April 10, 2024 • 15 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Today's CPI data is unlikely to settle the debate around the timing of Federal Reserve interest-rate cuts, with forecasters expecting some moderation following elevated inflation readings at the start of the year.
(2) Fitch Ratings has revised China's outlook to negative from stable, saying the government is likely to pile on debt as it seeks to pull the economy out of a real estate-driven slowdown.
(3) Joe Biden says Israeli prime minister Benjamin Netanyahu's approach to the war is a mistake. The US President spoke to Univision in an interview taped last week when an airstrike killed seven aid workers.
(4) Around 7.4 million people in the UK are struggling to pay the bills, underlining the scale of the cost of living crisis even as the total declines from last year's peak, according to the Financial Conduct Authority.
(5) Meta is under immense pressure to ensure that social media content created by artificial intelligence doesn't cause havoc with elections this year. The company's top leaders say they haven't seen that happen yet on their services.Christopher Pitt
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
This is the Blueberg Daybak you At podcast, available every
morning on Apple, Spotify or wherever you listen. It's Wednesday,
the tenth of April in London. I'm Caroline Hepkit.
Speaker 2 (00:11):
And I'm Stephen Carroll. Coming up today. Markets wait to
see if the US inflation print delivers the goldilocks data.
The Federal Reserve is looking for a.
Speaker 1 (00:20):
Major ratings agency goes negative on its outlook for China's
long term foreign debt pile.
Speaker 2 (00:26):
Plus making ends meet. The UK's financial regulator warns more
than seven million people are struggling to pay their bills.
Speaker 1 (00:34):
Let's start with a roundup of our top stories. The
March inflation report from the United States, due out later,
is unlikely to settle the debate around when the Federal
Reserve will cut US interest rates. Economy is surveyed by
Bloomberg are expecting a slow down in the pace of
price increases, with the core reading excluding food and energy
expected to rise by zero point three percent between February
(00:57):
and March. Invesas are now evenly split on the prospects
of a first FED cut in June, with many traders
unwinding dubbish bets on significant cuts for this year, but
Bloombig opinions in mohammadel Arian expects the Central Bank's overall
trajectory to remain unchanged.
Speaker 3 (01:15):
I think Chair palt has made it very clear that
he's willing to look through these bumps. They will need
overwhelming evidence that it is more than a bump in
order for them to change their views. Inflation will be sticky.
Inflation will be absolutely sticky. We're going to get stuck
at around two and a half to three percent, and
I do think that that actually warrants over the long term.
(01:37):
The FED rethinking is inflation target.
Speaker 1 (01:40):
Muhammed el Arian. He also told Bloomberg that he expects
only two rate cuts this year from the FED. His
comments come as the Bank of Atlanta FED President Rafael
Bostik reiterated his expectation for only one rate cut in
twenty twenty four.
Speaker 2 (01:54):
Fitch's cut it's out look for China's long term foreign
debt from stable to negative. The agency says rising economic
uncertainties have eroded fiscal buffers, although it's these government debt
increasing in coming years. It affirmed China's A plus rating.
Speaker 1 (02:10):
Joe Biden says that Israeli prime Minister Benjamin Netanyah, whose
approach to the war is a mistake. The US President
spoke to Univision in an interview taped last week when
an air strike killed seven AID workers. He says that
Netna who should be calling a ceasefire.
Speaker 4 (02:29):
I think when he's joining his a mistake. I don't
agree with his book. I think it's outrageous that those
four three vehicles were hit by drones and taken out
on a highway where it wasn't like it was along
the shore, it wasn't like it was a convoy movie.
Speaker 5 (02:46):
Here, etc.
Speaker 4 (02:47):
So I'm what I'm calling for is for the Israelis
to just call for a ceasefire.
Speaker 1 (02:57):
Biden's comments come after months of rising into national concerns
over the death toll in Gaza that have increasingly isolated
Israel on the world stage. Turkey yesterday announced fresh restrictions
on exports to Israel, further straining already tense relations between
the one time military allies.
Speaker 2 (03:16):
Millions in the UK are struggling to make ends me.
That's according to a new survey of British adults, many
of whom are falling behind on household bills or credit commitments.
Poomberg's Ewan Parts has the details.
Speaker 6 (03:28):
Some seven and a half million people in the UK
are struggling to pay their bills. That's a big drop
from the almost eleven million who were in the same
position at the start of last year, but it's still
higher than the number before the cost of living spiral
after the pandemic. The estimates come from a survey by
the Financial Conduct Authority, who says that more than two
and a half million adults are relying on debt advisors
and charities for help. The regulator is making permanent a
(03:51):
COVID era requirement for lenders to do more to support
borrowers in difficulty. Its efforts are sure as we put
to the test as inflation and higher interest rates continued
to squeeze house in London, EU and pots. Bloomberg Radio, now.
Speaker 1 (04:03):
The UK's biggest supermarket chain, Tesco, says that retail profit
will likely rise this year as easing cost pressures allow
for some price cuts. The British Grocery Giantswers that it
expects to generate at least two point eight billion pounds
of retail adjusted operating profit in the current fiscal year.
That's slightly up on what it reported last year. Tesco
(04:26):
also announced plans to buy back a billion pounds of
shares over the next twelve months.
Speaker 2 (04:31):
The crisis asked Thames Water is prompting fear is about
other UK utilities. The risk premium newly issued bonds in
the water sector is widened by as much as thirteen
basis points. James Wilcock has more.
Speaker 7 (04:44):
Thames Water is special. It's the largest and most indebted
of all water companies in Britain. Its owner, Kemble's default
rating was downgrade to see see yesterday by Fitch, and
it emerged Britain's Environment Secretary rejected i direct appeal for
intervention from shareholders. But a lot of UK water companies
(05:05):
have high levels of debt, inflation link bonds and poor
operating performance. That's got some fixed income traders wondering if
Thames is the large messy canary in the coal mine
or sewer in London. James Wilcock, Bloomberg Radio.
Speaker 1 (05:21):
And finally, Meta is downplaying the threat posed by this
year's bumper elections by disinformation created by artificial intelligence. The
company is under pressure to ensure that AI generated social
media content doesn't interfere with voting Meta's head of global affairs,
Nick Clegg, says that they haven't seen that yet on
(05:42):
their services. The social media JANT announced plans last week
to label all AI generated content on Facebook. Now, in
a moment, we're going to get more details on the
US inflation numbers that come out today, plus on the
UK the FCA reporting around the pressure that households in
Britain are still facing with bills. We'll talk about that too,
(06:04):
But first, this call RI perhaps wishful, think you maybe
a four day work week? Apparently it's still decades away.
In the United States, our colleague Allason Schreege has been
writing about this, drawing a lot from the example of France,
which brought in in nineteen ninety eight a reduced working week,
but saying that actually would add enormously to the costs
(06:25):
to US businesses and therefore to the US economy. So
she was sort of advocating perhaps to think twice on
this measure.
Speaker 2 (06:31):
Yeah, certainly this is in the context of Bernie Sanders
proposing legislation that would set a work week to thirty
two hours. And now the hope with France's thirty five
hour working week is that it would create employment essentially
because everyone would work less. That hasn't really worked out,
and actually the average working week in France is above
thirty five hours and pretty comparable to other OECD countries
(06:51):
as well. Essentially, for people who get paid by the hour,
it means that your overtime kicks in at a lower level,
although many companies are reluctant to pay that overtime. And
for those that don't work or aren't paid by the hour,
it means that people get a couple of extra days
leave a year to compensate for the fact that they
work over the thirty five hours. But it doesn't mean
that people are sitting there, you know, clock watching and
(07:11):
in a completely different way that you might see in
other capitals around Europe.
Speaker 1 (07:15):
Yeah, absolutely read it on the Bloomberg terminal this morning,
the idea of that full day work week still being
many decades away, although things have trended lower in terms
of working hours, but fairly slowly. That yeah, got our
attention this morning in terms of what we're thinking about.
Let's move on though, and think also about the March
us CPI report likely to show the hot readings of
(07:37):
the last couple of months maybe are an exception Bloomberg
Economics expects both the headline and course CPI number to
slow to zero point three percent month or month. Let's
discuss with Bloomberg's Europe FX rates and rates editor Aleen Omada,
who is hit with us in the radio studio. What
do we expect them from the CPI data? What are
we watching for?
Speaker 5 (07:58):
So the big thing to watch or in the CPI
today is whether it will confirm the FEDS message that
the past reports were just a bump, like you said,
or because the market has been a bit doubtful about that.
So the overall the headline number may still tick higher,
but the core, which is less volatile and something that
(08:19):
people really look into, is expected to accelerate. It to
accelerate further to the lowest level since twenty twenty one,
So that would confirm that prices are really cooling down.
Speaker 2 (08:29):
There's been a lot of anticipation and positioning I had
at this data points as well, and bond is particularly
placing an interest on short term interest rate futures.
Speaker 8 (08:36):
Bats. Yeah, that's right.
Speaker 5 (08:39):
The market is super bearish on treasuries recently, you're seeing
shorts piling up and that's all tied to the expectations
for the Fed. We had a big hockeysh repricing towards
less rate cuts, So this figure will be important to
tilt the balance either to more or less rate cuts.
(08:59):
We are at the moment where the market is hanging
in the ballance between two and three, so that will
will be important to determine.
Speaker 1 (09:08):
I mean, your focus is on Europe. What do you
make then of the divergence between the FED and the ECB,
which of course has got a great decision and there's
pressure potentially on the currency as well on the EU.
Speaker 5 (09:19):
Yeah, so the expectation is the FED will cut rates
less than the European Central Bank. When you look at
inflation in Europe, the downward trend is more clear. So
that's what's behind those expectations of more rate cuts here
in Europe. That won't be good for the euro. Of course,
the rate to frendship will just turning less in favor
(09:41):
of the Euro and we are seeing some pretty parish
comments recently, some people bringing up the parity talk. We
are still like eight percent away of that, but when
people start to consider it as a scenario, it definitely
brings some tension to the market.
Speaker 2 (09:56):
Does you know Look, we've got tomorrow's ECB meeting as well,
and I wonder when we put these pieces of information together,
are we going to look at a significantly different dynamic
potentially on interest rate bets by the end of this week.
Speaker 5 (10:08):
It could be as especially because the ECB may kind
of prepare the market for a June raid cut. That's
what they have been kind of doing without specifically putting
a date to it, obviously, but they have been guiding
the market toward a June raid cut. And if we
get a hotter CPI print from the US, then that
(10:29):
divergency will definitely arise this week.
Speaker 1 (10:33):
Where do you think that leads the Bank of England.
We were speaking to Katherine Nice just earlier this morning.
She's at Pigin, but she was and she held a
number of significant roles at the Bank of England. Got
the Bend Blanky review that comes out on Friday. I mean,
I suppose if we're thinking about the USCPI and the ECP,
we should include a word on the Bank of England.
Speaker 8 (10:52):
Yeah.
Speaker 5 (10:52):
The Bank of England is a very interesting story because
at the beginning of the year it was expected to
be the most hawkish one because inflation here is higher.
There were some more pressures from the wages side, but
now we are actually seeing more people getting on the
field that the bo may cut as much as the FED,
(11:13):
or even more. It's currently expected to cut in August
by market expectations, and a fully cut from the FED
is only fully priced by September, so it may come earlier.
In fact, I think it's one that there's a lot
of doubt still, so we'll have to see the next
(11:33):
labor data, the next inflation data to firm those expectations.
But it is the case, right, that's right, that maybe
they will cut more than the FED, keeping.
Speaker 2 (11:42):
Things interesting in markets anyway. Elenoi and Mada, thank you
very much for joining as Spoomberg's Europe Effects and rates editor.
Speaker 1 (11:47):
There Now let's turn our attention then to a new
report out this morning from the Financial Conduct Authority. More
than seven million people in the UK are struggling to
pay their bills, according to a survey of almost three
and a half thousand UK adults at the start of
this year. Comes as the regulator in Britain was given
added responsibility last year to protect UK borrowers. Joining us
(12:10):
to discuss at Blooeberg's EMA head of Finance and Investing,
Tom Metcalf, Great to have you with us. The cost
of living crisis is still very much with us. But
it's the angler around the FCA that really fascinates me
about this. I mean, what can the FCA do about it?
Is sort of tracking how people are faring economically.
Speaker 8 (12:28):
Yeah, well, it's sort of linked to these new responsibilities
you mentioned. There's a consumer duty and they're also effectively
over the of course the next few months, introducing more
and more protections for borrowers. So I think it's a
fair point how much can regulators actually alleviate the cost
of living crisis. What they say is, hey, we can
make sure if someone's struggling to pay the bills, you
know that the banks are treating them fairly. They're not
(12:48):
going straight to say, you know, kind of booting people
out of their own homes and stuff. But yeah, I
know this survey for me, as I look at it,
I remember it coming out last year. This was you know,
where there's something like ten million people struder face bills.
So obviously that's an improvement, but as you look at
the sort of the raw numbers, seven point four million,
that's you know, comfortably above about the five million or so.
It wasn't the pandemic. So my take from this is,
(13:10):
you know, those cost of living pressures are easy, but
they're still very much there, and you know, I think
the sort of reality on the ground is this survey
of show and is still very tough for a lot
a lot of people.
Speaker 2 (13:20):
It's interesting though, because what we've heard from banks in
recent reporting seasons as well hasn't been a massive uptake
of non performing loans either, and is that sort of
the next thing that we need to be watching as
we're heading into our the season.
Speaker 8 (13:31):
Absolutely efforts for the British banks, that's all we look for.
And it's been interesting, as you say, over the last
few quarters, it's always been a very kind of despite
maybe the broader macro picture being pretty grim, every single
bank is saying, no, we're not seeing in our own
book the arrears. So whether they are sort of there's
more stress popping up in parts of the system that
are maybe less transparent, or the fact that you know,
you've had this huge sort of subsidies going out over
(13:53):
the COVID period and you know, as they continue to
sort of work their way out of the system, you
might maybe see a bit more stress.
Speaker 1 (13:59):
Yeah, well, we have seen an enormous surgeon buying now
pay later firms in the UK and across Europe, has
to be said, and also in the UK quite some
pressure around financing for car loans in Britain. That is
another fact that we've talked about in terms of the banks,
some more exposed than others to that. So I suppose perhaps,
(14:19):
as you say, some parts of the markets maybe under
more sort of may may show that pressure more of
the consumer.
Speaker 8 (14:28):
Yeah, we're always looking for sort of that. I guess
the Canary and the coal mine, right, and car finance
was a classic and that's one of the questions we
always ask, you know, banks in particular is like, you know,
what is the credit card data showing? And as you say,
it does pop up. You can see this, you know,
you can see it's not a great time to be
a consumer, you know, stuff like that. But buying now,
pay later, and you know you're seeing a lot of
discretionary spend, you know, maybe on the higher ticket items
(14:49):
fall away, but then that you know, I was looking
at Tesco ownings today and there's you know, striking a
more positive tones. So you know, it's amazing the thing.
But perhaps if say, there is no sort of sharp
shot ahead, you know, it does look like at least
sort of you know, in terms of a really horrible
sort of falling out here is maybe being avoided, which
will be an impressive politic result.
Speaker 2 (15:11):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (15:17):
Look for us on your podcast feed every morning, on Apple,
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Speaker 2 (15:23):
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Speaker 1 (15:29):
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Speaker 2 (15:37):
I'm Caroline Hepka and I'm Stephen Carroll. Join us again
tomorrow morning for all the news you need to start
your day right here on Bloomberg Daybreak Europe
This is the Blueberg Daybak you At podcast, available every
morning on Apple, Spotify or wherever you listen. It's Wednesday,
the tenth of April in London. I'm Caroline Hepkit.
Speaker 2 (00:11):
And I'm Stephen Carroll. Coming up today. Markets wait to
see if the US inflation print delivers the goldilocks data.
The Federal Reserve is looking for a.
Speaker 1 (00:20):
Major ratings agency goes negative on its outlook for China's
long term foreign debt pile.
Speaker 2 (00:26):
Plus making ends meet. The UK's financial regulator warns more
than seven million people are struggling to pay their bills.
Speaker 1 (00:34):
Let's start with a roundup of our top stories. The
March inflation report from the United States, due out later,
is unlikely to settle the debate around when the Federal
Reserve will cut US interest rates. Economy is surveyed by
Bloomberg are expecting a slow down in the pace of
price increases, with the core reading excluding food and energy
expected to rise by zero point three percent between February
(00:57):
and March. Invesas are now evenly split on the prospects
of a first FED cut in June, with many traders
unwinding dubbish bets on significant cuts for this year, but
Bloombig opinions in mohammadel Arian expects the Central Bank's overall
trajectory to remain unchanged.
Speaker 3 (01:15):
I think Chair palt has made it very clear that
he's willing to look through these bumps. They will need
overwhelming evidence that it is more than a bump in
order for them to change their views. Inflation will be sticky.
Inflation will be absolutely sticky. We're going to get stuck
at around two and a half to three percent, and
I do think that that actually warrants over the long term.
(01:37):
The FED rethinking is inflation target.
Speaker 1 (01:40):
Muhammed el Arian. He also told Bloomberg that he expects
only two rate cuts this year from the FED. His
comments come as the Bank of Atlanta FED President Rafael
Bostik reiterated his expectation for only one rate cut in
twenty twenty four.
Speaker 2 (01:54):
Fitch's cut it's out look for China's long term foreign
debt from stable to negative. The agency says rising economic
uncertainties have eroded fiscal buffers, although it's these government debt
increasing in coming years. It affirmed China's A plus rating.
Speaker 1 (02:10):
Joe Biden says that Israeli prime Minister Benjamin Netanyah, whose
approach to the war is a mistake. The US President
spoke to Univision in an interview taped last week when
an air strike killed seven AID workers. He says that
Netna who should be calling a ceasefire.
Speaker 4 (02:29):
I think when he's joining his a mistake. I don't
agree with his book. I think it's outrageous that those
four three vehicles were hit by drones and taken out
on a highway where it wasn't like it was along
the shore, it wasn't like it was a convoy movie.
Speaker 5 (02:46):
Here, etc.
Speaker 4 (02:47):
So I'm what I'm calling for is for the Israelis
to just call for a ceasefire.
Speaker 1 (02:57):
Biden's comments come after months of rising into national concerns
over the death toll in Gaza that have increasingly isolated
Israel on the world stage. Turkey yesterday announced fresh restrictions
on exports to Israel, further straining already tense relations between
the one time military allies.
Speaker 2 (03:16):
Millions in the UK are struggling to make ends me.
That's according to a new survey of British adults, many
of whom are falling behind on household bills or credit commitments.
Poomberg's Ewan Parts has the details.
Speaker 6 (03:28):
Some seven and a half million people in the UK
are struggling to pay their bills. That's a big drop
from the almost eleven million who were in the same
position at the start of last year, but it's still
higher than the number before the cost of living spiral
after the pandemic. The estimates come from a survey by
the Financial Conduct Authority, who says that more than two
and a half million adults are relying on debt advisors
and charities for help. The regulator is making permanent a
(03:51):
COVID era requirement for lenders to do more to support
borrowers in difficulty. Its efforts are sure as we put
to the test as inflation and higher interest rates continued
to squeeze house in London, EU and pots. Bloomberg Radio, now.
Speaker 1 (04:03):
The UK's biggest supermarket chain, Tesco, says that retail profit
will likely rise this year as easing cost pressures allow
for some price cuts. The British Grocery Giantswers that it
expects to generate at least two point eight billion pounds
of retail adjusted operating profit in the current fiscal year.
That's slightly up on what it reported last year. Tesco
(04:26):
also announced plans to buy back a billion pounds of
shares over the next twelve months.
Speaker 2 (04:31):
The crisis asked Thames Water is prompting fear is about
other UK utilities. The risk premium newly issued bonds in
the water sector is widened by as much as thirteen
basis points. James Wilcock has more.
Speaker 7 (04:44):
Thames Water is special. It's the largest and most indebted
of all water companies in Britain. Its owner, Kemble's default
rating was downgrade to see see yesterday by Fitch, and
it emerged Britain's Environment Secretary rejected i direct appeal for
intervention from shareholders. But a lot of UK water companies
(05:05):
have high levels of debt, inflation link bonds and poor
operating performance. That's got some fixed income traders wondering if
Thames is the large messy canary in the coal mine
or sewer in London. James Wilcock, Bloomberg Radio.
Speaker 1 (05:21):
And finally, Meta is downplaying the threat posed by this
year's bumper elections by disinformation created by artificial intelligence. The
company is under pressure to ensure that AI generated social
media content doesn't interfere with voting Meta's head of global affairs,
Nick Clegg, says that they haven't seen that yet on
(05:42):
their services. The social media JANT announced plans last week
to label all AI generated content on Facebook. Now, in
a moment, we're going to get more details on the
US inflation numbers that come out today, plus on the
UK the FCA reporting around the pressure that households in
Britain are still facing with bills. We'll talk about that too,
(06:04):
But first, this call RI perhaps wishful, think you maybe
a four day work week? Apparently it's still decades away.
In the United States, our colleague Allason Schreege has been
writing about this, drawing a lot from the example of France,
which brought in in nineteen ninety eight a reduced working week,
but saying that actually would add enormously to the costs
(06:25):
to US businesses and therefore to the US economy. So
she was sort of advocating perhaps to think twice on
this measure.
Speaker 2 (06:31):
Yeah, certainly this is in the context of Bernie Sanders
proposing legislation that would set a work week to thirty
two hours. And now the hope with France's thirty five
hour working week is that it would create employment essentially
because everyone would work less. That hasn't really worked out,
and actually the average working week in France is above
thirty five hours and pretty comparable to other OECD countries
(06:51):
as well. Essentially, for people who get paid by the hour,
it means that your overtime kicks in at a lower level,
although many companies are reluctant to pay that overtime. And
for those that don't work or aren't paid by the hour,
it means that people get a couple of extra days
leave a year to compensate for the fact that they
work over the thirty five hours. But it doesn't mean
that people are sitting there, you know, clock watching and
(07:11):
in a completely different way that you might see in
other capitals around Europe.
Speaker 1 (07:15):
Yeah, absolutely read it on the Bloomberg terminal this morning,
the idea of that full day work week still being
many decades away, although things have trended lower in terms
of working hours, but fairly slowly. That yeah, got our
attention this morning in terms of what we're thinking about.
Let's move on though, and think also about the March
us CPI report likely to show the hot readings of
(07:37):
the last couple of months maybe are an exception Bloomberg
Economics expects both the headline and course CPI number to
slow to zero point three percent month or month. Let's
discuss with Bloomberg's Europe FX rates and rates editor Aleen Omada,
who is hit with us in the radio studio. What
do we expect them from the CPI data? What are
we watching for?
Speaker 5 (07:58):
So the big thing to watch or in the CPI
today is whether it will confirm the FEDS message that
the past reports were just a bump, like you said,
or because the market has been a bit doubtful about that.
So the overall the headline number may still tick higher,
but the core, which is less volatile and something that
(08:19):
people really look into, is expected to accelerate. It to
accelerate further to the lowest level since twenty twenty one,
So that would confirm that prices are really cooling down.
Speaker 2 (08:29):
There's been a lot of anticipation and positioning I had
at this data points as well, and bond is particularly
placing an interest on short term interest rate futures.
Speaker 8 (08:36):
Bats. Yeah, that's right.
Speaker 5 (08:39):
The market is super bearish on treasuries recently, you're seeing
shorts piling up and that's all tied to the expectations
for the Fed. We had a big hockeysh repricing towards
less rate cuts, So this figure will be important to
tilt the balance either to more or less rate cuts.
(08:59):
We are at the moment where the market is hanging
in the ballance between two and three, so that will
will be important to determine.
Speaker 1 (09:08):
I mean, your focus is on Europe. What do you
make then of the divergence between the FED and the ECB,
which of course has got a great decision and there's
pressure potentially on the currency as well on the EU.
Speaker 5 (09:19):
Yeah, so the expectation is the FED will cut rates
less than the European Central Bank. When you look at
inflation in Europe, the downward trend is more clear. So
that's what's behind those expectations of more rate cuts here
in Europe. That won't be good for the euro. Of course,
the rate to frendship will just turning less in favor
(09:41):
of the Euro and we are seeing some pretty parish
comments recently, some people bringing up the parity talk. We
are still like eight percent away of that, but when
people start to consider it as a scenario, it definitely
brings some tension to the market.
Speaker 2 (09:56):
Does you know Look, we've got tomorrow's ECB meeting as well,
and I wonder when we put these pieces of information together,
are we going to look at a significantly different dynamic
potentially on interest rate bets by the end of this week.
Speaker 5 (10:08):
It could be as especially because the ECB may kind
of prepare the market for a June raid cut. That's
what they have been kind of doing without specifically putting
a date to it, obviously, but they have been guiding
the market toward a June raid cut. And if we
get a hotter CPI print from the US, then that
(10:29):
divergency will definitely arise this week.
Speaker 1 (10:33):
Where do you think that leads the Bank of England.
We were speaking to Katherine Nice just earlier this morning.
She's at Pigin, but she was and she held a
number of significant roles at the Bank of England. Got
the Bend Blanky review that comes out on Friday. I mean,
I suppose if we're thinking about the USCPI and the ECP,
we should include a word on the Bank of England.
Speaker 8 (10:52):
Yeah.
Speaker 5 (10:52):
The Bank of England is a very interesting story because
at the beginning of the year it was expected to
be the most hawkish one because inflation here is higher.
There were some more pressures from the wages side, but
now we are actually seeing more people getting on the
field that the bo may cut as much as the FED,
(11:13):
or even more. It's currently expected to cut in August
by market expectations, and a fully cut from the FED
is only fully priced by September, so it may come earlier.
In fact, I think it's one that there's a lot
of doubt still, so we'll have to see the next
(11:33):
labor data, the next inflation data to firm those expectations.
But it is the case, right, that's right, that maybe
they will cut more than the FED, keeping.
Speaker 2 (11:42):
Things interesting in markets anyway. Elenoi and Mada, thank you
very much for joining as Spoomberg's Europe Effects and rates editor.
Speaker 1 (11:47):
There Now let's turn our attention then to a new
report out this morning from the Financial Conduct Authority. More
than seven million people in the UK are struggling to
pay their bills, according to a survey of almost three
and a half thousand UK adults at the start of
this year. Comes as the regulator in Britain was given
added responsibility last year to protect UK borrowers. Joining us
(12:10):
to discuss at Blooeberg's EMA head of Finance and Investing,
Tom Metcalf, Great to have you with us. The cost
of living crisis is still very much with us. But
it's the angler around the FCA that really fascinates me
about this. I mean, what can the FCA do about it?
Is sort of tracking how people are faring economically.
Speaker 8 (12:28):
Yeah, well, it's sort of linked to these new responsibilities
you mentioned. There's a consumer duty and they're also effectively
over the of course the next few months, introducing more
and more protections for borrowers. So I think it's a
fair point how much can regulators actually alleviate the cost
of living crisis. What they say is, hey, we can
make sure if someone's struggling to pay the bills, you
know that the banks are treating them fairly. They're not
(12:48):
going straight to say, you know, kind of booting people
out of their own homes and stuff. But yeah, I
know this survey for me, as I look at it,
I remember it coming out last year. This was you know,
where there's something like ten million people struder face bills.
So obviously that's an improvement, but as you look at
the sort of the raw numbers, seven point four million,
that's you know, comfortably above about the five million or so.
It wasn't the pandemic. So my take from this is,
(13:10):
you know, those cost of living pressures are easy, but
they're still very much there, and you know, I think
the sort of reality on the ground is this survey
of show and is still very tough for a lot
a lot of people.
Speaker 2 (13:20):
It's interesting though, because what we've heard from banks in
recent reporting seasons as well hasn't been a massive uptake
of non performing loans either, and is that sort of
the next thing that we need to be watching as
we're heading into our the season.
Speaker 8 (13:31):
Absolutely efforts for the British banks, that's all we look for.
And it's been interesting, as you say, over the last
few quarters, it's always been a very kind of despite
maybe the broader macro picture being pretty grim, every single
bank is saying, no, we're not seeing in our own
book the arrears. So whether they are sort of there's
more stress popping up in parts of the system that
are maybe less transparent, or the fact that you know,
you've had this huge sort of subsidies going out over
(13:53):
the COVID period and you know, as they continue to
sort of work their way out of the system, you
might maybe see a bit more stress.
Speaker 1 (13:59):
Yeah, well, we have seen an enormous surgeon buying now
pay later firms in the UK and across Europe, has
to be said, and also in the UK quite some
pressure around financing for car loans in Britain. That is
another fact that we've talked about in terms of the banks,
some more exposed than others to that. So I suppose perhaps,
(14:19):
as you say, some parts of the markets maybe under
more sort of may may show that pressure more of
the consumer.
Speaker 8 (14:28):
Yeah, we're always looking for sort of that. I guess
the Canary and the coal mine, right, and car finance
was a classic and that's one of the questions we
always ask, you know, banks in particular is like, you know,
what is the credit card data showing? And as you say,
it does pop up. You can see this, you know,
you can see it's not a great time to be
a consumer, you know, stuff like that. But buying now,
pay later, and you know you're seeing a lot of
discretionary spend, you know, maybe on the higher ticket items
(14:49):
fall away, but then that you know, I was looking
at Tesco ownings today and there's you know, striking a
more positive tones. So you know, it's amazing the thing.
But perhaps if say, there is no sort of sharp
shot ahead, you know, it does look like at least
sort of you know, in terms of a really horrible
sort of falling out here is maybe being avoided, which
will be an impressive politic result.
Speaker 2 (15:11):
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stories making news from London to Wall Street and beyond.
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