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Speaker 1: This is Bloomberg Daybreak Europe for this Friday, the twenty

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Speaker 1: first of April in London. Coming up today, Biden versus Beijing.

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Speaker 1: US President gets set to unbuild China investment curbs for

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Speaker 1: American businesses. A Fed chorus sounds a higher note. Policymakers

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Speaker 1: signal the need for at least one more hike subsidy Roulette.

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Speaker 1: The Irish Finance Minister tells Bloomberg Radio that America's Inflation

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Speaker 1: Reduction Act is rubbing European businesses up the wrong way.

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Speaker 2: Zuckerberg says Meta will slow hiring loyal sabers have been

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Speaker 2: hit the hardest. And BMW Mini faces accusations of discrimination

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Speaker 2: over a Shanghai ice cream giveaway. Those other stories we're

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Speaker 2: looking at in today's papers, And I'm Leanne Gerren's.

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Speaker 1: Plus an explosive success. Musk SpaceX blows up its starship

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Speaker 1: rocket after a post launch engine miss out.

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Speaker 3: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 3: news you need to start your day in just one

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Speaker 3: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App,

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Speaker 3: and every way you get your podcasts.

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Speaker 1: Good morning, I'm Lizzie Burden here are the stories we're

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Speaker 1: following today. President Biden wants to limit American business investments

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Speaker 1: into key parts of China's economy. Bloomberg has learned that

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Speaker 1: he'll sign an executive order in the coming weeks focusing

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Speaker 1: on chips AI and quantum computing. The revelation comes after

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Speaker 1: the US Treasury Secretary Janet Yellen said the administration is

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Speaker 1: prepared to accept the economic costs of securing US interests

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Speaker 1: from threats posed by Beijing.

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Speaker 4: National security is of paramount importance in our relationship with China.

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Speaker 4: Even though these policies may have economic impacts, they are

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Speaker 4: driven by straightforward national security considerations, and we will not

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Speaker 4: compromise on these concerns even when they force trade offs

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Speaker 4: with our economic interests.

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Speaker 1: Janet Yellen there speaking at Johns Hopkins University's School of

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Speaker 1: Advanced International Studies in Washington. The US has been briefing

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Speaker 1: its G seven partners on the plan and hopes to

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Speaker 1: get an endorsement at next month's meeting. Federal Reserve officials

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Speaker 1: are backing another rate increase as they monitor the economic

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Speaker 1: fallout from recent bank collapses. One of the central bank's

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Speaker 1: more hawkish voices, Cleveland Fed President Lorettamester says she favors

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Speaker 1: hiking again.

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Speaker 5: I anticipate that monetary policy will need to move somewhat

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Speaker 5: further into restrictive territory this year, but Fed funds rate

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Speaker 5: moving above five percent and the real Fed funds rates

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Speaker 5: staying in positive territory for some time now. Precisely how

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Speaker 5: much higher the Fed funds rate will need to go

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Speaker 5: from here and for how long policy will need to

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Speaker 5: remain restrictive will depend on economic and financial developments.

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Speaker 1: Messa's fellow policymakers have also been weighing in. Bank of

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Speaker 1: Atlanta FED President Raphael Bostik says he supports the case

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Speaker 1: for pausing after one more hike, while Bank of Philadelphia

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Speaker 1: FED President Patrick Harker says rates are pretty close to

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Speaker 1: where they need to be, and America's massive green subsidies

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Speaker 1: may be pulling investment away from Europe. That's the view

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Speaker 1: of the Island Finance Minister Michael McGraw, who's been speaking

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Speaker 1: to us here on Bloomberg Radio.

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Speaker 6: The early indications already Inflation Reduction Act is having an impact,

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Speaker 6: but we need to see what is the evidence is

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Speaker 6: a displacing investment that otherwise would have come to Europe

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Speaker 6: and I think we need to examine the data that

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Speaker 6: is available.

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Speaker 1: Michael McGraw also said it's difficult for the EU to

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Speaker 1: compete with what the US is doing and that the

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Speaker 1: Bloc has to work to do, more work to do

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Speaker 1: if it wants to level the playing field. We'll have

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Speaker 1: more of our interview with Michael McGrath a little later

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Speaker 1: on here. In the UK, household confidence is at its

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Speaker 1: highest level since the war in Ukraine sent living costs soaring.

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Speaker 1: Bloomberg Samuel Ettien reports.

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Speaker 7: And GfK's Consumer Confidence Index rose six points to minus

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Speaker 7: five thirty in April, a fourteen month high and the

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Speaker 7: third consecutive improvement. It shows consumers are making big purchases

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Speaker 7: as they become upbeat about the economy's prospects over the

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Speaker 7: next year. Figures were stronger than economist's expectations, adding to

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Speaker 7: evidence that households are holding up against double digit inflation now.

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Speaker 7: Retail sales and GDP data have also beaten expectations in

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Speaker 7: recent months, and the UK could escape the recession that

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Speaker 7: was once predicted by most forecasters Elsewhere. The Bank of

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Speaker 7: England policy maker Sylvana Tenrero compared her hawkish colleagues to

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Speaker 7: a fool in the shower who get scolded by being

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Speaker 7: too impatient to wait for the water to warm up,

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Speaker 7: saying interest rates are already too high for the economy

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Speaker 7: to bear In London. I'm Samuel Etien Bloomberg, Daybreak, Europe.

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Speaker 1: And finally, SpaceX's attempt to send its Starship rockets into

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Speaker 1: space ended in a blast after an engine failure forced

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Speaker 1: it to blow up the launcher shortly after lift off.

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Speaker 1: As it blew up, the company's engineers could be heard

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Speaker 1: groaning and then cheering. The launch was crucial for Starship

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Speaker 1: and meant to show that the vehicle could reach space

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Speaker 1: and complete a partial orbit of Earth. Shortly after the explosion,

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Speaker 1: CEO Elon Musk tweeted that the next test launch would

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Speaker 1: take place in a few months. Well, there are top

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Speaker 1: stories this morning. I have to say the story of

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Speaker 1: SpaceX Is attempt to send Starship into space yesterday really

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Speaker 1: might be a bit of a metaphor for so many

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Speaker 1: things we told you yesterday morning. How Tesla shares had

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Speaker 1: sunk in wednesday's trading after Elon Musk said that he

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Speaker 1: was going to sacrifice yet more margin to cut EV prices. Well,

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Speaker 1: in yesterday's session, that news continued to go down like

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Speaker 1: a ton of bricks. The shares closed down for Tesla

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Speaker 1: nine point seventy five percent. Meanwhile, if you haven't paid

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Speaker 1: the eight dollars a mon the price tag, you'll be

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Speaker 1: waking up to discover you've lost your blue tick on Twitter. Woe. Now,

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Speaker 1: aside from journalist's egos, the first casualty of all of

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Speaker 1: this has been Musk's personal wealth. According to the Bloomberg

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Speaker 1: Billionaires Index, it fell by the most this year, twelve

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Speaker 1: point six billion dollars, even though the valuation of SpaceX

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Speaker 1: has rocketed because at least as we heard that the

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Speaker 1: starship got off the ground. As I mentioned earlier, Bloomberg

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Speaker 1: has learned that US President Joe Biden aims to sign

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Speaker 1: an executive order in the coming weeks that's going to

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Speaker 1: limit US business's investment in the China economy. To discuss that,

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Speaker 1: we're joined now by Bloomberg's chief North Asia correspondent Steven Engel.

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Speaker 1: Great to have you with us, Stephen.

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Speaker 8: Sure, absolutely, it's an interesting story obviously.

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Speaker 1: Yeah, I mean, how much does this mark a new

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Speaker 1: era in the US China relationship With Donald Trump? It

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Speaker 1: was all about tariffs. It seems that capital flows are

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Speaker 1: in focus.

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Speaker 8: Now, yeah, I think that's exactly right. It is sort

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Speaker 8: of a new phase that adds on top of the

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Speaker 8: export controls that the Biden administration has already imposed on

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Speaker 8: the sale of advanced semiconductors and chip equipment to China.

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Speaker 8: And essentially what this will this executive order that is

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Speaker 8: expected to be signed by mister Biden in the next

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Speaker 8: couple of weeks before he heads off to Japan and

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Speaker 8: the G seven leaders summit that starts May nineteenth in Hiroshima.

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Speaker 8: Essentially they will cover fields of semiconductors, artificial intelligence, quantum computing.

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Speaker 8: You know, these are strategic industries where the United States

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Speaker 8: has IP and it's going to infect you basically focus

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Speaker 8: on investments where US firms play active roles in management.

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Speaker 8: Some of these investments would potentially be banned outright, other

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Speaker 8: investments would have to get US government approval. And it's

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Speaker 8: supposedly targeting potential new investments, not existing ones. So it'll

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Speaker 8: be interesting to see the details after that is indeed

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Speaker 8: signed and he goes to Japan, where he behind the

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Speaker 8: scenes is trying to garner some endorsements of its ally

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Speaker 8: in the G seven for these moves.

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Speaker 1: Yeah, we heard from US Treasury Secretary Janet Yellen earlier

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Speaker 1: in the program. The US of course trying to frame

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Speaker 1: this as being about national security to hold back the

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Speaker 1: Chinese military rather than holding back its economic rival. I

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Speaker 1: wonder is that going to wash on anyone?

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Speaker 8: Well, is it going to wash with Beijing? I mean,

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Speaker 8: they look at everything that the United States with a

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Speaker 8: heavy dose of skepticism. They do see it as you know,

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Speaker 8: she jimping himself has described US efforts as containment, encirclement,

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Speaker 8: suppression of China. Pick your adjective. They basically say the

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Speaker 8: United States or the verb the United States is doing

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Speaker 8: all three according to China, and this is just going

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Speaker 8: to make matters worse. I mean, really, Janet Yellen's overall

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Speaker 8: messages national security is going to take precedence, if it's

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Speaker 8: a critical, critical component of competitiveness, we're going to have

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Speaker 8: to take I'm paraphrasing her. Essentially there's going to be

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Speaker 8: an economic cost if there is a national security issue

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Speaker 8: that needs to be prioritized, and it is essentially intended

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Speaker 8: this executive order to choke off critical funding and know

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Speaker 8: how that could eventually end up in Chinese military hands.

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Speaker 1: And meanwhile, the US wants to cut its dependence on

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Speaker 1: Taiwanese microchips in case China invades Taiwan. Surely there's more

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Speaker 1: diplomatic cost to that than economic benefit. I mean, the

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Speaker 1: US doesn't seem to be committing enough money into trying

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Speaker 1: to law the Taiwanese chip business stateside.

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Speaker 8: Well, yeah, I mean, obviously, the United States absolutely needs

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Speaker 8: that semiconductor's supply chain from Taiwan. It is luring the

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Speaker 8: likes of TSMC, by far the world's biggest chip foundry

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Speaker 8: to you know, Arizona. It's building forty billion dollars worth

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Speaker 8: of plants in Arizona. But it's not nearly enough. I mean,

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Speaker 8: TSMC and Taiwan basically control or make ninety percent of

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Speaker 8: the world's advanced semiconductors.

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Speaker 3: Right.

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Speaker 8: So the concern is that we're hearing through back channels

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Speaker 8: and the like officials telling us. And this is a

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Speaker 8: great bloomberg scoop if you have a chance to read it,

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Speaker 8: do read it. Basically, officials in Taiwan are particularly concerned

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Speaker 8: by comments coming out of the United States, this rhetoric

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Speaker 8: that war is potentially imminent and the like it's scaring

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Speaker 8: away potential investors to Taiwan because TSMC is not moving

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Speaker 8: its entire operation to the United States. Far from it.

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Speaker 8: You know, most of it's R and D and its

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Speaker 8: advanced chips are still going to be made in Taiwan.

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Speaker 8: But when Gino Romando, the US Commerce Secretary last year,

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Speaker 8: who said US dependence on Taiwan made chips is untenable

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Speaker 8: and unsafe, well, you know this, this message gets repeated

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Speaker 8: and repeated and repeated, and investors start, you know, questioning

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Speaker 8: whether we need to continue to invest. And Warren Buffett

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Speaker 8: is a great example. Berkshire Hathaway and fourth Quarter cut

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Speaker 8: its TSMC holdings by eighty six percent, and Warren Buffett says, look,

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Speaker 8: management's fine. The semiconductor business is a great business. We're

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Speaker 8: just concerned, and I'm paraphrasing again, concerned by these geopolitical risks.

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Speaker 1: All right, Bloomberg's chief North Asia correspondent, Stephen Engel, thank

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Speaker 1: you very much for taking us through all of that.

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Speaker 3: Now.

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Speaker 1: Ireland's finance minister says smaller EU member states should not

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Speaker 1: be disadvantaged by Europe's response to the US Inflation Reduction Act.

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Speaker 1: Michael McGraw has been speaking to Bloomberg Radio's Stephen Carroll

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Speaker 1: at the New Economy Gateway Europe event in Ireland. They

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Speaker 1: started by discussing new projects from the Irish government, which

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Speaker 1: show a budget surplus of more than twenty billion euros

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Speaker 1: over the next two years.

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Speaker 6: No, we're not preparing for illumin crisis, but we recognize

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Speaker 6: that we are in something of a sweet spot in

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Speaker 6: terms of the public finances at this point in time.

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Speaker 6: It is driven by particularly buoyant corporation tax receipts in

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Speaker 6: Ireland which may not prove sustainable into the long term.

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Speaker 6: And my own department estimate that potentially has of the

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Speaker 6: amount of receipts that we will collect this year under

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Speaker 6: that tax heading could be windfall in nature. So what

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Speaker 6: I cannot do is make permanent expenditure commitments on the

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Speaker 6: back of those receipts because those receipts may not repeat

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Speaker 6: into the future. And then alongside that, we have, along

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Speaker 6: with most other countries and aging population, our demographics are changing.

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Speaker 6: We know, for example, that by the end of this decade,

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Speaker 6: it will cost between seven and eight billion euro more

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Speaker 6: per annum to provide public services because of the aging

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Speaker 6: nature of our population. And so that means we have

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Speaker 6: to have resources available. So I will be setting up

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Speaker 6: a longer term national reserve fund or National resilience fund.

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Speaker 6: The title isn't the most important thing, but the idea

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Speaker 6: is to put money away for costs that we know

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Speaker 6: are coming away.

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Speaker 9: What risks is Areland facing from the inflation reduction action

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Speaker 9: and subsidies being offered by the United States.

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Speaker 6: So this is an issue of debate in Europe at

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Speaker 6: this point in time. So I sit around the ecofin

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Speaker 6: table with my finance minister colleagues from our own Europe

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Speaker 6: and there is a sense that Europe needs to respond,

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Speaker 6: but it needs to respond in a way that also

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Speaker 6: respects the fact that the Single market in Europe operates

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Speaker 6: on the principle of a level playing field across member states.

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Speaker 6: And so if the response is to be a change

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Speaker 6: to state aid rules, for example the use of subsidies,

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Speaker 6: then there isn't equal capacity across different member states to

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Speaker 6: deploy resources in an effort to complete what the United

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Speaker 6: States are doing.

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Speaker 9: So is there a risk that larger U member states

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Speaker 9: will be able to disproportionately spend and put countries like

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Speaker 9: Ireland at a disadvantage.

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Speaker 6: And there is that concern among smaller member states, including

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Speaker 6: Ireland to be frank, but I do think we have

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Speaker 6: to examine the evidence and the data, and there are

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Speaker 6: certainly some early signs that the Inflation Reduction Act is

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Speaker 6: proving to be effective, that we are seeing investments of

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Speaker 6: significant scale now being made by US companies and perhaps

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Speaker 6: also by European co companies. So the data is emerging.

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Speaker 6: I think we need to examine it. We need to

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Speaker 6: see what is an appropriate response. But like Europalta has

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Speaker 6: a lot of firepower, we have Next Generation EU, which

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Speaker 6: is an overall package of about eight hundred billion euro

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Speaker 6: which is essentially about the green transition about digitalization, but

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Speaker 6: of course that is administered and implemented through twenty seven

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Speaker 6: different national plans, Whereas there seems to be an attraction

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Speaker 6: in the simplicity of what the United States are doing

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Speaker 6: that essentially the support to the tax system is cash

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Speaker 6: back and it's difficult for Europe to compete with that.

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Speaker 6: So I think we have work to do to calibrate

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Speaker 6: an appropriate response.

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Speaker 9: Would you be in favor of there being a balance

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Speaker 9: at counterbalancing mechanism to ensure that EU member states aren't

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Speaker 9: putting each other at a disadvantage.

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Speaker 6: Well, that for me is the essential safeguard that has

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Speaker 6: to be put in place if Ireland is to support

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Speaker 6: a significant EU response. We do need to ensure that

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Speaker 6: it doesn't come at the expense of small amount states,

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Speaker 6: including Ireland, because we know that the vast majority of

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Speaker 6: state aid is used by the larger member states and

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Speaker 6: as I say, the smaller states simply may not have

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Speaker 6: the capacity to compete. So we have to protect the

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Speaker 6: level playing field. That is the fundamental pillar of how

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Speaker 6: the Single Market operates, and it's proven to be very,

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Speaker 6: very effective. But I do acknowledge that the early indications

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Speaker 6: are the Inflation Reduction Act is having an impact, but

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Speaker 6: we need to see what is the evidence. Is it

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Speaker 6: displacing investment that otherwise would have come to Europe? And

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Speaker 6: I think we need to examine the data that is available.

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Speaker 9: A bigger picture question To wrap up, it's a very

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Speaker 9: uncertain economic environment right now. Inflation is still very high.

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Speaker 9: We're looking at the lagging effects of higher interest rates

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Speaker 9: in Europe. What's the biggest challenge facing the Irish economy now?

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Speaker 6: Well, the biggest domestic challenge is housing and providing accommodation

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Speaker 6: for a growing population, which is now five point one

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Speaker 6: million people. We have taken in about eighty thousand people

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Speaker 6: from Ukraine who fled the war. We have net inward

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Speaker 6: economic migration as well. People see in oursh economy that

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Speaker 6: is successful country with a good quality of life and consequence, right,

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Speaker 6: so they want to be part of that story. I

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Speaker 6: think that's part of it for sure. So we need

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Speaker 6: to increase supply. We do have a mismatch between supply

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Speaker 6: and demand at the moment. Look, it is first and

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Speaker 6: foremost the social issue. We need to provide homes for

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Speaker 6: our people. But secondly it is an economic issue, and

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Speaker 6: of course it can be a constraint to further growth

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Speaker 6: and development if investors are seeing that accommodation is in

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Speaker 6: short supplies. So that's a top priority domestically and on

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Speaker 6: a broader front. That is certainly managing the downward path

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Speaker 6: of inflation and making sure that we support households who

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Speaker 6: are vulnerable and support businesses, and we're doing that through

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Speaker 6: very targeted energy support schemes and other interventions.

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Speaker 1: Now let's get to our newspapers. We've got a roundup

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Speaker 1: of the front pages. Real le Anne Gerrin's as she promises.

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Speaker 1: Zuckerberg says Meta will slow hiring, Loyal savers are being

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Speaker 1: hit the hardest, and BMW Mini faces accusations of discrimination

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Speaker 1: over a Shanghai ice cream giveaway.

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Speaker 3: Now the paper review on blue Bird Daybreak Europe. The

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Speaker 3: news you need to know from today's papers.

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Speaker 1: Now on the front pages today. The Wall Street Journal

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Speaker 1: has Mark Zuckerberg saying Meta will slow hiring, it won't

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Speaker 1: rule out future layoffs. Lean gerins, what do you make

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Speaker 1: of this?

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Speaker 2: So, Lizzie, this will happen during an address to employees

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Speaker 2: in a virtual Q and A session yesterday, and that

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Speaker 2: came after the latest rounds of layoffs, and Mark Zuckerberg

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Speaker 2: really relayed this news to his employees. The CEO said

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Speaker 2: he didn't rule out any future job cuts at Meta

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Speaker 2: and the company was really to slow hiring. This is

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Speaker 2: all according to The Wall Street Journal. Since November, Facebook's

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Speaker 2: parent company is It would lay off twenty one thousand employees.

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Speaker 2: Now the cuts are expected to be completed by next month,

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Speaker 2: and cuts have been made to the information Problems Engineering

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Speaker 2: team Lizzie, which really helps enable fact checking and address

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Speaker 2: misinformation claims and also tech divisions. These job losses have

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Speaker 2: really raised some eyebrows and caused some concern from staff

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Speaker 2: members and scores of employees during that Q and A

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Speaker 2: yesterday actually took issue with high performance reviews and bonuses

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Speaker 2: handed out to the tight circle of executives which do

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Speaker 2: surround Mark Zuckerberg. So this is something that employees are

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Speaker 2: not happy about. All the job cuts happening but huge

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Speaker 2: bonuses going to top executives. And the Financial Times is

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Speaker 2: reporting that Meta plans to cut more than ten percent

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Speaker 2: of its UK workforce. That's citing an internal documents sent

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Speaker 2: to company staff on Wednesday, And according to Bean, Meta

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Speaker 2: Platforms is planning to cut or relocate its London based

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Speaker 2: Instagram employees. So lots coming out about the latest round

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Speaker 2: of job cuts at Meta, and some of those concerns

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Speaker 2: been raised by staff.

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Speaker 1: A risky place to be when you've got recession risks

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Speaker 1: on the horizon. And noon the Times, how's the headline

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Speaker 1: loyal savers hit even harder as rates keep rising.

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Speaker 2: Yes, indeed, so these are the words of Nickel Rathi,

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Speaker 2: the chief executive of the Financial Conduct Authority. Lizzie Now

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Speaker 2: He's written a letter to Harriet Balden Baldwin, the chairwoman

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Speaker 2: of the Commons Treasury Select Committee, and he said harm

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Speaker 2: to long term savers on less competitive rates is likely

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Speaker 2: to have grown as interest rates in the UK increase. Now.

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Speaker 2: Rathy also argues it has been standard practice for financial

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Speaker 2: firms to offer more tractor rates to new savers while

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Speaker 2: existing savers so they very loyal customers earn less competitive rates,

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Speaker 2: so they are losing out. No, it's definitely not fair.

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Speaker 2: So I was reading this and thinking to myself, how

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Speaker 2: are they going to make this fair? And I'll tell

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Speaker 2: you how. He says changes on the horizon for savers

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Speaker 2: and the CEO of the FCA is hoping financial firms

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Speaker 2: do start to embrace new guidelines which have been outlined

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Speaker 2: so from July when setting rates, firms must comply with

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Speaker 2: the consumer duty, including acting in good faith towards and

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Speaker 2: providing fair value to all groups of savers. So he's

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Speaker 2: really raising this concern about loyal customers when it comes

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Speaker 2: to saving accounts and not just offering attractive rates to

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Speaker 2: law new people.

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Speaker 1: In well, they should do that for all businesses, I think,

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Speaker 1: not just new customers being rewarded, loyal ones as well.

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Speaker 1: And finally, the Telegraph says that BMW Mini is accused

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Speaker 1: of discrimination in Shanghai ice cream giveaway. What's that about?

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Speaker 2: So the incident actually occurred at the la largest motor

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Speaker 2: show in a China and a video has been circulating

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Speaker 2: on the Chinese social media website Webo and has been

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Speaker 2: watched Lizzie by millions of people, so millions of views,

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Speaker 2: and this has really sparked the outrage. Now the video

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Speaker 2: shows workers on a stand promoting Mini telling local visitors

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Speaker 2: that it had run out of the frozen dessert, before

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Speaker 2: offering a Western visitor an ice cream just moments later. Now, Mini,

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Speaker 2: owned by BMW, has apologized for the incident that happened,

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Speaker 2: and like I said, has become widespread on Chinese media.

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Speaker 2: Chinese consumers are increasingly conscious of how foreign companies behave

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Speaker 2: in the nation. And this is because it's become this

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Speaker 2: massive consumer of Western goods. We've seen that in earnings

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Speaker 2: results from Alvia, mach and lots of other big companies.

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Speaker 2: And I don't know, if you cast your mind back

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Speaker 2: to twenty eighteen, I remember this well. The fashion brand

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Speaker 2: Dolce and Gabana also had to make a public apology

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Speaker 2: when it released an advert featuring a Chinese woman trying

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Speaker 2: to eat pizza with chopsticks. Now what this basically says

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Speaker 2: is exactly what the newspaper The Telegraph is telling us

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Speaker 2: is Chinese consumers want to make sure that foreign companies

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Speaker 2: behave correctly when they are in the nation and advertising.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 1: stories making news from London to Wall Street and beyond.

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Speaker 1: listen live each morning on London DAB Radio, the Bloomberg

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Speaker 7: The Burden