17 Burst results for "Treasury Select Committee"
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"This is Bloomberg daybreak Europe. I think what you're going to see in the UK is you're going to see the Central Bank having to respond to really bad data. Tax cuts should not be the priority at the moment. It's about a credible plan for growth over the next two, three years. I think we have started to turn a corner. That's encouraging. There's a long way to go and there are a lot of risks. We know that we have ground to cover. We know that we are not done. Bloomberg daybreak, Europe, on Bloomberg radio. And at 7 30 a.m. here in London good morning, I'm Caroline heppel. And I'm Stephen Carol, this is Bloomberg daybreak, Europe. We checked the markets for you all day long at Bloomberg gear stocks 50 futures, half a percent lower, 4100 features, three tant to 1% lower as we look towards the start of the European trading session Wall Street futures also in the red S&P E minis down by a tenth of 1%. The Japanese yen now just four tenths of 1% stronger after that report, if you've had from the Nike about the potential name for the new governor of the bank of Japan, the announcement formally due to take place next week, the Bloomberg dollar spot index is a touch weaker. The pound is two tenths of 1% weaker against the dollar one 2095 is where it's trading. And now to our top stories, the UK avoided a recession by the narrowest of margins last year, GDP was on changed in the final three months of 2022 following a revised two tenths of 1% decline in the previous three months. However, the cost of living crisis and industrial action hit the economy hard in December without put declining by half a percent in the final month of the year. Professor Stephen Miller deputy director at the National Institute of economic and social research says that 2023 will be a tough year for many. And the key points I think I'd like to make is that although we're not forecasting a recession as such, life is certainly not going to be great for a large number of households. We're not expecting the economy to grow that much at all. Professor Stephen millard also told us that one in four UK households will be unable to pay their energy and food bills in 2023. The Bank of England governor Andrew Bailey says big increases in public sector pay will add to inflation if they aren't offset by tax increases. Speaking to the treasury select committee in parliament, Bailey said that even with falling energy costs inflationary risks remain. There are really sort of two countervailing forces going on at the moment. There are very powerful base effects that are going to come out that effectively come out this year. And that puts a very powerful negative trajectory on inflation. And that's really down to a lot of that is down to energy prices. Now, we all concerned about persistence. And that's why we frankly raised interest rates this time. The Bank of England governor was speaking as firefighters called off the threat of strikes after receiving an improved pay offer, the fire brigade's union said its members would vote on a 7% raise back data to last summer and a further 5% increase from this July. Now Trafigura is facing a $577 million loss after discovering metal cargoes it bought did not contain the nickel that they were supposed to. Bloomberg zucchini broke down the story for us. Trafalgar is a company that has grown rapidly in the past decade to become one of the world's largest trading houses and it spent the last two months uncovering what it now believes to be systemic fraud against it. And people close to the matter say the group's head of nickel and cobalt trading is actually leaving the company, although the firm has said in a statement it does not believe anyone at the company was complicit in the fraud. Sukin reporting that the revelations are another black mark for the metals trading industry which is recent years has been beset by tales of fake warehouse receipts, duplicate shipping documents and even containers filled with painted rocks. China's consumer price inflation accelerated last month as the lunar new year holiday stimulated demand, CPI rose in line with inflation hitting 2.1% year on year. Bloomberg economic says the pickup in CPI was down to higher food prices, core inflation which strips out food and energy costs gained just 1%. Okay, those are a few of our top stories for you still had on blue bag daybreak here. We're going to talk about the global outlook with Friday duke rose, who is head of macroeconomic research at picte, wealth management, a very difficult year ahead for the UK expected not quite so bad elsewhere, but that yields curve inversion is a difficult signal for the U.S.
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"This is Bloomberg daybreak Europe. I think what you're going to see in the UK is you're going to see the Central Bank, having to respond to really bad data. Tax cuts should not be the priority at the moment. It's about a credible plan for growth over the next two, three years. I think we have started to turn a corner. That's encouraging. There's a long way to go and there are a lot of risks. We know that we have ground to cover. We know that we are not done. Bloomberg daybreak, Europe, on Bloomberg radio. And a 6 30 a.m. here in London, good morning. I'm Caroline Hepburn. And I'm Stephen Carroll. You are listening to Bloomberg daybreak Europe. So rates worries are starting to build in markets and that is affecting stocks and bonds. You've got risk off for futures down 6 tenths of 1% for the U.S. stocks 50 futures, NASDAQ and S&P 500, even many features down over a tenth of 1%. So really traders are focused on possibly 6% fed rates. That's what's in focus. Ten years this morning, trading at 360 six on the two year you trade at four 49, so there's a gap of 80 90 basis points now, a big yield curve inversion. And just lastly, Bloomberg dollar spot index is slightly stronger on the back of that. Our top stories this morning, traffic aura is facing a $577 million loss after discovering metal cargoes that had bought didn't contain the nickel that they were supposed to. Bloomberg seeking and broke down the story for us. Trafalgar is a company that has grown rapidly in the past decade to become one of the world's largest trading houses and it spent the last two months uncovering what it now believes to be systemic fraud against it. People close to the matter say the groups head of nickel and cobalt trading is actually leaving the company, although the firm has said in a statement it does not believe anyone at the company was complicit in the fraud. Saint kaden reporting there, the revelations and other black mark for the metals trading industry which in recent years has been beset by tales of fake warehouse receipts, duplicate shipping documents and even containers filled with painted rocks. The Bank of England governor Andrew Bailey says that big increases in public sector pay will add to inflation if they aren't offset by tax increases. Speaking to the treasury select committee in parliament, Bailey said that even with falling energy costs, inflationary risks remain. There are really sort of two countervailing forces going on at the moment. There are very powerful base effects that are going to come out as an effect to come out this year. And that puts a very powerful negative trajectory on inflation. And that's really down to a lot of that is down to energy prices. Now, we all concerned about persistence. And that's why we frankly raised interest rates this time. So the Bank of England governor, he spoke as far fighters, though, have called off the threat of strikes after receiving an improved pay offer, the fire brigades union said that its members would vote on a 7% raise backdated to last summer and a further 5% increase from this July. China's consumer price inflation accelerated last month as the lunar new year holiday stimulated demand, CPI rose and line with expectations hitting 2.1% year on year, Bloomberg economics says the pickup in CPI was down to higher food prices, core inflation which strips out food and energy costs gained just 1%. Yahoo is eliminating about a thousand jobs beginning this week or roughly 12% of its employees. That story now from Bloomberg's Charlie pellet. It is the first round of cuts in a larger plan to restructure its advertising tech division amid a wave of layoffs in the industry. The company now owned by Apollo global management plans to reduce headcount at its Yahoo for business ad tech unit by almost 50% by the end of this year or more than 20% of the workforce at Yahoo. Digital advertising providers have had to grapple with skittish customers who are concerned about the uncertain economic climate. In New York, Charlie pellet, Bloomberg, daybreak, Europe. Now times to see mother corporate news, L'oreal sales growth has beaten expectations in the fourth quarter, despite weakness in China, the French cosmetics giants are sales increased 8.1% on a comparable basis with L'oreal's active cosmetics units reporting the fastest growth rate, the results follow a pessimistic outlook from U.S. competitor Estee Lauder last week, which noted high level of merchandise in stores in China. Okay, those are a few of our top stories for you still ahead on blue bag daybreak here. We're going to break down the big week that we've seen in fed speakers with Gordon Shannon, whose portfolio manager at 24 asset management and really this kind of extraordinary change in markets where the idea of one strategy is for macro hive talking about 8% fed funds rate is really grabbing all the attention, but traders have focused very much on 6% fed rates now. Yeah, that inversion in the yield curve absolutely
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"The treasury was making up its own forecasts and basically marking its own homework in terms of what it expected economic growth and therefore the deficit to do. So I think The Office for budget responsibility is a sort of external check on the homework. But I think the question about whether or not there is a dynamic quality and a sort of laffer curve effect to you tax cuts, I think The Office for budget responsibility is quite linear in that regard, but I think you can make the case and unfortunately the case was not made in this case for why some tax cuts can actually increase revenue because of that laffer curve effect. What does the OBR need to change the way it works then? I think it's doing what it should do and we're renewing its charter today in parliament. I think it's an external part of what gives the markets confidence in lending to the UK government and therefore I'm a strong supporter of what it does. Do you think from what you just said then? Do you believe that there is room to cut taxes? Or is that argument very last autumn? Well, I think we need to get inflation down. Inflation is a terrible tax. It's the worst tax that affects the poorest the worst. And so we absolutely got to get inflation back down to the Bank of England target of 2%. So I think that's got to be the top economic priority. Once that's done and the inflationary pressures are out of the economy, then there's potentially room to stimulate through tax cuts, but you know, I just don't think it's the right time at the moment. And I don't think it was the right time last September either. I want to talk about your reports, your committee has today in terms of victims of payments, fraud and how you feel the system needs to be changed and should be sped up. Either banks doing enough here who's responsibility is it to make sure that this system changes. Yeah, this fraud where people are tricked into paying money into the wrong bank account. It's the biggest economic crime in the UK. And I think it's really important that the banks play their part in tackling it. And I think there's been a bit of foot dragging really actually from the banks because if you're asked to transfer money to the wrong bank account, the bank ought to be able to find that money and see where it's gone, particularly if it's within its own accounts. And so what we're doing through legislation, but also the payment systems regulator is we're encouraging the banks to be more rigorous and to reimburse people who are victims of these frauds. And we think that will make them really focused on tackling this crime and helping eliminate this really terrible scourge, particularly on older people in the United Kingdom. And you're going to be speaking to four of the UK's biggest bank CEOs this week I understand Harriet. I mean, I assume that's a topic of conversation. What else are you helping to hoping to pin them down on? Yeah, we're concerned on behalf of our constituents on a couple of issues. First of all, that while mortgage rates have been quick to go up, savings rates have been extremely slow to go up when the Bank of England has changed rates. And so we're seeing from our constituents, people who are still earning very, very little on their savings, a bit like having your money under the mattress at the moment, if you've got your money in some of these big bank savings accounts. And secondly, a lot of our constituencies are experiencing bank closures, a lot of branch closures, and I'm sure that will be a topic of conversation when we have the banks in front of us tomorrow as well. Okay, I want to ask you as well about the IMF's latest forecast on growth for the UK. I know previously we've talked about how the IMF didn't come to talk to the treasury select committee after their intervention during the mini bodgers. What did you make of the latest IMF forecast and do you think it reflects an accurate picture of where the UK economy is? So totally believe that the IMF ought to be prepared to come in front of our committee to justify their forecasts as the office for budget responsibility does and to give us evidence about the assumptions. And they're not prepared to do that on the record. So I'm going to reiterate my invitation at their welcome any time to come and talk us through their thinking. In terms of growth, you know, one of the things that's worth highlighting is that last year, the UK economy in the IMF numbers grew over 4%. These are the actual results. You know, twice the rate of the U.S. economy higher than the Eurozone as a whole, 25% higher than China. On a forward looking basis, they have got us having a small recession this year. And we will see if they are right. I think that that's consistent with what the Bank of England forecasts in their monetary policy report last week. They are forecasting a shallower and shorter recession than they did in the previous report and as you know, people were expecting us to be in recession over Christmas and we're not. So our possibly people are a bit too pessimistic about the strength and resilience of the great businesses that we have here in the UK. Yeah, the economists do seem to be divided on whether we are going to be in recession this year. I think the Bank of England still, though, is forecasting one even if shallow weather. Yeah, that's right. So we're in shorter. Can I ask you about your ideas? Your committee's ideas as to how we get older workers back into the workforce. This is clearly something that the Bank of England is wrestling with. And I wonder if you're committee, it's going to be able to weigh in on that subject. Well, we'd love to. But it's slightly outside the scope of our committee and more for the department for work and pensions committee. But I think there is an angle that potentially we can look at through the lens of the tax and benefit system and the incentives that that consent. So it is very much something that's on our radar and I'm discussing it with the chair of that committee as to how we can work together on that. Okay, Harriet Baldwin, chair of the treasury select committee. Thank you very much for your time on Bloomberg radio this morning. Let's get an update on some of the global news flow
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"To check on the blockchain as to what assets FTX held was at the missing ingredient within FTX help us understand how that can be something that assures investors going forward and yet was not part of the infrastructure that made up FTX. Yes, that's correct. And there have been several cases where even before the fall of FTX, where people called them out for mismanaging assets. And they were able to only, they were only able to identify this by using blockchain data. One company in particular, the name eludes me, did a token issuance or token offering through FTX and then they noticed from the blockchain data that they were actually pooling those recent pooling those tokens and offering synthetic tokens in place of them. And they were able to discover this using blockchain data. That company then made an announcement to everybody that they should pull their tokens off of the exchange at which case FTX was exposed and had to actually make good on all of the tokens that were that were in their custody and that they had sold to other people. So obviously the details of which even mister ray is still trying to piece together what happened where it went and how but obviously there are bank accounts involved. There are many different wallet addresses involved. And this is SPF was able through because people trusted him so much to obfuscate the truth and what was going on behind the scenes. You say crypto isn't what failed here, but what is it going to take for confidence to return to the sector after all the events of relief? Yeah, right now. It's not necessarily because of crypto and correlates very well with other risk assets. This is all fed driven market activity, the way that they were printing free money for the last decade and a half since the global financial crisis and then went into overdrive when COVID hit has been very good for stock markets and for crypto markets in general. It allowed many without very much very much of a business model to grow alarming proportions and then when the fed flipped on a dime and started taking money out of the system, it caused the cost a lot of constriction and we can see across many different sectors that are seeing mass layoffs at the moment. There just isn't as much money in the system as there was anymore. But yesterday's inflation data obviously was very significant investors or economists were expecting 7.7% annual CPI or the last one was 7.7. They were expecting 7.3. The actual number came out at 7. According to data that I'm watching, I mean, the actual inflation number is probably more around like 6%. But the idea is that that had a very positive impact on Bitcoin as well as the stocks because the anticipation that today's fed meeting, of course, is going to be a lot more dovish than previously. Like so many assets, crypto also, of course, laser focused on the direction of the fed and its rate trajectory. Mattie, Greenspan, thank you very much, indeed, CEO of quantum economics breaking down, of course, the latest when it comes to FTX implications for the broader space currently, Bitcoin trading at 17,837. That's an increase in just four tenths of 8%. Now, for more on one of our other top stories, UK lawmakers say that the government's cost of living support for households struggling with sky high energy bills may be contributing to labor shortages, joining us now is Harriet Baldwin, chairwoman of the treasury select committee who came up with that assessment who's also interested in crypto, I should say. Thanks so much for being with us, Harriet. Your committee. Thank you. In this report that benefits might be adding to the labor market in activity inadvertently. I've heard lots of economists say this, but it's bold if not controversial to hear it from you. In your own constituency of west Worcestershire, are you seeing examples of people who are choosing not to work because they're better off on benefits? Well, thank you for having me on and this report that we've published today is a cross party report. And I think that makes it even more impactful. We welcome the fact that the Chancellor in our cost of living help for households. And he has extended that to next winter as well. So what was saying is that the help that he's announced will be focused on those who are on means tested benefits. They will get 900 pounds next winter to help them with their energy bills. Now, the problem with it as far as our committee is concerned is that if you are on the invested benefit plus one pound of earnings, you will not get this 900 pounds. So it's what we call a cliff edge. And we're saying that that could potentially start distorting the labor market as people realize that it's not worse than taking on an extra hour of work. So what was suggested to the government is that they moved that cliff edge by spreading the payments out into 6 payments over the winter and that that will mean that, for example, if you're made redundant, just one day too late, the benefit for the 900 pounds, you would capture some of it because you would be back on means tested benefits for additional period. So it's something we think is potentially distorting behavior in terms of people taking on work and your absolutely right that in my constituency I do hear from my employers. How discourse it is for them to find staff at the moment. And that's part of the broader conundrum for the UK labor market is the lack of the falling participation rate how to encourage more workers back into the workforce. So your prescription is aimed at partially at least tackling that. How entrenched is that problem? How unique it is is it to the UK and what are the policy measures should officials and lawmakers and the government be looking at to address that participation rate failure? Yes. Well, I mean, we have to be had a really if you run a small business, you need the most from every investment. That's why Comcast business gives you more, like our new gig speed Wi-Fi. Plus, unlimited data, all on the largest
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"For that. Well let's get more on those latest inflation numbers here in the UK. We're joined by Duncan Weldon economist and writer of the value added newsletter and 200 years of muddling through the Balkan economic history of Britain, Duncan, great to have you with us on the program. It's hard to believe that we're talking about relief around an inflation figure that's 10.7 percent. Should we be excited about it? Well, it is very hard to believe. Isn't it? If you go back a year, if you'd said that inflation was going to be above 10% in the UK and we were going to be relieved by that. You'd be amazed. You know, the big picture is inflation is at something like a four decade high in Britain. And yes, there is now a bit of sign that maybe maybe we are past the peak. But if you look at the projections from the Bank of England, if you look at the projections from the office of budget responsibility, we're still expecting inflation to be more than 5% this time next year. So I'm comfortably high inflation is going to be with us throughout the next year, even if we are past the peak in terms of the rate of acceleration. And Duncan great to have you on. Where does it leave the Bank of England this week? Because I'm sure there are doves on the committee who will see this print and say, look, we're past the peak of inflation, really, we shouldn't be going for a 75 basis point hike. Yeah, I mean, I think this is going to help the doves. I think another 75 basis point hike feels quite unlikely. At this point. The Bank of England, the message from rate setters from the governor down really in the last month has been pretty consistent that they think market expectations of the peak of bank right next summer are too high. They've been trying to talk that there. Now, they're not done. Rates are going to have to go up more. But the message has been relatively dovish. Of course, I think what the bank will be focused on in today's numbers is not that headline rate coming down, but core inflation. Core CPI, if we exclude food prices and energy prices, which are mostly driven by global factors, is running an annual rate of 6.3% in these numbers down from 6.5 the month before. It's also coming down, but that is, that is an uncomfortably high rate of core inflation when your target is 2%. So there is more to go but probably not as much as markets had been expecting. Okay, we're of course in the midst of this wave of strikes affecting all various parts of the UK economy does this inflation reading influence the government's negotiating tactics when it comes to things like public sector pay, the nurses, I'm thinking of particular. Yeah, I think the government have got themselves into a problem here, haven't they? They're talking about public sector pay as part of their sort of anti inflation policy. Which isn't really how the macroeconomic setup in Britain normally works. Inflation is something the bank is supposed to deal with. The government should normally be setting public sector pay, not with an eye on inflation, but with an eye on ensuring it can do the recruitment and retention it needs to ensure that public services are adequately staffed. And the gap between public sector pay growth and private sector pay growth is now the biggest it's been in several decades and you're seeing real recruitment and retention problems impacting on public services. Now, given the government have been arguing, they've got to keep a tight stance on public sector pay to help bring inflation down. The fact that inflation looks to have peaked is I suppose helpful for those arguing for bigger public sector pay rises, but I don't think this government is going to is going to give in on that no matter what the strikes no matter the inflation outlook. And Duncan, I want to ask you about a really fascinating story on the terminal. It's about a report from the treasury select committee which essentially says that the benefits system is disincentivizing work and contributing to labor shortages. This is from the chairwoman of the treasury select committee, Harriet Baldwin, we're getting her on the program later today. But we've heard about inactivity being blamed on long COVID, NHS backlogs, people retiring early. This seems though particularly controversial. It's new. It seems as if it's a bit get on your bike or maybe more blaming the prime minister for rushing out cost of living crisis benefits. What's your take on this from Harriet Baldwin? Yes. My take on this is that Britain is facing a labor shortage, which is probably adding to inflation by pushing up wage growth and it's almost certainly harming growth as firms can't get the workers they need. And your labor shortages are happening around the world, but the British case is particularly acute because we've got this very large rise in economic inactivity. A much bigger rise than we've seen in many other advanced economies. So there is something uniquely British there. When I look at the numbers and I see this huge rise in people reporting themselves as too sick to work, a big rise in chronic illness. That tells me that the driver of this is something to do with sickness and the health of the workforce. That's the single biggest driver there are other factors. The fact that that is not happening in ever advanced economies suggests to me it is not a long COVID story. And we didn't have a particularly virulent strain that left people with more long covered in Britain compared to France, Germany, the United States. It suggests to me it is related to the problems in the NHS with this rise in waiting lists from under 2 million to over 7 million for various operations over the last two years. Probably adding to sickness. Now I'm not saying that the benefit system couldn't be tweaked in ways to encourage work incentives, but I don't think that can be the driver of labor shortages in Britain when you compare us to other advanced economies. It looks like there's something has gone wrong with sickness and I suspect that's to do with delays in the NHS. I mean, that argument comes back to the question of pay, I'm wondering briefly if you don't mind, can the government afford to meet the pay demands that the NHS workers are
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Me? It says three hours 51 minutes. Is it going to take me? Is it really going to be three hours 51? I can guarantee it won't be. So that's a forecast, right? It's guaranteed to be wrong. Furthermore, you start driving and the thing changes as you go along because road conditions change in its responding to news. And that's all forecasts can ever do. That's all the OBR can do. So even the OBR says that it's always wrong, but I think the point is, David miles says at least the satnav tells you the direction of travel or most economists, I speak to, say what's worrying is that the government isn't even acknowledging the direction of travel on Brexit, let alone the OBR's numbers. It's 6 years since the Brexit referendum and still we're talking about opportunities. But of course, Jeremy hunt needs to sound optimistic about Brexit at this point because of all the suspicion that this story and The Sunday Times about a Swiss style deal with Brussels came from the treasury. He was in front of the treasury select committee this week, he repeatedly refused to deny that the treasury was the source of the story even though he insisted it was wrong. So a lot of suspicion that Jeremy hunts a closet remainer waiting for the moment to soften the UK's stunts on Brexit. It really interesting. It's interesting to me that there were Brexit has been allowed to come back because wherever in government this trial balloon was floated from. You'd think they could have done it in other language, avoid the B word, and it would have avoided us all jumping back into sort of that polarized conversation that dominated in the run up to and after 2016. So two policymakers have said that the bank the Central Bank needs to keep on hiking. So back to the here and now and what we're dealing with at this moment, then Lizzie, which is, of course, high inflation levels. So with these policymakers commerce, where does that leave the December vote? Well, you had Dave Ramsey pointing to the tight labor market high inflation expectations, Catherine Mann saying that there's not much military policy can do to help with soaring energy and food prices. But as you say, both of them saying that the bank needs to keep hiking. Now remember, these are two of the bank's biggest hawks. There are doves on the committee like sylvana tenreiro and swati dinger who were very worried about adding to the recession with aggressive hiking. And I would say behind the scenes what I hear is that because silvana tenreyro is an academic when she presents her arguments, even if other members don't vote as dovish Lee as her, she's a very dovish anchor on the voting generally. So that could hold back the monetary policy committee from doing any more than a half point hike in December. Lizzie, at the same time, we've got discussions going on behind the scenes about regulation and how the UK moves on from the sets of EU rules that are trying to unwind and it seems it's not as easy as perhaps where she's in I could hope. No, you've had 12 lobby groups representing business worker environmental interests saying in a letter to the business secretary grant shops it's going to be a recipe for chaos if you have this bonfire of regulations and you've also seen the government having to row back on its proposal to have call in powers that would have overridden financial regulators to take advantage of Brexit freedoms. So what you can see is that the government is very hamstrung on the one hand it can't be soft on Brexit because that's going to upset the European research group and the right wing of the Conservative Party, but it also can't go too hard on being a hard line on Brexit because it confronts the reality in business and the Bank of England. Lizzie, thanks very much for being back Lizzie Burton with the latest news flow surrounding the UK and the UK economy. Let's get to a broader global markets conversation. We're joined now by Christina Aquino, managing editor of Bloomberg's city latest blog and a woman who always brings a $1 trillion smile to the office. I just read that, but I would have I would have said the same had I read Christine, so that's excellent. It's lost on radio, of course, but you can find Christine occasionally on TV too. So a note from JPMorgan stressed us out this morning forecast and improvement of about $1 trillion in the supply demand equation should help bring yields lower. So this is a big call on global bond markets. What do you make of that? Absolutely, Anna, and I think it's very interesting that this is coming out at this particular juncture, just as we're also talking about other factors that could be potentially supportive for the bond market, right? There is that potential slow down in a fed rate hikes, the recession narrative that is gaining traction, all of these things. The combination of that would be particularly positive for bonds heading into 2023. And so now JPMorgan coming out with this call largely predicated on those supply demand dynamics, which is separate from the fed and the recession conversation. That's just kind of adds to this view that perhaps 2023 could be a bit of a turnaround year for bonds after such a terrible year this year. Okay, Christine, at the same time, we've had the latest forecast in the institute for international finance looking at the global economy looking as weak next year as 2009. This sort of feels like it's the most telegraphed recession in history. Absolutely. I think this is something that has been coming for quite some time. I mean, I feel like we've been talking about the recession risk. Ever since this summer, essentially, when really those rate hikes from the Federal Reserve and other central banks picked up because I think now we've kind of really come to understand there's notion of such a massive series of great hives from all these major central banks really just kind of focuses the mind on what's coming right around the corner, which is a potential sharp turnaround or slowdown in growth and a likely possibility that all those rate hikes are going to have to be undone next year if a lot of the major economy suddenly plunge into a recession. If we're looking for slightly better news on the inflation front, then maybe we look to oil markets. Our colleague Mark cudmore was writing earlier on this week about the extent to which we've seen a retreat on oil prices. And if you put that into other currencies other than the dollar, that's even more the case, which helps Europe and helps the UK, of course. Meanwhile, oil markets themselves flashing red in terms of their structure at the moment because some of the market pricing is reflecting fears that maybe there's just going to be too much supply in the short term. I mean, that's bad for those who make money out of oil prices, but good for the inflation dynamic. Yeah, absolutely add in. I think this kind of also feeds into that gross load down narrative, right? I mean, I think the hope at least among central bankers I can imagine is that after they've done the series of massive rate hikes this year that you do see those prices start to come down, yes, demand will cool alongside that. But the idea is that that also means that the very, very high installation levels that we're currently seeing, what kind of ease a little bit more. The question I think there is that you will get a demand load on alongside that, right? This is definitely what we're seeing in terms of the dynamics in oil markets. It's just a question of how hard is that landing going to be? How hard is that slowdown going to be and how long does it go into the? Casino, thank you very much for taking us through all of those latest market movements coming up next. We'll be speaking to the financial conduct authority, say with us for that, this is Bloomberg.
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"To need to reach out to some of his rivals. If he wants to show that unity. So there could be a consolation prize for penny morden, who dropped out of the race, Boris Johnson says he's still got a lot to offer the party and I'm hearing that he may promote his former campaign chief Mel stride who was the chairman of the treasury select committee. So tomorrow, U.S. White House says it's working on setting up a meeting with China's president Xi Jinping, John Kirby, spokesman for the National Security Council, says the administration will not have a comment on the leadership process that would want to keep the lines of kenwick communication open though. They look at the sidelines at the G 20. And Kirby is well today on CBS at Kim Jong-un's escalation of missile tests. It's very troubling. He says he takes the rhetoric with a grain of salt, but then again. One thing is clear, with each one of these launches, whether it's successful or not, he learns. And he has the ability to improve his program, which is why we're taking so seriously and have our commitments to the South Koreans and to the Japanese. And he says, that's why troops have to be ready at a moment's notice. Police in St. Louis now say three people are dead after a 20 year old man broke into a high school and opened fire, a woman, a teenage girl in the gunman himself, 6 others were injured and taken to the hospital. In San Francisco, I'm Ed Baxter, this is Bloomberg. All right, Brian. Okay, 9 minutes past the hour camera brand is with this director of research at farm, so much to talk about and to China, Japan, Rishi sunak. But let's start with the markets and the fed. The two, the markets and the feds seem to have come around now to the realization that front loading Cameron, which the fed says it has been doing is not by definition the whole tamale. They're ten days away from 375 to 400 basis points of front loading. The mid and the final stages are nigh. Yes? Obviously implied in that is a question that this is the phase that we're moving into, do you support that Cameron? Well, certainly the consensus is that sort of four 25 four 50 basis points is the peak and you do have to add in the running down in the balance sheet, which I think is being slightly underestimated in terms of its tightening impact. So I certainly think that the fed is anxious to pause and if inflation numbers give them any reasonable room to sit back and admire the handiwork, I think they'll take it. Cameron, I mean, but that would, again, that would be confusing for market participants. I mean, that would represent an effect. A U turn. Again, at the moment, the feds inflation hiking mandate is front and center, but the fed has a number. I think of implicit mandates as well. Which is sort of taken on in the aftermath of the great financial crisis and those include market stability and a fairly high level of employment. So I think the moment that it feels it has inflation under heading in the right direction that it will focus a bit
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"In the spring. So there is a bit of time for the government now to really just try and steady the markets. I think they've made two pragmatic moves, one on the 45 P rate and the other on the OBR forecast coming forward. And to the extent those can really sort of calm the markets and settle things down, demonstrate that there's a clear plan that is fiscally credible. And that's the important point. Then I think the government has an opportunity to build from there. But under current economic circumstances and given all the spending issues are in play, undoubtedly, it's going to be quite a bumpy road. But I think we need to not put the cart before the horse. So I think we need to just settle things down now and take a measured view going forward as these issues arise. That's the treasury select committee chairman mail stride speaking to Bloomberg's Lizzie bird and a little bit earlier, Caroline, that is where things stand at this moment. Of course, we're watching very closely for what happens next in Birmingham. Absolutely. I just know Bloomberg say UK economists saying that kwa Tang's reputation is shot a credible plan to balance the books will still be very difficult to craft further U turns may yet be in the offing. We hear from key ministers Therese coffee, health minister amory trevelyan transport the Home Secretary all to death. NHS, the rail strikes immigration can they build a case for a credible government. That is a big big question still. Okay, Carolyn in Birmingham, thank you so much for that. We will have more on our UK politics show today from Birmingham as well as well, of course, continuing coverage across Bloomberg as well. So do stay with us for that as well. That show is live on Bloomberg DAB digital radio at 12 in London today. Coming up next in the program we'll get back to our markets conversation as the equity rally continues here in Europe would be speaking to Morgan delle donne
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Stride the sort of Bronco ride that was what I can't take credit for describing it that way, but I thought it was a perfect way of describing what happened to Sterling and to guilt yields. That could be taken in stride too. Can it be by markets is a big question and then when do we get the medium term fiscal outlook? When do we actually get the nuts and bolts of spending and how it's going to be how the tax cuts are going to be afforded? Well, traditionally Caroline, it would be it. This is the conference. This is the point where the conservatives gather and annually build for the next election set out their policy agenda, reaffirm their ideological commitment to what they hold dear. But instead it seems to be a party playing catch up. It's dealing with the latest crises. It's dealing with the latest comms fallout and it's trying desperately to hold on to its MPs because if you can't handle your gathering of the party faithful, just wait until parliament gets back next week and you have to handle the leader of the opposition and your rebel MP's plotting and having shown up here. Yeah, absolutely. Well, in the speech, yes, they quasi quoting said that he would set out how the government plans to get the debt falling as a percentage of GDP over the medium term soon, so shortly was his word of the FT saying, it expects that to happen later this month, but we heard from those treasury select committee MPs that they would prefer for it to happen before the 3rd of November, which is the next Bank of England meeting. And I think what is interesting now is that has gone public. And you see the same thing with Michael gove and grant shap, who owned over the weekend, went public, which helped precipitate that big U turn in the first place. What is starting to happen is people are coming out of the woodwork and saying, I object to this and they're willing to go public and with people like govern shaps well known figures in the party, they're becoming lightning rods for other MPs criticism and now we see mouse stride and Anthony Brown say, well, we'd like this push forward as well. Other MPs are trying to shape their own government policy they're raising their hands and going, actually I have an idea of how this could work better. That is going to lead to difficulties for trust who is trying to have a unified ship because now she has to deal with basically people call it what they want from outside the tent. Okay. James, thanks so much for being with me, putting back James wolcott with me at the Conservative Party conference in live in Birmingham where Stephen, but the songs come up, people are starting to come out the Starbucks is open, so there you go. We've got lots of confidence members now turning up for their coffee for everyone much happier to see the Starbucks opened. Caroline and James in Birmingham, thank you more from you later in the program. This is Bloomberg
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"I get it. I get it. We are listening and have listened. And now I want to focus on delivering the major parts of that growth package. That was the Chancellor quasi quarte on the government's U turn on cutting taxes for top earners. The move was welcomed by the treasury select committee chairman Mel stride, who has been pushing quoting to accelerate at that announcement, Mel stride, of course, will be speaking to Bloomberg live this morning, so we'll get a very interesting update from him in person. Meanwhile, members of Liz truss cabinet are now saying that the prime minister will struggle to drive through key parts of her economic agenda because her standing in the party is simply already so damaged. Bloomberg's Ewan ports has more details. Speaking on the sidelines of the toys conference, the cabinet ministers told us so likely to be more rebellions from MPs pushing around a lame duck prime minister, like the one that forced her to U turn on her tax plans. Less than a month into a premiership, the ministers say that Liz trust has failed to take basic steps to ensure support for her plans, such as putting them before the cabinet for discussion. They say the new p.m. standing within the Conservative Party is already so damaged. She'll struggle to drive through key parts of the economic revolution she's planning. But the ministers also predicted she will survive until the next election, due by the end of next year as there's not enough time to get a new leader in place. In London, I'm you and pots been big daybreak Europe. We're later today we'll be hearing from some of the ministers running some of the government's biggest departments, including education health and transport those features will be scrutinized closely for clues about possible spending cuts in the coming months, more from Caroline at the Conservative Party conference in just a moment, but for us to look at some of today's other top stories, Credit Suisse has gauge of credit risk rose to a record high on Monday while its dark hit a fresh low after the bank failed to reassure markets about its financial stability. Investors are worried about how the bank will cover the cost of a strategic review due to be published at the end of the month, analysts estimate it will need $4 billion in new capital. Harris associates are the Swiss bank's largest shareholder with a ten and a half percent stake, speaking back in August, David harrow, their CIO for international equities was less than flattering about the investment. This has been a problem child. We've owned this bank, literally since the early 2001. And the first ten years was a very good holding. I mean, it literally went from 20 to 60 or 70. Now what we should have done is just sold it and that's it. Since David harrow made those comments on the 19th of August, Credit Suisse shares have fallen by 22%, the lander is hoping to raise cash to pay for the recovery plan through disposals of assets rather than a rights issue which would hurt longtime shareholders such as Harris associates. And Australia's Central Bank has surprised investors by raising rates at half the pace expected sending the Aussie dollar and bond yields tumbling. The RBA ended a streak of half percent percentage point hikes opting instead to raise the cash rate by 25 basis points to 2.6% only a quarter of economists polled by Bloomberg predicted that move. Well, let's go back to the Conservative Party conference in Birmingham where focus is on unpacking the details of the Chancellor's speech yesterday quasi cartoon speaking after the government U turn on taxes, but also reports that Liz trusts is struggling to push her economic agenda through because of the fallout from that. Let's go back to Caroline Hepburn in Birmingham Caroline. Yeah, good morning. Steven so menaces speaking to Bloomberg at the conference, some of Liz truss's top team say that she has failed to take the basic steps to line up support for her plan, not for example, putting them to cabinet debate. In fact, one former cabinet minister talking about Liz trust would be gone within a year that the local elections in May 2023 would provide the clear indicator. But look, this is an incredibly difficult moment for the conservatives. Joining me now is Bloomberg's James Walcott. So look, we've been at the conference here for a couple of days now. The mood does seem to be really pretty grim. Quasi Quartet has to do that major U turn yesterday. The 20 minute speech that he gave in the afternoon, there was nervous laughter in the hall talking about color the turbulence that the budget had caused is the government taking this seriously enough oil in just such peril that that's the response they're having to give. I mean, there was this odd kind of buoyancy at the start of conference. I think people sort of coming together, feeling like they were seeing their old mates as kind of joy. The bubble popped on Monday morning when Claus is U turn began. And then we started noticing other things. A lot of MPs aren't here. Yes. You see that isn't here. Boris Johnson isn't here. Mel stride who we're talking to later today on Bloomberg isn't here. He's dialing in. And so as well as the absence of them became clear, I've been talking to some people at the conference floor who are staffers MPs who their MPs aren't here. But they've come along as part of the party anyway. So I think it speaks to our conference. It's still a cult of the party faithful. These are this trust is strong as backers and they will back her to the hilt. But it is worrying when even when those people I talk to say they are considering looking for jobs outside of politics the next couple of years. Yeah, absolutely. Meanwhile, we've got a couple of really key interviews this morning. So we're going to be speaking to Mel stride who's the head of the treasury select committee and on that to let committee and other MP Anthony Brown, who will be talking to us. I mean, I think the key question is going to be around the other U turn the idea of not delaying weeks and weeks to the 23rd of November, the actual fiscal plan that the budget is based on and the OBR's assessment of how realistic it is, but bringing that forward. So the question is going to be date, date, date, when do we get those numbers? When we get those numbers, but also when do we get those details? What is the point of a party conference? It's supposed to be this is the store. This is the party you're voting for. This is what we want to do. This is who we want to be. But this government has just been going from crisis to crisis to crisis. It was leadership election. And then we have the market fallout, and obviously there's also built into that tragedy that was the death of the queen. They are simply responding and they are in response mode. This is supposed to be the point where they set out what they're about. And yesterday what they were about was a massive U turn. Now, today is supposed to be a big policy day on health on education. We're hoping to see some meat on
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"The founder of Bridgewater associates says that due to levels of existing interest rates and the fed's shrinking balance sheet, cash is now about neutral. He says and neither a very good or a very bad deal. Those are our top stories this morning. Let's get some of the events that we're watching out for later today. We've got Bloomberg's Leanne gars with us in studio, Leon, what have you got on me agenda? Stephen could morning to you so at 10 a.m. UK time we'll have Euro area PPI will bring you all those figures when we get them. Then at 3 p.m. we'll have data from the U.S.. Now this will include factory orders as well as durable goods. Also today, the ECB governing council member Mario Santino speaks at the conference which is happening in Luxembourg. Later, a number of fed presidents are attending various events across the U.S. with New York's John Williams, Dallas, loris Logan, Cleveland, Loretta mester and San Francisco's Mary Daly now they are all due to speak, so whole host of fed speakers a little bit later on. But here in the UK Steven, we are still focusing on the Conservative Party conference which has now continuing its in its third day and will get keynote speeches from cabinet ministers, including the Home Secretary Sue brava men, and the foreign secretary James cleverly at 5 20 p.m. UK time. It's rather been speech which is likely to focus on immigration and just ten minutes later, so not that long, at 5 30, we'll hear from James cleverly, so that is exactly what will be watching up for today. Okay, Leanne, thank you very much. Let's go back to Birmingham and the Conservative Party conference and join Caroline Hepburn who's there, Caroline. Yesterday of course, all about the Chancellor speech, but today the party is trying to move on Yeah, absolutely. We do have those hosts of ministers who are going to focus on domestic issues very, very difficult for them, though, given that they may well be the departments that see major cuts in order to deliver on the budget promises that quasi quilting and the prime minister Liz chars have made. We're going to hear later on this morning from Mel stride the treasury select committee chair, hugely important voice for markets, Anthony Brown, who is also on that committee at 7 45 will be joining us, and then ipsos Gideon's skinner will be with us at 9 a.m., but with me right now has been both Lizzie Burton, who's been trotting around the conference for the last couple of days also, really great to have you with me. I mean, let's sort of just chew things over. The blue bag editorial this morning I thought was really interesting. That in truth, Liz truss had little choice but to pivot the financial turmoil induced by the budget, really threatened a party rebellion, the parliament looked ready to actually vote the proposals down. Was there any choice but to do a U turn? No, I agree it looked completely inevitable on Sunday, lays trust was throwing quite ang under a bus. Then you had that intervention from Michael gove saying that the top rate tax cut wasn't in line with Conservative Party values. He seemed to be the de facto leader of the rebels who were going to vote this measure down, so Liz trust seized back the initiative rather than being defeated in the commons by her own MPs. Pull the measure herself. So she's tried to get back on the front foot. That's a measure for politics, right? This was the most politically toxic measure. I think the second U turn that we saw yesterday has not been officially confirmed, but sources are saying that the Chancellor is going to bring forward his medium term fiscal plan as well as the OBR, the office for budget responsibility forecasts that will accompany it. That's the measure for markets. This is because they had gagged the OBR in the first place. It undermined the credibility of the budget in the eyes of the markets, but I have to say, the fundamental issue remains. These are tax cuts that are funded by borrowing. Tax cuts are essentially permanent, right? Not an emergency measure like the energy bailout. And they are funded by borrowing at a time when boring is getting more expensive. This is still offensive to markets and it's an issue that the Chancellor is going to have to address. Yeah, I mean, from his speech, I thought it was extraordinary that he sort of had to reiterate some of the basics, really. We will act in a fiscally sustainable and responsible way. He started the speech by saying, what a day. It's been tough, but we need to focus on the job in hand. Okay, so from this, where does Liz truss go? Because we've been hearing from a number of ministers in Michael gove, as you say, was the sort of leader along with grant shaft in terms of getting the U turn yesterday, but she's also not really got that much support. It would seem within her own cabinet her own government. So what's the path forwards for Liz trust? Well, I have to say our colleague kitty Donaldson has been doing some fantastic reporting. She's always in the dark corners of this car going to Graham Brady. Is it still grain Brady? No change for black men is also on the team. There's been a lot of change in the Tory party recently. But asking for literacy immunity for a year from a vote of confidence to be removed. Now that seems to have died down, but what kitty's hearing from even Liz trusts his own cabinet is that she's going to be a lame duck for the rest of her premiership. She's
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"The treasury select committee chair he is a hugely important voice. City of last Caroline there in Birmingham, but plenty more she was saying. 45. That's anti brand we will be having on radio at 7 45. Thank you very much Caroline more from you later in the program first a check on the markets for you and we are seeing that risk on sentiment across equity markets this morning as the nikkei two two 5 is racing 2.8% higher. We had that sentiment begin on Wall Street yesterday as a measure of manufacturing the ISM index came in weaker than expected leading markets to scale back their bets for fed rate hikes. That's push shares generally hires was to say the nica in Tokyo 2.8% higher this morning markets are closed in Hong Kong and in Mainland China for the golden week holidays, Euro stocks 50 futures are one and a half percent higher this morning for 2100 features are 8 tenths higher we are seeing a rally across bond markets as well the ten year treasury yield 3.61% this morning down three basis points as we see the Bloomberg dollar spot index is a tenth of 1% weaker, Australian yields have jumped though after the RBA hiked by only 25 basis points the expectation from the markets had been for a 50 basis point hike to 2.6%. Those are the markets this morning. And now to our top stories, the Chancellor quasi Quartet is due to bring forward the announcement of his medium term fiscal plan in a bid to reassure financial markets. Was previously set to publish the proposal alongside a set of economic forecasts on the 23rd of November, but two sources have told Bloomberg that will now come sooner, addressing the conference yesterday the Chancellor said that he understands the market reaction to his mini budget. I know the plan put forward only ten days ago, has caused a little turbulence. I get it. I get it. We are listening and have listened. And now I want to focus on delivering the major parts of our growth package. That was the chance LaCroix equate on the government's U turn on cutting taxes for top earners. The move was welcomed by treasury select committee chairman Mel's dried, who has been pushing quoting to accelerate the announcement. Meanwhile members of Liz truss's cabinet are saying the prime minister was struggled to drive truth key parts of her economic agenda because her standing in the party is already so damaged, Bloomberg's you and parts has the details. Speaking on the sidelines of the Tories conference, the cabinet ministers told us they were likely to be more rebellions from MPs pushing around a lame duck prime minister, like the one that forced her to U turn on her tax plans. Less than a month into a premiership the ministers say that Liz trust has failed to take basic steps to ensure support for her plans, such as putting them before the cabinet for discussion. They say the new p.m. standing within the Conservative Party is already so damaged, she'll struggle to drive through key parts of the economic revolution she's planning. But the ministers also predicted she will survive until the next election due by the end of next year as there's not enough time to get a new leader in place. In London, I'm you and pots been big daybreak Europe. Later today we'll be hearing from ministers running some of the government's biggest departments, including education, health, and transport their speeches will be scrutinized closely for possible clues about spending cuts in the coming months. While in other news this morning, Credit Suisse gauge of credit risk grows to a record high on Monday while its stock had a fresh low after the bank failed to reassure markets about its financial stability. Investors are worried about how the bank will cover the cost of a strategic review due to be announced at the end of this month. Analysts estimate it may cost around $4 billion. Harris associates are the Swiss bank's largest shareholder with a ten and a half percent stake, speaking back in August, David harrow, their CIO for international equities was less than flattering about the investment. This has been a problem child. We've owned this bank, literally since the early 2001. And the first ten years was a very good holding. I mean, it literally went from 20 to 60 or 70. Now what we should have done is just sold it and that's it. That was David harrow, CIO, for international accuracies of Harris associates since he made those comments on the 19th of August, shares and Credit Suisse have fallen by 22%. The lender hopes to raise cash to pay for the recovery through disposals rather than a rights issue, which would be highly dilutive to longtime shareholders such as Harris associates. Two European commissioners are calling for more joint debt to be issued by the EU to help tackle the energy crisis an opinion article by Terry britton pilot gentiloni published in several major European newspapers, argues the continent is at another crossroads. The EU's €1.8 trillion emergency package during the pandemic was the first time the block issued joint debt, the push for more is likely to face opposition from more hawkish member states. And there's been a showdown on Twitter between the world's richest man, Elon Musk, and Ukraine's president over a peace plan suggested by the billionaire tycoon. Musk is suggesting measures include that Crimea be recognized as Russian territory and Athena United Nations supervisor rerun of last week's referendums and four areas occupied by Moscow's forces. Speaking to Bloomberg tech economy, founder David kirkpatrick says that Musk is an attention seeker. I think falls prey to a number of dangerous ideas. One is if I'm so rich, I must be smart enough to do anything to solve anything. That's ludicrous. David kirkpatrick went on
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Economists led by Jan hatzius expect the fed to raise rates 75 basis points this month, 50 basis points in November. The ECB is likely, although not certain to increase rates by 75 basis points today, according to market expectations, the European Central Bank last raised its key rate by three quarters of a percentage point in 1999. The odds of a 75 basis point Nat move now at about 65% according to swaps tied to the meeting, our chief rates correspondent Garfield Reynolds says the Euro could look very sick if the ECB ops for less than 75. The kind of the key for a lot of central banks is precisely that with the fed leading the way, if they don't stick with outsized hikes or in the ECB's case carry out a few more, they risk their currencies dropping a lot. And that in and of itself will fuel inflation pressures. Bloomberg's chief rights correspondent Garfield Reynolds speaking to us a little earlier, that decision from the European Central Bank to at one 15 London time today. Well, on Liz truss's first full day in office prime minister, the pound hit a low not seen since Margaret Thatcher was in power, Sterling fell to a dollar 14 on Wednesday the lowest level since 1985 and down 15% since the start of the year. Malachi policy committee member Catherine Mann, warned MPs yesterday that inflation is becoming embedded. The short term inflation that fueled in particular has talked about and others, the energy price inflation. It's very real. It's very salient to households. It's very important for business. Those short term inflation spikes are becoming increasingly embedded in domestic, more domestic oriented prices. That was NPC member Catherine Mann speaking to the treasury select committee. The latest figures on job vacancies could be an early sign of that slowing economic growth. They grew in August at the slowest pace in 18 months according to KPMG and the recruitment and employment confederation. Well, let's say in the UK, there's trust set to make her first major policy announcement later with a plan to tackle soaring energy bills, the package could see the government spend as much as 200 billion pounds over the next 18 months to cap prices. Speaking during her first appearance at
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Stories this morning. Frederick over the Federal Reserve vice chair lael brainard says the U.S. Central Bank will have to raise interest rates to restrictive levels as a Central Bank battles to bring inflation under control. That commitment to fight inflation from the fed comes as the ECB gets set to announce a likely three quarter point rate rise of its own later today. The ECB last raised its key rate by three quarters of a percentage point in 1999 with the odds of a 75 basis point move about 65% according to swaps tied to the meetings. On Liz's trust first week as U.S. prime minister, the pound hit alone not seen since Margaret Thatcher's era, Sterling fell to $1.14 on Wednesday, the lowest level since 1985 and down 15% since the start of the year, the move is mostly driven by the U.S. currency strength, but also highlights the economic struggle, trusses administration faces. And in Asia, the Chinese megacity of Chengdu extended a lockdown after COVID-19 cases increased. The 21 million person city has been closed for a week, it reported a 116 local cases for Wednesday compared to a 121 on Tuesday. Now the decision to prolong the lockdown shows China's commitment to COVID zero, even as the cost of its growth. Thank you very much for joining us here for today's top stories. Great to have you on the program joining us today on Bloomberg daybreak, Europe. Let's get more on that big story here in the UK and the British prime minister Liz truss laying out her plan to tackle soaring energy bills today. That's as the pound crashed to a new low, certain 1985 low and guilt of sagged given concern among investors about the big spending splurge to come. We've also been hearing from Bank of England officials testifying to the treasury select committee yesterday as well offering some new clues on the impacts the prime minister's agenda might have on growth, productivity and guilt issuance. We've got Bloomberg's Lizzie burden with us in studio to talk more about all of this. Good morning to you, Lizzie. What does the energy package then mean for consumers and how much will it help? Well, this is truss first big act as prime minister dealing with the energy crisis, which of course is at the heart of the cost of living crisis. Documents seen by Bloomberg suggest that it's going to cost 200 billion pounds, we know that households were going to face 80% higher energy bills next month. And so this would cap them lower and fix the price for businesses, so it's absolutely huge for context the COVID support package costs 310 billion pounds, but even with the bailout bills are set to be almost triple what they were last winter, so it doesn't remove all the pain. But apart from the obvious question how to fund it, it does raise a couple of issues. Will it be targeted enough or will people who don't need help be getting it? And what if this situation is the new normal? We have the former Chancellor. On Bloomberg TV this week, he warned that the government can't keep paying people's bills forever if this is a structural change Putin shutting off the Russian gas, otherwise people are just going to keep on using energy in exactly the same way. Yeah, exactly. So back to then the main the other main issue, which is how does it get funded? I mean, what about Bank of England guilt issuance or world of markets are viewing in terms of this big potential spending splurge? Well, it was really interesting at least trust his first prime minister's questions yesterday, Keir Starmer, the opposition labor leader, went in on a Bloomberg scoop. Which showed that treasury analysis suggests that because of all these excess profits of the energy companies during the war in Ukraine, if the windfall tax were to be continued, then the treasury could rake in tens of billions of pounds that it could fund this with, but trust ruled out the windfall tax because she said it would hinder investment, but then later yesterday, we found out that actually she's going to continue the windfall tax so perhaps what she meant was she isn't going to increase it or extend it to include power generators, which means that we're going to have a lot of borrowing and interestingly at the treasury select committee yesterday, governor of the BOE Andrew Bailey said that perhaps they're going to have to put the brakes on active quantitative tightening, which comes back to another of Philip Hammond's warnings to trust, the markets watching. Lizzie, the question of Bank of England independence came up during a course the leadership campaign of the Conservative Party, what should we be expecting about the relations between Liz truss and the Bank of England? Well, given that warning from Philip having given what you said about the pound having that horrific day yesterday inviting unwelcome comparisons to Margaret Thatcher this time for Liz truss, the worst since 1985 against the dollar, it does seem that her top team quasi quoting the Chancellor is now paying heed. He said that the bureau's independence is sacrosanct. He's going to meet the governor twice a week at first and then down to once a week. So he seems to be desperately trying to reassure markets. Our audience. And also a bit of rowing back on this vague suggestion throughout the campaign that they're going to review the BOE's mandate. So it seems that this transition from campaign to government economics is very real. We're getting a huge handout if 200 billion pounds worth of support isn't a handout what is. And we're also seeing softer language on the bank. The charm offensive for the city of flatter. I mean, this is, this is pretty novel stuff, isn't it, certainly, I think, for the City of London, Lizzie, thank you so much for being with us this morning, Bloomberg's Lizzie Burton then on Liz truss's new energy package plan. Coming up next on Bloomberg daybreak, Europe will be looking at Apple's latest
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"For this year that could maybe be well under the cost of inflation Well I mean if inflation plan I mean the government has been more than 3% in the payroll this year So if that is going to happen and we hope to review bodies take the different views then you're basically saying to people that pay rise would be wiped out and more because of the inflation And I think I would be less than concerned about industrial action and more concerned about the sheer loss of stock we would experience if paid doesn't even attempt to keep up with inflation We talked a bit about the market rate to pay actually quite a lot of NHS jobs on fairly vulnerable to improved pay in the retail sector and the very often you do be an immediate impact in health and social care if you opportunities open up in retail So I think that could be very damaging So that was John resto speaking to us on Bloomberg Westminster talking about the dilemma for the NHS the long road to try to dig the health service in the UK out of the pandemic whole There are simply so many backlogged cases So also on Bloomberg Westminster today at lunchtime we're going to be speaking to the conservative MP for north Wiltshire that's James gray and we'll be finding out what British people are actually thinking at the moment with kantar public UK's CEO Craig Watkins this of course after we had appearances yesterday from both Rishi sunak the chance of having to defend his spring statement last week he was defending that in front of a treasury select committee that was pretty pointed in its criticism of him Asking him whether he really is a tax cutting Chancellor he had to defend himself on that And also Andrew Bailey was speaking in Europe yesterday saying that the UK is facing an historic hit to real incomes that will weigh on demand and growth in Britain and also start to pull down domestically generated inflation.
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Let's not forget about that So we had quite a decent report from Deutsche Bank fourth quarter earnings revenue beats corporate bank and advisory units showing some strength That is a blueberry business flash now Here's how a George with all the top stories good morning Good morning Caroline Well sources say China is considering a proposal to dismantle evergrande by selling the bulk of its assets The restructuring proposal would leave the developer with its separately listed property management and electric vehicle units a group led by cinder asset management would take over any unsold property assets Here in the UK a group of MPs is calling for an investigation about market sensitive leaks in the lead up to the last budget The treasury select committee says pre release details about hikes to the national living wage could have constituted inside information The committees also examining the wider announcements in the budget warning policies could contribute to higher inflation and pressure on wages And asking prices for rental homes in the UK have skyrocketed at the fastest annual rate on record This comes as a surge in demand from tenants outstrip the supply of properties on the market Right move says the average price landlords were asking for rose 9.9% from a year ago in the fourth quarter London rents are exceeding pre-pandemic levels for the first time Global news 24 hours a day on air and Don Bloomberg quick take powered by more than 2700 journalists and analysts in more than a 120 countries I'm Hannah George This is Bloomberg.
Bloomberg Radio New York
"treasury select committee" Discussed on Bloomberg Radio New York
"Well Caroline is above expectations as you say it's higher than November and it's the highest in 30 years but what's really interesting is that it's driving factors of food and furniture So this is going beyond energy now And it does increase the chance of a Bank of England high in February It would be the first back to back pair of hikes we've had in the UK since 2004 Remember last month it was the November CPI print that seemed to push the bank over the edge to hike in December And it sent the benchmark guilt yields to the highest since 2019 so in other words doubling down on bets of a rate hike We'll have Andrew Bailey in front of the treasury select committee the government of PMQ Q's or lies on the prime minister's to face up to the questioning How did yesterday strong jobs data though factor in And how does it factor into this Well you say it was strong but actually UK wages were falling late last year in real terms and that's even before this cost of living crisis is set to peak in April when you've got higher taxes higher energy bills And that's the moment when Bloomberg economics sees inflation peaking At 6.5% So the point is even though you've got record vacancies and widespread labor shortages that tightness in the labor market still isn't translating into pay rises across the board So it does seem to vindicate the Bank of England's decision not to well two prioritize inflation over the job spheres in December to take the hawkish stunt and again it's strengthens the case for a February rise Okay we've talked about the Bank of England but of course the pressure on household is also massively political We spoke to the institute for fiscal studies about this this morning we've spoken to the resolution foundation everybody's worried about households and whether they can cope Yeah because inflation is not just a number And this is such a headache for Boris Johnson on top of party gate in all the rest of it So the resolution foundation reckons that the number of households who can't afford their energy bills is going to triple in April And it's the poorest household who will suffer the most because even though everybody's bills will go up 40 to 47% For the poorest household it takes a bigger chunk of their income The Joseph roundtree foundation estimates that will be a 5th after housing costs for the poorest households in April And that's a big problem when millions of people are already behind on their bills So without immediate government support those think tanks say that the poorest families just won't be able to cope Okay so lots more problems then for the Chancellor for the prime minister to think about thank you so much Lizzie for being with us been begging me to report to the Lizzie burden taking us through the inflation date Let's get over to Hannah George now standing by with the latest in world news Good morning Hannah Good morning Caroline while here the telegraph reports a further 11 conservative MPs have submitted letters of no confidence in Boris Johnson 54 letters are needed to trigger a no confidence vote in the prime minister but it's difficult to know for sure just how many have been handed in It's over claims Boris Johnson knew that a Downing Street garden gathering during lockdown in 2020 was against the rules something he quote categorically denies I can't believe that we would have gone ahead with an event that people were saying was against the rules or against what we were asking people to do And nobody warned me that it was against the rules I can absolutely categorical about it Because I would remember that Johnson faces another showdown in parliament today as prime minister's questions He's also reportedly expected to announce the lifting of COVID-19 restrictions in England today Turkey has reopened a key crude pipeline running from Iraq That's after it was knocked out by an explosion yesterday oil paired gains often used the restart was imminent flows through the pipeline which carried more than 450,000 barrels a day last year have returned to normal levels That's according to a senior Turkish official In Germany new daily COVID-19 cases have topped a 100,000 for the first time Bloomberg's silvia climati reports Germany joined the likes of the UK France and Italy and surpassing the 100,000 infections a day milestone adding to evidence that the origin variant is spreading rapidly across the country Berlin has tightened restrictions on access to restaurants and pledged to accelerate vaccinations to fight the strain but policymakers have signaled more measures might be needed at the country's parliament prepares to discuss introducing mandatory jobs In London I'm Sylvia climati Bloomberg daybreak Europe And health experts have slammed Hong Kong's decision to kill thousands of hamsters rabbits and chinchillas over fears about the spread of COVID-19 Officials said that a case in a pet shop worker was spread by hamster prompting the coal but experts have told Bloomberg the decision is an excessive reaction and unjustified Global news 24 hours a day on air and on Bloomberg quick take powered by more than 2700 journalists and analysts in more than a 120 countries I'm Hannah George This is Bloomberg Okay with the round up of the sports here is Chris cave Chelsea boss Thomas Tuchel says his players badly need rest following last night's one all draw with Brighton in the Premier League It's now just one win in 7 top flight games for his side who are 12 points off top spot tonight's Leicester host Tottenham while Manchester United had traveled to Brentford Rangers are four points clear at the top of the Scottish premiership despite drawing one all the way at Aberdeen They finished with ten men after Ryan Jack received a second yellow card in the closing stages hart's east pass bottom side saint Johnston two nil but fourth placed motherwell were beaten three one at Ross county dun to the united missed the chance to move into the top half of the table as they lost Yep honey I'll be right there I just gotta turn out the light Ow.