This is Bloomberg day Baker for this Tuesday, the twenty fourth of January in London. Coming up this hour, leguard on Guard, the ECB president, says the bank will stay the course on inflation searching for competition, the US Justice Department prepares to sue Google over its digital ad dominance.
In a tweet, elon Must tells a jury he had the funding needed to take Tessler private and twenty eighteen regulator role reversal, low tax loons and putting the OH in O N s. Those are the stories we're looking at in today's papers. I'm James Wilcock. Plus Apple takes hand eye coordination to the next level with a three
thousand dollar mixed reality headset. That's all straight ahead on Bloomberg day Break Europe on d A B Digital Radio London, Bloomberg eleven three oh New York, Bloomberg Washington, d C, Bloomberg one O six one, Boston, Bloomberg nine sixties, San Francisco, Cyrus XM Channel one nineteen, and around the world on Bloomberg Radio dot Com and via the Bloomberg Business Set. Good morning, I'm Stephen Carroll and I'm Caroline Hecker. Here
are the stories that we're following today. ECB President Christine Legarde says the bank will do everything necessary to return inflation to its two percent goal. In a speech in Germany, Laguard pointed to more significant interest rate increases in coming meetings. That view is supported by JP Morgan's CEIO for Fixed Income Ian Steely, who told Bloomberg's Jonathan Pharaoh that the Central Bank has a way to go on rate hikes. We were in a world where they were hiking rates
to deal with inflation. Now inflation is coming or likely to come off because what's happening in energy prices that should be good for the economy. Growth was supposed. We're supposed to be in recession in Europe at the moment, and we're not. So are the e C began and maybe have to go slower but further as they try to battle it. Does the ECB hike more than the Fed? In yes, Steele's comment that add to the unfolding debate over whether a slowdown in the pace of rate heights
is appropriate as inflation dips from all time highs. The US Justice Department is poised to sue Google over the search giants dominance and the digital advertising market. Bloomberg sources say the case is expected to be filed in a federal court before the end of the week. That also will mark the Justice Department's second monopoly case against parent company Alphabet. Google has said the market for online advertising
it's crowded and competitive. During his second day on the stand in his security food trial, Elon Musk has defended his tweet about taking Tesla private with more his Bloomberg's head Baxter, the Crush of Tasham only shuttered around a deal with a Shoudy public investment fund. He said he had had a handshake agreement in getting help going private, but then they began to back pedal on the arrangement
after his goal private tweet. He also said he had support from Larry La Shan as well as two other investment firms. Musco also noted the wording of the text that he was contemplating taking the company private. He's back on the stand today in San Francisco. I'm at Baxter Bloomberg Daybreak Europe for his plans to cut around three thousand, two hundred jobs across Europe, with the majority concentrated in Germany.
The cuts effect roles in development and administrative areas. It follows workforce reductions in the US has forward slashers costs in a shift towards electric vehicles and apples. Long anticipated mixed reality headset would attempt to create a three D version of the iPhones operating system. So also say that it would include eye and hand tracking systems that could set the technology apart from rival products. Bloombergs Apple correspondent
Mark German explains how it works. Where you control the device is you can just look at something, whether you want to launch an app, whether you want to swipe through a list or toggle a setting, look at it and then you pinch your thumb and your index finger together when you're looking at it to launch it. Just like on a touch screen you tap what you want or on a mouse you point the cursor toward it and then you click. This is you look and tap
your fingers together. So pretty nifty, Mark German. There well, he says. The roughly three thousand dollar device will be out later this year. It will probably be called Reality Probe. Well. Here in the UK, Prime Minister Ishi soon Ac has ordered a probe into Conservative Party Chairman of Deans and how he's tax affairs. So how he says he was careless with his tax affairs following a report that he paid a five million pound bill to Revenue and Customs.
Labor Leader Kir Starmer condemned the lack of ethics. So how we can't stay as Tory Party chair. The very idea he can be discussing and negotiating his own tax affairs with the body that he's supposed to be running. Everybody knows it's wrong. Labor Leader Kir Starmer, there he will be questioning the Prime Minister tomorrow. The PMS announced probe follows allegations about financial impropriety among the Conservative Party that have undermined the Prime Minister has planed to run
an administration beyond reproach. Okay, those are a few of our top stories for you this morning. Listen. I've pulled out of one of the kind of piles of most interesting stories I've read this morning, Barkley's warning that there's a real risk of greenwashing. We've talked so much over the last couple of years around E s G. They say that actually there's a real clash emerging market countries want debt relief, they want to explore that sometimes that's
being tied to commitments to preserve nature. Barkley's have done a lot of work and some research into this. They say, actually the amount of money that goes towards this nature conservation goals in those deals is often a small fraction of the transaction size, so we should be really quite wary. I think that's quite interesting that the E s G is getting a lot of the sort of light what has been seen as a win win. Actually their wide
could be green washing. No interesting stuff on my list of interesting stories today is that the reopening of China's borders could help the UK economy because of the tourists coming here to spend more money. This is according to apparently Yes point to percentage points of GDP could be added to growth in three This is according to Credit Suite Stars that Chinese tourists and stronger UK exports could help things when it comes to China's reopening her helping
the UK. My god, well, I did see the photographs actually of Chinese tourist returning to Tie Beaches for the Lunar New Year holiday, so yeah it is. I mean that that Chinese tourism business is worth so much money, okay up next regulator role reverse or low tax loons and putting the oh in O and s now. The paper review on blue Bird Daybreak Europe. The news you need to know from today's papers FLO makes James Walcok
joins US now with the details. James the former Chancellor and deems the Harwi is on the front pages today mainly because Rishi Sunaka is now ordered a probe into his tax affairs. The FT says that Zahari is fighting for his political life. The Mirror headline the only way is ethics. But that aside, James, you're interested in some other FT stories, and in particular the UK beginning post Brexit review of the EU's investor fund regulation. This is
quite interesting, exactly, Kathy. You emphasize that just perfectly because for a long time this story has been the other way around. It's been sort of the EU looking at the UK's financial stability. But so part of the Brexit deal was that EU based funds can continue to use these kind of passports into the sort of the UK's market until five and you get holds actually two trillion pounds in cash and EU offshore financial center. So this
isn't a small amount, and that's predominantly Island and Luxembourg. Now. During the pension fund meltdown last September, the ft and this piece, it was predominantly pension fund vehicles based in Ireland and Luxembourg that were the ones that the Bank of England were bailing out. So now UK watchdogs are writing to the EU counterpart to say, so what are
your safeguards and as their regulations diverge. It turns out that bank from the Governor Andrew Bailey last week Todd MPs that he wasn't that impressed and he doesn't think these things are going to improve because the EU say they can't change their regulations until five, which is when they're getting a mandate, which is also when these passports run out. So increasingly the UK is now looking at these kind of large amounts of money in Europe and
saying we're not sure this is good for our financial stability. Okay. In the Times, William Hague is writing a piece there and he's warning watch out Rishi Sunac Low tax loons are circling. It's quite something, Stephen, when a former leader of the Conservative Party is calling his own MPs loons um. So William hag doesn't name this MP, but is corking about a recent meeting Rishi Sunac had with his own backbench. Is what he's saying, you all understand I can't do
tax cuts. And one reporters saying I do want tax cuts and I'm not an idiot. Well, William Hagan is politely saying you are an idiot, and it's a Tory calling for public spending. This is unusual arguments, so I think it's worth pointing out in the papers. He's saying that defense does not need a small amount of money if you look at Ukraine. He says, we also need green substidutes to combat what's happening in the US, and ultimately central banks might be underestimating inflation. We don't know.
And the quieteying mini budget was a sure fire way of saying, actually, trying to have a tax reduction during a period of high interest rates and inflation doesn't work. So he sums us up by saying that Pete voters want economic competence from the Tories, not just tax cuts. There is more to politics than just offering a sort of a short term incentive. Yeah, I mean on the other hand, one can have a bit of sympathy for
the MP. The MP understands that with the cost of living crisis, his own constituents are watching their tax bills rise and that's a stress point, isn't it. And that's the debate that they're going to have over the next year. And the challenges you face are trying to hold these two wings together. Yeah, absolutely, you're stuck on the times. Though this morning changed because there's another story, but this time about the n S, the Office for National Statistics
and what's going on. I couldn't get away from this one, so long story short. Obviously, there has published a lot of data and most of it is very accurate. But in productivity, the idea that the amount of output per hour you work with a focus on productivity because after the working from home revolution, now for the pandemic, we're really quite interested in how the UK performed. And to put it bluntly, the n S had to release a correction to their figures because they had added up two
years worth of growth into one. So from last year's productivity, we went from being the best bar Japan in the G seven to the worst bar France. It's a complete reversal, and it is highlighting that Britain's productivity chronic productivity problem which we've talked about private and public section investment. It's not a question of oh, what have we learned from the pandemic and more, Oh that's not so great. So
the technology has not helped particularly. Yeah, very interesting, Okay, James Wilcock, thank you very much for that review of the newspapers this morning. Let's dig into the latest commentary from the European Central Bank now, Christine Laguard pointing to more significant interest rate rises as they, in her words, stay the course to bring inflation back down to the two percent target. This, of course, I had of next
week's ECB meeting. Markets are expecting the bank to raise rates by another fifty basis points are ECB reporter at Yana Rando joins us now for a more good morning to you, Yana. How clear, then, have the signals been from the ECB president in this latest speech. I think she couldn't have been any clearer. Um she said, and it was very specific, um that staying the course is the policy mantra for the ECB for the time to come. And that means if there had been any doubts about
another half point high coming up in February. Those outs are now dispelled. There weren't then many, I have to say, because she was already very specific in December. But we have seen um, some diverging opinions I would say, over the past couple of days and UM, and she put her foot down and said for now, this is what we're going to do. And that was that was certainly very forceful. Yeah, okay, so very forceful. But the issue is about, um, you know, getting unanimity or or at
least getting agreement a course. UM. The e c B is often seen more difficult than for the fair. How does her position compared to other Governing Council members that we've heard from, Janna, I think for February there all of them are pretty much on on message and and everybody expects another half point hike. UM. The more interesting debate is going to be March, when no forecasts are available. And of course we have seen quite quite a few
developments since the last round in December. UM that suggests that the inflation outlook might have actually improved a little bit. Gas prices have come down, UM, inflation itself has slowed quite a bit. And UH that of course, UH takes pressure out of out of wage discussions. UM. So there is there is a bit of hope that the forecast will look a look a lot better and UM, you know, with that, with that prospect came UH quite a diverging
view of opinion. We've heard from from the likes of Robert Holtzman in class not UM sitting very much on the hawkish side of the governing council UM, pushing for for several more UM half point hikes UM in the in the first half of the year. And that of course contrasts very clearly with comments from from Nazovisco or Janis Donadas, um, you know, from from Italy and Greece respectively, UH that argued for graduality UM, saying we need to be more gradual, we need to take into account what
we've already done. UM. And and they also brought up the the idea of you know, UM, maybe now is not not the time to hike too much and and go into into restrictive territory too much. UM. So there is a difference of opinion out there. UM. We're not going to get much clarity, I'm afraid um in the next couple of weeks, because ultimately the ECB says it is data dependent. It will look at the numbers, it will look at the forecast, and then it will take
its decision. And March is unfortunately still quite a while away. Okay, And and of course we have you know that those p M I datas out later as well. What are the data points that we should be kind of keeping a very close eye on that would feed into the U E c B S thinking, yeah, so the p M E s are going to be an interesting one to watch, um, mainly because for the Eurozone we are expecting all economists, I should say, are expecting return to growth in the services sector and um that that would
be certainly good news. UM. What what I like to look at for the p M I s are the forward looking indicators, UM, the order intake um uh, export orders. That might tell us a little bit about demand in China and how that is going to um uh you know, boost boost the economy. And then of course, of course the price and indicators are going to be interesting, UM, how much are companies adjusting their prices? Um, we've seen a slowdown and producer prices and other indicators UM in
important prices of course. UM. So it's going to be interesting to watch whether whether they're UM that will feed through UM and and maybe ease pressures a little bit. This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Streets and beyond. Look for us on your podcast feed every morning on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning on London D A B Radio,
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