This is the Bloomberg Daybake podcast, available every morning on Apple, Spotify or wherever you listen. It's Wednesday, the first of May in London. I'm Caroline Hipkip.
And I'm Stephen Carroll. Coming up today. Expectations grow that the Federal Reserve will today signal a delay to rate cuts.
Japan's yen tovention fizzles in the face of dollar strength.
Plus Sunak's comeback bid. The Prime Minister does his best to avoid a catastrophic result in tomorrow's local elections.
Let's start with a roundup of our top stories.
The Federal Reserve is expected to hold rates today and signal no plans for cuts in the near future. Bloomberg Economics also believes Charge your Own Pal will adopt a notably more hawkish tone in his comments following the decision. The expected hawkish pivot comes after a series of hotter than expected inflation and economic data led traders to unwind
bets on multiple cuts in the coming months. The former Reserve Bank of India governor Ragor and Rajan says FED policymakers got ahead of themselves at recent meetings.
The fact that we are in a very uncertain world that we've switched from soft landing to hard landing to no landing and back. I think that would suggest a little bit of caution when the FED tries to predict the future, and it should, I mean, with hindsight, have basically stayed with the We will know when enough is enough and we can start cutting, but right now we're not going to make strong predictions.
Ragora Rajan also hinted that the FED may need to raise rates in future if data continues to come in hotter than expected. We'll bring you the right decision live here on Bloomberg at seven pm London time, with chargerown Pals press conference thirty minutes later.
Interest rates remaining high in the US will continue to drive strength in the dollar. On Monday, that appears to have forced Japanese authorities to intervene to pop up the yen for the first time since twenty twenty two. Bank of Japan accounts analyzed by Bloomberg suggests intervention did take place. Bloomberg's Garfield Reynolds says failing to step in could have left authorities with a number of problems.
With the reverse argument would be what they hadn't intervened, and you were starting from one hundred and sixty or more yen per dollar, then who knows where you could end up. One hundred and seventy would come into play pretty rapidly, and that's the sort of thing that would have a lot of impact on Japan's economy, on the political situation.
Garfield Reynolds, speaking there on Bloomberg Television, recent yen swings might be an indicator of worse to come, as the Federal Reserve looks unlikely to cut interest rates during today's policy setting meeting. Pressure on the currency could build even further if fedchaed your own power takes that hawkish tonally mentioned this evening, New.
York City police serage down to Columbia University's campus overnight, arresting pro Palestinian demonstrators who'd barrow caided themselves into a building. According to reports, dozens of people were detained and loaded onto busses as chance continued, sir, who do you protect?
Sir?
Who do you protect? Sir?
Those were protesters at the scene, chanting. Their university leaders said in a statement that they were left with no choice but to call authorities. After Columbia's own security personnel were forced out of the building. The police action capped two weeks of rising tention at the university, which some more than one hundred arrests. On April eighteenth.
Chancellor Jeremy Hunt has publicly criticized the UK regulators plans to name and shame companies that it's investigating in a rare political intervention. Hunt said that he hopes the Financial Conduct Authority will relook at their decision after an industry backlash. The Financial Watchdog says that firms and consumers would benefit from knowing which issues are in the watchdog's sites, but the FCA says that plans are still at the consultation stage.
Amazon's cloud unit posted its strongest sales growth in a year. The first quarter results are assigned. Businesses are starting to spend more on tech projects, partly driven by AI demand. Bloomberg's Ed Ludlow explains.
The strategy is basically to be a place where other companies who are interested in AI can build whatever software it is they want on aws's platforms.
Ludlow ads are the company's fifteen point three billion dollar operating profit is also down to CEO Andy Jase's cost cutting program. Despite that Amazon's main e commerce business slightly missing analysts estimates as consumers tried to save money.
And here in the UK, Isshsunak has urged supporters to take part in the quote greatest comeback in political history, as he trails badly behind in the polls. Bloomberg understands that the Conservative leader attempted a rallying speech. Party campaign is ahead of local elections tomorrow. Bloomberg's James Orcock has.
More since the nineteen nineties, if the opposition had been ahead in the polls by more than five percentage points a year out of the general election, they've taken over government. Labor are currently twenty points ahead. So when Rischie Sunak talks about the greatest comeback, that is the political gravity he's trying to overcome. His remarks are also a tacit admission of the electoral clobbering is expected to take in Thursday's local elections, which some Conservatives think may then be
used to try and to seat him in London. James Orcock Bloomberg Radio.
Well, in the moment, we're going to look ahead to the federal reserve rate decision and also to tomorrow's local elections. In England and Wales that James was discussing. But of course there's always a few stories that have caught Ri on the Bloomberg terminal this morning, and I think this one's quite close to home for you, Stephen.
Yeah.
As of today, Ireland has no listed companies with the female CEO. That's after the CEO of Irish Residential Properties Reach PLC, margaretsween You retired yesterday, so she's been replaced by a man. There are only thirty one list of companies on your next exchange in Dublin, but now none of them are led by a woman, and that makes Ireland among you member states, only joining Luxembourg as having
no female CEOs of public firms. Now, the levels across the EU aren't particularly high, or should we say across the world. Europe is an underperforming in this level either, but the lack of gender equality at the top of companies listed on Ireland Stock Exchange is, according to the thirty Percent Club, exacerbated by the fact that it's dominated by traditionally male heavy industries like construction. Now it's worth saying that representation on boards is improving. At the end
of November twenty twenty three. Female board representation was at thirty nine percent in Ireland, which is up from eighteen percent just five years previously. That's after a number of government level steps that have been taken, and there are other areas of the Irish economy that do seeta representation of women, particularly the startup scene in particular. But then Ireland also has the same listings problem that lots of
other parts of Europe have as well. Out of these companies aren't choosing to list on the Stock Exchange in Ireland when they are going public, They're choosing to do so in the US, a story that we see in lots of other parts.
Yeah, I think it's a very fascinating story and it's a really interesting one also about you know, how much the goals of government actually seep into business or not. So Yeah, a very good story to have a look at. On the Bluebig Tunnel this morning.
Well that's turned back to the Federal Reserve decision. Later, officials expected to keep interest rates on hold, but markets will be watching to see how your own paler as colleagues are reacting to the recent higher than expected inflation data. Bloomberg TV anchor Critty Group tos with us to help us look ahead to that morning, Critty, can you remind us first of all of the key data the FED will be considering going into this meeting.
Well, it's so funny because we should be considering the CPI, that's the no brainer rate, even the PCE which kind of takes out some of those core costs as well. Now they have other pieces of data that they have to take into account. This isn't They can't blame it on just anomalies. And I think the greatest example of this is just within the last twenty four hours, the employment costs index over in the States coming in really
really hot. Now, for those of you who aren't familiar with kind of this data set, it's what the name's just. An employment cost index is quite literally the kind of amalgamation of what costs look like from a more wage
perspective across the fifty states. Now, this number came in hot because wages are rising in the States, and we know that we kind of knew that was going to happen with a lot of these minimum wage decisions that have been made across I think like twenty five states or so out of fifty, So we knew that there was going to be this push anyway. The problem is the numbers came as significantly hotter than we'd expected just
from those minimum wage increases. So that's where you're starting to see a little bit of kind of spooking in the markets. And then you saw a real market reaction off of that data because it suggests that some of the inflationary numbers that we're seeing are not one offs.
You are seeing the spread across the economy. You're seeing it spread across regions more importantly, and that's a really important piece of this equation because now the Federal Reserve can look at the state and say, this is not just goods driven inflation, services driven inflation, and this is wage driven inflation, when for years they were really trying to combat the inflationary story because weges weren't keeping up.
Okay, So how likely is that then to play into the press conference and into the statement and the decision making.
Well, I imagine he'll be asked about that in the press conference, specifically in terms of what the data points he's actually looking at.
Caroline.
The very ends, even the very first questions that you guys asked me, simply because they are known famously to only kind of really zero in on that PCE deflator number. So now that they're seeing different pieces of it, is this still a commodity driven story? Is this a kind of labor market story still? Or do we need to look at other pieces of the policy tools? So if we're not looking at rate decisions, do we need to look at QT for example? Do we need to look
at what's going on with the treasury? Is election risk even relevant to the Fed? They'll say no, but I imagine they'll be pressed on it regardless.
Anythink as that markets'll be watching that.
For Definitely, the story on the QT is important, but I think the treasury may be more important. And there's a lot of questions about the deficit story. There's a lot of questions, But how that's kind of seeking or I should say creeping up? I think is the worth of looking for creeping up? The coffe hasn't quite hit yet, Bear with me creeping up on a lot of investors simply because it has a lot to do with treasury
supply and it has to do with these buyback announcements. Remember, before we get the FED decision, we also get that refunding announcement. From the Treasury literally thirty minutes prior. So you're going to see the markets be very bouncy this morning in terms or this afternoon you say, in terms of how they are reacting to what the government is doing. But we actually had a guest onm Blomber TV said this very eloquently that it might just be Janet Yellen who may be more in charge of policy.
Than j Powell.
And that seems to be the going concern at least in terms of what investors are really watching.
Yeah. Absolutely, and another piece to that, big reaction expected potentially in the s and P at least Film City, biggest FED day move, that's the expectation. So it's really going to be hotly watched. The decision at seven pm London time, the press conference half an hour later, Pritty groups of Bloomberg's TV and can thank you so much for being with us.
Well here in the UK, voters will be going to the polls tomorrow in England and Wales in local mayoral and police and Crime commissioner elections tomorrow, some of which are seen as a bellwether for the Conservative Party's prospects at a general election. We're expecting later this year with the details, We've got Bloomberg's UK correspondent Lizzie Burden with us in studio Morning Lizzie. So for the Conservative Party, then, what are the key goals that they'll be hoping for.
What are they going to be looking out for when it comes to what could inter be interpreted as a win or a big last for them?
Will you talk about these local elections as a barometer for the general There are two elements that define the point at which Sunak's team around him and the wider party will lose hope of staying in power beyond the general.
First of all, do the Conservatives.
Lose half of the just under a one thousand seats that they won in twenty twenty one across local councils? And secondly, do they hold on to Andy Street, the Tory mayor in the West Midlands and Ben Houchin, the Tory mayor in Tees Valley, because those two mayors really
represent the party's ability to compete in labor facing areas. Now, the latest yug of polling actually suggests that bit Street and Houchin are going to cling on and that would be a major victory for Rishi Sunak because it would calm the nerves about the general election being some sort of extinction event.
But on point one, this could still be a bloodbath for the Conservatives. M okay.
Will the local election result then put Labor on course to win the general election? How much of a kind of wind in the sales of what is already a pretty speedy Labor boat.
Yeah, very much on that course already, aren't they.
Sunak's really failed to put a dent in Labour's twenty point pole league, despite the fall in inflation and the turnaround in growth.
His advisors say.
That last week was his best in off, But the problem is he hasn't been able to sustain a positive news cycle since getting the keys to number ten, and therefore he's failed to placate the right wing of his party. Even when he's been preaching to the choir, you know, with policies like deporting asylum seekers to Rwanda, he still hasn't managed to keep the likes of Penny Mordant happy.
And while he's had this ongoing failure to launch, at the same time, the opposition Labor leader Kirs Starmer, has just had another boost because Scotland's first Minister Humsa Yusuf has resigned. Now north of the border, Labour's only managed to get one seat in the.
Twenty fifteen and twenty nineteen general.
Elections, but now with the SMP pretty much rudderless, things are looking up for Labor in Scotland and it means that the path to Downing Street for kir Starmer looks even clearer, and it seems it's going to run through Scotland.
Could these local election results be a cat lists though for the Tory Party actually ousting Richie Sunak as their leader.
Well, Sunak's critics on the Tory right are really going to use any bad result in these local elections as evidence to argue the only way to win the general is to change leader, because otherwise they'll have a total wipeout. But even if he does get hammered in these local elections, he could actually stay in number ten because remember, there's no obvious candidate to replace him and the Conservatives are already on their third prime minister since Boris Johnson won the twenty.
Nineteen general election.
The thing is, Conservative party rules mean that the rebels only need just over fifty letters from Tory MPs to trigger a no confidence vote in the party leader, so Richie Sunac cannot take his place for granted.
This is Bloomberg Daybreak Europe.
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