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Speaker 1: Good morning.

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Speaker 2: It's Tuesday, the first of August here in London. This

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Speaker 2: is the Bloomberg DAYBAK podcast. I'm Caroline Hepka.

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Speaker 3: And I'm Stephen Carroll. Coming up today, HSBC becomes the

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Speaker 3: latest global bank to post bumper profits.

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Speaker 2: UK shop prices dropped for the first time in two years,

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Speaker 2: in a boost for ISHISUNAC.

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Speaker 3: And the UK scraps plans to replace the eused product

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Speaker 3: safety stamp.

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

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Speaker 3: HSBC says it plans to buy back up to another

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Speaker 3: two billion dollars of stock after making a pre tax

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Speaker 3: profit of eight point eight billion in the second quarter.

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Speaker 3: The results are a clear beat, with top line growth

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Speaker 3: and net interest margin both exceeding estimates. The bank's CEO

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Speaker 3: no Quinn told Bloomberg that while higher rates have benefited

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Speaker 3: the bank, there's also a downside.

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Speaker 4: Higher interest rates for longer will continue to pressure both

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Speaker 4: consumers and businesses, and it's in all our interests that

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Speaker 4: we can get inflation down as soon as possible in

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Speaker 4: order to eat the pressure on the YU curve and rates.

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Speaker 3: We'll have more of that interview with HSBC's Noel Quinn

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Speaker 3: in a few minutes time. The lender joins the likes

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Speaker 3: of Barclay's, Standard Chartered and Deutsche Bank and announcing share buyback.

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Speaker 3: Says surging loan income boosts profitability.

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Speaker 2: Now inflation in UK shops is falling for the first

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Speaker 2: time in two years. Bloomberg's James Wilcock has more.

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Speaker 5: Shop prices were zero point one percent lower in July

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Speaker 5: than in June. Wet weather and staple goods like oil

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Speaker 5: and fish. There's some of the major factors driving prices down.

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Speaker 5: And although some might see it as good news for

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Speaker 5: the Bank of England, the central Bank's June forecast predicted

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Speaker 5: falling goods inflation, it's more concerned about wages and service

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Speaker 5: price rises in London, James Wilcock, Bloomberg day Break.

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Speaker 3: Europe hedge funds are throwing in the towel on their

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Speaker 3: stock bets, according to data from JP Morgan. In a

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Speaker 3: move known as degrossing, managers have slashed positions on both

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Speaker 3: bullish and bearish equity wagers rather than sinking like most

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Speaker 3: forecasters predict did. Stocks ivinstad Surgne hopes of a soft landing.

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Speaker 3: That's which for thinking, According to JP Morgan's chief Global

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Speaker 3: market strateist Makao Kolanovich. She says market expectations are too high.

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Speaker 2: The Federal Reserve says that banks have reported tighter standards

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Speaker 2: and ongoing weak demand for loans in the second quarter.

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Speaker 2: That's staring ow On Bloomberg's Charlie.

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Speaker 6: Pellett, it extends a trend that began before recent stresses

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Speaker 6: in the banking sector emerged. According to a FED survey

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Speaker 6: of lending officers, the proportion of American banks tightening terms

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Speaker 6: on commercial and industrial loans from medium and large businesses

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Speaker 6: rose to fifty point eight percent, up from forty six

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Speaker 6: percent in the first quarter. The collapse of four US

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Speaker 6: regional banks since March sparked turmoil in the financial sector

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Speaker 6: and increased concerns that lenders would reign in access to

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Speaker 6: credit in a way that could tip the US economy

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Speaker 6: into a recession. In New York, Charlie College Bloomberg Daybreak, Europe.

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Speaker 3: Nigel Farage says Coots and parent bank not West have

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Speaker 3: offered to reinstate his accounts. Speaking on his gb News show,

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Speaker 3: the FORMERMEP and Brexit campaigner said he responded with a

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Speaker 3: solicitor's letter.

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Speaker 1: I want some full apologies. I want some compensation for

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Speaker 1: my costs. But more important than all of that, I

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Speaker 1: want to face to face meeting with the bank's bosses.

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Speaker 1: I want to find out how many other people in

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Speaker 1: Coots on at West have had accounts closed because of

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Speaker 1: their political opinions, and I want to make sure this

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Speaker 1: never happens to anybody else ever again.

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Speaker 3: Nigel Farag's comments come after a dispute over the closure

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Speaker 3: of his account led the bosses of Coots and nat

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Speaker 3: West to step down. A spokesperson for Coots said the

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Speaker 3: bank couldn't comment on individual customers.

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Speaker 2: And finally, Richie Sounax's government says that UK companies can

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Speaker 2: use the EU's Product Safety Mark in death. Definitely, it's

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Speaker 2: a climb down on a post Brexit plan to enforce

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Speaker 2: a domestic standard that was criticized by businesses, but it's

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Speaker 2: likely to anger breggsit tears pushing for divergence. Yesterday, the

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Speaker 2: government said that business can continue to apply these eu

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Speaker 2: CE label to their products without also having to include

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Speaker 2: the new UK c A stamp.

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Speaker 3: So those are our top stories on the program this morning.

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Speaker 3: Another story that caught my eye is now Caroline that

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Speaker 3: you're very influential. I know that your influence extends far

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Speaker 3: and wide. I didn't realize you'd beaten Bierby to a

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Speaker 3: trend though.

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Speaker 1: Ah.

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Speaker 2: Yes, this is Buckenstock's my favorite footwear and the company

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Speaker 2: which is planning an IPO in the US. It's reported Yeah,

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Speaker 2: apparently Margo Robi in the Barbie movie, which I still

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Speaker 2: have not managed to see. Don's a pair of bright

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Speaker 2: pink birken Stocks. Of course. Actually the company is owned

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Speaker 2: by L. Caterton and also a chunk of it is

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Speaker 2: owned by LVMH's Berner Arnold's. So look, it's probably knocked

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Speaker 2: out to me. I suspect it's much more down to

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Speaker 2: be a French fashion house. We're making it very trendy again.

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Speaker 3: But yeah, I mean fascinating to see. I mean it's

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Speaker 3: also you know, at an IPO at a time that

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Speaker 3: we're seeing a very maribund market for IPOs around the world,

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Speaker 3: So I'm very interesting that this would be the choice

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Speaker 3: as well, that they're going to go into market on

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Speaker 3: this in September by the looks of things.

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Speaker 2: Yeah, absolutely, and that they could be valued at more

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Speaker 2: than eight billion dollars is Yeah, it's a very interesting move.

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Speaker 2: So we could see that soon September.

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Speaker 3: Yeah, certainly. Well, let's get more details now on those

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Speaker 3: bullish earnings from HSBC. The CEO nol Quinn has been

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Speaker 3: speaking to Bloomberg's Francine Lackwatt about the results.

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Speaker 4: Because of our strong capital generation commit to a further

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Speaker 4: ten cents dibidend of interim dividends for Q two and

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Speaker 4: an additional two billion dollar up to two billion dollar

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Speaker 4: buy back, which we intend to complete in the next

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Speaker 4: three months. So that's a good outcome. But I do

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Speaker 4: want to say it's broad based across all geographies and

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Speaker 4: cross all business lines.

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Speaker 7: No, no, how worried are you about Chinese real estate

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Speaker 7: and actually, if you look at what you've announced today,

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Speaker 7: developments could be worse than what you're expecting and will

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Speaker 7: you have to take more more fresh charges against some

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Speaker 7: of your exposure there.

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Speaker 4: I think what we announced today was we do a

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Speaker 4: scenario on what a potential plausible downside could be on

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Speaker 4: that we're not predicting. That we scenario plan that. We

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Speaker 4: did take some additional provisions in the in quarter two,

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Speaker 4: but they were relatively manageable within our overall ecl charge.

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Speaker 4: I think we took about three hundred million in the

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Speaker 4: first half of this year. That was top up on

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Speaker 4: some existing provisions. But if I look at my overall

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Speaker 4: ECL charge for the first half of the year, it

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Speaker 4: was one point three billion, and that absorbed commercial readA

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Speaker 4: state in China, specifically on real estate in China, it

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Speaker 4: will be a challenge in six twelve months, the industry

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Speaker 4: still has some challenges ahead. We believe we're well provisioned.

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Speaker 4: We're comfortable with the provisioning we have at the half year,

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Speaker 4: and we'll have to wait and see how the policy

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Speaker 4: measures continue to adopt adapt. And what is really challenging

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Speaker 4: in the real estate market in China is a lack

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Speaker 4: of demand and that's really where I think the solution

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Speaker 4: to the challenges will come from.

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Speaker 7: What does the decision to downsize your London headquarters tell

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Speaker 7: us about your commitment to the UK.

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Speaker 4: Were absolutely committed to the UK and our decision on

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Speaker 4: premises in the UK is a function, frankly, of some

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Speaker 4: of the reduction in costs that we've done over the

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Speaker 4: past three to four years. It's a function of changing

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Speaker 4: working pasterns, and it's a function of some of the

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Speaker 4: offshoring that we've done. So our need for premises in

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Speaker 4: the UK is less today than it was three four

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Speaker 4: years ago. So our choice on where we relocated the

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Speaker 4: head office wasn't a decision between Canary Wharf and the City.

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Speaker 4: It was a decision based on available premises somewhere around

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Speaker 4: twenty twenty six and twenty twenty seven that had the capacity,

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Speaker 4: but not too much capacity to absorb the people we wanted.

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Speaker 4: So frankly, we needed a build in half the size

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Speaker 4: of Canary Wharf and there aren't that many buildings that

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Speaker 4: were available. This was not a decision between the City

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Speaker 4: or Canary Wharf. It was a practical decision based on

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Speaker 4: property availability.

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Speaker 7: Given where we are now worldwide and some of I

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Speaker 7: guess the influencers across the world, do you say your

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Speaker 7: reasons for remaining in the UK are actually decreasing.

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Speaker 4: No. I think UK is a very good place to

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Speaker 4: have a headquarter for a global institution. It covers all

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Speaker 4: the time zones. Well, it's a good environment to operate

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Speaker 4: in with lots of professional services to support an organization. Remember,

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Speaker 4: we're a global business. We have to have a headquarter

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Speaker 4: somewhere and the UK has been a good headquarter for us.

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Speaker 4: But I'm also at the moment in our headquarters in

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Speaker 4: Hong Kong, and in a few weeks time I'll be

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Speaker 4: in our headquarters in the Middle East. So you know,

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Speaker 4: we're a global organization and there has to be a

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Speaker 4: place that where you're registered, and the UK is a

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Speaker 4: good place to be register that it's a good environment

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Speaker 4: to operate a global bank with a good regulatory environment,

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Speaker 4: and we're very happy there.

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Speaker 7: When you look at UK mortgages, I think you were

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Speaker 7: the first major bank to actually start cutting your rates

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Speaker 7: last week. Do you see rates substantially filing for mortgages

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Speaker 7: in the near future.

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Speaker 4: I think it's going to be a function frankly, the

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Speaker 4: swap rates in the UK. You know, it's not just

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Speaker 4: the base rates in the UK, but it's the swap

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Speaker 4: rates because most mortgages are priced off swaps. And it

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Speaker 4: will be there for a function of what is the

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Speaker 4: market confidence? Where does the market see the yel curve?

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Speaker 4: And we saw the eyel curve go up, then we

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Speaker 4: started to see it come down. Our ambition is to

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Speaker 4: try and make sure our rates are as reasonable as

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Speaker 4: possible to help customers navigate what is definitely a challenging

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Speaker 4: the environment of higher rates in the market. Plus higher inflation,

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Speaker 4: so if we can move down, we will do as

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Speaker 4: quickly as possible. So that was our decision. It will,

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Speaker 4: it will. I can't predict what the yel curve necessarily do.

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Speaker 4: There is the prospect of more interest rate rises in

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Speaker 4: the future in order to combat the inflation, and that

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Speaker 4: therefore could change the yield curve for the swap rates,

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Speaker 4: and therefore we may have to adjust price in then

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Speaker 4: upboard down.

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Speaker 7: No, it's clear that in the last couple of weeks

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Speaker 7: Nigel Faras really dominated the headlines when it came to

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Speaker 7: banking in the UK. Do you think it will change

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Speaker 7: banking in this country and would you ever drop a

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Speaker 7: customer because of their political beliefs.

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Speaker 4: Well, first, our policy is very clear. We do not

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Speaker 4: exeit a client or de banker client based on their

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Speaker 4: lawful personal views. We don't do that as part of

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Speaker 4: our policy. What I also want to do is say

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Speaker 4: we will work with the authorities in the UK, the

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Speaker 4: FCA and the regulators in the UK in whatever work

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Speaker 4: they're going to do over the next few weeks to

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Speaker 4: try and find a good resolution to the current situation

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Speaker 4: that exists. But our policy is we do not debank

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Speaker 4: based on the lawful personal views of our customers.

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Speaker 3: CEO nol Quinn, speaking there to Bloomberg's editor at large

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Speaker 3: Francine Laqua. Up next, Sunac downplays Green policies to Court

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Speaker 3: Middle England and Musk's giant X sign dismantled.

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Speaker 4: Now the paper review on blue Bird Daybreak Europe.

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Speaker 5: The news you need to know from today's papers.

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Speaker 2: Tony is this morning bluebags, Leanne gons to discuss. Let's

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Speaker 2: start with the Financial Times this morning, Leanne Rishi. Sunac

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Speaker 2: downplays Green policies to Court Middle England.

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Speaker 8: Caroline, good morning to you. Yes, and this is the

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Speaker 8: headline in the FT and they basically say Sunak is

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Speaker 8: playing down the Conservative Party's Green credentials and they say

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Speaker 8: that is due to that surprise by election winn in

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Speaker 8: Uxbridge two weeks ago over the issue of ules. So

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Speaker 8: this is what the Ft'll say. And yesterday we were

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Speaker 8: talking about this in the papers, weren't we that the

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Speaker 8: Prime Minister was off to Aberdeen in Scotland yesterday He

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Speaker 8: actually got a private jet there and he also announced

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Speaker 8: plans for hundreds more north sea drilling licenses in the

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Speaker 8: years to come. But as the Ft explains, the move

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Speaker 8: has been slammed by a former Tory energy minister as

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Speaker 8: the wrong decision When the rest of the world is

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Speaker 8: experiencing record heat waves, climate changes really come into focus

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Speaker 8: in Europe and around the world, especially this summer. Meanwhile,

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Speaker 8: campaigners say extracting more fossil fuels would send a wrecking

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Speaker 8: ball through the UK's climate commitments. But as we know,

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Speaker 8: Rishi Sunak is saying we need to do this for

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Speaker 8: our energy security going forward, so we don't rely on

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Speaker 8: foreign markets. The ft says. Sunac's press secretary insisted he

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Speaker 8: had not changed his policy since that Uxbridge win, but

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Speaker 8: his tone has shifted in the last week. This is

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Speaker 8: what the newspapers saying as toy MP's clamor for a

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Speaker 8: dilution of government green policies. But the big question is

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Speaker 8: this ahead of the election, because we know they trailing

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Speaker 8: in the polls against Labor, and Labour's Jess Phillips came

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Speaker 8: out yesterday and actually also really poured cold water on

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Speaker 8: the carbon capture program where she Sunac announced too.

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Speaker 4: Yeah.

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Speaker 2: Absolutely, look the line on this sort of reporting that

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Speaker 2: has stuck in my mind. It's from a couple of

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Speaker 2: days ago, but it was in the economist saying that

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Speaker 2: any environmental obligation that stands between mister Sunac and re

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Speaker 2: election will be ditched. That was the sort of economist's

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Speaker 2: take on it, you know, saying that actually perhaps people

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Speaker 2: misunderstand the Prime Minister, that this PM is a right winger,

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Speaker 2: as the economist said, and so on the environment. Yeah,

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Speaker 2: that was the issue that kind of stuck in my

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Speaker 2: mind as I was watching him up in Scotland yesterday.

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Speaker 2: But that's an interesting one, the ft.

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Speaker 3: Let's go to the Times nextly, and the Competition of

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Speaker 3: Markets Authority opens a new consultation on Microsoft takeover a bit.

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Speaker 8: Yes, indeed, Steven, and We've spoken about this many times before,

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Speaker 8: but I've got an update for you, courtesy of the

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Speaker 8: Times newspaper, Microsoft's submitted changes to the UK regulator this

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Speaker 8: CMO CMA excuse me over this anticipated acquisition of Activision Blizzard. Now,

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Speaker 8: the watchdog moved to hold that large deal in the

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Speaker 8: video gaming industry earlier this year. However, it has now

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Speaker 8: published the tech giants argument for it to be reconsidered. Remember,

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Speaker 8: this was going to be the largest deal in video

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Speaker 8: gaming history, so it's massive. We're talking sixty nine billion dollars,

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Speaker 8: and three weeks ago the CMA called a truce with

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Speaker 8: Microsoft to consider how the acquisition could be modified, and

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Speaker 8: that was really to soften those regulatory concerns. The regulator

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Speaker 8: has denied altering its stance as a result of external pressure.

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Speaker 8: And I think we can all remember the pressure the

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Speaker 8: CMA really came under when they said that this take

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Speaker 8: overbid could not happen. The initial decision to block it

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Speaker 8: prompted that huge backlash, with both companies claiming that it

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Speaker 8: showed the UK was closed for business. And now we

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Speaker 8: know that the Competition watchdog has said it will decide

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Speaker 8: whether to clear or block Microsoft's takeover of the video

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Speaker 8: game developer Action Vision Blizzard by the twenty ninth of August,

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Speaker 8: So first of August today, and so we've got a

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Speaker 8: few days ago, twenty eight precisely.

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Speaker 2: Yeah, okay, interesting on Microsoft. Just lastly, the Wall Street

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Speaker 2: Journal has the headline X sign removed from former Twitter

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Speaker 2: HQ a planning issue.

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Speaker 8: Oh Caroline, you should see this big flashing sign that's

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Speaker 8: upset all these local residents. They aren't happy at all.

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Speaker 8: Their Elon Musk put this huge giant X sign on

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Speaker 8: top of its headquarters in San Francisco on Friday when

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Speaker 8: the Twitter one was taken down. But locals just aren't

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Speaker 8: happy because it's flashing into their homes. They're saying it's

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Speaker 8: just not appropriate. And city officials say the sign was

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Speaker 8: put up without a proper permit and you know, these

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Speaker 8: bright lights beaming into their apartments. So the San Francisco

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Speaker 8: Department of Building Inspection has opened an investigation into this

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Speaker 8: installation and we're going to see what the outcome is.

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Speaker 8: But this massive, big flashing sign. But Elon Mustard say

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Speaker 8: it was just temporary. However, you know, we never.

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Speaker 6: Perhaps perhaps more temporary than he thought.

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Speaker 8: Yes, exactly, yes, three days it was up.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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