WEBVTT - Daybreak Europe: January 24, 2023

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<v Speaker 1>This is Bloomberg day Baker for this Tuesday, the twenty

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<v Speaker 1>fourth of January in London. Coming up this hour, leguard

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<v Speaker 1>on Guard, the ECB president, says the bank will stay

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<v Speaker 1>the course on inflation searching for competition, the US Justice

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<v Speaker 1>Department prepares to sue Google over its digital ad dominance.

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<v Speaker 1>In a tweet, elon Must tells a jury he had

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<v Speaker 1>the funding needed to take Tessler private and twenty eighteen

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<v Speaker 1>regulator role reversal, low tax loons and putting the OH

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<v Speaker 1>in O N s. Those are the stories we're looking

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<v Speaker 1>at in today's papers. I'm James Wilcock. Plus Apple takes

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<v Speaker 1>hand eye coordination to the next level with a three

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<v Speaker 1>thousand dollar mixed reality headset. That's all straight ahead on

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<v Speaker 1>Bloomberg day Break Europe on d A B 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 O six one, Boston, Bloomberg nine sixties, San Francisco,

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<v Speaker 1>Cyrus XM Channel one nineteen, and around the world on

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<v Speaker 1>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 Hecker. Here

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<v Speaker 1>are the stories that we're following today. ECB President Christine

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<v Speaker 1>Legarde says the bank will do everything necessary to return

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<v Speaker 1>inflation to its two percent goal. In a speech in Germany,

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<v Speaker 1>Laguard pointed to more significant interest rate increases in coming meetings.

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<v Speaker 1>That view is supported by JP Morgan's CEIO for Fixed

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<v Speaker 1>Income Ian Steely, who told Bloomberg's Jonathan Pharaoh that the

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<v Speaker 1>Central Bank has a way to go on rate hikes.

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<v Speaker 1>We were in a world where they were hiking rates

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<v Speaker 1>to deal with inflation. Now inflation is coming or likely

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<v Speaker 1>to come off because what's happening in energy prices that

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<v Speaker 1>should be good for the economy. Growth was supposed. We're

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<v Speaker 1>supposed to be in recession in Europe at the moment,

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<v Speaker 1>and we're not. So are the e C began and

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<v Speaker 1>maybe have to go slower but further as they try

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<v Speaker 1>to battle it. Does the ECB hike more than the Fed?

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<v Speaker 1>In yes, Steele's comment that add to the unfolding debate

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<v Speaker 1>over whether a slowdown in the pace of rate heights

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<v Speaker 1>is appropriate as inflation dips from all time highs. The

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<v Speaker 1>US Justice Department is poised to sue Google over the

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<v Speaker 1>search giants dominance and the digital advertising market. Bloomberg sources

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<v Speaker 1>say the case is expected to be filed in a

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<v Speaker 1>federal court before the end of the week. That also

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<v Speaker 1>will mark the Justice Department's second monopoly case against parent

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<v Speaker 1>company Alphabet. Google has said the market for online advertising

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<v Speaker 1>it's crowded and competitive. During his second day on the

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<v Speaker 1>stand in his security food trial, Elon Musk has defended

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<v Speaker 1>his tweet about taking Tesla private with more his Bloomberg's

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<v Speaker 1>head Baxter, the Crush of Tasham only shuttered around a

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<v Speaker 1>deal with a Shoudy public investment fund. He said he

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<v Speaker 1>had had a handshake agreement in getting help going private,

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<v Speaker 1>but then they began to back pedal on the arrangement

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<v Speaker 1>after his goal private tweet. He also said he had

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<v Speaker 1>support from Larry La Shan as well as two other

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<v Speaker 1>investment firms. Musco also noted the wording of the text

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<v Speaker 1>that he was contemplating taking the company private. He's back

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<v Speaker 1>on the stand today in San Francisco. I'm at Baxter

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<v Speaker 1>Bloomberg Daybreak Europe for his plans to cut around three thousand,

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<v Speaker 1>two hundred jobs across Europe, with the majority concentrated in Germany.

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<v Speaker 1>The cuts effect roles in development and administrative areas. It

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<v Speaker 1>follows workforce reductions in the US has forward slashers costs

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<v Speaker 1>in a shift towards electric vehicles and apples. Long anticipated

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<v Speaker 1>mixed reality headset would attempt to create a three D

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<v Speaker 1>version of the iPhones operating system. So also say that

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<v Speaker 1>it would include eye and hand tracking systems that could

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<v Speaker 1>set the technology apart from rival products. Bloombergs Apple correspondent

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<v Speaker 1>Mark German explains how it works. Where you control the

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<v Speaker 1>device is you can just look at something, whether you

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<v Speaker 1>want to launch an app, whether you want to swipe

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<v Speaker 1>through a list or toggle a setting, look at it

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<v Speaker 1>and then you pinch your thumb and your index finger

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<v Speaker 1>together when you're looking at it to launch it. Just

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<v Speaker 1>like on a touch screen you tap what you want

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<v Speaker 1>or on a mouse you point the cursor toward it

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<v Speaker 1>and then you click. This is you look and tap

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<v Speaker 1>your fingers together. So pretty nifty, Mark German. There well,

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<v Speaker 1>he says. The roughly three thousand dollar device will be

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<v Speaker 1>out later this year. It will probably be called Reality Probe. Well.

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<v Speaker 1>Here in the UK, Prime Minister Ishi soon Ac has

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<v Speaker 1>ordered a probe into Conservative Party Chairman of Deans and

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<v Speaker 1>how he's tax affairs. So how he says he was

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<v Speaker 1>careless with his tax affairs following a report that he

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<v Speaker 1>paid a five million pound bill to Revenue and Customs.

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<v Speaker 1>Labor Leader Kir Starmer condemned the lack of ethics. So

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<v Speaker 1>how we can't stay as Tory Party chair. The very

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<v Speaker 1>idea he can be discussing and negotiating his own tax

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<v Speaker 1>affairs with the body that he's supposed to be running.

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<v Speaker 1>Everybody knows it's wrong. Labor Leader Kir Starmer, there he

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<v Speaker 1>will be questioning the Prime Minister tomorrow. The PMS announced

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<v Speaker 1>probe follows allegations about financial impropriety among the Conservative Party

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<v Speaker 1>that have undermined the Prime Minister has planed to run

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<v Speaker 1>an administration beyond reproach. Okay, those are a few of

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<v Speaker 1>our top stories for you this morning. Listen. I've pulled

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<v Speaker 1>out of one of the kind of piles of most

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<v Speaker 1>interesting stories I've read this morning, Barkley's warning that there's

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<v Speaker 1>a real risk of greenwashing. We've talked so much over

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<v Speaker 1>the last couple of years around E s G. They

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<v Speaker 1>say that actually there's a real clash emerging market countries

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<v Speaker 1>want debt relief, they want to explore that sometimes that's

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<v Speaker 1>being tied to commitments to preserve nature. Barkley's have done

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<v Speaker 1>a lot of work and some research into this. They say,

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<v Speaker 1>actually the amount of money that goes towards this nature

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<v Speaker 1>conservation goals in those deals is often a small fraction

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<v Speaker 1>of the transaction size, so we should be really quite wary.

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<v Speaker 1>I think that's quite interesting that the E s G

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<v Speaker 1>is getting a lot of the sort of light what

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<v Speaker 1>has been seen as a win win. Actually their wide

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<v Speaker 1>could be green washing. No interesting stuff on my list

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<v Speaker 1>of interesting stories today is that the reopening of China's

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<v Speaker 1>borders could help the UK economy because of the tourists

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<v Speaker 1>coming here to spend more money. This is according to

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<v Speaker 1>apparently Yes point to percentage points of GDP could be

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<v Speaker 1>added to growth in three This is according to Credit

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<v Speaker 1>Suite Stars that Chinese tourists and stronger UK exports could

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<v Speaker 1>help things when it comes to China's reopening her helping

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<v Speaker 1>the UK. My god, well, I did see the photographs

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<v Speaker 1>actually of Chinese tourist returning to Tie Beaches for the

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<v Speaker 1>Lunar New Year holiday, so yeah it is. I mean

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<v Speaker 1>that that Chinese tourism business is worth so much money,

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<v Speaker 1>okay up next regulator role reverse or low tax loons

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<v Speaker 1>and putting the oh in O and s now. The

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<v Speaker 1>paper review on blue Bird Daybreak Europe. The news you

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<v Speaker 1>need to know from today's papers FLO makes James Walcok

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<v Speaker 1>joins US now with the details. James the former Chancellor

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<v Speaker 1>and deems the Harwi is on the front pages today

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<v Speaker 1>mainly because Rishi Sunaka is now ordered a probe into

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<v Speaker 1>his tax affairs. The FT says that Zahari is fighting

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<v Speaker 1>for his political life. The Mirror headline the only way

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<v Speaker 1>is ethics. But that aside, James, you're interested in some

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<v Speaker 1>other FT stories, and in particular the UK beginning post

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<v Speaker 1>Brexit review of the EU's investor fund regulation. This is

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<v Speaker 1>quite interesting, exactly, Kathy. You emphasize that just perfectly because

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<v Speaker 1>for a long time this story has been the other

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<v Speaker 1>way around. It's been sort of the EU looking at

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<v Speaker 1>the UK's financial stability. But so part of the Brexit

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<v Speaker 1>deal was that EU based funds can continue to use

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<v Speaker 1>these kind of passports into the sort of the UK's

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<v Speaker 1>market until five and you get holds actually two trillion

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<v Speaker 1>pounds in cash and EU offshore financial center. So this

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<v Speaker 1>isn't a small amount, and that's predominantly Island and Luxembourg. Now.

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<v Speaker 1>During the pension fund meltdown last September, the ft and

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<v Speaker 1>this piece, it was predominantly pension fund vehicles based in

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<v Speaker 1>Ireland and Luxembourg that were the ones that the Bank

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<v Speaker 1>of England were bailing out. So now UK watchdogs are

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<v Speaker 1>writing to the EU counterpart to say, so what are

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<v Speaker 1>your safeguards and as their regulations diverge. It turns out

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<v Speaker 1>that bank from the Governor Andrew Bailey last week Todd

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<v Speaker 1>MPs that he wasn't that impressed and he doesn't think

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<v Speaker 1>these things are going to improve because the EU say

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<v Speaker 1>they can't change their regulations until five, which is when

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<v Speaker 1>they're getting a mandate, which is also when these passports

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<v Speaker 1>run out. So increasingly the UK is now looking at

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<v Speaker 1>these kind of large amounts of money in Europe and

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<v Speaker 1>saying we're not sure this is good for our financial stability. Okay.

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<v Speaker 1>In the Times, William Hague is writing a piece there

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<v Speaker 1>and he's warning watch out Rishi Sunac Low tax loons

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<v Speaker 1>are circling. It's quite something, Stephen, when a former leader

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<v Speaker 1>of the Conservative Party is calling his own MPs loons um.

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<v Speaker 1>So William hag doesn't name this MP, but is corking

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<v Speaker 1>about a recent meeting Rishi Sunac had with his own backbench.

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<v Speaker 1>Is what he's saying, you all understand I can't do

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<v Speaker 1>tax cuts. And one reporters saying I do want tax

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<v Speaker 1>cuts and I'm not an idiot. Well, William Hagan is

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<v Speaker 1>politely saying you are an idiot, and it's a Tory

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<v Speaker 1>calling for public spending. This is unusual arguments, so I

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<v Speaker 1>think it's worth pointing out in the papers. He's saying

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<v Speaker 1>that defense does not need a small amount of money

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<v Speaker 1>if you look at Ukraine. He says, we also need

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<v Speaker 1>green substidutes to combat what's happening in the US, and

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<v Speaker 1>ultimately central banks might be underestimating inflation. We don't know.

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<v Speaker 1>And the quieteying mini budget was a sure fire way

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<v Speaker 1>of saying, actually, trying to have a tax reduction during

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<v Speaker 1>a period of high interest rates and inflation doesn't work.

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<v Speaker 1>So he sums us up by saying that Pete voters

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<v Speaker 1>want economic competence from the Tories, not just tax cuts.

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<v Speaker 1>There is more to politics than just offering a sort

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<v Speaker 1>of a short term incentive. Yeah, I mean on the

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<v Speaker 1>other hand, one can have a bit of sympathy for

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<v Speaker 1>the MP. The MP understands that with the cost of

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<v Speaker 1>living crisis, his own constituents are watching their tax bills

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<v Speaker 1>rise and that's a stress point, isn't it. And that's

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<v Speaker 1>the debate that they're going to have over the next year.

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<v Speaker 1>And the challenges you face are trying to hold these

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<v Speaker 1>two wings together. Yeah, absolutely, you're stuck on the times.

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<v Speaker 1>Though this morning changed because there's another story, but this

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<v Speaker 1>time about the n S, the Office for National Statistics

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<v Speaker 1>and what's going on. I couldn't get away from this one,

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<v Speaker 1>so long story short. Obviously, there has published a lot

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<v Speaker 1>of data and most of it is very accurate. But

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<v Speaker 1>in productivity, the idea that the amount of output per

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<v Speaker 1>hour you work with a focus on productivity because after

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<v Speaker 1>the working from home revolution, now for the pandemic, we're

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<v Speaker 1>really quite interested in how the UK performed. And to

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<v Speaker 1>put it bluntly, the n S had to release a

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<v Speaker 1>correction to their figures because they had added up two

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<v Speaker 1>years worth of growth into one. So from last year's productivity,

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<v Speaker 1>we went from being the best bar Japan in the

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<v Speaker 1>G seven to the worst bar France. It's a complete reversal,

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<v Speaker 1>and it is highlighting that Britain's productivity chronic productivity problem

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<v Speaker 1>which we've talked about private and public section investment. It's

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<v Speaker 1>not a question of oh, what have we learned from

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<v Speaker 1>the pandemic and more, Oh that's not so great. So

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<v Speaker 1>the technology has not helped particularly. Yeah, very interesting, Okay,

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<v Speaker 1>James Wilcock, thank you very much for that review of

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<v Speaker 1>the newspapers this morning. Let's dig into the latest commentary

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<v Speaker 1>from the European Central Bank now, Christine Laguard pointing to

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<v Speaker 1>more significant interest rate rises as they, in her words,

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<v Speaker 1>stay the course to bring inflation back down to the

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<v Speaker 1>two percent target. This, of course, I had of next

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<v Speaker 1>week's ECB meeting. Markets are expecting the bank to raise

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<v Speaker 1>rates by another fifty basis points are ECB reporter at

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<v Speaker 1>Yana Rando joins us now for a more good morning

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<v Speaker 1>to you, Yana. How clear, then, have the signals been

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<v Speaker 1>from the ECB president in this latest speech. I think

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<v Speaker 1>she couldn't have been any clearer. Um she said, and

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<v Speaker 1>it was very specific, um that staying the course is

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<v Speaker 1>the policy mantra for the ECB for the time to come.

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<v Speaker 1>And that means if there had been any doubts about

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<v Speaker 1>another half point high coming up in February. Those outs

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<v Speaker 1>are now dispelled. There weren't then many, I have to say,

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<v Speaker 1>because she was already very specific in December. But we

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<v Speaker 1>have seen um, some diverging opinions I would say, over

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<v Speaker 1>the past couple of days and UM, and she put

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<v Speaker 1>her foot down and said for now, this is what

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<v Speaker 1>we're going to do. And that was that was certainly

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<v Speaker 1>very forceful. Yeah, okay, so very forceful. But the issue

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<v Speaker 1>is about, um, you know, getting unanimity or or at

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<v Speaker 1>least getting agreement a course. UM. The e c B

0:12:27.320 --> 0:12:29.559
<v Speaker 1>is often seen more difficult than for the fair. How

0:12:29.600 --> 0:12:32.600
<v Speaker 1>does her position compared to other Governing Council members that

0:12:32.640 --> 0:12:37.320
<v Speaker 1>we've heard from, Janna, I think for February there all

0:12:37.400 --> 0:12:39.760
<v Speaker 1>of them are pretty much on on message and and

0:12:39.880 --> 0:12:43.680
<v Speaker 1>everybody expects another half point hike. UM. The more interesting

0:12:43.720 --> 0:12:47.600
<v Speaker 1>debate is going to be March, when no forecasts are available.

0:12:47.600 --> 0:12:50.840
<v Speaker 1>And of course we have seen quite quite a few

0:12:50.880 --> 0:12:55.679
<v Speaker 1>developments since the last round in December. UM that suggests

0:12:55.720 --> 0:12:58.880
<v Speaker 1>that the inflation outlook might have actually improved a little bit.

0:12:58.920 --> 0:13:02.600
<v Speaker 1>Gas prices have come down, UM, inflation itself has slowed

0:13:02.679 --> 0:13:06.720
<v Speaker 1>quite a bit. And UH that of course, UH takes

0:13:06.800 --> 0:13:10.640
<v Speaker 1>pressure out of out of wage discussions. UM. So there

0:13:10.720 --> 0:13:12.280
<v Speaker 1>is there is a bit of hope that the forecast

0:13:12.280 --> 0:13:15.640
<v Speaker 1>will look a look a lot better and UM, you know,

0:13:15.920 --> 0:13:20.440
<v Speaker 1>with that, with that prospect came UH quite a diverging

0:13:20.520 --> 0:13:22.800
<v Speaker 1>view of opinion. We've heard from from the likes of

0:13:23.120 --> 0:13:26.160
<v Speaker 1>Robert Holtzman in class not UM sitting very much on

0:13:26.200 --> 0:13:29.520
<v Speaker 1>the hawkish side of the governing council UM, pushing for

0:13:29.520 --> 0:13:32.960
<v Speaker 1>for several more UM half point hikes UM in the

0:13:33.160 --> 0:13:35.520
<v Speaker 1>in the first half of the year. And that of

0:13:35.559 --> 0:13:40.520
<v Speaker 1>course contrasts very clearly with comments from from Nazovisco or

0:13:40.920 --> 0:13:45.800
<v Speaker 1>Janis Donadas, um, you know, from from Italy and Greece respectively,

0:13:46.240 --> 0:13:50.319
<v Speaker 1>UH that argued for graduality UM, saying we need to

0:13:50.360 --> 0:13:52.400
<v Speaker 1>be more gradual, we need to take into account what

0:13:52.440 --> 0:13:55.520
<v Speaker 1>we've already done. UM. And and they also brought up

0:13:55.600 --> 0:13:58.480
<v Speaker 1>the the idea of you know, UM, maybe now is

0:13:58.520 --> 0:14:01.079
<v Speaker 1>not not the time to hike too much and and

0:14:01.120 --> 0:14:05.480
<v Speaker 1>go into into restrictive territory too much. UM. So there

0:14:05.559 --> 0:14:09.000
<v Speaker 1>is a difference of opinion out there. UM. We're not

0:14:09.040 --> 0:14:11.160
<v Speaker 1>going to get much clarity, I'm afraid um in the

0:14:11.200 --> 0:14:15.120
<v Speaker 1>next couple of weeks, because ultimately the ECB says it

0:14:15.240 --> 0:14:17.319
<v Speaker 1>is data dependent. It will look at the numbers, it

0:14:17.360 --> 0:14:19.240
<v Speaker 1>will look at the forecast, and then it will take

0:14:19.240 --> 0:14:24.400
<v Speaker 1>its decision. And March is unfortunately still quite a while away. Okay,

0:14:24.440 --> 0:14:26.200
<v Speaker 1>And and of course we have you know that those

0:14:26.240 --> 0:14:29.280
<v Speaker 1>p M I datas out later as well. What are

0:14:29.320 --> 0:14:31.160
<v Speaker 1>the data points that we should be kind of keeping

0:14:31.160 --> 0:14:33.040
<v Speaker 1>a very close eye on that would feed into the

0:14:33.560 --> 0:14:36.640
<v Speaker 1>U E c B S thinking, yeah, so the p

0:14:36.840 --> 0:14:38.280
<v Speaker 1>M E s are going to be an interesting one

0:14:38.280 --> 0:14:42.120
<v Speaker 1>to watch, um, mainly because for the Eurozone we are

0:14:42.320 --> 0:14:45.920
<v Speaker 1>expecting all economists, I should say, are expecting return to

0:14:45.960 --> 0:14:49.480
<v Speaker 1>growth in the services sector and um that that would

0:14:49.480 --> 0:14:54.400
<v Speaker 1>be certainly good news. UM. What what I like to

0:14:54.440 --> 0:14:55.960
<v Speaker 1>look at for the p M I s are the

0:14:56.120 --> 0:15:01.800
<v Speaker 1>forward looking indicators, UM, the order intake um uh, export orders.

0:15:02.200 --> 0:15:05.480
<v Speaker 1>That might tell us a little bit about demand in

0:15:05.720 --> 0:15:08.760
<v Speaker 1>China and how that is going to um uh you know,

0:15:09.080 --> 0:15:12.040
<v Speaker 1>boost boost the economy. And then of course, of course

0:15:12.040 --> 0:15:16.440
<v Speaker 1>the price and indicators are going to be interesting, UM,

0:15:16.480 --> 0:15:20.640
<v Speaker 1>how much are companies adjusting their prices? Um, we've seen

0:15:20.640 --> 0:15:23.680
<v Speaker 1>a slowdown and producer prices and other indicators UM in

0:15:23.800 --> 0:15:27.160
<v Speaker 1>important prices of course. UM. So it's going to be

0:15:27.200 --> 0:15:31.240
<v Speaker 1>interesting to watch whether whether they're UM that will feed

0:15:31.240 --> 0:15:34.720
<v Speaker 1>through UM and and maybe ease pressures a little bit.

0:15:35.800 --> 0:15:38.520
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