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

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Speaker 2: This is the Big Big Day Baqut podcast available every

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

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Speaker 2: the seventh of February in London. I'm Caroline Hepka and.

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Speaker 1: I'm Stephen Carroll coming up today. Andrew Bailey says he's

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Speaker 1: a very very strong supporter of Labourer's growth agenda. As

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Speaker 1: the Bank of England simultaneously slashes its growth forecast for

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Speaker 1: this year.

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Speaker 2: US Treasury Secretary Scott Bessen tells Bloomberg Elon Musk is

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Speaker 2: doing important cost cutting.

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Speaker 1: Work plus seeing the wood for the trees. The EU

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Speaker 1: wants to keep old trees standing in a bid to

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Speaker 1: hit decarbonization targets, but forest owners aren't convinced.

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

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Speaker 1: The Bank of England has had its UK growth forecast

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Speaker 1: for this year and says the economy has a forty

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Speaker 1: percent chance of already being in recession. The BOO expects

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Speaker 1: the economy to grow I just zero point seventy five

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Speaker 1: percent this year, while also calculating a shallow contraction at

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Speaker 1: the end of last year. The forecasts illustrate this dark

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Speaker 1: challenge facing Rachel Reeves as she attempts to repair Britain's

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Speaker 1: finances and reverse a decline in sentiment. Despite the gloomy outlook,

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Speaker 1: Bank of England Governor Andrew Bailey endorsed the Chancellor's approach

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Speaker 1: to boosting GDP.

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Speaker 3: I mean, I'm a very very strong supporter both of

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Speaker 3: the growth agenda that this government had and by the way,

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Speaker 3: what the growth of general of the previous government had

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Speaker 3: as well. We've told the story quite a few times

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Speaker 3: that the potential growth rate in the UK has been

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Speaker 3: low since the financial crisis, and that obviously has an

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Speaker 3: effect on our policy environment, has an effect on other

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Speaker 3: policy environments as well, and addressing those questions is critical.

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Speaker 3: So very strongly agree with the Chancellor on this point. Now,

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Speaker 3: what I will say is, of course structural policies take

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Speaker 3: time to come through, so when we're looking at obviously

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Speaker 3: a two to three horizon here, you wouldn't expect a

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Speaker 3: lot of that to come through quickly.

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Speaker 1: Bailey's comments follow the Bank's decision to lower rates by

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Speaker 1: a quarter point to four point five percent. However, the

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Speaker 1: beer we also warned it now sees inflation peaking at

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Speaker 1: three point seven percent later this year, a big jump

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Speaker 1: from the two point eight percent it predicted in November.

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Speaker 2: Worries that US President Donald Trump will impose tariffs affecting

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Speaker 2: gold has led to weeks long queues to withdraw the

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Speaker 2: metal from the Bank of England's vault. Trump hasn't targeted

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Speaker 2: precious metals specifically, but denas are worried that they could

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Speaker 2: be included in blanket tariffs that he is threatening. The

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Speaker 2: Bank of England holds more than four hundred thousand gold

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Speaker 2: bars worth over four hundred and fifty billion dollars at

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Speaker 2: current prices, largely on behalf though of other central banks

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Speaker 2: and also a few key gold dealers. Bars at the

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Speaker 2: central Bank's vaults have also been trading at a discount

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Speaker 2: to the wider market this week, as withdrawal delays make

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Speaker 2: a goal at the Bank of England less attractive than

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Speaker 2: billion held in more accessible commercial vaults.

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Speaker 1: The new US Treasury Secretary is aiming to project a

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Speaker 1: sense of normalcy after facing turbulence during his first two

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Speaker 1: weeks in office. Speaking to Bloomberg, Scott best And said

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Speaker 1: his department are methodically pursuing its economic goals.

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Speaker 4: Look, I think with the President's policies of energy, dominance, deregulation,

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Speaker 4: and non inflationary growth. I think that the tenure is

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Speaker 4: going to naturally come.

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Speaker 1: Down, Scott Besant, speaking there. Under his leadership, the Treasury

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Speaker 1: is supporting Elon Musk's Department of Government Efficiency, which aims

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Speaker 1: to identify wasteful spending and modernize federal technology. Best insisted

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Speaker 1: the Treasury payment system is safe, despite Mosk's team gaining

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Speaker 1: access to it.

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Speaker 2: Senior intelligence officials in the United States are concerned that

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Speaker 2: they could be hit by the Trump administration's cost cutting efforts.

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Speaker 2: National security agencies are supposed to be exempt from the

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Speaker 2: so called efficiency drive being led by MARS, but CIA

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Speaker 2: director John Ratcliffe has offered buyouts to his staff in

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Speaker 2: what the agency said was an effort to sharpen its

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Speaker 2: focus on priorities like China and help President Trump's overall

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Speaker 2: efforts to shrink the federal workforce. The relationship between Trump

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Speaker 2: and the intelligence agencies soured in his first term after

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Speaker 2: they concluded that Russia had interfered in the twenty sixteen

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Speaker 2: presidential election to boost his candidacy.

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Speaker 1: Donald Trump has set out his tax priorities in a

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Speaker 1: meeting with Republican lawmakers. The US president is seeking an

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Speaker 1: end to the private equity carried interest tax break and

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Speaker 1: an expansion to the state and local tax deduction, among

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Speaker 1: other measures. According to the White House Press Secretary Carolyn Levitt,

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Speaker 1: Trump would like to see a sweeping tax bill passed

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Speaker 1: this year. Details of a deal are expected to be

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Speaker 1: announced as soon as today.

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Speaker 2: Amazon has warned investors on its results conference call that

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Speaker 2: it might face capacity constrain in its cloud computing division,

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Speaker 2: despite plans to invest one hundred billion dollars this year.

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Speaker 2: CEO Andy Jasse says that growth will be lumpy due

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Speaker 2: to delays in getting hardware and insufficient electricity, echoing concerns

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Speaker 2: of rival Microsoft. Discussing the company's results, Dan Ives, global

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Speaker 2: head of tech research at web Bush Securities, told Bloomberg

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Speaker 2: that the firm is still strong.

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Speaker 5: I think if you looked up samdbag special in the dictionary,

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Speaker 5: you'd see Amazon's ticker because look the actual quarter beat

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Speaker 5: on aws, strength on advertising, and I think on the

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Speaker 5: retail side they have mass and momentum.

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Speaker 2: So that was Webbush's Dan Ives speaking there. Amazon spent

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Speaker 2: twenty six point three billion dollars in capital expenditures in

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Speaker 2: the last three months of twenty twenty four, mostly on

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Speaker 2: AI related projects with Amazon Web Services. The stock has

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Speaker 2: gained eight point nine percent so far this year, after

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Speaker 2: a forty four percent jump in twenty twenty four.

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Speaker 1: Those are our top stories on the markets. We're looking at.

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Speaker 1: Shares in Hong Kong ops six tenths of one percent,

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Speaker 1: the hankstng Tech Index up by over one percent today,

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Speaker 1: listing lifting Asian stocks in general, selling pressure in Japan, though,

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Speaker 1: where the Nike and Tokyo's down six tenths of one percent.

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Speaker 1: European stock future is four tenths weaker, and on Wall

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Speaker 1: Street s and p mini futures are down by a tenth.

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Speaker 1: The Bloomberg Dollar Spot Index a tenth of one percent higher,

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Speaker 1: the pound at one twenty four to twenty two against

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Speaker 1: the dollar.

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Speaker 2: Now in a moment, we'll bring you more on how

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Speaker 2: markets are reading the comments from the Bank of England,

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Speaker 2: plus why EU climate rules are threatening to disrupt the

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Speaker 2: forestry industry in Sweden and Finland. But we have another story,

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Speaker 2: always a story that catches our high in the morning

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Speaker 2: and you know, gets us thinking it is a victory

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Speaker 2: for London cab drivers over navigation apps.

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Speaker 1: I love this story in case it was a doubt

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Speaker 1: for anyone's mind. Cab drivers are smarter than your navigation apps.

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Speaker 1: That is essentially the conclusion of new research.

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Speaker 2: I could have told this five years ago.

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Speaker 1: Well look, I mean it's again a testament to the

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Speaker 1: idea of actually learning something. The human brain is still

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Speaker 1: smarter than AI is. As the conclusion of what I've

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Speaker 1: taken away from you exactly relief all around what I've

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Speaker 1: taken away from these research published in the Proceedings of

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Speaker 1: the National Academy of Sciences. Essentially it has used the

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Speaker 1: example of London cab drivers and the knowledge test and

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Speaker 1: how they have to learn, you know, essentially a mental

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Speaker 1: map of London, and how it actually can help AI

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Speaker 1: algorithms to be trained to make them more efficient because

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Speaker 1: the way and the way they did is they asked

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Speaker 1: cab drivers to describe a route to go somewhere and

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Speaker 1: essentially found that because of the way that you'd think about,

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Speaker 1: how you'd use certain junctions and using certain landmarks is

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Speaker 1: different to how technology would process a route, and essentially

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Speaker 1: the cab driver's version was better.

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Speaker 2: Yeah, which I think is just brilliant, isn't it. I mean,

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Speaker 2: that's why London invented the eight Z. It is an

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Speaker 2: old city, a complex city.

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Speaker 1: When I first moved to London, I on earthed it somewhere,

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Speaker 1: I think when I moved back after a long absence

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Speaker 1: and realized I didn't need it anymore.

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Speaker 2: I'm not sure whether we'll be saying this about AI

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Speaker 2: iny years time, but anyway, there we are. It is

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Speaker 2: a lovely story that is on the Bloomberg terminal for

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Speaker 2: you can read it Linda Pohne's City Lab article on

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Speaker 2: Bloomberg dot Com or on the terminal.

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Speaker 1: Well, let's bring you more now on reaction to the

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Speaker 1: Bank of England's latest decision and commentary from the Governor

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Speaker 1: Andrew Bailey as well, plus a little bit of detail

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Speaker 1: on how markets are viewing those comments from your Treasury secretary.

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Speaker 1: It's got best end Our Market's Live strategist Mary Nicola

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Speaker 1: joins us for more. Mary, Good morning. First on the

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Speaker 1: Bank of England Andrew Bailey cautioning against markets reading too

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Speaker 1: much into the vote split and the decision when he

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Speaker 1: spoke to Bloomberg. Did markets pay attention to the governor,

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Speaker 1: of course not.

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Speaker 6: I think the fact that the member who was perceived

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Speaker 6: as the most hawkish voted for a fifty basis point recut.

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Speaker 6: That was a big shocker to the markets and that's

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Speaker 6: why they've moved in a very different direction than what

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Speaker 6: Andrew Billy was suggesting. But I think the biggest takeaway

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Speaker 6: from what we saw from the Bank of England was

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Speaker 6: the increase in inflation forecasts and the downgrade and growth,

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Speaker 6: and that combination is really going to undermine the pound,

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Speaker 6: especially if these expectations come to fruition.

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Speaker 4: Yeah.

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Speaker 2: Absolutely, we're already down a tenth of one percent this

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Speaker 2: Morly one twenty four twenty one in terms of cable.

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Speaker 2: What's the updated forecasts then mean around the market expectations

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Speaker 2: for the rate path going forwards?

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Speaker 6: Yeah, so now we're looking at expectations are for about

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Speaker 6: three more cuts over the next year, which was which

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Speaker 6: is definitely more dubbish than before the meeting. But the

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Speaker 6: risk is that they become more cautious, as Andrew Bailly

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Speaker 6: had highlighted, especially given inflationary pressures. So it will really

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Speaker 6: come down to what they see as a priority. Is

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Speaker 6: it growth or is it inflation. Take for example, here

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Speaker 6: in Asia, it seems like growth has won out, So

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Speaker 6: for example, RBIs has cut because of growth concerns. We've

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Speaker 6: seen other central banks as well do the same. So

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Speaker 6: either way, weak activity though and higher prices is really

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Speaker 6: going to keep sterling assets under pressure.

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Speaker 7: Yeah.

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Speaker 1: Indeed, and of course a big focus too for the

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Speaker 1: government here who are trying to start their growth agenda.

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Speaker 1: Let's turn to the US Mary Scott Beson's interview saying

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Speaker 1: he favors a strong dollar and won't alter the US

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Speaker 1: debt issuance plans. Has that given investors enough certainty about

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Speaker 1: the approach of this administration.

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Speaker 6: So far? I think he's Besince done a good job

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Speaker 6: in placating the market's concerns. And of course, because we've

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Speaker 6: heard about President Trump discussing his his woes about the

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Speaker 6: US dollar strength, reiterating that reiterating that strong dollar policy

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Speaker 6: is absolutely key when it comes from the US Secretary,

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Speaker 6: the US Treasury secretary. But still, I think what investors

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Speaker 6: are going to look for is from the Treasury is

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Speaker 6: more on fiscal policy and the government's intentions on spending.

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Speaker 6: That's going to be the critical support because fiscal profligacy

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Speaker 6: is not going to go unnoticed by a lot of

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Speaker 6: the bond vigilantes that are out there.

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Speaker 2: Yeah, and it's jobs day of course today the data

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Speaker 2: to you out later. What are we expecting?

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Speaker 6: So consensus is looking for one hundred and seventy five

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Speaker 6: thousand jobs were added in January. I think to sustain

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Speaker 6: an equity rally, we're going to investors are going to

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Speaker 6: need to see a number that's not too hot that

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Speaker 6: could delay rate cuts even longer, and not too cold

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Speaker 6: that damp and see outlook for growth or raises concerns

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Speaker 6: about a recession. The other thing too to watch out

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Speaker 6: for today is the revisions to the establishment and household surveys,

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Speaker 6: because that's really going to reveal how weak or strong

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Speaker 6: the labor market actually was over the last year.

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Speaker 1: Okay, Mary nicol our Market's live stratgs, thank you very

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Speaker 1: much for joining us now.

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Speaker 2: In Sweden and in Finland, hundreds of thousands of people

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Speaker 2: make their living from forests, but their way of life

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Speaker 2: and this important industry is under threat from EU climate rules,

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Speaker 2: which aim to protect bio diversity and reduce carbon emissions.

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Speaker 2: Our reporter Jonas Ekblom joins us now for more on

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Speaker 2: this story. Good morning, Jonas, thanks for being with us

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Speaker 2: for context. Just how important is the forestry sector in

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Speaker 2: Sweden and Finland.

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Speaker 7: It's hard to underestimate, if at least the cultural significance

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Speaker 7: of the forest industry. Like the forest industry plays a

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Speaker 7: key role in the early industrialization of Sweden and still

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Speaker 7: today it's very much a core industry and a lot

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Speaker 7: of Swedish towns and like a lot of big Swedish

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Speaker 7: companies provide the world with their paper products. For example,

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Speaker 7: they're Slish companies like Sity who makes tampous and diapers,

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Speaker 7: as well as like other hygiene products which comes from

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Speaker 7: Swedish trees, and around twenty five percent of the world's

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Speaker 7: milk cartons come from Sweden.

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Speaker 1: Don'ta's talk us through then the EU rules that are

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Speaker 1: that are causing trouble for this industry. Which ones are

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Speaker 1: they unhappy about?

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Speaker 7: The one that draws particular ire is called LULUCF, which

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Speaker 7: is the climate regulation which prescribes that European members states

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Speaker 7: need to increase their carbon think that is, like how

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Speaker 7: much carbon the nature in their country needs to take

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Speaker 7: up from the atmosphere and the easiest way to do it.

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Speaker 7: Most s rate for a way to do it is

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Speaker 7: by not cutting down trees and all of these lu

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Speaker 7: lucive targets Sweden and Finland, for example, like in our story,

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Speaker 7: like the rest of Europe has pledged to do this

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Speaker 7: by twenty thirty and they need to do it now.

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Speaker 7: So the big conflict is between the EU who needs

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Speaker 7: to eat climate carbon amounts saved now, and you've got

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Speaker 7: the industry who argues that we should cut down the

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Speaker 7: trees to make paper cups and replace plastic cups and

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Speaker 7: bio energy instead of fossil fuels.

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Speaker 2: Beautiful pictures and images in the story that you've written

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Speaker 2: give me a real sense of the kind of cultural

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Speaker 2: heritage and what it means. Do the businesses not support

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Speaker 2: though the goal of cut in carbon emissions they do?

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Speaker 7: I think is just a big question, particularly from these

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Speaker 7: bigger players who produce the pull and the paper products.

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Speaker 7: They often like to teut their substitute so called substitution effects,

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Speaker 7: which is like how much fosstile resources are we all

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Speaker 7: setting by using trees instead. Conservationists on the other hand,

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Speaker 7: argues that the climate benefits are greater by just letting

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Speaker 7: the trees stand. And then there's also a larger conflict

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Speaker 7: about the way these forests are managed. For example, like

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Speaker 7: most is logged by so called clear cutting is when

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Speaker 7: you cut a certain acreage, for example, and you cut

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Speaker 7: down all the trees in a certain plot, and that

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Speaker 7: has its own biodiversity challenges for example, which is another

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Speaker 7: reason why the conservationists, conservationist group and you is eyeing

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Speaker 7: to make policies more strict in this area.

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Speaker 1: I mean, the national governments in Sweden and Finland had

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Speaker 1: a part in the passing of these rules as well.

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Speaker 1: How are they playing this given the importance of this

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Speaker 1: industry in those countries.

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Speaker 7: Sweden in particular like to play themselves as like a

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Speaker 7: very measured EU members date, not like the one who,

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Speaker 7: for example, is like, you know, very anti ERIIG relations.

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Speaker 7: But here is one where they vie mentally argued that

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Speaker 7: the EU should not regulate the forest industry, and traditionally

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Speaker 7: it hasn't. The EU comes head to head with Sweden

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Speaker 7: here in this case because it's not usually been an

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Speaker 7: area which has been traditionally covered by EU policy. It's

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Speaker 7: rather been something which has been like a so called

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Speaker 7: national competency. But with these new climate regulations, the EU

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Speaker 7: takes a very holistic approach to nature, environment, climate and

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Speaker 7: all of that.

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