Speaker 1: This is Bloomberg Daybreak here for this Friday, the third
Speaker 1: of February in London. Coming up today Bailey's interest gap.
Speaker 1: The BAWI governor tells Bloomberger corner has been turned, but
Speaker 1: there's work to do doubling up. The ECB hikes by
Speaker 1: half a percent and signals the same again. In March,
Speaker 1: a wealth whitefuse gouger M Dannie sees his fortune full
Speaker 1: by close to sixty billion dollars as troubles mount Soon.
Speaker 1: Act rules out massive pay rises for nurses, the risks
Speaker 1: of delaying chip strategy and pre payment meters controversy. Those
Speaker 1: are the stories we're looking at in today's papers. And
Speaker 1: I'm leanne Garon's plus triple A troubles, Amazon, Apple and
Speaker 1: Alphabet get way down by cooling demand. That's all straight
Speaker 1: ahead on Bloomberg Daybreak Europe on DAB Digital Radio, London,
Speaker 1: Bloomberg eleven three oh New York, Bloomberg Washington, d C,
Speaker 1: Bloomberg one oh six one, Boston, Bloomberg nine six, San Francisco,
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Speaker 1: on Bloomberg Radio dot com and via the Bloomberg Business Set.
Speaker 1: Good morning, I'm Stephen Carroll and I'm Caroline Hitker. Here
Speaker 1: are the stories that we're following today. The Bank of
Speaker 1: England has signaled to the fastest pace of interest rate
Speaker 1: hikes in three decades, maybe drawing to a close. Speaking
Speaker 1: to Bloomberg's editor at large, Francine Laque, the Governor Andrew
Speaker 1: Bailey said, it's too soon to declare victory on inflation.
Speaker 1: We are going to react to the information and the
Speaker 1: evidence that we see. We're not on We're not. We
Speaker 1: haven't pre announced an intention because we have reached a
Speaker 1: point and as I've said for I think we have
Speaker 1: started to turn a corner that's encouraging. There's a long
Speaker 1: way to go and there are a lot of risks. Yesterday, policymakers,
Speaker 1: led by Andrew Bailey, voted seven to two to raise
Speaker 1: the rate to four percent. That's the highest since two
Speaker 1: thousand and eight. However, the bo's latest forecast show that
Speaker 1: inflation is likely to fall sharply this year to around
Speaker 1: four percent from a four decade high of eleven point
Speaker 1: one last October. The central Bank's outlook is for a
Speaker 1: shorter and shallower recession than it projected in November, well
Speaker 1: a fifty basis point hike is a near certainty in March.
Speaker 1: That's according to the ECB president Christine Lagarde. Her comments
Speaker 1: came after the European Central Bank lifted its rates by
Speaker 1: a half a percentage point to two and a half percent.
Speaker 1: Speaking to journalists, Laguards sought to make her position on
Speaker 1: the matter clear. It should be fifty this time around.
Speaker 1: It intended to be fifty in March. Now you will say, well, yes,
Speaker 1: but what about after March? Does that mean that you
Speaker 1: have reached the pinnacle or the peak? No? No, no, no.
Speaker 1: We know that we have ground to cover. We know
Speaker 1: that we are not done. As you heard their Leaguards
Speaker 1: sought underscore that hikes are likely to persist beyond next month.
Speaker 1: That echoed the message from the Fed. Ched your own
Speaker 1: Pal a day earlier, but as with Pal, investors were
Speaker 1: not convince. Your bond's extended gains and European stocks now
Speaker 1: are within striking distance of April run versus April of
Speaker 1: last year. The value of Gajamdani's beleaguered empire has now
Speaker 1: more than halved the one and twenty five billion dollar
Speaker 1: wipeout comes less than two weeks after the accusations of
Speaker 1: fraud by Hindenburg Research. A short seller now veteran emerging
Speaker 1: markets investor, Mark Mobias told Bloomberg his firm didn't participate
Speaker 1: in the Adani stock offering due to concerns over how
Speaker 1: much the conglomerate had borrowed. It's all about debt, and
Speaker 1: company and its associates heavily in debt and that's what
Speaker 1: sort of scares away. That was Mark Mobia speaking to
Speaker 1: Bloomberg Television. The Danni Group has repeatedly denied the allegations
Speaker 1: from Hindenburg, calling their report bogus. Whoever, the growing crisis
Speaker 1: of confidence has seen Gautamadanni's personal fortune dropped by close
Speaker 1: to sixty billion dollars. Now in the tech sector, three
Speaker 1: mega companies have reported earnings. For Apple, it was the
Speaker 1: first dropping courtly revenue in three and a half years.
Speaker 1: The smartphone giant blamed supply snags and softening demand from
Speaker 1: the poor holiday A sales CEO Tim Cook says, it's
Speaker 1: a difficult period for the company as a result of
Speaker 1: a challenging environment. Our revenue was down five percent year
Speaker 1: over year. We remain confident in and focused on the
Speaker 1: long term opportunity well Cook's long term optimism is driven
Speaker 1: by China, where he expects the lifting of COVID restrictions
Speaker 1: to bring back demand. Amazon's earnings didn't quite deliver, with
Speaker 1: the web giant warning of slow cloud computing sales. It's
Speaker 1: a troubling forecast because AWS Amazon Web Services has long
Speaker 1: generated most of the company's profit. CEO Andy Jasse told
Speaker 1: investors he's pairing back the business after a rapid expansion
Speaker 1: during the pandemic. Probably the number one priority that I
Speaker 1: spent time with the team on is reducing our cost
Speaker 1: to serve and our operations network. Amazon started a new
Speaker 1: round of upcuts last month that will eventually total eighteen
Speaker 1: thousand employees. Meanwhile, Google parent Alphabet reported fourth quarter results
Speaker 1: which narrowly missed analysts expectations. CFO Ruth Poet tell Bloomberg
Speaker 1: that they too are looking to cut costs and slow harring.
Speaker 1: Charlie Pellett has the numbers. Alphabet said sales excluding partner
Speaker 1: payouts were sixty three point one billion dollars in the
Speaker 1: fourth quarter. Analysts had projected sixty three point two billion,
Speaker 1: according to data compiled by Bloomberg. The lackluster results come
Speaker 1: as Google's core and business is under threat on multiple fronts,
Speaker 1: and not just because of a slowing economy. The U.
Speaker 1: S Department of Justice has called for a breakup of
Speaker 1: the Search Giants AD technology business over alleged illegal monopolization
Speaker 1: of the market, and the company's flagship search business maybe
Speaker 1: under threat from new entrants in New York. Charlie Palett
Speaker 1: Bloomberg Daybreak Europe. So those are a few of our
Speaker 1: top stories. Um, there's lots of think about really today.
Speaker 1: I mean, not least that the now stack looks to
Speaker 1: beyond trap for bullmarket, but all of those disappointing earnings
Speaker 1: for the big tech sector. They did see after hours
Speaker 1: shares dropped for Alphabet, Amazon, Apple, all in the range
Speaker 1: of about four percent. So that's, you know, one of
Speaker 1: the big stories that we're thinking about today. You've also
Speaker 1: got the US jobs report that's coming out. But plenty
Speaker 1: more you interesting hearing on those Amazons or those good
Speaker 1: Alphabet numbers, I should say, because of course there are
Speaker 1: still plenty of alphab employees waiting to hear whether their
Speaker 1: jobs are going to be safe enough. There still in
Speaker 1: the middle of announcing the who's going to be affected
Speaker 1: by the job cuts? Twelve thousand jobs and all that's
Speaker 1: going to They're not the only ones, though, who are
Speaker 1: considering what's going to be happening with jobs. That's part
Speaker 1: of the story about Deutsche Bank preparing further further job
Speaker 1: cuts keep casts and check, but could be set to
Speaker 1: spare traders as it prepares that that reduction and staff numbers. Yeah,
Speaker 1: it could be focused on the retail branches in Germany
Speaker 1: in terms of job cards. I mean, Deutsche Bank did
Speaker 1: already slash what thousands, I think it was about eight
Speaker 1: thousand jobs in twenty nineteen. I think the other story
Speaker 1: to think about is the consent continued pursuit also around
Speaker 1: bankers and money managers. In the US, the SEC is
Speaker 1: really getting tough on messaging, not just WhatsApp. Yes, they've
Speaker 1: issued a billion dollars worth of fines, but apparently now
Speaker 1: they're coming after people's mobile phones. They've asked certain businesses
Speaker 1: to look at the personal mobile phones of their employees
Speaker 1: just to make sure business isn't happening sort of somewhere
Speaker 1: else in an avenue on people's personal mobiles. I thought
Speaker 1: that was really interesting. Yeah, definitely a story to watch
Speaker 1: given all of the regulator decisions we've had on that
Speaker 1: issue already up next Seago was out massive pay rise
Speaker 1: for a nurse, the risks of delaying chip strategy and
Speaker 1: controversy over prepayment meters. Now the paper review on bluebirdday
Speaker 1: Break Europe. The news you need to know from today's
Speaker 1: papers fusic again, so as it's now for a roundup
Speaker 1: of today's papers. The Financial Times headline reads Soonac says
Speaker 1: UK cannot afford quote massive pay rises for nurses. This
Speaker 1: is the Prime Minister again laying things out, Leon Goins,
Speaker 1: What did he say? Yes? Indeed, good morning to you
Speaker 1: Friday Friday, Caroline. I was going to say Happy Friday
Speaker 1: and all just went into one. Say everyone out there,
Speaker 1: happy Friday. Now. Speaking to Pis Morgan on Talk TV
Speaker 1: last night, Caroline, the Prime Minister just continued to take
Speaker 1: the super tough line on pay rises for nurses. Now.
Speaker 1: This comes ahead of strike action next week. The Royal
Speaker 1: College of Nursing is asking for this pay rise to
Speaker 1: really battle inflation and a demand. That demand has been
Speaker 1: rejected by both the Prime Minister, Rishi Sunac and also
Speaker 1: by the labor leader Kia Starmer. While speaking to Pis Morgan's,
Speaker 1: Sunac also insisted that the government can just not afford
Speaker 1: these massive pay rises at the moment and this is
Speaker 1: due to inflation. Of course. Yesterday we saw a rise
Speaker 1: in int as rates and the economy is said to
Speaker 1: be going into the shallower recession, even though it's going
Speaker 1: to be shorter. And this leaves room really for Steve Barkley,
Speaker 1: the Health Secretary, to make nurses a big one off
Speaker 1: payment or backdating a more generous pay rise. And according
Speaker 1: to the Financial Times, the wave of strike action across
Speaker 1: the country is really sapping support for the Prime Minister
Speaker 1: and our very own Kitty Donaldson has a really great
Speaker 1: place on the Bloomberg terminal today. It's called soon next
Speaker 1: Rocky premiership after one hundred days of strikes and scandals.
Speaker 1: The Prime Minister has only been in on what office
Speaker 1: one hundred days and that was yesterday. So if you
Speaker 1: do read that piece, it's very interesting, Okay, Leon, Let's
Speaker 1: turn to the Times next. It says the chip industry
Speaker 1: delays pose and national risk. Yes, indeed, so the Chairman
Speaker 1: of the Commons Business Select Committee, that's Darren Jones, has
Speaker 1: a superstark warning when it comes to the chip industry
Speaker 1: here in the UK and the labor MP says a
Speaker 1: lack of national strategy to secure supply chains for semiconductors
Speaker 1: is actually quote an act of national self harm. The
Speaker 1: Times newspaper reports that the UK needs to act swiftly
Speaker 1: to keep up with the US, the EU and Japan.
Speaker 1: The Department for Digital Culture and Media and Sport was
Speaker 1: supposed to lay out a plan for the microchip industry
Speaker 1: here in the UK last autumn. However, that has been
Speaker 1: delayed and it's very long overdue, and I just want
Speaker 1: to say one thing Darren Jones also mentioned is semiconductors
Speaker 1: are the brains of modern electronics, used in everything from
Speaker 1: mobile phones to cars to wind turbines. So really knuckling
Speaker 1: down there, and the fact that it's so important we
Speaker 1: have our own industry in order to make sure those
Speaker 1: things are secured. There's also another striking story though in
Speaker 1: The Times, as a big photograph on the front page
Speaker 1: and the headline of art O debt collector reviewed by
Speaker 1: Watchdog over gas meter breakers. Yes, indeed and Caroline we
Speaker 1: were discussing this early and it's a very very emotive
Speaker 1: piece that has been in the news for the last
Speaker 1: couple of weeks, and The Times is continuing with its
Speaker 1: investigation on this and on British Gas, and the company
Speaker 1: has been banned from force fitting pre payment meters to
Speaker 1: protect its vulnerable customers, and all other major energy companies
Speaker 1: have also agreed to suspend this practice. Now, this follows
Speaker 1: the paper's deep dive into the situation and it has
Speaker 1: now been revealed the debt collection company used by British
Speaker 1: Gas is also been closely reviewed by the Financial Conduct
Speaker 1: Authority and this comes after the time alleged that Avarto
Speaker 1: obtained warrants gaining access to homes of vulnerable customers to
Speaker 1: force fit these energy payment meters when they just weren't
Speaker 1: able to pay for their energy bills. As we do know,
Speaker 1: they have really skyrocketed. But the German company does not
Speaker 1: have a direct role in regulating the collection of utility debts. However,
Speaker 1: the f c A have said that any rogue behavior
Speaker 1: could have an impact on the company's overall fitness to practice. Now,
Speaker 1: a spokesman for the German parent company said yesterday that
Speaker 1: it expects a Varto to comply with the law and
Speaker 1: to adhere to the company's code of conduct. And also
Speaker 1: the British Gas have made a statement apologizing for what
Speaker 1: has happened when it comes to vulnerable people and these
Speaker 1: pre payment meters. Yeah, I thought that was it was
Speaker 1: a very interesting story and it has dominated the news
Speaker 1: over the last sort of week, the investigations into pre
Speaker 1: payment meters at a time of very high energy costs. So, yeah,
Speaker 1: that's a very interesting one to follow in the Times newspaper.
Speaker 1: Lean go and thank you so much for that newspaper review. Well,
Speaker 1: let's get back to our conversation around central banks. That
Speaker 1: there wasn't much caroline in Andrew Bailey's either commentary or
Speaker 1: interview to be optimistic about. No. I thought it was
Speaker 1: completely bleak. The economy is already in recession, pre pandemic
Speaker 1: levels of output are not going to come back until
Speaker 1: six The forecast for growth in Britain it's only seven
Speaker 1: tenths of one for the next three years. It's a
Speaker 1: very very difficult moment, even though it does look like markets,
Speaker 1: you know, took it as read that the hiking cycle
Speaker 1: is coming to an end. Well, that key phrase was
Speaker 1: a corner has been turned a center bank speak goes.
Speaker 1: Markets are taking that line as cautious optimism from Governor
Speaker 1: Andrew Bailey. Bloom Books editor at large. Francy Lacque spoke
Speaker 1: to the governor yesterday and asked him where rates will
Speaker 1: eventually settle. We don't have a view on the neutral rate,
Speaker 1: which actually shapes our decision making at the moment. And
Speaker 1: the reason for that. You might say, that's a interesting
Speaker 1: thing for me to say, But the reason is that
Speaker 1: there is such uncertainty at the moment. Uh. You know,
Speaker 1: in the landscape that we face, we've got very big
Speaker 1: move being parts. We've had very big shocks, and particularly
Speaker 1: there are big shocks on the supply side. But if
Speaker 1: you look at the market reaction, so you hiked by
Speaker 1: fifty basis points and the market is taken this as
Speaker 1: a devish message, are they right? Well, the market, of
Speaker 1: course was expecting us to hike by fifty basis points.
Speaker 1: Sim don't think they will have been surprised by that.
Speaker 1: I think the market obos to be focused on what
Speaker 1: we do next and they will have seen some change
Speaker 1: in our language and they that's deliberate. I mean that
Speaker 1: change is obviously deliberate. And the way I would interpret
Speaker 1: it is to say, we are going to react to
Speaker 1: the information and the evidence that we see. We're not
Speaker 1: on We're not we haven't pre announced an intention because
Speaker 1: we have reached a point. You As I've said before,
Speaker 1: I think we have started to turn a corner that's encouraging.
Speaker 1: There's a long way to go and there are a
Speaker 1: lot of risks. How soon do you think we'll see
Speaker 1: it cut? From the Bank in England, we're not in
Speaker 1: We're not in a position of speculating on that at
Speaker 1: the moment. That's that's that's all. That's all somewhere in
Speaker 1: the future, not this year. We're not speculating on what
Speaker 1: it is I say in the future, because you know
Speaker 1: rates do go up and down in the long run,
Speaker 1: but when we have no date in our speculation. We've
Speaker 1: heard a lot from the Bank in England about the
Speaker 1: many sharks that this economy is facing. What's the prescription
Speaker 1: to fix this longer term? Well, I think I mean
Speaker 1: there's a number of issues that come out of them. Obviously,
Speaker 1: some of those shocks are external and relate to very sadly,
Speaker 1: obviously the war in Ukraine, which is terrible. Um, we
Speaker 1: are beginning that the energy prices come down quite rapidly,
Speaker 1: Food commodity prices have sort of seemed to have reached
Speaker 1: at least a level, but it's not coming through and
Speaker 1: yet in retail food prices, so obviously that's important. Um,
Speaker 1: Europe has had a much better winter from the point
Speaker 1: of view of energy than I think people feared, so
Speaker 1: that's important. And then domestically, labor supply is the big issue.
Speaker 1: I think just getting closer to the EU change that
Speaker 1: does it change the trajectory for the UK economy in
Speaker 1: the context of the of the EU, in the context
Speaker 1: of Brexit, well, I think what we were identified as
Speaker 1: is at least three big shocks that we can see.
Speaker 1: There's been a there's been COVID, there's been energy, and
Speaker 1: has been Brexit. It's very hard to separate them out.
Speaker 1: But the judgment that we've we've we've sort of reached
Speaker 1: on rather tentative, but I think the evidence is pointing
Speaker 1: that way. Is that we identified that there would be, yeah,
Speaker 1: a shock to UK productivity from the reduced openness of
Speaker 1: the economy. We thought that might might emerged over a
Speaker 1: rather longer period. You know, on our latest evidence, it's
Speaker 1: probably going to emerge over a rather shorter period and
Speaker 1: possibly by the end of the forecasts arising, so look
Speaker 1: forward to three years. This is Bloomberg Daybreak Europe. Your
Speaker 1: morning brief on this story is making news from London
Speaker 1: to Wall Streets and beyond. Look for us on your
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