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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: They say it's the Bloomberg Daybreak yourop podcast, available every

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Speaker 2: morning on Apple, Spotify or wherever you listen. It's Thursday,

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Speaker 2: the thirty first of October in London. I'm Stephen Carroll

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Speaker 2: and I'm Francin Laqua.

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Speaker 3: Coming up today, Labors. Rachel Reeves raises UK taxes by

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Speaker 3: forty billion pounds to fund a seventy billion pound increase

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Speaker 3: in public spending in a massive bet on big state economics.

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Speaker 2: We dig into a busy morning for earnings with results

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Speaker 2: Moraft of European banks as well as Shell, Total Energy

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Speaker 2: and Stilantis Plus.

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Speaker 3: Does a long queue for your morning coffee put you

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Speaker 3: off Starbucks? While the train's new chief executives thinks it does,

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Speaker 3: and he's vowed to get wait times below four minutes.

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Speaker 2: Let's start with a round up of our top stories.

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Speaker 3: Rachel Reeves has delivered one of the largest packages of

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Speaker 3: tax hikes and investment plans in the UK's post war

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Speaker 3: history in a bid.

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Speaker 1: To revive the economy.

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Speaker 3: Now the chances were announced some forty billion pounds of

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Speaker 3: annual tax rises in her budget, hitting employers and the

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Speaker 3: wealthy hardest now. She says she was forced into fixing

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Speaker 3: the previous government's mistakes.

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Speaker 4: I accept that this is a big and a substantial budget.

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Speaker 4: It wasn't the budget that I was expecting to deliver

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Speaker 4: when I became Chancellor on the fifth of July. I

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Speaker 4: didn't think that any government would be so reckless.

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Speaker 1: Well.

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Speaker 3: Businesses have expressed concern about the scale of Reeves's tax hikes,

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Speaker 3: which include arise in employer's national insurance contributions, but the

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Speaker 3: International Monetary Fund endorsed the Chancellor's plan, citing the needed

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Speaker 3: increase in public investment to boost growth.

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Speaker 2: The Chancellor also announced an extra one hundred billion pounds

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Speaker 2: in capital investment for the Office for Budget Responsibility says

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Speaker 2: it will only lead to a short term jump in growth.

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Speaker 2: Bloomberg's TFUK economist Dan Hanson explains why.

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Speaker 5: You have this boost from capital spending so you get

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Speaker 5: a bigger economy because they're basically more machines in the

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Speaker 5: economy that we can all use and we're more productive.

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Speaker 5: They take away from the supply capacity of the economy

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Speaker 5: through in higher employer nicks because it passes through to

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Speaker 5: wages and that affects the incentives to work and The

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Speaker 5: final thing the ABR have said, which is completely against

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Speaker 5: Reeves's narrative, is that it crowds out private investment, doesn't

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Speaker 5: crowd it in because interest rates are higher as a

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Speaker 5: result of this policy package.

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Speaker 2: As Hanson notes, the new government has made boosting public

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Speaker 2: and private investment a core tenet of its bid for growth.

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Speaker 2: Bond prices fail after the budget as investors digested the

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Speaker 2: prospect of historically high debt issuance and fiscal stimulus that

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Speaker 2: could mean Bank of England interest rates stay higher for longer.

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Speaker 3: Now, the LA Dodgers have won their second Baseball World

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Speaker 3: Series in five seasons.

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Speaker 1: Here's how it ended. The Dodgers are strikeaway from a

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Speaker 1: championship from a proper celebration starting Los Angeles, Your Dodgers

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Speaker 1: Whosers Well?

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Speaker 3: Broadcast on Fox Sports. The Victoria's Dodgers overcame a five

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Speaker 3: run deaf sit with the help of three Yankees defensive

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Speaker 3: miscues to beat the New York team seven to six

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Speaker 3: in Game five on Wednesday Night. Now, Freddy Freeman continued

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Speaker 3: his rich vein of form during the matchup and was

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Speaker 3: voted series Most Valuable Player MVP. Now the superstar shortstop

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Speaker 3: hit a two run single to tie the series record

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Speaker 3: of twelve runs battled in set by Bobby Richardson over

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Speaker 3: seven games in nineteen sixties. Well, the Yankees lost means

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Speaker 3: that New York remains with that title since two thousand

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Speaker 3: and nine.

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Speaker 2: Let's bring you some of the breaking earnings news this hour,

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Speaker 2: Shell announcing a three and a half billion dollar buyback program,

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Speaker 2: with adjusted third quarter profits beating estimates of six point

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Speaker 2: zero three billion dollars. The estimate had been for five

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Speaker 2: point three nine billion dollars, so significant beat from them

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Speaker 2: at just earnings per shares is going to be ninety

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Speaker 2: six cents for his estimates of eighty five cents, as well,

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Speaker 2: a net death lower than had been forecast thirty five

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Speaker 2: point two to three billion dollars. Staying with the energy

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Speaker 2: space total in France missing expectations on its third quarter

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Speaker 2: adjusted net figure that's at four point zero seven billion dollars.

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Speaker 2: The estimate had been for four point two seven billion dollars,

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Speaker 2: and our third quarter production was on target. Looking at

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Speaker 2: the adjusted earnings per share, that's also coming out as

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Speaker 2: a slight mess to one dollar seventy four a share

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Speaker 2: from total NLG. If we turn to Stalantis the carmaker.

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Speaker 2: The latest numbers out of that company. Yeah, it's interesting.

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Speaker 3: First of all, it's really good to get a Shell

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Speaker 3: into that at the same time because they have very

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Speaker 3: different strategies. So I think the big you know, dividend

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Speaker 3: and buyback program from Shell was pretty much expected, but

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Speaker 3: they really broke away from what they're trying to do

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Speaker 3: in renewables where Toutology Energy is really into it. Stillantis,

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Speaker 3: it's another story, but it's one of those stories that's

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Speaker 3: under pressure in Europe because of car makers. We also

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Speaker 3: know there's negotiations with China. Net revenue actually below estimates

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Speaker 3: for the third quarter at Stalantis thirty two point nine

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Speaker 3: instead of thirty five point nine expected, and then we

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Speaker 3: have a bit of shipping with MRSK.

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Speaker 1: Yeah, that's right.

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Speaker 2: The Marst numbers out this morning as well, or sit

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Speaker 2: there seeing full year global container growth at about six percent.

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Speaker 2: They're just a debit for the full year ESTIMATESBD eleven

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Speaker 2: and eleven and a half billion. That's the underlying ebit

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Speaker 2: figure from them as well. The third quarter numbers beating

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Speaker 2: estimates three point three to one billion dollars. The estimate

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Speaker 2: has been for over two two point five to six

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Speaker 2: in Facts of significant beat too from mersk Now.

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Speaker 3: It is in general a very busy corporate day associational

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Speaker 3: as the chief executive officer Solovomir Croupa has also replaced

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Speaker 3: his top lieutenants in the biggest overhaul since taking the job.

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Speaker 3: Now the lenders, deputy CEO, chief financial officer and French

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Speaker 3: retail banking head are all stepping down. That's according to

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Speaker 3: such Jen in a statement. The news came as a

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Speaker 3: bank broadly beat analyst estimates for the third quarter, reporting

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Speaker 3: net income of one point three billion euros. The results

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Speaker 3: may provide a boost to the chief executive Krupa, who

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Speaker 3: has cut jobs and sold units in a bit to

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Speaker 3: focus on the bank's most profitable businesses.

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Speaker 2: Microsoft shares fell by oro ound four percent postmarket after

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Speaker 2: the firm forecast to slow down in cloud revenue growth.

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Speaker 2: The company says it's struggling to bring data centers online

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Speaker 2: fast enough and to keep up with demand for AI services,

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Speaker 2: but CEO such And Nadala says the unit is still

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Speaker 2: attracting more customers.

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Speaker 6: We are seeing continued growth in cloud migration. Azure Arc

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Speaker 6: now has over thirty nine thousand customers across every industry,

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Speaker 6: including American Tower CTT Laureal up more than eighty percent

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Speaker 6: year over year.

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Speaker 2: Microsoft, Such and Dallas comments come as the tech giant

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Speaker 2: reported results that still beat estimates first quarter revenue increase

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Speaker 2: by sixteen percent, just I have sixty six billion dollars.

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Speaker 3: And chairs in metafel by more than two point eight percent,

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Speaker 3: and extended trading after the firm vowed to continue its

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Speaker 3: ramp up in spending on AI and other futuristic tech

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Speaker 3: now delivering its latest results or set of results, the

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Speaker 3: tech giant also warned that artificial intelligence and augmented reality

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Speaker 3: losses will continue to widen meaningfully this year. Now, the

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Speaker 3: chief executive, Mark Zuckerberg, says the heavy investment will be

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Speaker 3: supported by AD revenue.

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Speaker 7: First, it's clear that there are a lot of new

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Speaker 7: opportunities to use new AI advances to accelerate our core

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Speaker 7: business that should have strong ROI over the next few years,

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Speaker 7: so I think we should invest more there. And Second,

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Speaker 7: our AI investments continue to require serious infrastructure, and I

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Speaker 7: expect to continue investing significantly there too well.

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Speaker 3: Mark Zuckerberg speaking there as Facebook and Instagram actually helped

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Speaker 3: the firm to deliver a small beat on Wall Street

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Speaker 3: expectations sales for the quarter rows nineteen percent. You're on

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Speaker 3: year to forty point six billion dollars.

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Speaker 1: Those are your top stories on the markets.

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Speaker 2: Eurostoxs fifty features are six tenths lower, the MSCI Specific

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Speaker 2: Index down by two tenths of one percent, and the

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Speaker 2: ten year treasurey yield is two basis points lower at

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Speaker 2: four point two eight percent.

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Speaker 1: Now, in a moment, we'll bring you more on the.

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Speaker 2: UK budget yesterday, plus dig into some of this morning's

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Speaker 2: breaking earnings news as well. But first to a story

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Speaker 2: in honor of you, Franci Lackoll. We had a story

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Speaker 2: about coffee. I thought can very serious story. Yeah, well, look,

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Speaker 2: this is about how long are you willing to wait

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Speaker 2: for a coffee if you're if you're buying one to

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Speaker 2: take away? Do you have like a countdown clock that

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Speaker 2: you just hold up everywhere.

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Speaker 6: That you go?

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Speaker 3: I do remember, So you know in a lot of

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Speaker 3: European countries, as you all know, you kind of come

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Speaker 3: in you don't even.

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Speaker 1: Sit down to have a coffee at a bar.

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Speaker 3: You have it piping hot, you bring it down and

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Speaker 3: then you get at work or wherever you need.

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Speaker 1: To get to.

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Speaker 3: But this is like a real, I guess philosophical question

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Speaker 3: for Starbucks. They have a Newtief executive. Starbucks has been

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Speaker 3: really into doll drums, and now they're thinking of algorithms

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Speaker 3: of how to make sure that if you order it first,

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Speaker 3: you get the coffee first. So this is what you

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Speaker 3: know when you sit down at a restaurant and somebody

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Speaker 3: sits after you and.

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Speaker 1: They get served first.

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Speaker 3: So frustrating, so frustrating. So if you have that over

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Speaker 3: and over in the morning at Starbucks, do.

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Speaker 1: You go back question mark and making things simpler?

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Speaker 2: Making the menu simpler too many choices essentially, they want

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Speaker 2: fewer choices in there as well, and also some little

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Speaker 2: touches to try and make it feel a bit like

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Speaker 2: less like fast food, which I thought was interesting because

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Speaker 2: on one hand, you're trying to serve people faster. On

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Speaker 2: the other hand, you're saying, here, put it in a

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Speaker 2: real cup, which I actually quite sure are you.

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Speaker 3: Dissing like the triple cappuccino latte, pumpkin spice oatmeal, Yes,

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Speaker 3: are you not? I do I still only have an

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Speaker 3: espresso even at Starbucks.

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Speaker 2: Well, look, other choices are available and they're very popular,

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Speaker 2: so good for those people. But look, this is part

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Speaker 2: of a story around Starbucks declining sales. They're doing what

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Speaker 2: they can to tackle it. At another time from and

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Speaker 2: we have more time, we will talk about my personal

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Speaker 2: price index for different neighborhoods and powers, which is based

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Speaker 2: on how much a coffee at the contra costs. But

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Speaker 2: we don't have time for that. Let's talk about the

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Speaker 2: UK budget instead. Are UK correspond at Lizzie Burden is here? Lizzie,

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Speaker 2: you were in Westminster yesterday? Is this raft of announcements

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Speaker 2: and there was a lot came out. Let's talk a

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Speaker 2: little bit about some of the reaction that we've had

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Speaker 2: to the detail.

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Speaker 1: Yeah, she went on a bit, didn't she? Rachel reave

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Speaker 1: lots and she'd been waiting a long.

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Speaker 8: Time, more than fourteen years for a labor government to

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Speaker 8: make a budget, the first ever by a female chancellor.

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Speaker 8: For me, the key takeaways were that you had this

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Speaker 8: massive expansion of the state, the biggest tax hike since

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Speaker 8: Norman in nineteen ninety three, fourteen billion pounds forty billion

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Speaker 8: pounds in total, so employer national insurance contributions, capital gains tax,

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Speaker 8: inheritance tax all going up. But what economists are noting

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Speaker 8: is that Actually the fiscal watchdog, the Officer Budget Responsibility,

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Speaker 8: doesn't reckon that this will this package of spending and

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Speaker 8: tax hikes will add that much to growth. So it's

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Speaker 8: one point one percent this year, two percent next year,

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Speaker 8: notably less than the two point five percent target of

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Speaker 8: annual growth that Labour has set itself. And actually by

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Speaker 8: twenty twenty nine, the obi c's growth falling compared to

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Speaker 8: what the Conservatives would have done by zero point one percent,

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Speaker 8: So economists are asking whether these political decisions were actually

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Speaker 8: worth it. You've also got an inflationary impact of the

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Speaker 8: higher minimum wage, the one hundred and forty two billion

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Speaker 8: pounds of extra borrowing, and traders and economists think that

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Speaker 8: that's going to hold back how fast the Bank of

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Speaker 8: England can cut rates. Hence the guilt market reaction yesterday's

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Speaker 8: So if you look at it, it was pretty sanguine

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Speaker 8: while Rachel Reeves is on her feet, and then as

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Speaker 8: traders digested the obr's forecast, there's this pretty ferocious sell

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Speaker 8: off and actually guilt yields on the tenure ending the

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Speaker 8: day higher four basis points at four point three percent.

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Speaker 3: Yeah, I love the bond market. There were everything's fine

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Speaker 3: and then wait how much are they selling?

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Speaker 1: Wait? Hold on age? What growth? Lizzie.

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Speaker 3: I mean, this was a very it felt like a

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Speaker 3: very political budget and this is not you know, this

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Speaker 3: we used to call labor like Conservatives with a small C.

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Speaker 1: I mean, this feels very labor like.

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Speaker 3: I think phil Aldric was also saying, it's probably more

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Speaker 3: you know, like Jeremy Corbyn than it is Blair.

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Speaker 1: Right, what does it mean for how they see economic

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Speaker 1: future growth for the UK?

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Speaker 8: Yeah, And even though Rachel Reeves emphasized she's an XBOE economist,

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Speaker 8: she didn't hold back on the political framing of this budget.

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Speaker 8: Hence perhaps why it went on for so long. I

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Speaker 8: think part of the problem is that this still may

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Speaker 8: feel like austerity because, as she emphasized, she's so fiscally constrained.

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Speaker 8: So yes, she's raised day to day spending by one

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Speaker 8: point five percent in real terms, but that's less than

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Speaker 8: the two percent that was expected. So this, you know,

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Speaker 8: could go down like a lead balloon with some parts

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Speaker 8: of her party. She's just had to be very targeted

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Speaker 8: about where she does put the money. She's raised NHS

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Speaker 8: funding by the most since twenty ten outside of COVID

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Speaker 8: and yet we'll have to see how this feels when

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Speaker 8: people come to vote in five years, whether they feel

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Speaker 8: better off because of the change of government. Yeah.

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Speaker 2: I mean, look, there's so much to delve into in

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Speaker 2: this as well, and plenty more to watch as we

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Speaker 2: see the budget go through the LEGENDTI process as well.

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Speaker 2: For now, Lizzie Bird and a UK correspondent, thank you

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Speaker 2: very much for joining us with your analysis of yesterday's announcements.

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Speaker 3: Now let's get some more details on this morning's breaking

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Speaker 3: earnings news. Our reporter Joe Easton joins us from We've

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Speaker 3: had so many drug good mornings, so let's start with

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Speaker 3: the oil majors.

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Speaker 1: We've had results from Shell and to Dell.

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Speaker 3: Nerg's loves to focus on on how fossil fuel firms

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Speaker 3: are basically trying to convince shareholders to stick with them

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Speaker 3: by just giving them a lot of money.

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Speaker 9: Yes, so Shell doing exactly that, giving a lot of

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Speaker 9: money to their shareholders, doing a three point five billion

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Speaker 9: dollar buy back. They're beating expectations on some of their

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Speaker 9: key lines in their latest report. There are a little

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Speaker 9: bit of weakness in some of the numbers, including a

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Speaker 9: justive profit which actually looks slightly below expectations, but the

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Speaker 9: gas profit is what's driving that return. According to analyst,

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Speaker 9: the gas profit up thirteen percent in the latest quarter,

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Speaker 9: and that is offsetting some weakness in the oil price

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Speaker 9: which has been hitting refining margins total energies. Meanwhile, over

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Speaker 9: in France, not getting the gas boosts, really hit by

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Speaker 9: the refining slump and their profits actually dropping more than expected.

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Speaker 9: According to this statement. Today they have got a buyback

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Speaker 9: of two billions and not as good as Shells three billion.

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Speaker 1: But clearly if you're more.

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Speaker 9: Exposed to gas than oil, then you're able to give

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Speaker 9: those investors more money at the end of the quarter.

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Speaker 2: Yeah, so interesting to the reading to get from those

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Speaker 2: two companies in that sector. Let's talk about cars next.

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Speaker 2: We've had numbers out of Stillanta's third quarter revenues something

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Speaker 2: twenty seven percent.

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Speaker 1: Yeah, it's a.

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Speaker 9: Massive drop for Stilantis in terms of their sales, the

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Speaker 9: maker of Jeep struggling at the moment on the market.

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Speaker 9: In terms of their share price. They reported revenues of

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Speaker 9: thirty three billion euros. Alys we're looking for almost thirty

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Speaker 9: six so decent myths in terms of the analyst expectations

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Speaker 9: shipments down in Europe and North America, so Asia actually

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Speaker 9: holding up. Okay, a lot of the focus has been

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Speaker 9: on Chinese demand, but this is a sector that's had

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Speaker 9: so many profit warnings recently. We've seen them from Mercedes,

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Speaker 9: BMW all over the place in that sector really, so

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Speaker 9: potentially this is going to be priced in. There's been

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Speaker 9: a heavy drop in the shares over the past three months,

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Speaker 9: so I think maybe this is potentially already expected by

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Speaker 9: the market.

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Speaker 1: Joe, what about the banks.

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Speaker 3: I guess it's you know, big changes at SOBGEN that's

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Speaker 3: really catching the market's attention.

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Speaker 9: Yes, so we got the CFO stepping down the CEO.

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Speaker 9: We're seen breaking headlines on that one step down over there,

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Speaker 9: as well as the deputy CEO. To be clear on that, Philippe,

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Speaker 9: I'm rich he will be leaving his role, but in

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Speaker 9: terms of the business, so to say, the CFO leaving

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Speaker 9: as well. Now, the business basically doing well on the

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Speaker 9: trading so fixed income French retail and the actual more

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Speaker 9: domestic consumer lending not looking very strong at all, weakening

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Speaker 9: given the expected declining rates. That's the same thing that's

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Speaker 9: been seen over at BNP Parabar as well. So BNP

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Speaker 9: is missing on their net income today. Over in Spain though,

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Speaker 9: we are actually seeing some decent numbers coming out from

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Speaker 9: Kaisher and BBVA Sabadela as well.

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Speaker 1: All those looking stronger.

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Speaker 9: The Spanish bank's really exposed to the declining rates, probably

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Speaker 9: more so than some of the French lenders and actually

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Speaker 9: beating analysts worse fares today. So potentially the Spanish ones

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Speaker 9: looking stronger and the French ones probably missing on the

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Speaker 9: core retail businesses but slightly better in trading is the

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Speaker 9: headline there.

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Speaker 2: Okay loves to watch as we can to the start

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Speaker 2: of the European trade. Joe Easton, our equities reporter, Thanks

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Speaker 6: Mm hmm