May 17, 2024 • 16 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) China’s retail sales grew at the slowest pace since 2022 while industrial production accelerated, highlighting the unbalanced recovery of the world’s No. 2 economy.
(2) China removed the floor on mortgage rates and lowered the minimum down payment ratios for individual homebuyers in its most drastic move to shore up the beleaguered property market.
(3) Jamie Dimon tells Bloomberg that when it comes to China, the right thing for America is to “fully and deeply” engage.
(4) Several Federal Reserve officials said the central bank should keep borrowing costs high for longer as policymakers await more evidence inflation is easing, suggesting they’re not in a rush to cut interest rates.
(5) Governments and companies want the clean fuel to play a big role in fueling the continent. If they’re wrong, the planet will be worse off than before.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
This is the Bloomberg Daybak podcast, available every morning on Apples,
Spotify or whatever you listen. It's Friday, the seventeenth of
May here in London. I'm Caroline Hepka and.
Speaker 2 (00:11):
I'm Stephen Carroll. Coming up today, Chinese consumption slows as
Beijing looks at ways to revive the country's battered property sector.
Speaker 1 (00:20):
FED officials suggests interest rates should stay higher for longer,
as Jamie Diamond warns of inflation risks.
Speaker 2 (00:27):
Plus, governments and companies want green hydrogen to play a
big role in fueling Europe. But what if they're wrong.
We have a special report.
Speaker 1 (00:35):
Let's start with a roundup of our top stories.
Speaker 2 (00:37):
Chinese retail sales grew by two point three percent in April,
the slowest pace since twenty twenty two. At the same time,
industrier production in the country rose faster than had been expected.
Robin Ching, chief China economist at morganst Stanley, says the
numbers highlight the mixed recovery.
Speaker 3 (00:54):
Hi flavely due to the strength in exports and the
manufacturing for production thy the but the domestic consumption side
is very weak. Property and the retail sales they both
missed expectations. So I think a growth is stabilizing, but
that they're unbalanced the pace.
Speaker 2 (01:11):
Morgan Stanley's Robin Jing speaking their present Choosing Things government
has signaled that more economic help is covering is coming now.
Speaker 1 (01:20):
Staying with China, where the government is planning to speak
to key officials about helping the country's declining property sector,
Bloomberg has learned that financial regulators, local governments, and housing
officials will join a Chinese cabinet meeting today to discuss
the matter, including a proposal to clear excess housing inventory.
A report suggests authorities will announce new policy measures to
(01:42):
tackle the real estate crisis. Winnie Wu China Equity Strates
is that Bank of America Security says the government's help
is needed for.
Speaker 4 (01:50):
The demand side. The key is to make property desirable
again because for the past few years, you know, with
the properties for leaving, not for speculation, home price has
been falling and people are not going to buy a
depreciating asset, right So the key is to change the
expectation to make people have the confidence on property price
that is going to stabilize or even have room for
(02:12):
long term appreciation. Now you know that probably need a
strong momentum in terms of a package of policies.
Speaker 1 (02:19):
Bank of America's Winnie Wu speaking there, the news comes
as defaulted Chinese builds a country guards and begins a
major legal battle with a creditor seeking the developer's liquidation. Today,
a Bloomberg gauge of Chinese real estate stocks rose as
much as seven percent in early morning trading, following an
eleven percent gain on Thursday.
Speaker 2 (02:40):
China's president Chi Jinping and Russian leader of Vladimir Putin
have pledged to intensify cooperation against what they see as
US containment. Putin is in Beijing for a state visit,
and in a joint declaration, the two leaders called Washington's
approach destructive and hostile. But JP Morgan CEO Jamie Diamond
says that despite growing policy tensions, the US should not
(03:02):
turn away from China.
Speaker 5 (03:03):
I think it's the right thing for America to fully
and deeply engaged with China, you know, competitively. You know
every nation is going to do it's in their own interest,
national security, social America. We should define that frillium properly.
If it's unfair trade, you know, negotiate that or do
whatever you need to do, but the engagement is the
right theyre going to do.
Speaker 2 (03:23):
Jamie Diamond made the comments and an exclusive interview with
Bloomberg at the bank's Global Markets conference in Paris. The
CEO of the Wall Street Giant also told us he's
still more worried about inflation than markets appear to be well.
Speaker 1 (03:37):
Jamie Darmond's warning that significant price pressures continue to influence
the US economy comes as a slew of FED policymakers
repeated your own powers higher for longer message on interest rates.
Speaking separately, the Cleveland FED President Lorettamesta, the New York
FED President John Williams, and Richmond FED President Thomas Barkin
(03:57):
have all been arguing that it may now take longer
for inflation to reach the bank's two percent target. Now
Here is Loretemester.
Speaker 6 (04:06):
Incoming economic information indicates that it's going to take longer
to gain that confidence, So holding our restrictive stance for
longer is prudent at this point as we gain clarity
about the path of inflation.
Speaker 1 (04:19):
Mester, who votes on policy decisions this year, says that
it's too soon to say that progress on inflation has stalled.
The comments come after the data released on Wednesday showed
a measure of underlying US inflation cooled in April for
the first time in six months.
Speaker 2 (04:35):
Ping Ann is weighing options that would allow it to
reduce its thirteen billion dollar steak and HSBC. Bloomberg has
learned that the Chinese insurance giant wants to lock in
some profits from its eight percent stake in Europe's largest lender,
ping An. Has An has had a contentious relationship with
HSBC in recent years, as it campaigned for the bank
to embark on a series of reforms, including spinning off
(04:58):
its Asian arm.
Speaker 1 (05:00):
Well to the UK, where Chancellor Jeremy Hunt will pledge
to reduce taxes if his party wins the next election.
Hunts follows major both major party leaders setting out their
agendas for a general election earlier this week. Bloomberg's James
Wilcock has more.
Speaker 7 (05:16):
Jeremy Hunt knows the Conservative Party has a problem. His
main rivals in labor poll better on the economy, so
the Chancellor wants to stress how the government have handled
a pandemic and point to tax cuts that would come
if his party were re elected.
Speaker 8 (05:31):
We want to bring down the tax burd and we
want to bring down over time when it is affordable
and responsible. We want to bring down employees' national insurance
to zero. That is a very clear aspiration.
Speaker 7 (05:45):
That was Jeremy Hunt last week. But with Labour more
than twenty points ahead in the polls and keis Starmer
making stabilizing the economy his first job, the question many,
even in Hunt's own party, are asking is can the
public be one over? In London James Wilcock inn Berg Radier.
Speaker 2 (06:03):
The world's super rich club, now has fifteen members of
fourteen's over one hundred billion dollars, the most unrecords. The
story from Bloomberg's Charlie Pallace.
Speaker 9 (06:12):
They are riding the waves of artificial intelligence, luxury goods,
and geopolitical shifts. According to the Bloomberg Billionaires Index, the
combined net worth of these people is up thirteen percent
this year to two point two trillion dollars, beating the
pace of inflation and the broader stock market. Between them,
(06:33):
they hold nearly a quarter of the wealth of the
world's five hundred richest people in New York. Charlie Pellett,
Bloomberg Radio.
Speaker 1 (06:41):
And those are a few of our top stories for
you this morning. I think I'm going to have to
get used of saying the word Centi billionaire.
Speaker 2 (06:47):
At the moment, we'll digainst that Chinese economic data and
discuss why Europe's pushed to harness hydrogen as a fuel
source might be in trouble. Put another story that caught
ARI this morning about the value of celebrity memory Rebelia.
It's now so big that there's an auction house that
specializes in this. It's called Julian's and it's opening its
first office in Asia to try and cater to demand there.
(07:09):
So they were notably involved in the sale of things
like Marilyn Monroe's Happy Birthday Mister President dress. They were
involved in getting it sold to Ripley's believe it or not.
Kim Kardashian also wore it to the met Ball in
twenty twenty two, and they were involved in orchestrating that
loan as well. That was a four point six million
dollar sale for that particular piece of merchandise. But it's
something that they're seeing a big boom in that this
(07:32):
was area of the market.
Speaker 1 (07:34):
Yeah, absolutely, look for more point.
Speaker 2 (07:35):
Eight million dollars, I should say, notup four point six Yeah,
very important to know the value of the dress in twenty.
Speaker 1 (07:39):
Sixteen, absolutely yes, And also I mean obviously it was
hugely valuable as well to Kim Kardashian, given that it
just the pictures went absolutely Ever, look, the whole idea
is and we often talk about alternative investments art and
wine and so on, but apparently memorabilia is now having
its moment, and Deloitte's Art and Finance report showing age
(08:01):
has been the growth driver actually for this type of
luxury collectible. But it's really a very particular type of collectible.
You know, it's really got to have like a big
name attached, you know, John Lennon's guitar and things like that.
Speaker 2 (08:14):
Yeah, I mean it's the star power that essentially adds
the value to this, but it also is a bet
on the future value of that celebrity, whether or not
something that they touched ten twenty thirty years ago is
still going to be worth something. It's a very risky
investment from that point of view.
Speaker 1 (08:28):
Sure, yeah it is, and I mean we were having
a chat about this earlier. Look, I think it's also
to do with people's memory. You know, when that memory
is significant, and then you get the cash and it's
your memory and you want to buy it. Then that's
when perhaps the MEMORYIDIA goes up.
Speaker 2 (08:42):
And what happens if someone gets to use internet parliamce
canceled for something later on? Just the value of that investment, Plumb,
I see. Anyway, that's the things that I worry about.
Speaker 1 (08:51):
Okay, let's get some more details now. In the latest
round of Chinese economic data, which showed slowing growth in
retail sales but a pickup in factory product auction, Big
News edits a Jill d System. It's just now for more, Hi, Jill,
good morning. What do these numbers tell us then about
the state of the Chinese economy? Really was quite a
big data.
Speaker 10 (09:08):
Dump, Mourning, Yes, I think that what it's telling us
is that this is very much a two track recovery,
and we are seeing a pretty substantial imbalance between supply
and demand. As you said, on the one side, you're
looking at those industrial output figures growing six point seven
percent in April from a year earlier. That's better than
a lot of economists were expected and actually attracts pretty
(09:28):
well with some of the recent data we've seen out
of the manufacturing sector, including some pretty solid export growth
of you know, showing improvement for April. So all of that,
I think, you know, indicates that the manufacturing side of
the equation is doing pretty well, the supply side of
the equation, but then you look at the demand side,
and that's really where a lot of these issues are
still continuing to persist. I mean, those consumer sales figures,
(09:51):
I think it was somewhere around two point three percent
expansion in April. That was pretty significantly lower than what
a lot of economists were expecting. That also comes on
the heels of some pretty anemic consumer inflation data that
we just got recently. So all of that's telling us
that there's still these issues within domestic demand that are
really weighing on the economy and sort of threatening growth
(10:13):
for the year. And I think what that's all pointing
to is that there's still a lot of issues within
the property sector, in particular in China that are really
really weighing on demand and sentiments.
Speaker 2 (10:23):
Jill, we got this data as China also launched the
first of its special bond sales. What did that tell
us about in vaster confidence in the Chinese economy.
Speaker 10 (10:32):
Yeah, so, actually, I think the issuance of the special
sovereign bonds was pretty solid today. So they started with
a thirty year auction it to redemand of almost four
times the amount on offer. Of course, the sale of
these ultralong special sovereign bonds are going to continue throughout
the rest of the year, so this just marks a
portion of that. But I think that's some you know,
(10:53):
you know, obviously some fairly significant news for how this
form of stimulus is going to take place. I remember
when this was announced back the beginning of March. You know,
there wasn't a massive market reaction, just the fact that
you know, these were going to be issued, but it
does indicate that the government cares to a certain extent
about building up some stimulus. This is the kind of
thing that's usually used for like infrastructure investments, so sort
(11:16):
of spurring activity that way. But we'll see how, you know,
the rest of that carries throughout the year. But a
pretty decent start so far.
Speaker 2 (11:22):
Let's turn to another story that we're looking at this morning.
European companies and governments are banking on green hydrogen to
replace fossil fuels, but the dream may have to be
scaled back as hydrogen is much more expensive and there's
still no proven method yet to safely store, transport and
burn it. The danger is if Europe waits too long
(11:42):
for the so called green gas to materialize, it could
be hooked on fossil fuels for longer. This is something
that our energy transition reporter Petrosga has been reporting on
and she joined us from Berlin now for more. Petro
good morning. Is hydrogen being hyped too much?
Speaker 11 (11:56):
Yes, clearly. I mean it is seen as a great
alternative for natural which is used in homes and power
plants everywhere. So it's a very easy solution just to
swap one gas with the other. The problem is that
hydrogen has only why the time you're producing hydrogen, you're
losing seventy percent of the efficiency, and of course it's
much more expensive.
Speaker 1 (12:17):
So what's the risk if the bet on green hydrogen
doesn't materialize and there is a big bet in Europe
on it isn't there.
Speaker 11 (12:23):
It's exactly that we will just delay the transition that
we can already make, like for example, installing heat pumps
or using the renewable energy that's already there from a
solar wind and other sources, and waiting on something that
still hasn't materialized yet. The IEA has done a research
(12:44):
last year that only four percent of the projects announced
on hydrogen have actually reached a final investment decision, So
there's a huge gap between the announcements and the actual
projects on the ground.
Speaker 2 (12:57):
Talk to us about of the German government is thinking
about that. They're looking at building gas power plants that
could then later be converted to hydrogen.
Speaker 11 (13:04):
That's a huge trial because Germany, as you know, has
switched off its last nuclear power plants last year. It
also wants to fade out coal, but you need something
when wind and solar are not available, especially in the winters.
So they're backing on these hydrogen ready new gas power
plants to produce that energy and eventually switch to full
(13:27):
hydrogen by the end of the twenty thirties. And that
means actually building new fossil fuel infrastructure in the next years.
Yet there's not yet any government scheme available. We don't
know when is this coming. They want to build ten
gigawatts of capacity, which is more than twenty large power plants.
There's one such utility in place which we visited in
(13:51):
East Germany's Leipzig. They have the turbine that with a
few tweaks can actually run one hundred percent hydrogen, although
there has never been a test yet. They want to
do that first test in twenty twenty six. Yet they
don't have a connection to the hydrogen grid which is
still on the drawing board in Germany. They don't have
actualizers on site, so it has to be tracked. And
(14:14):
then the question is how safe is that and how
especially economic economically viable. Even the utility did not answer
these questions when we went there.
Speaker 1 (14:27):
Yeah, and that sounds like a long list of issues.
Here in the UK, there was also a proposal to
try to get people in towns and cities. Redcar, for example,
had a pilot scheme around using hydrogen in homes. We
saw a lot of protests in the UK and the
(14:47):
end that didn't happen. What did you take away from that?
Speaker 11 (14:52):
Yeah, my colleague Raga Morrison went to the town where
Northern Gas Networks tried to basically replace natural gas one
hundred percent hydrogen and people were really scared because suddenly
on stoves and in the heating boilers, which some of
them also had to be replaced. You're having a gas
(15:12):
where you don't know is it combustible. They have to
put even fans to make sure there's no danger in
the house. People also weren't told about the pricing of hydrogen.
If they have to pay for a fuel that's now
way more expensive than natural gas, of course that will
be dramatic for small households. So eventually, after these protests,
(15:38):
the test was called off.
Speaker 2 (15:40):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (15:46):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (15:52):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (15:58):
Our flagship New York State is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 2 (16:07):
I'm Stephen Carol. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe.
This is the Bloomberg Daybak podcast, available every morning on Apples,
Spotify or whatever you listen. It's Friday, the seventeenth of
May here in London. I'm Caroline Hepka and.
Speaker 2 (00:11):
I'm Stephen Carroll. Coming up today, Chinese consumption slows as
Beijing looks at ways to revive the country's battered property sector.
Speaker 1 (00:20):
FED officials suggests interest rates should stay higher for longer,
as Jamie Diamond warns of inflation risks.
Speaker 2 (00:27):
Plus, governments and companies want green hydrogen to play a
big role in fueling Europe. But what if they're wrong.
We have a special report.
Speaker 1 (00:35):
Let's start with a roundup of our top stories.
Speaker 2 (00:37):
Chinese retail sales grew by two point three percent in April,
the slowest pace since twenty twenty two. At the same time,
industrier production in the country rose faster than had been expected.
Robin Ching, chief China economist at morganst Stanley, says the
numbers highlight the mixed recovery.
Speaker 3 (00:54):
Hi flavely due to the strength in exports and the
manufacturing for production thy the but the domestic consumption side
is very weak. Property and the retail sales they both
missed expectations. So I think a growth is stabilizing, but
that they're unbalanced the pace.
Speaker 2 (01:11):
Morgan Stanley's Robin Jing speaking their present Choosing Things government
has signaled that more economic help is covering is coming now.
Speaker 1 (01:20):
Staying with China, where the government is planning to speak
to key officials about helping the country's declining property sector,
Bloomberg has learned that financial regulators, local governments, and housing
officials will join a Chinese cabinet meeting today to discuss
the matter, including a proposal to clear excess housing inventory.
A report suggests authorities will announce new policy measures to
(01:42):
tackle the real estate crisis. Winnie Wu China Equity Strates
is that Bank of America Security says the government's help
is needed for.
Speaker 4 (01:50):
The demand side. The key is to make property desirable
again because for the past few years, you know, with
the properties for leaving, not for speculation, home price has
been falling and people are not going to buy a
depreciating asset, right So the key is to change the
expectation to make people have the confidence on property price
that is going to stabilize or even have room for
(02:12):
long term appreciation. Now you know that probably need a
strong momentum in terms of a package of policies.
Speaker 1 (02:19):
Bank of America's Winnie Wu speaking there, the news comes
as defaulted Chinese builds a country guards and begins a
major legal battle with a creditor seeking the developer's liquidation. Today,
a Bloomberg gauge of Chinese real estate stocks rose as
much as seven percent in early morning trading, following an
eleven percent gain on Thursday.
Speaker 2 (02:40):
China's president Chi Jinping and Russian leader of Vladimir Putin
have pledged to intensify cooperation against what they see as
US containment. Putin is in Beijing for a state visit,
and in a joint declaration, the two leaders called Washington's
approach destructive and hostile. But JP Morgan CEO Jamie Diamond
says that despite growing policy tensions, the US should not
(03:02):
turn away from China.
Speaker 5 (03:03):
I think it's the right thing for America to fully
and deeply engaged with China, you know, competitively. You know
every nation is going to do it's in their own interest,
national security, social America. We should define that frillium properly.
If it's unfair trade, you know, negotiate that or do
whatever you need to do, but the engagement is the
right theyre going to do.
Speaker 2 (03:23):
Jamie Diamond made the comments and an exclusive interview with
Bloomberg at the bank's Global Markets conference in Paris. The
CEO of the Wall Street Giant also told us he's
still more worried about inflation than markets appear to be well.
Speaker 1 (03:37):
Jamie Darmond's warning that significant price pressures continue to influence
the US economy comes as a slew of FED policymakers
repeated your own powers higher for longer message on interest rates.
Speaking separately, the Cleveland FED President Lorettamesta, the New York
FED President John Williams, and Richmond FED President Thomas Barkin
(03:57):
have all been arguing that it may now take longer
for inflation to reach the bank's two percent target. Now
Here is Loretemester.
Speaker 6 (04:06):
Incoming economic information indicates that it's going to take longer
to gain that confidence, So holding our restrictive stance for
longer is prudent at this point as we gain clarity
about the path of inflation.
Speaker 1 (04:19):
Mester, who votes on policy decisions this year, says that
it's too soon to say that progress on inflation has stalled.
The comments come after the data released on Wednesday showed
a measure of underlying US inflation cooled in April for
the first time in six months.
Speaker 2 (04:35):
Ping Ann is weighing options that would allow it to
reduce its thirteen billion dollar steak and HSBC. Bloomberg has
learned that the Chinese insurance giant wants to lock in
some profits from its eight percent stake in Europe's largest lender,
ping An. Has An has had a contentious relationship with
HSBC in recent years, as it campaigned for the bank
to embark on a series of reforms, including spinning off
(04:58):
its Asian arm.
Speaker 1 (05:00):
Well to the UK, where Chancellor Jeremy Hunt will pledge
to reduce taxes if his party wins the next election.
Hunts follows major both major party leaders setting out their
agendas for a general election earlier this week. Bloomberg's James
Wilcock has more.
Speaker 7 (05:16):
Jeremy Hunt knows the Conservative Party has a problem. His
main rivals in labor poll better on the economy, so
the Chancellor wants to stress how the government have handled
a pandemic and point to tax cuts that would come
if his party were re elected.
Speaker 8 (05:31):
We want to bring down the tax burd and we
want to bring down over time when it is affordable
and responsible. We want to bring down employees' national insurance
to zero. That is a very clear aspiration.
Speaker 7 (05:45):
That was Jeremy Hunt last week. But with Labour more
than twenty points ahead in the polls and keis Starmer
making stabilizing the economy his first job, the question many,
even in Hunt's own party, are asking is can the
public be one over? In London James Wilcock inn Berg Radier.
Speaker 2 (06:03):
The world's super rich club, now has fifteen members of
fourteen's over one hundred billion dollars, the most unrecords. The
story from Bloomberg's Charlie Pallace.
Speaker 9 (06:12):
They are riding the waves of artificial intelligence, luxury goods,
and geopolitical shifts. According to the Bloomberg Billionaires Index, the
combined net worth of these people is up thirteen percent
this year to two point two trillion dollars, beating the
pace of inflation and the broader stock market. Between them,
(06:33):
they hold nearly a quarter of the wealth of the
world's five hundred richest people in New York. Charlie Pellett,
Bloomberg Radio.
Speaker 1 (06:41):
And those are a few of our top stories for
you this morning. I think I'm going to have to
get used of saying the word Centi billionaire.
Speaker 2 (06:47):
At the moment, we'll digainst that Chinese economic data and
discuss why Europe's pushed to harness hydrogen as a fuel
source might be in trouble. Put another story that caught
ARI this morning about the value of celebrity memory Rebelia.
It's now so big that there's an auction house that
specializes in this. It's called Julian's and it's opening its
first office in Asia to try and cater to demand there.
(07:09):
So they were notably involved in the sale of things
like Marilyn Monroe's Happy Birthday Mister President dress. They were
involved in getting it sold to Ripley's believe it or not.
Kim Kardashian also wore it to the met Ball in
twenty twenty two, and they were involved in orchestrating that
loan as well. That was a four point six million
dollar sale for that particular piece of merchandise. But it's
something that they're seeing a big boom in that this
(07:32):
was area of the market.
Speaker 1 (07:34):
Yeah, absolutely, look for more point.
Speaker 2 (07:35):
Eight million dollars, I should say, notup four point six Yeah,
very important to know the value of the dress in twenty.
Speaker 1 (07:39):
Sixteen, absolutely yes, And also I mean obviously it was
hugely valuable as well to Kim Kardashian, given that it
just the pictures went absolutely Ever, look, the whole idea
is and we often talk about alternative investments art and
wine and so on, but apparently memorabilia is now having
its moment, and Deloitte's Art and Finance report showing age
(08:01):
has been the growth driver actually for this type of
luxury collectible. But it's really a very particular type of collectible.
You know, it's really got to have like a big
name attached, you know, John Lennon's guitar and things like that.
Speaker 2 (08:14):
Yeah, I mean it's the star power that essentially adds
the value to this, but it also is a bet
on the future value of that celebrity, whether or not
something that they touched ten twenty thirty years ago is
still going to be worth something. It's a very risky
investment from that point of view.
Speaker 1 (08:28):
Sure, yeah it is, and I mean we were having
a chat about this earlier. Look, I think it's also
to do with people's memory. You know, when that memory
is significant, and then you get the cash and it's
your memory and you want to buy it. Then that's
when perhaps the MEMORYIDIA goes up.
Speaker 2 (08:42):
And what happens if someone gets to use internet parliamce
canceled for something later on? Just the value of that investment, Plumb,
I see. Anyway, that's the things that I worry about.
Speaker 1 (08:51):
Okay, let's get some more details now. In the latest
round of Chinese economic data, which showed slowing growth in
retail sales but a pickup in factory product auction, Big
News edits a Jill d System. It's just now for more, Hi, Jill,
good morning. What do these numbers tell us then about
the state of the Chinese economy? Really was quite a
big data.
Speaker 10 (09:08):
Dump, Mourning, Yes, I think that what it's telling us
is that this is very much a two track recovery,
and we are seeing a pretty substantial imbalance between supply
and demand. As you said, on the one side, you're
looking at those industrial output figures growing six point seven
percent in April from a year earlier. That's better than
a lot of economists were expected and actually attracts pretty
(09:28):
well with some of the recent data we've seen out
of the manufacturing sector, including some pretty solid export growth
of you know, showing improvement for April. So all of that,
I think, you know, indicates that the manufacturing side of
the equation is doing pretty well, the supply side of
the equation, but then you look at the demand side,
and that's really where a lot of these issues are
still continuing to persist. I mean, those consumer sales figures,
(09:51):
I think it was somewhere around two point three percent
expansion in April. That was pretty significantly lower than what
a lot of economists were expecting. That also comes on
the heels of some pretty anemic consumer inflation data that
we just got recently. So all of that's telling us
that there's still these issues within domestic demand that are
really weighing on the economy and sort of threatening growth
(10:13):
for the year. And I think what that's all pointing
to is that there's still a lot of issues within
the property sector, in particular in China that are really
really weighing on demand and sentiments.
Speaker 2 (10:23):
Jill, we got this data as China also launched the
first of its special bond sales. What did that tell
us about in vaster confidence in the Chinese economy.
Speaker 10 (10:32):
Yeah, so, actually, I think the issuance of the special
sovereign bonds was pretty solid today. So they started with
a thirty year auction it to redemand of almost four
times the amount on offer. Of course, the sale of
these ultralong special sovereign bonds are going to continue throughout
the rest of the year, so this just marks a
portion of that. But I think that's some you know,
(10:53):
you know, obviously some fairly significant news for how this
form of stimulus is going to take place. I remember
when this was announced back the beginning of March. You know,
there wasn't a massive market reaction, just the fact that
you know, these were going to be issued, but it
does indicate that the government cares to a certain extent
about building up some stimulus. This is the kind of
thing that's usually used for like infrastructure investments, so sort
(11:16):
of spurring activity that way. But we'll see how, you know,
the rest of that carries throughout the year. But a
pretty decent start so far.
Speaker 2 (11:22):
Let's turn to another story that we're looking at this morning.
European companies and governments are banking on green hydrogen to
replace fossil fuels, but the dream may have to be
scaled back as hydrogen is much more expensive and there's
still no proven method yet to safely store, transport and
burn it. The danger is if Europe waits too long
(11:42):
for the so called green gas to materialize, it could
be hooked on fossil fuels for longer. This is something
that our energy transition reporter Petrosga has been reporting on
and she joined us from Berlin now for more. Petro
good morning. Is hydrogen being hyped too much?
Speaker 11 (11:56):
Yes, clearly. I mean it is seen as a great
alternative for natural which is used in homes and power
plants everywhere. So it's a very easy solution just to
swap one gas with the other. The problem is that
hydrogen has only why the time you're producing hydrogen, you're
losing seventy percent of the efficiency, and of course it's
much more expensive.
Speaker 1 (12:17):
So what's the risk if the bet on green hydrogen
doesn't materialize and there is a big bet in Europe
on it isn't there.
Speaker 11 (12:23):
It's exactly that we will just delay the transition that
we can already make, like for example, installing heat pumps
or using the renewable energy that's already there from a
solar wind and other sources, and waiting on something that
still hasn't materialized yet. The IEA has done a research
(12:44):
last year that only four percent of the projects announced
on hydrogen have actually reached a final investment decision, So
there's a huge gap between the announcements and the actual
projects on the ground.
Speaker 2 (12:57):
Talk to us about of the German government is thinking
about that. They're looking at building gas power plants that
could then later be converted to hydrogen.
Speaker 11 (13:04):
That's a huge trial because Germany, as you know, has
switched off its last nuclear power plants last year. It
also wants to fade out coal, but you need something
when wind and solar are not available, especially in the winters.
So they're backing on these hydrogen ready new gas power
plants to produce that energy and eventually switch to full
(13:27):
hydrogen by the end of the twenty thirties. And that
means actually building new fossil fuel infrastructure in the next years.
Yet there's not yet any government scheme available. We don't
know when is this coming. They want to build ten
gigawatts of capacity, which is more than twenty large power plants.
There's one such utility in place which we visited in
(13:51):
East Germany's Leipzig. They have the turbine that with a
few tweaks can actually run one hundred percent hydrogen, although
there has never been a test yet. They want to
do that first test in twenty twenty six. Yet they
don't have a connection to the hydrogen grid which is
still on the drawing board in Germany. They don't have
actualizers on site, so it has to be tracked. And
(14:14):
then the question is how safe is that and how
especially economic economically viable. Even the utility did not answer
these questions when we went there.
Speaker 1 (14:27):
Yeah, and that sounds like a long list of issues.
Here in the UK, there was also a proposal to
try to get people in towns and cities. Redcar, for example,
had a pilot scheme around using hydrogen in homes. We
saw a lot of protests in the UK and the
(14:47):
end that didn't happen. What did you take away from that?
Speaker 11 (14:52):
Yeah, my colleague Raga Morrison went to the town where
Northern Gas Networks tried to basically replace natural gas one
hundred percent hydrogen and people were really scared because suddenly
on stoves and in the heating boilers, which some of
them also had to be replaced. You're having a gas
(15:12):
where you don't know is it combustible. They have to
put even fans to make sure there's no danger in
the house. People also weren't told about the pricing of hydrogen.
If they have to pay for a fuel that's now
way more expensive than natural gas, of course that will
be dramatic for small households. So eventually, after these protests,
(15:38):
the test was called off.
Speaker 2 (15:40):
This is Bloomberg Daybreak Europe, your morning brief on the
stories making news from London to Wall Street and beyond.
Speaker 1 (15:46):
Look for us on your podcast feed every morning, on Apple, Spotify,
and anywhere else you get your podcasts.
Speaker 2 (15:52):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 1 (15:58):
Our flagship New York State is also available on your
Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty.
I'm Caroline Hepka and.
Speaker 2 (16:07):
I'm Stephen Carol. Join us again tomorrow morning for all
the news you need to start your day right here
on Bloomberg Daybreak Europe.
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