, with

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<v Speaker 1>the web giant warning of slow cloud computing sales. It's

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<v Speaker 1>a troubling forecast because AWS Amazon Web Services has long

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<v Speaker 1>generated most of the company's profit. CEO Andy Jasse told

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<v Speaker 1>investors he's pairing back the business after a rapid expansion

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<v Speaker 1>during the pandemic. Probably the number one priority that I

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<v Speaker 1>spent time with the team on is reducing our cost

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<v Speaker 1>to serve and our operations network. Amazon started a new

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<v Speaker 1>round of upcuts last month that will eventually total eighteen

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<v Speaker 1>thousand employees. Meanwhile, Google parent Alphabet reported fourth quarter results

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<v Speaker 1>which narrowly missed analysts expectations. CFO Ruth Poet tell Bloomberg

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<v Speaker 1>that they too are looking to cut costs and slow harring.

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<v Speaker 1>Charlie Pellett has the numbers. Alphabet said sales excluding partner

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<v Speaker 1>payouts were sixty three point one billion dollars in the

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<v Speaker 1>fourth quarter. Analysts had projected sixty three point two billion,

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<v Speaker 1>according to data compiled by Bloomberg. The lackluster results come

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<v Speaker 1>as Google's core and business is under threat on multiple fronts,

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<v Speaker 1>and not just because of a slowing economy. The U.

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<v Speaker 1>S Department of Justice has called for a breakup of

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<v Speaker 1>the Search Giants AD technology business over alleged illegal monopolization

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<v Speaker 1>of the market, and the company's flagship search business maybe

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<v Speaker 1>under threat from new entrants in New York. Charlie Palett

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<v Speaker 1>Bloomberg Daybreak Europe. So those are a few of our

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<v Speaker 1>top stories. Um, there's lots of think about really today.

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<v Speaker 1>I mean, not least that the now stack looks to

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<v Speaker 1>beyond trap for bullmarket, but all of those disappointing earnings

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<v Speaker 1>for the big tech sector. They did see after hours

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<v Speaker 1>shares dropped for Alphabet, Amazon, Apple, all in the range

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<v Speaker 1>of about four percent. So that's, you know, one of

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<v Speaker 1>the big stories that we're thinking about today. You've also

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<v Speaker 1>got the US jobs report that's coming out. But plenty

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<v Speaker 1>more you interesting hearing on those Amazons or those good

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<v Speaker 1>Alphabet numbers, I should say, because of course there are

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<v Speaker 1>still plenty of alphab employees waiting to hear whether their

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<v Speaker 1>jobs are going to be safe enough. There still in

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<v Speaker 1>the middle of announcing the who's going to be affected

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<v Speaker 1>by the job cuts? Twelve thousand jobs and all that's

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<v Speaker 1>going to They're not the only ones, though, who are

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<v Speaker 1>considering what's going to be happening with jobs. That's part

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<v Speaker 1>of the story about Deutsche Bank preparing further further job

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<v Speaker 1>cuts keep casts and check, but could be set to

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<v Speaker 1>spare traders as it prepares that that reduction and staff numbers. Yeah,

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<v Speaker 1>it could be focused on the retail branches in Germany

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<v Speaker 1>in terms of job cards. I mean, Deutsche Bank did

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<v Speaker 1>already slash what thousands, I think it was about eight

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<v Speaker 1>thousand jobs in twenty nineteen. I think the other story

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<v Speaker 1>to think about is the consent continued pursuit also around

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<v Speaker 1>bankers and money managers. In the US, the SEC is

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<v Speaker 1>really getting tough on messaging, not just WhatsApp. Yes, they've

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<v Speaker 1>issued a billion dollars worth of fines, but apparently now

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<v Speaker 1>they're coming after people's mobile phones. They've asked certain businesses

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<v Speaker 1>to look at the personal mobile phones of their employees

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<v Speaker 1>just to make sure business isn't happening sort of somewhere

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<v Speaker 1>else in an avenue on people's personal mobiles. I thought

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<v Speaker 1>that was really interesting. Yeah, definitely a story to watch

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<v Speaker 1>given all of the regulator decisions we've had on that

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<v Speaker 1>issue already up next Seago was out massive pay rise

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<v Speaker 1>for a nurse, the risks of delaying chip strategy and

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<v Speaker 1>controversy over prepayment meters. Now the paper review on bluebirdday

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<v Speaker 1>Break Europe. The news you need to know from today's

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<v Speaker 1>papers fusic again, so as it's now for a roundup

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<v Speaker 1>of today's papers. The Financial Times headline reads Soonac says

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<v Speaker 1>UK cannot afford quote massive pay rises for nurses. This

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<v Speaker 1>is the Prime Minister again laying things out, Leon Goins,

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<v Speaker 1>What did he say? Yes? Indeed, good morning to you

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<v Speaker 1>Friday Friday, Caroline. I was going to say Happy Friday

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<v Speaker 1>and all just went into one. Say everyone out there,

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<v Speaker 1>happy Friday. Now. Speaking to Pis Morgan on Talk TV

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<v Speaker 1>last night, Caroline, the Prime Minister just continued to take

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<v Speaker 1>the super tough line on pay rises for nurses. Now.

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<v Speaker 1>This comes ahead of strike action next week. The Royal

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<v Speaker 1>College of Nursing is asking for this pay rise to

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<v Speaker 1>really battle inflation and a demand. That demand has been

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<v Speaker 1>rejected by both the Prime Minister, Rishi Sunac and also

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<v Speaker 1>by the labor leader Kia Starmer. While speaking to Pis Morgan's,

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<v Speaker 1>Sunac also insisted that the government can just not afford

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<v Speaker 1>these massive pay rises at the moment and this is

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<v Speaker 1>due to inflation. Of course. Yesterday we saw a rise

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<v Speaker 1>in int as rates and the economy is said to

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<v Speaker 1>be going into the shallower recession, even though it's going

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<v Speaker 1>to be shorter. And this leaves room really for Steve Barkley,

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<v Speaker 1>the Health Secretary, to make nurses a big one off

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<v Speaker 1>payment or backdating a more generous pay rise. And according

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<v Speaker 1>to the Financial Times, the wave of strike action across

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<v Speaker 1>the country is really sapping support for the Prime Minister

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<v Speaker 1>and our very own Kitty Donaldson has a really great

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<v Speaker 1>place on the Bloomberg terminal today. It's called soon next

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<v Speaker 1>Rocky premiership after one hundred days of strikes and scandals.

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<v Speaker 1>The Prime Minister has only been in on what office

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<v Speaker 1>one hundred days and that was yesterday. So if you

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<v Speaker 1>do read that piece, it's very interesting, Okay, Leon, Let's

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<v Speaker 1>turn to the Times next. It says the chip industry

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<v Speaker 1>delays pose and national risk. Yes, indeed, so the Chairman

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<v Speaker 1>of the Commons Business Select Committee, that's Darren Jones, has

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<v Speaker 1>a superstark warning when it comes to the chip industry

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<v Speaker 1>here in the UK and the labor MP says a

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<v Speaker 1>lack of national strategy to secure supply chains for semiconductors

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<v Speaker 1>is actually quote an act of national self harm. The

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<v Speaker 1>Times newspaper reports that the UK needs to act swiftly

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<v Speaker 1>to keep up with the US, the EU and Japan.

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<v Speaker 1>The Department for Digital Culture and Media and Sport was

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<v Speaker 1>supposed to lay out a plan for the microchip industry

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<v Speaker 1>here in the UK last autumn. However, that has been

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<v Speaker 1>delayed and it's very long overdue, and I just want

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<v Speaker 1>to say one thing Darren Jones also mentioned is semiconductors

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<v Speaker 1>are the brains of modern electronics, used in everything from

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<v Speaker 1>mobile phones to cars to wind turbines. So really knuckling

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<v Speaker 1>down there, and the fact that it's so important we

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<v Speaker 1>have our own industry in order to make sure those

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<v Speaker 1>things are secured. There's also another striking story though in

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<v Speaker 1>The Times, as a big photograph on the front page

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<v Speaker 1>and the headline of art O debt collector reviewed by

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<v Speaker 1>Watchdog over gas meter breakers. Yes, indeed and Caroline we

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<v Speaker 1>were discussing this early and it's a very very emotive

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<v Speaker 1>piece that has been in the news for the last

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<v Speaker 1>couple of weeks, and The Times is continuing with its

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<v Speaker 1>investigation on this and on British Gas, and the company

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<v Speaker 1>has been banned from force fitting pre payment meters to

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<v Speaker 1>protect its vulnerable customers, and all other major energy companies

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<v Speaker 1>have also agreed to suspend this practice. Now, this follows

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<v Speaker 1>the paper's deep dive into the situation and it has

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<v Speaker 1>now been revealed the debt collection company used by British

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<v Speaker 1>Gas is also been closely reviewed by the Financial Conduct

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<v Speaker 1>Authority and this comes after the time alleged that Avarto

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<v Speaker 1>obtained warrants gaining access to homes of vulnerable customers to

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<v Speaker 1>force fit these energy payment meters when they just weren't

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<v Speaker 1>able to pay for their energy bills. As we do know,

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<v Speaker 1>they have really skyrocketed. But the German company does not

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<v Speaker 1>have a direct role in regulating the collection of utility debts. However,

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<v Speaker 1>the f c A have said that any rogue behavior

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<v Speaker 1>could have an impact on the company's overall fitness to practice. Now,

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<v Speaker 1>a spokesman for the German parent company said yesterday that

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<v Speaker 1>it expects a Varto to comply with the law and

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<v Speaker 1>to adhere to the company's code of conduct. And also

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<v Speaker 1>the British Gas have made a statement apologizing for what

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<v Speaker 1>has happened when it comes to vulnerable people and these

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<v Speaker 1>pre payment meters. Yeah, I thought that was it was

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<v Speaker 1>a very interesting story and it has dominated the news

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<v Speaker 1>over the last sort of week, the investigations into pre

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<v Speaker 1>payment meters at a time of very high energy costs. So, yeah,

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<v Speaker 1>that's a very interesting one to follow in the Times newspaper.

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<v Speaker 1>Lean go and thank you so much for that newspaper review. Well,

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<v Speaker 1>let's get back to our conversation around central banks. That

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<v Speaker 1>there wasn't much caroline in Andrew Bailey's either commentary or

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<v Speaker 1>interview to be optimistic about. No. I thought it was

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<v Speaker 1>completely bleak. The economy is already in recession, pre pandemic

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<v Speaker 1>levels of output are not going to come back until

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<v Speaker 1>six The forecast for growth in Britain it's only seven

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<v Speaker 1>tenths of one for the next three years. It's a

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<v Speaker 1>very very difficult moment, even though it does look like markets,

0:13:25.760 --> 0:13:28.120
<v Speaker 1>you know, took it as read that the hiking cycle

0:13:28.240 --> 0:13:30.560
<v Speaker 1>is coming to an end. Well, that key phrase was

0:13:30.920 --> 0:13:33.800
<v Speaker 1>a corner has been turned a center bank speak goes.

0:13:33.840 --> 0:13:36.560
<v Speaker 1>Markets are taking that line as cautious optimism from Governor

0:13:36.600 --> 0:13:39.440
<v Speaker 1>Andrew Bailey. Bloom Books editor at large. Francy Lacque spoke

0:13:39.480 --> 0:13:41.440
<v Speaker 1>to the governor yesterday and asked him where rates will

0:13:41.440 --> 0:13:44.959
<v Speaker 1>eventually settle. We don't have a view on the neutral rate,

0:13:44.960 --> 0:13:47.920
<v Speaker 1>which actually shapes our decision making at the moment. And

0:13:47.960 --> 0:13:50.439
<v Speaker 1>the reason for that. You might say, that's a interesting

0:13:50.480 --> 0:13:52.440
<v Speaker 1>thing for me to say, But the reason is that

0:13:52.559 --> 0:13:56.200
<v Speaker 1>there is such uncertainty at the moment. Uh. You know,

0:13:56.360 --> 0:13:59.439
<v Speaker 1>in the landscape that we face, we've got very big

0:13:59.760 --> 0:14:03.440
<v Speaker 1>move being parts. We've had very big shocks, and particularly

0:14:03.440 --> 0:14:05.760
<v Speaker 1>there are big shocks on the supply side. But if

0:14:05.800 --> 0:14:07.920
<v Speaker 1>you look at the market reaction, so you hiked by

0:14:07.960 --> 0:14:10.240
<v Speaker 1>fifty basis points and the market is taken this as

0:14:10.240 --> 0:14:13.280
<v Speaker 1>a devish message, are they right? Well, the market, of

0:14:13.320 --> 0:14:16.280
<v Speaker 1>course was expecting us to hike by fifty basis points.

0:14:15.920 --> 0:14:18.280
<v Speaker 1>Sim don't think they will have been surprised by that.

0:14:19.520 --> 0:14:21.520
<v Speaker 1>I think the market obos to be focused on what

0:14:21.560 --> 0:14:24.520
<v Speaker 1>we do next and they will have seen some change

0:14:24.560 --> 0:14:27.160
<v Speaker 1>in our language and they that's deliberate. I mean that

0:14:27.240 --> 0:14:30.480
<v Speaker 1>change is obviously deliberate. And the way I would interpret

0:14:30.520 --> 0:14:33.760
<v Speaker 1>it is to say, we are going to react to

0:14:33.800 --> 0:14:36.760
<v Speaker 1>the information and the evidence that we see. We're not

0:14:36.840 --> 0:14:40.040
<v Speaker 1>on We're not we haven't pre announced an intention because

0:14:40.040 --> 0:14:41.800
<v Speaker 1>we have reached a point. You As I've said before,

0:14:41.840 --> 0:14:45.800
<v Speaker 1>I think we have started to turn a corner that's encouraging.

0:14:46.000 --> 0:14:47.560
<v Speaker 1>There's a long way to go and there are a

0:14:47.560 --> 0:14:49.720
<v Speaker 1>lot of risks. How soon do you think we'll see

0:14:49.720 --> 0:14:51.920
<v Speaker 1>it cut? From the Bank in England, we're not in

0:14:52.560 --> 0:14:54.880
<v Speaker 1>We're not in a position of speculating on that at

0:14:54.880 --> 0:14:57.800
<v Speaker 1>the moment. That's that's that's all. That's all somewhere in

0:14:57.800 --> 0:15:01.680
<v Speaker 1>the future, not this year. We're not speculating on what

0:15:01.800 --> 0:15:04.200
<v Speaker 1>it is I say in the future, because you know

0:15:04.440 --> 0:15:05.920
<v Speaker 1>rates do go up and down in the long run,

0:15:06.000 --> 0:15:10.280
<v Speaker 1>but when we have no date in our speculation. We've

0:15:10.280 --> 0:15:11.680
<v Speaker 1>heard a lot from the Bank in England about the

0:15:11.680 --> 0:15:14.960
<v Speaker 1>many sharks that this economy is facing. What's the prescription

0:15:15.120 --> 0:15:17.720
<v Speaker 1>to fix this longer term? Well, I think I mean

0:15:17.720 --> 0:15:19.880
<v Speaker 1>there's a number of issues that come out of them. Obviously,

0:15:20.040 --> 0:15:25.280
<v Speaker 1>some of those shocks are external and relate to very sadly,

0:15:25.280 --> 0:15:29.160
<v Speaker 1>obviously the war in Ukraine, which is terrible. Um, we

0:15:29.200 --> 0:15:31.960
<v Speaker 1>are beginning that the energy prices come down quite rapidly,

0:15:32.560 --> 0:15:35.520
<v Speaker 1>Food commodity prices have sort of seemed to have reached

0:15:35.560 --> 0:15:37.800
<v Speaker 1>at least a level, but it's not coming through and

0:15:38.080 --> 0:15:43.520
<v Speaker 1>yet in retail food prices, so obviously that's important. Um,

0:15:44.800 --> 0:15:46.600
<v Speaker 1>Europe has had a much better winter from the point

0:15:46.600 --> 0:15:49.200
<v Speaker 1>of view of energy than I think people feared, so

0:15:49.320 --> 0:15:54.160
<v Speaker 1>that's important. And then domestically, labor supply is the big issue.

0:15:54.200 --> 0:15:56.720
<v Speaker 1>I think just getting closer to the EU change that

0:15:56.960 --> 0:16:00.240
<v Speaker 1>does it change the trajectory for the UK economy in

0:16:00.240 --> 0:16:02.640
<v Speaker 1>the context of the of the EU, in the context

0:16:02.680 --> 0:16:07.080
<v Speaker 1>of Brexit, well, I think what we were identified as

0:16:07.280 --> 0:16:09.120
<v Speaker 1>is at least three big shocks that we can see.

0:16:09.160 --> 0:16:11.320
<v Speaker 1>There's been a there's been COVID, there's been energy, and

0:16:11.960 --> 0:16:14.840
<v Speaker 1>has been Brexit. It's very hard to separate them out.

0:16:15.160 --> 0:16:17.800
<v Speaker 1>But the judgment that we've we've we've sort of reached

0:16:17.800 --> 0:16:20.480
<v Speaker 1>on rather tentative, but I think the evidence is pointing

0:16:20.520 --> 0:16:24.320
<v Speaker 1>that way. Is that we identified that there would be, yeah,

0:16:24.360 --> 0:16:27.480
<v Speaker 1>a shock to UK productivity from the reduced openness of

0:16:27.480 --> 0:16:30.320
<v Speaker 1>the economy. We thought that might might emerged over a

0:16:30.440 --> 0:16:34.120
<v Speaker 1>rather longer period. You know, on our latest evidence, it's

0:16:34.120 --> 0:16:37.000
<v Speaker 1>probably going to emerge over a rather shorter period and

0:16:37.040 --> 0:16:39.600
<v Speaker 1>possibly by the end of the forecasts arising, so look

0:16:39.640 --> 0:16:43.200
<v Speaker 1>forward to three years. This is Bloomberg Daybreak Europe. Your

0:16:43.280 --> 0:16:45.840
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