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Speaker 1: This is the Blueberg Daybak you At podcast, available every

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Speaker 1: morning on Apple, Spotify or wherever you listen. It's Wednesday,

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Speaker 1: the tenth of April in London. I'm Caroline Hepkit.

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Speaker 2: And I'm Stephen Carroll. Coming up today. Markets wait to

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Speaker 2: see if the US inflation print delivers the goldilocks data.

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Speaker 2: The Federal Reserve is looking for a.

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Speaker 1: Major ratings agency goes negative on its outlook for China's

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Speaker 1: long term foreign debt pile.

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Speaker 2: Plus making ends meet. The UK's financial regulator warns more

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Speaker 2: than seven million people are struggling to pay their bills.

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Speaker 1: Let's start with a roundup of our top stories. The

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Speaker 1: March inflation report from the United States, due out later,

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Speaker 1: is unlikely to settle the debate around when the Federal

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Speaker 1: Reserve will cut US interest rates. Economy is surveyed by

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Speaker 1: Bloomberg are expecting a slow down in the pace of

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Speaker 1: price increases, with the core reading excluding food and energy

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Speaker 1: expected to rise by zero point three percent between February

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Speaker 1: and March. Invesas are now evenly split on the prospects

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Speaker 1: of a first FED cut in June, with many traders

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Speaker 1: unwinding dubbish bets on significant cuts for this year, but

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Speaker 1: Bloombig opinions in mohammadel Arian expects the Central Bank's overall

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Speaker 1: trajectory to remain unchanged.

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Speaker 3: I think Chair palt has made it very clear that

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Speaker 3: he's willing to look through these bumps. They will need

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Speaker 3: overwhelming evidence that it is more than a bump in

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Speaker 3: order for them to change their views. Inflation will be sticky.

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Speaker 3: Inflation will be absolutely sticky. We're going to get stuck

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Speaker 3: at around two and a half to three percent, and

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Speaker 3: I do think that that actually warrants over the long term.

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Speaker 3: The FED rethinking is inflation target.

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Speaker 1: Muhammed el Arian. He also told Bloomberg that he expects

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Speaker 1: only two rate cuts this year from the FED. His

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Speaker 1: comments come as the Bank of Atlanta FED President Rafael

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Speaker 1: Bostik reiterated his expectation for only one rate cut in

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Speaker 1: twenty twenty four.

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Speaker 2: Fitch's cut it's out look for China's long term foreign

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Speaker 2: debt from stable to negative. The agency says rising economic

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Speaker 2: uncertainties have eroded fiscal buffers, although it's these government debt

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Speaker 2: increasing in coming years. It affirmed China's A plus rating.

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Speaker 1: Joe Biden says that Israeli prime Minister Benjamin Netanyah, whose

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Speaker 1: approach to the war is a mistake. The US President

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Speaker 1: spoke to Univision in an interview taped last week when

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Speaker 1: an air strike killed seven AID workers. He says that

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Speaker 1: Netna who should be calling a ceasefire.

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Speaker 4: I think when he's joining his a mistake. I don't

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Speaker 4: agree with his book. I think it's outrageous that those

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Speaker 4: four three vehicles were hit by drones and taken out

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Speaker 4: on a highway where it wasn't like it was along

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Speaker 4: the shore, it wasn't like it was a convoy movie.

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Speaker 5: Here, etc.

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Speaker 4: So I'm what I'm calling for is for the Israelis

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Speaker 4: to just call for a ceasefire.

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Speaker 1: Biden's comments come after months of rising into national concerns

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Speaker 1: over the death toll in Gaza that have increasingly isolated

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Speaker 1: Israel on the world stage. Turkey yesterday announced fresh restrictions

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Speaker 1: on exports to Israel, further straining already tense relations between

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Speaker 1: the one time military allies.

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Speaker 2: Millions in the UK are struggling to make ends me.

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Speaker 2: That's according to a new survey of British adults, many

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Speaker 2: of whom are falling behind on household bills or credit commitments.

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Speaker 2: Poomberg's Ewan Parts has the details.

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Speaker 6: Some seven and a half million people in the UK

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Speaker 6: are struggling to pay their bills. That's a big drop

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Speaker 6: from the almost eleven million who were in the same

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Speaker 6: position at the start of last year, but it's still

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Speaker 6: higher than the number before the cost of living spiral

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Speaker 6: after the pandemic. The estimates come from a survey by

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Speaker 6: the Financial Conduct Authority, who says that more than two

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Speaker 6: and a half million adults are relying on debt advisors

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Speaker 6: and charities for help. The regulator is making permanent a

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Speaker 6: COVID era requirement for lenders to do more to support

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Speaker 6: borrowers in difficulty. Its efforts are sure as we put

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Speaker 6: to the test as inflation and higher interest rates continued

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Speaker 6: to squeeze house in London, EU and pots. Bloomberg Radio, now.

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Speaker 1: The UK's biggest supermarket chain, Tesco, says that retail profit

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Speaker 1: will likely rise this year as easing cost pressures allow

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Speaker 1: for some price cuts. The British Grocery Giantswers that it

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Speaker 1: expects to generate at least two point eight billion pounds

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Speaker 1: of retail adjusted operating profit in the current fiscal year.

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Speaker 1: That's slightly up on what it reported last year. Tesco

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Speaker 1: also announced plans to buy back a billion pounds of

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Speaker 1: shares over the next twelve months.

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Speaker 2: The crisis asked Thames Water is prompting fear is about

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Speaker 2: other UK utilities. The risk premium newly issued bonds in

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Speaker 2: the water sector is widened by as much as thirteen

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Speaker 2: basis points. James Wilcock has more.

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Speaker 7: Thames Water is special. It's the largest and most indebted

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Speaker 7: of all water companies in Britain. Its owner, Kemble's default

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Speaker 7: rating was downgrade to see see yesterday by Fitch, and

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Speaker 7: it emerged Britain's Environment Secretary rejected i direct appeal for

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Speaker 7: intervention from shareholders. But a lot of UK water companies

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Speaker 7: have high levels of debt, inflation link bonds and poor

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Speaker 7: operating performance. That's got some fixed income traders wondering if

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Speaker 7: Thames is the large messy canary in the coal mine

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Speaker 7: or sewer in London. James Wilcock, Bloomberg Radio.

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Speaker 1: And finally, Meta is downplaying the threat posed by this

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Speaker 1: year's bumper elections by disinformation created by artificial intelligence. The

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Speaker 1: company is under pressure to ensure that AI generated social

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Speaker 1: media content doesn't interfere with voting Meta's head of global affairs,

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Speaker 1: Nick Clegg, says that they haven't seen that yet on

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Speaker 1: their services. The social media JANT announced plans last week

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Speaker 1: to label all AI generated content on Facebook. Now, in

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Speaker 1: a moment, we're going to get more details on the

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Speaker 1: US inflation numbers that come out today, plus on the

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Speaker 1: UK the FCA reporting around the pressure that households in

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Speaker 1: Britain are still facing with bills. We'll talk about that too,

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Speaker 1: But first, this call RI perhaps wishful, think you maybe

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Speaker 1: a four day work week? Apparently it's still decades away.

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Speaker 1: In the United States, our colleague Allason Schreege has been

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Speaker 1: writing about this, drawing a lot from the example of France,

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Speaker 1: which brought in in nineteen ninety eight a reduced working week,

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Speaker 1: but saying that actually would add enormously to the costs

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Speaker 1: to US businesses and therefore to the US economy. So

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Speaker 1: she was sort of advocating perhaps to think twice on

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Speaker 1: this measure.

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Speaker 2: Yeah, certainly this is in the context of Bernie Sanders

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Speaker 2: proposing legislation that would set a work week to thirty

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Speaker 2: two hours. And now the hope with France's thirty five

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Speaker 2: hour working week is that it would create employment essentially

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Speaker 2: because everyone would work less. That hasn't really worked out,

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Speaker 2: and actually the average working week in France is above

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Speaker 2: thirty five hours and pretty comparable to other OECD countries

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Speaker 2: as well. Essentially, for people who get paid by the hour,

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Speaker 2: it means that your overtime kicks in at a lower level,

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Speaker 2: although many companies are reluctant to pay that overtime. And

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Speaker 2: for those that don't work or aren't paid by the hour,

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Speaker 2: it means that people get a couple of extra days

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Speaker 2: leave a year to compensate for the fact that they

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Speaker 2: work over the thirty five hours. But it doesn't mean

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Speaker 2: that people are sitting there, you know, clock watching and

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Speaker 2: in a completely different way that you might see in

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Speaker 2: other capitals around Europe.

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Speaker 1: Yeah, absolutely read it on the Bloomberg terminal this morning,

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Speaker 1: the idea of that full day work week still being

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Speaker 1: many decades away, although things have trended lower in terms

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Speaker 1: of working hours, but fairly slowly. That yeah, got our

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Speaker 1: attention this morning in terms of what we're thinking about.

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Speaker 1: Let's move on though, and think also about the March

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Speaker 1: us CPI report likely to show the hot readings of

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Speaker 1: the last couple of months maybe are an exception Bloomberg

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Speaker 1: Economics expects both the headline and course CPI number to

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Speaker 1: slow to zero point three percent month or month. Let's

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Speaker 1: discuss with Bloomberg's Europe FX rates and rates editor Aleen Omada,

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Speaker 1: who is hit with us in the radio studio. What

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Speaker 1: do we expect them from the CPI data? What are

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Speaker 1: we watching for?

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Speaker 5: So the big thing to watch or in the CPI

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Speaker 5: today is whether it will confirm the FEDS message that

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Speaker 5: the past reports were just a bump, like you said,

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Speaker 5: or because the market has been a bit doubtful about that.

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Speaker 5: So the overall the headline number may still tick higher,

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Speaker 5: but the core, which is less volatile and something that

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Speaker 5: people really look into, is expected to accelerate. It to

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Speaker 5: accelerate further to the lowest level since twenty twenty one,

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Speaker 5: So that would confirm that prices are really cooling down.

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Speaker 2: There's been a lot of anticipation and positioning I had

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Speaker 2: at this data points as well, and bond is particularly

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Speaker 2: placing an interest on short term interest rate futures.

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Speaker 8: Bats. Yeah, that's right.

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Speaker 5: The market is super bearish on treasuries recently, you're seeing

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Speaker 5: shorts piling up and that's all tied to the expectations

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Speaker 5: for the Fed. We had a big hockeysh repricing towards

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Speaker 5: less rate cuts, So this figure will be important to

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Speaker 5: tilt the balance either to more or less rate cuts.

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Speaker 5: We are at the moment where the market is hanging

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Speaker 5: in the ballance between two and three, so that will

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Speaker 5: will be important to determine.

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Speaker 1: I mean, your focus is on Europe. What do you

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Speaker 1: make then of the divergence between the FED and the ECB,

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Speaker 1: which of course has got a great decision and there's

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Speaker 1: pressure potentially on the currency as well on the EU.

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Speaker 5: Yeah, so the expectation is the FED will cut rates

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Speaker 5: less than the European Central Bank. When you look at

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Speaker 5: inflation in Europe, the downward trend is more clear. So

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Speaker 5: that's what's behind those expectations of more rate cuts here

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Speaker 5: in Europe. That won't be good for the euro. Of course,

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Speaker 5: the rate to frendship will just turning less in favor

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Speaker 5: of the Euro and we are seeing some pretty parish

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Speaker 5: comments recently, some people bringing up the parity talk. We

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Speaker 5: are still like eight percent away of that, but when

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Speaker 5: people start to consider it as a scenario, it definitely

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Speaker 5: brings some tension to the market.

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Speaker 2: Does you know Look, we've got tomorrow's ECB meeting as well,

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Speaker 2: and I wonder when we put these pieces of information together,

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Speaker 2: are we going to look at a significantly different dynamic

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Speaker 2: potentially on interest rate bets by the end of this week.

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Speaker 5: It could be as especially because the ECB may kind

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Speaker 5: of prepare the market for a June raid cut. That's

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Speaker 5: what they have been kind of doing without specifically putting

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Speaker 5: a date to it, obviously, but they have been guiding

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Speaker 5: the market toward a June raid cut. And if we

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Speaker 5: get a hotter CPI print from the US, then that

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Speaker 5: divergency will definitely arise this week.

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Speaker 1: Where do you think that leads the Bank of England.

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Speaker 1: We were speaking to Katherine Nice just earlier this morning.

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Speaker 1: She's at Pigin, but she was and she held a

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Speaker 1: number of significant roles at the Bank of England. Got

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Speaker 1: the Bend Blanky review that comes out on Friday. I mean,

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Speaker 1: I suppose if we're thinking about the USCPI and the ECP,

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Speaker 1: we should include a word on the Bank of England.

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Speaker 8: Yeah.

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Speaker 5: The Bank of England is a very interesting story because

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Speaker 5: at the beginning of the year it was expected to

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Speaker 5: be the most hawkish one because inflation here is higher.

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Speaker 5: There were some more pressures from the wages side, but

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Speaker 5: now we are actually seeing more people getting on the

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Speaker 5: field that the bo may cut as much as the FED,

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Speaker 5: or even more. It's currently expected to cut in August

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Speaker 5: by market expectations, and a fully cut from the FED

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Speaker 5: is only fully priced by September, so it may come earlier.

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Speaker 5: In fact, I think it's one that there's a lot

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Speaker 5: of doubt still, so we'll have to see the next

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Speaker 5: labor data, the next inflation data to firm those expectations.

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Speaker 5: But it is the case, right, that's right, that maybe

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Speaker 5: they will cut more than the FED, keeping.

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Speaker 2: Things interesting in markets anyway. Elenoi and Mada, thank you

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Speaker 2: very much for joining as Spoomberg's Europe Effects and rates editor.

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Speaker 1: There Now let's turn our attention then to a new

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Speaker 1: report out this morning from the Financial Conduct Authority. More

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Speaker 1: than seven million people in the UK are struggling to

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Speaker 1: pay their bills, according to a survey of almost three

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Speaker 1: and a half thousand UK adults at the start of

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Speaker 1: this year. Comes as the regulator in Britain was given

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Speaker 1: added responsibility last year to protect UK borrowers. Joining us

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Speaker 1: to discuss at Blooeberg's EMA head of Finance and Investing,

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Speaker 1: Tom Metcalf, Great to have you with us. The cost

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Speaker 1: of living crisis is still very much with us. But

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Speaker 1: it's the angler around the FCA that really fascinates me

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Speaker 1: about this. I mean, what can the FCA do about it?

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Speaker 1: Is sort of tracking how people are faring economically.

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Speaker 8: Yeah, well, it's sort of linked to these new responsibilities

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Speaker 8: you mentioned. There's a consumer duty and they're also effectively

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Speaker 8: over the of course the next few months, introducing more

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Speaker 8: and more protections for borrowers. So I think it's a

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Speaker 8: fair point how much can regulators actually alleviate the cost

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Speaker 8: of living crisis. What they say is, hey, we can

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Speaker 8: make sure if someone's struggling to pay the bills, you

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Speaker 8: know that the banks are treating them fairly. They're not

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Speaker 8: going straight to say, you know, kind of booting people

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Speaker 8: out of their own homes and stuff. But yeah, I

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Speaker 8: know this survey for me, as I look at it,

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Speaker 8: I remember it coming out last year. This was you know,

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Speaker 8: where there's something like ten million people struder face bills.

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Speaker 8: So obviously that's an improvement, but as you look at

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Speaker 8: the sort of the raw numbers, seven point four million,

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Speaker 8: that's you know, comfortably above about the five million or so.

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Speaker 8: It wasn't the pandemic. So my take from this is,

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Speaker 8: you know, those cost of living pressures are easy, but

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Speaker 8: they're still very much there, and you know, I think

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Speaker 8: the sort of reality on the ground is this survey

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Speaker 8: of show and is still very tough for a lot

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Speaker 8: a lot of people.

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Speaker 2: It's interesting though, because what we've heard from banks in

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Speaker 2: recent reporting seasons as well hasn't been a massive uptake

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Speaker 2: of non performing loans either, and is that sort of

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Speaker 2: the next thing that we need to be watching as

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Speaker 2: we're heading into our the season.

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Speaker 8: Absolutely efforts for the British banks, that's all we look for.

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Speaker 8: And it's been interesting, as you say, over the last

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Speaker 8: few quarters, it's always been a very kind of despite

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Speaker 8: maybe the broader macro picture being pretty grim, every single

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Speaker 8: bank is saying, no, we're not seeing in our own

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Speaker 8: book the arrears. So whether they are sort of there's

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Speaker 8: more stress popping up in parts of the system that

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Speaker 8: are maybe less transparent, or the fact that you know,

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Speaker 8: you've had this huge sort of subsidies going out over

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Speaker 8: the COVID period and you know, as they continue to

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Speaker 8: sort of work their way out of the system, you

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Speaker 8: might maybe see a bit more stress.

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Speaker 1: Yeah, well, we have seen an enormous surgeon buying now

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Speaker 1: pay later firms in the UK and across Europe, has

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Speaker 1: to be said, and also in the UK quite some

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Speaker 1: pressure around financing for car loans in Britain. That is

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Speaker 1: another fact that we've talked about in terms of the banks,

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Speaker 1: some more exposed than others to that. So I suppose perhaps,

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Speaker 1: as you say, some parts of the markets maybe under

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Speaker 1: more sort of may may show that pressure more of

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Speaker 1: the consumer.

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Speaker 8: Yeah, we're always looking for sort of that. I guess

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Speaker 8: the Canary and the coal mine, right, and car finance

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Speaker 8: was a classic and that's one of the questions we

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Speaker 8: always ask, you know, banks in particular is like, you know,

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Speaker 8: what is the credit card data showing? And as you say,

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Speaker 8: it does pop up. You can see this, you know,

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Speaker 8: you can see it's not a great time to be

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Speaker 8: a consumer, you know, stuff like that. But buying now,

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Speaker 8: pay later, and you know you're seeing a lot of

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Speaker 8: discretionary spend, you know, maybe on the higher ticket items

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Speaker 8: fall away, but then that you know, I was looking

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Speaker 8: at Tesco ownings today and there's you know, striking a

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Speaker 8: more positive tones. So you know, it's amazing the thing.

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Speaker 8: But perhaps if say, there is no sort of sharp

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Speaker 8: shot ahead, you know, it does look like at least

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Speaker 8: sort of you know, in terms of a really horrible

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Speaker 8: sort of falling out here is maybe being avoided, which

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Speaker 8: will be an impressive politic result.

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