September 8, 2025 • 19 mins
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Prime Minister Francois Bayrou’s government will likely fall Monday, a victim of his push to chip away at France’s massive debt load.
(2) Japanese Prime Minister Shigeru Ishiba said he’ll step down following weeks of calls for his departure in the aftermath of a second national election setback, setting in motion a leadership race that threatens to unnerve investors.
(3) The immigration raid on a Georgia EV battery plant run by two South Korean firms has rattled Seoul, coming less than two weeks after President Lee Jae Myung’s White House meeting with Donald Trump where Korean companies pledged to invest hundreds of billions in the US.
(4) OPEC+ is signaling it has the confidence to push a bold oil market strategy a little bit further.
(5) Wages for new hires in the UK rose at their weakest pace in over four years, a sign that a cooling labor market is weighing on inflationary pressures, according to a survey monitored by the Bank of England.
(6) Walkouts by London Underground staff have begun, forcing several main lines on the network to completely or partially shut down on Sunday ahead of the start of the work week.
Podcast Conversation: Consumer Product Scents Are Getting Stronger: Essay
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is the.
Speaker 3 (00:10):
Bloombag Day Baker podcast. Good morning, It's Monday, the eighth
of September. I'm Caroline Hepga in London and.
Speaker 2 (00:15):
I'm steping Caroline Paris, where the French Prime Minister looks
likely to lose his job and collapse the government in
a crunch confidence vote with major political and economic repercussions.
Speaker 3 (00:26):
And in other news, the yen drops as Japan's Ishaba
announces he will step down, paving the way for a
new leader. Plus, HSBC's biggest shakeup in a decade has
raised the stakes for CEO George L. Henri. Reassess how
he's doing one year into the top job at Europe's
biggest bank. Let's start with a roundup of our top stories.
(00:49):
France's government is expected to collapse today, with Prime Minister
France Fois Bayu expected to lose a confidence vote in parliament.
Beau called the votes in a bid to pressure lawmakers
into backing his budget plan, which includes spending carts and
tax hikes aimed at bringing the country's ballooning debt under control.
(01:09):
France's fiscal deficit is already the widest in the euro
Area and is on calls to grow further, with the
cost of servicing it set to hit seventy five billion
euros next year. Now here's what Prime Minister fast Wid
Bayou said on French TV Danteur Luviv.
Speaker 4 (01:28):
We are experiencing a situation that threatens the very future
of the country, and everyone is whistling as if it
doesn't exist. Everyone is looking the other way. Everyone is
using the answers we could have provided to gain electoral advantage.
Speaker 3 (01:46):
Franst wi Beaerus speaking there now. President Emmanuel Macon faces
limited options if his government falls. He could name a
new prime minister or call fresh elections for the National Assembly,
but neither of is likely to improve the country's fiscal
outlook in the near future, and further political turmoil will
put increased pressure on French government bond yields. Now Ishiba
(02:12):
has announced that he plans to step down as Japan's
Prime minister. The move follows calls for his resignation after
back to back election losses that cost his LDP party
its parliamentary majority. Japan's currency has already slid half of
one percent against the US dollar on concerns political instability
will reduce the prospect of the Bank of Japan raising
(02:34):
interest rates. Prime Minister Shigeo Ishuba announced his decision at
a news conference on Sunday.
Speaker 5 (02:40):
I have been considering that it is this administration's task
to set a course for negotiation with the United States
regarding the terrorfs, which one can refer to as a
national crisis. Last Friday, the Memorandum of Understanding on investments
was signed and the US President's executive order was issued.
(03:02):
With the other day's report from Minister Akasawa, I felt
I have reached a milestone.
Speaker 3 (03:10):
Prime Minister Ishiba says that he will stay on as
Prime Minister until his success is named. However, with no
clear options, his departure is likely to fuel uncertainty among
investors over the coming weeks until a new leader is chosen.
An immigration raid on an electric vehicle battery plant in
(03:32):
Georgia in the United States run by two South Korean
companies has rattled officials in Seoul. It comes less than
two weeks after South Korean President Lee J Mung met
with President Donald Trump in the White House and Korean
firms pledged to invest hundreds of billions of dollars in
the US. Korean officials worked over the weekend to secure
(03:54):
the release of three hundred of its citizens detained by
US Immigration and Customs in enforcement at a construction site
for Hyundai Motor and LG Energy Solutions, their joint venture.
President Trump spoke to reporters about the incident outside Air
Force One.
Speaker 6 (04:14):
We heard about it yesterday and the same thing in time.
ICE was doing right because they were here illegally. But
we do have to work something out where we bring
in experts so that.
Speaker 7 (04:24):
Our people can be trained so that they can do
it themselves.
Speaker 6 (04:27):
Does that make sense right, Because it's really the relationship
with Korea RA. We have a great relationship with South Korea.
Speaker 3 (04:35):
President Trump speaking there as the raid has put South
Korean President Lee's government under pressure at home and threatens
to become a major diplomatic issue with one of Washington's
closest allies. APEC Plus has backed a further rise in
supply quotas were starting one hundred and thirty seven thousand
(04:56):
bars a day of output from October and defying Warner
traders had initially expected the organization to pause production after
firms including JP Morgan and Goldman Sachs advice that continuing
with supply increases risks deepening a slump in prices. Binberg's
Asia Energy team leader Stephen Stepchinsky says the move does
(05:16):
exhibit still a degree of caution.
Speaker 8 (05:19):
There was a surprise aspect of it, but there was
no awe. There was not an expectation that they would
add the supply. Yes, the market was hedging their bets
with the prices falling last week, and you did see that.
But I think in the previous increases that they've had
where they surprised the market, there was that are there
was more supply that they were adding. They're just adding
about one hundred and thirty thousand barrels a day, and
(05:41):
that's compared to it was about half of what we
were seeing in the previous months when they're adding that.
Speaker 3 (05:45):
Trane Blomberg, Stephen Stepchinski speaking their bent Koud futures already
fell three point nine percent last week, amin signs that
an increase was coming, something that made limit price downside.
According to traders who spoke to Bloomberg, pay for new
workers is growing at its lowest pace since the pandemic.
According to new data here in the UK. The poll
(06:08):
by the Recruitment and Employment Confederation and KPMG found that
starting pay growth for August calls to levels last scene
in early twenty twenty one. The numbers will make uncomfortable
reading for the Prime Minister Kiss Starmer. He spent his
weekend completing a wide ranging government reshuffle after his deputy leader,
Angela Rayner resigned over her mishandling of her tax affairs defense.
(06:33):
Actually John Healey, whose position remains unchanged, says that the
new cabinet will now focus on delivery.
Speaker 1 (06:41):
What Kiss Starmer has done has put a new team
in place and said to us, all you've got to
go up a gear and you've got to go up
a gear to demonstrate the government can deliver for people.
And what that means is that we've got to start
to show that we can help change people's lives.
Speaker 3 (06:56):
John Healey, speaking there as the Labour Party continues to
languish in the pole, with the anti Immigration Reform UK Party,
which won just five seats in last year's general election
to Labour's four hundred and eleven, consistently topping national surveys
since April, and a major strike has begun on the
London Underground. It will force several of the main lines
(07:19):
on the network to shut down until the end of
the working week. Members of the RMT union are striking
overpay and pushing for a four day work week, a
demand which the Transport for London authorities say it cannot
afford to meet. The Center for Economics and Business Research
estimates that the walkouts could cost the UK economy about
(07:40):
two hundred and thirty million pounds. So those are a
few of our top stories this morning. I'm sure that
people in London will be noting the five days effectively
of London Underground travel, stress and chaos. Yes, took me
about that thirty two hour working week that the union
would like to see. Of course, they also want a
(08:02):
three point four percent pay increase, so that's going to
affect everybody this morning on their commute in the capital.
Let's think about markets though, so a lot of political
turmoil in Japan in France expected today. Japanese yen is
week a half of one percent this morning. Bloembog dollar
spot index is stronger right now looking at futures then
(08:23):
for the start of European trading, actually reasonably positive. We're
up by four tenths of one percent s and P
five hundred emailis gaining barely a tenth four point one
percent for US ten year yields. Friendshields, of course, will
begin trading at three P forty four on that ten
year yield. Oil prices actually surging despite the moves by
(08:43):
OPEC plus over the weekend. Breakthrough futures up by one
point two percent this morning. So those are the markets.
In a moment, we're going to bring you more on
the countdown to that crunch confidence vote in France with
our own Stephen Cowell Plus will assess how HSBC's CEO
is doing a year into the job. But before that,
a story that Komi this morning, that's just such a
(09:05):
beautiful read. What is in a scent? A lot? If
you read Madison Derbyshire's beautiful essay, It begins with the
disappointment about her washing up liquid, changing formula, changing changing scent,
and it weaves its way to explaining why our sense
of smell is thought to be the very first sense
(09:27):
that we developed. And she explains, which I think is
so interesting, why it raises memories and emotions so swiftly
when you smell something is because it grew. Our sense
of smell grew from apparently the same brain tissue that
grew when we emerge from the primordial ooze. So she
(09:48):
talks about the business of fragrances and flavors, and apparently, yes,
fragrances are getting stronger, particularly in the US but everywhere.
It's a really lovely piece. I'll put a link to
it in our show notes from Bloomberg's Madison Derbyshire. Now
let's get to Paris. St. Stephen cal is there for
(10:08):
us this morning, live in Paris, as we are counting
down to this confidence vote later today which looks likely
to see the French government collapse. Good morning, Stephen, and
really lovely to have you in Paris. Of course you're
usually in Brussels, but there for this important moment. Is
there any hope that Frost weare Bayru's government is actually
going to win this vote?
Speaker 2 (10:29):
If there is, it's pretty hard to find that the
papers today are already writing the end of the Bayru premiership.
And it's really been clear since this vote was called
two weeks ago that there really was no hope for
Francois Bieru to be able to win this confidence vote
because the opposition parties from the far left of the
fire right said almost immediately that they would vote against
(10:50):
the government.
Speaker 7 (10:51):
This is a simple majority vote.
Speaker 2 (10:53):
Substensions don't really help that much, and looking at the
parliamentary math, you have a National Assembly divided roughly in
three between the left wing, the ste interest on the
right wing blocks. It's very difficult to see how Bairu
could survive, and impossible if you listen to what the
party leaders have said about how they're going to vote.
No sense he called this vote Frontalberro has met all
the political parties.
Speaker 7 (11:13):
He's been on.
Speaker 2 (11:14):
Every possible TV, radio and online media in the past
fortnight trying to make his case for his budget, because
this all comes down to He announced his budget plan
back in July of this year, and he's been talking
about the scale of the country's death problem, the need
to bring down the deficit, and the urgency with which
that needs to be done. The efforts don't seem to
(11:35):
really have done anything to win him new supporters. He
will have a last chance to appeal to lawmakers when
he begins the debate in the National Assembly later, but
it looks like France is already heading for its fifth
prime minister in just over three years.
Speaker 3 (11:48):
And this is perhaps a common problem, isn't it, For
when debted develops economies, nobody wants to make painful cuts
or see difficult tax increases. But what happens if this
French government fullpen.
Speaker 2 (12:01):
So if Beheru loses this vote this afternoon or this evening,
the government will resign immediately. It'll actually be the first
time in modern French history that a government will have
fallen on a confidence vote as opposed to a no
confidence vote which is what happened last December for Michelle Baugnier.
Speaker 7 (12:15):
And it then goes back to President Macron again.
Speaker 2 (12:17):
He has a choice to appoint a new prime minister
to try again where both Michelle Baugnier and france Hi
Beriou failed with this current parliamentary configuration. Or he has
the option to call fresh elections to the National Assembly.
That's something he couldn't do the last time around when
the government fell in December.
Speaker 7 (12:34):
Now he said he won't do that.
Speaker 2 (12:35):
So the speculation here in Paris is very much focused
on who he might choose to take over from Francois Birou.
Speaker 7 (12:40):
He could pick another name from.
Speaker 2 (12:42):
His own circle the Justice Minister General Doloman now as
one of the names being circulated who could fit that profile,
or if he wants to try and change the parliamentary match.
The center left Socialist Party, who are not part of
the current centre's coalition, have said they'd be willing to
lead a government if they could advance their own budget plan,
which involves less in terms of cuts, although still a
(13:03):
reduction of public spending, and it does include measures like
a wealth tax on fortunes of over one hundred million euros. Essentially,
the choice is Emmanuel Maccon's if this vote doesn't go
in favor of the government later he's already meeting the
President of the National Assembly this morning. He's been known
to surprise us in the past, so I wouldn't put
it pass and doing something a bit unexpected.
Speaker 3 (13:23):
Okay, what does it mean then for the French economy,
for the budget y challenges?
Speaker 2 (13:29):
Look, this is the crux of the matter. The French
state is spending too much versus what it's taking in.
Speaker 7 (13:32):
It's piling up debt.
Speaker 2 (13:33):
As Fanso Bayou, who's reminded us many times over the
past few weeks, at a rate of five thousand euros
per second. The budget plan that Baeru put forward, which
has been rejected by all the opposition parties, propose as
cuts of forty four billion euros to the deficit to
bring it down from the current five point four percent
to four point six percent next year. It's already the
widest in the Euro Area. Markets have essentially already priced
(13:56):
in the Bayu government falling. We've seen the spread between
French and German borrowing cars swidening to around eighty basis
points since the vote was called. France's thirty year bond
yield head of HIA since twenty eleven last week, the
Kakaran's been under performing, pressure on banks, homebuilders, domestically focused stocks.
The longer the uncertainty goes on, the worse this situation
is likely to get.
Speaker 7 (14:15):
There are a few very imminent deadlines.
Speaker 2 (14:17):
You've got ratings reviews in the coming week, including from
Fitch this Friday. Could they move to downgrade French government
debt That could make the situation worse, And the budget
process has to proceed no matter what. France has to
submit a budget to the European Commission by mid October,
which will give whoever will be prime minister about a month,
perhaps less than to formulate a plan.
Speaker 3 (14:38):
Well, it's all very nail biting.
Speaker 4 (14:40):
Stephen.
Speaker 3 (14:40):
Thank you so much for being with us then and
talking us through the stresses for France and this government
a vote of course later today, Thank you so much.
You're going to be with us throughout the day, of course,
taking us through everything that's happening in the politics in France.
Stephen Cowe their live in Paris, stay with us. More
(15:03):
from Bloomberg Daybaquobe coming up after this. Now, let's go
to one of our deep dive stories this morning. HSBC
CEO George L. Hendrie has spent his first year at
the bank in a massive shakeup. Thanks share price has surged,
but expenses have also soared and now there are some
doubts emerging. Joining us now to discuss this is Boomberg,
(15:24):
Senior Asia Finance correspondent and Brien Chowdry And Brian, thank
you so much. You've done this long story in depth
with a number of colleagues about George L.
Speaker 7 (15:33):
Hendrie.
Speaker 3 (15:33):
I mean, he's just about a year into this job.
What has l Hendri done in terms of shrinking refocusing
the business. The overhaul was quite unexpected.
Speaker 9 (15:45):
Yes, good morning.
Speaker 7 (15:45):
That's right.
Speaker 9 (15:46):
It's been around a year since he took over as CEO,
and you know, to a huge extent, many people viewed
him as the continuity chief because he's been at the
bank for over the twenty years and all these have
taken investors by surprise. So essentially, over the past twelve months,
(16:06):
like a man on a mission, the new CEO is
embarked in the biggest overhauled bank has seen in at
least a decade. So he's ripped up much of his
his inheritance. He first of all, reorganized the bank into
four new divisions. He shot some businesses his predecessors once
considered key to the lenders future, and essentially he stripped
(16:28):
out layers of middle management to streamline decision making. And
in that process he's cut hundreds of jobs, made a
lot of people unhappy. And then, most importantly, in January,
he basically upended life for the firm's investment bankers by
gutting the majority of the investment banking business in Europe
(16:48):
and the Americas, which again has caused a lot of
issues with morale amongst staff at the bank over the
past year.
Speaker 3 (16:56):
But then the share but I seem to welcome all
of this chair. There are some doubts emerging about the
future though, why that's right.
Speaker 9 (17:05):
So the shares have ridden a wave of investor confidence
in UK lenders, surging around forty four percent to record
since he became CEO in early September. However that rally
is you know, slowly losing momentum. Investors, professional sorry analysts,
they're sarring on HSBC stock, most betting they will barely
(17:28):
budge this year. So they've got a lot of challenges ahead.
One is, you know, there's quite a few. So first
of all, we reported last month that HSBC's cutting ties
with more than one thousand wealthy Middle East clients and
that's linked to its private bank amid a Swiss probe
into suspected money laundering. Then, as you say, they've got
(17:51):
rising expenses and that's linked to restructuring that was quite
large in the most recent results. And also it's got
this background in its markets of Hong Kong and mainland
China where it's battling a commercial real estate downturn in
the property and of course they've got you know, the
ongoing geopolitical uncertainty which is keeping the Bank on edge
(18:16):
of the posture.
Speaker 3 (18:18):
Absolutely, I'm in the ongoing US China trade war.
Speaker 7 (18:20):
Just briefly.
Speaker 3 (18:21):
The next big test replacing the chairman, Mark Tucker, Yes,
that is right.
Speaker 9 (18:27):
Is due to leave in the next few weeks, and
so far, you know, we've not least seen any sort
of public statement on who they're appointing, permanent or interim.
It's one of the reasons, maybe because you know, finding
a replacement for Mark Tucker may be difficult to find.
He actually oversaw four CEOs during his tenure at the bank,
(18:48):
including three appointed, and he's wielded the type of hands
on control that most non executive chairmans rarely assert. So investors,
I guess, are waiting with the interest's interest on who
the next person may be.
Speaker 2 (19:02):
Internal awards to This is Bloomberg Daybreak Europe, your morning
brief on the stories making news from London to Wall
Street and beyond.
Speaker 3 (19:10):
Look for us on your podcast feed every morning on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (19:16):
You can also listen live each morning on London DAB Radio,
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Speaker 3 (19:22):
Our flagship New York station is also available on your
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I'm Caroline Hepka, and.
Speaker 2 (19:31):
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
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:09):
This is the.
Speaker 3 (00:10):
Bloombag Day Baker podcast. Good morning, It's Monday, the eighth
of September. I'm Caroline Hepga in London and.
Speaker 2 (00:15):
I'm steping Caroline Paris, where the French Prime Minister looks
likely to lose his job and collapse the government in
a crunch confidence vote with major political and economic repercussions.
Speaker 3 (00:26):
And in other news, the yen drops as Japan's Ishaba
announces he will step down, paving the way for a
new leader. Plus, HSBC's biggest shakeup in a decade has
raised the stakes for CEO George L. Henri. Reassess how
he's doing one year into the top job at Europe's
biggest bank. Let's start with a roundup of our top stories.
(00:49):
France's government is expected to collapse today, with Prime Minister
France Fois Bayu expected to lose a confidence vote in parliament.
Beau called the votes in a bid to pressure lawmakers
into backing his budget plan, which includes spending carts and
tax hikes aimed at bringing the country's ballooning debt under control.
(01:09):
France's fiscal deficit is already the widest in the euro
Area and is on calls to grow further, with the
cost of servicing it set to hit seventy five billion
euros next year. Now here's what Prime Minister fast Wid
Bayou said on French TV Danteur Luviv.
Speaker 4 (01:28):
We are experiencing a situation that threatens the very future
of the country, and everyone is whistling as if it
doesn't exist. Everyone is looking the other way. Everyone is
using the answers we could have provided to gain electoral advantage.
Speaker 3 (01:46):
Franst wi Beaerus speaking there now. President Emmanuel Macon faces
limited options if his government falls. He could name a
new prime minister or call fresh elections for the National Assembly,
but neither of is likely to improve the country's fiscal
outlook in the near future, and further political turmoil will
put increased pressure on French government bond yields. Now Ishiba
(02:12):
has announced that he plans to step down as Japan's
Prime minister. The move follows calls for his resignation after
back to back election losses that cost his LDP party
its parliamentary majority. Japan's currency has already slid half of
one percent against the US dollar on concerns political instability
will reduce the prospect of the Bank of Japan raising
(02:34):
interest rates. Prime Minister Shigeo Ishuba announced his decision at
a news conference on Sunday.
Speaker 5 (02:40):
I have been considering that it is this administration's task
to set a course for negotiation with the United States
regarding the terrorfs, which one can refer to as a
national crisis. Last Friday, the Memorandum of Understanding on investments
was signed and the US President's executive order was issued.
(03:02):
With the other day's report from Minister Akasawa, I felt
I have reached a milestone.
Speaker 3 (03:10):
Prime Minister Ishiba says that he will stay on as
Prime Minister until his success is named. However, with no
clear options, his departure is likely to fuel uncertainty among
investors over the coming weeks until a new leader is chosen.
An immigration raid on an electric vehicle battery plant in
(03:32):
Georgia in the United States run by two South Korean
companies has rattled officials in Seoul. It comes less than
two weeks after South Korean President Lee J Mung met
with President Donald Trump in the White House and Korean
firms pledged to invest hundreds of billions of dollars in
the US. Korean officials worked over the weekend to secure
(03:54):
the release of three hundred of its citizens detained by
US Immigration and Customs in enforcement at a construction site
for Hyundai Motor and LG Energy Solutions, their joint venture.
President Trump spoke to reporters about the incident outside Air
Force One.
Speaker 6 (04:14):
We heard about it yesterday and the same thing in time.
ICE was doing right because they were here illegally. But
we do have to work something out where we bring
in experts so that.
Speaker 7 (04:24):
Our people can be trained so that they can do
it themselves.
Speaker 6 (04:27):
Does that make sense right, Because it's really the relationship
with Korea RA. We have a great relationship with South Korea.
Speaker 3 (04:35):
President Trump speaking there as the raid has put South
Korean President Lee's government under pressure at home and threatens
to become a major diplomatic issue with one of Washington's
closest allies. APEC Plus has backed a further rise in
supply quotas were starting one hundred and thirty seven thousand
(04:56):
bars a day of output from October and defying Warner
traders had initially expected the organization to pause production after
firms including JP Morgan and Goldman Sachs advice that continuing
with supply increases risks deepening a slump in prices. Binberg's
Asia Energy team leader Stephen Stepchinsky says the move does
(05:16):
exhibit still a degree of caution.
Speaker 8 (05:19):
There was a surprise aspect of it, but there was
no awe. There was not an expectation that they would
add the supply. Yes, the market was hedging their bets
with the prices falling last week, and you did see that.
But I think in the previous increases that they've had
where they surprised the market, there was that are there
was more supply that they were adding. They're just adding
about one hundred and thirty thousand barrels a day, and
(05:41):
that's compared to it was about half of what we
were seeing in the previous months when they're adding that.
Speaker 3 (05:45):
Trane Blomberg, Stephen Stepchinski speaking their bent Koud futures already
fell three point nine percent last week, amin signs that
an increase was coming, something that made limit price downside.
According to traders who spoke to Bloomberg, pay for new
workers is growing at its lowest pace since the pandemic.
According to new data here in the UK. The poll
(06:08):
by the Recruitment and Employment Confederation and KPMG found that
starting pay growth for August calls to levels last scene
in early twenty twenty one. The numbers will make uncomfortable
reading for the Prime Minister Kiss Starmer. He spent his
weekend completing a wide ranging government reshuffle after his deputy leader,
Angela Rayner resigned over her mishandling of her tax affairs defense.
(06:33):
Actually John Healey, whose position remains unchanged, says that the
new cabinet will now focus on delivery.
Speaker 1 (06:41):
What Kiss Starmer has done has put a new team
in place and said to us, all you've got to
go up a gear and you've got to go up
a gear to demonstrate the government can deliver for people.
And what that means is that we've got to start
to show that we can help change people's lives.
Speaker 3 (06:56):
John Healey, speaking there as the Labour Party continues to
languish in the pole, with the anti Immigration Reform UK Party,
which won just five seats in last year's general election
to Labour's four hundred and eleven, consistently topping national surveys
since April, and a major strike has begun on the
London Underground. It will force several of the main lines
(07:19):
on the network to shut down until the end of
the working week. Members of the RMT union are striking
overpay and pushing for a four day work week, a
demand which the Transport for London authorities say it cannot
afford to meet. The Center for Economics and Business Research
estimates that the walkouts could cost the UK economy about
(07:40):
two hundred and thirty million pounds. So those are a
few of our top stories this morning. I'm sure that
people in London will be noting the five days effectively
of London Underground travel, stress and chaos. Yes, took me
about that thirty two hour working week that the union
would like to see. Of course, they also want a
(08:02):
three point four percent pay increase, so that's going to
affect everybody this morning on their commute in the capital.
Let's think about markets though, so a lot of political
turmoil in Japan in France expected today. Japanese yen is
week a half of one percent this morning. Bloembog dollar
spot index is stronger right now looking at futures then
(08:23):
for the start of European trading, actually reasonably positive. We're
up by four tenths of one percent s and P
five hundred emailis gaining barely a tenth four point one
percent for US ten year yields. Friendshields, of course, will
begin trading at three P forty four on that ten
year yield. Oil prices actually surging despite the moves by
(08:43):
OPEC plus over the weekend. Breakthrough futures up by one
point two percent this morning. So those are the markets.
In a moment, we're going to bring you more on
the countdown to that crunch confidence vote in France with
our own Stephen Cowell Plus will assess how HSBC's CEO
is doing a year into the job. But before that,
a story that Komi this morning, that's just such a
(09:05):
beautiful read. What is in a scent? A lot? If
you read Madison Derbyshire's beautiful essay, It begins with the
disappointment about her washing up liquid, changing formula, changing changing scent,
and it weaves its way to explaining why our sense
of smell is thought to be the very first sense
(09:27):
that we developed. And she explains, which I think is
so interesting, why it raises memories and emotions so swiftly
when you smell something is because it grew. Our sense
of smell grew from apparently the same brain tissue that
grew when we emerge from the primordial ooze. So she
(09:48):
talks about the business of fragrances and flavors, and apparently, yes,
fragrances are getting stronger, particularly in the US but everywhere.
It's a really lovely piece. I'll put a link to
it in our show notes from Bloomberg's Madison Derbyshire. Now
let's get to Paris. St. Stephen cal is there for
(10:08):
us this morning, live in Paris, as we are counting
down to this confidence vote later today which looks likely
to see the French government collapse. Good morning, Stephen, and
really lovely to have you in Paris. Of course you're
usually in Brussels, but there for this important moment. Is
there any hope that Frost weare Bayru's government is actually
going to win this vote?
Speaker 2 (10:29):
If there is, it's pretty hard to find that the
papers today are already writing the end of the Bayru premiership.
And it's really been clear since this vote was called
two weeks ago that there really was no hope for
Francois Bieru to be able to win this confidence vote
because the opposition parties from the far left of the
fire right said almost immediately that they would vote against
(10:50):
the government.
Speaker 7 (10:51):
This is a simple majority vote.
Speaker 2 (10:53):
Substensions don't really help that much, and looking at the
parliamentary math, you have a National Assembly divided roughly in
three between the left wing, the ste interest on the
right wing blocks. It's very difficult to see how Bairu
could survive, and impossible if you listen to what the
party leaders have said about how they're going to vote.
No sense he called this vote Frontalberro has met all
the political parties.
Speaker 7 (11:13):
He's been on.
Speaker 2 (11:14):
Every possible TV, radio and online media in the past
fortnight trying to make his case for his budget, because
this all comes down to He announced his budget plan
back in July of this year, and he's been talking
about the scale of the country's death problem, the need
to bring down the deficit, and the urgency with which
that needs to be done. The efforts don't seem to
(11:35):
really have done anything to win him new supporters. He
will have a last chance to appeal to lawmakers when
he begins the debate in the National Assembly later, but
it looks like France is already heading for its fifth
prime minister in just over three years.
Speaker 3 (11:48):
And this is perhaps a common problem, isn't it, For
when debted develops economies, nobody wants to make painful cuts
or see difficult tax increases. But what happens if this
French government fullpen.
Speaker 2 (12:01):
So if Beheru loses this vote this afternoon or this evening,
the government will resign immediately. It'll actually be the first
time in modern French history that a government will have
fallen on a confidence vote as opposed to a no
confidence vote which is what happened last December for Michelle Baugnier.
Speaker 7 (12:15):
And it then goes back to President Macron again.
Speaker 2 (12:17):
He has a choice to appoint a new prime minister
to try again where both Michelle Baugnier and france Hi
Beriou failed with this current parliamentary configuration. Or he has
the option to call fresh elections to the National Assembly.
That's something he couldn't do the last time around when
the government fell in December.
Speaker 7 (12:34):
Now he said he won't do that.
Speaker 2 (12:35):
So the speculation here in Paris is very much focused
on who he might choose to take over from Francois Birou.
Speaker 7 (12:40):
He could pick another name from.
Speaker 2 (12:42):
His own circle the Justice Minister General Doloman now as
one of the names being circulated who could fit that profile,
or if he wants to try and change the parliamentary match.
The center left Socialist Party, who are not part of
the current centre's coalition, have said they'd be willing to
lead a government if they could advance their own budget plan,
which involves less in terms of cuts, although still a
(13:03):
reduction of public spending, and it does include measures like
a wealth tax on fortunes of over one hundred million euros. Essentially,
the choice is Emmanuel Maccon's if this vote doesn't go
in favor of the government later he's already meeting the
President of the National Assembly this morning. He's been known
to surprise us in the past, so I wouldn't put
it pass and doing something a bit unexpected.
Speaker 3 (13:23):
Okay, what does it mean then for the French economy,
for the budget y challenges?
Speaker 2 (13:29):
Look, this is the crux of the matter. The French
state is spending too much versus what it's taking in.
Speaker 7 (13:32):
It's piling up debt.
Speaker 2 (13:33):
As Fanso Bayou, who's reminded us many times over the
past few weeks, at a rate of five thousand euros
per second. The budget plan that Baeru put forward, which
has been rejected by all the opposition parties, propose as
cuts of forty four billion euros to the deficit to
bring it down from the current five point four percent
to four point six percent next year. It's already the
widest in the Euro Area. Markets have essentially already priced
(13:56):
in the Bayu government falling. We've seen the spread between
French and German borrowing cars swidening to around eighty basis
points since the vote was called. France's thirty year bond
yield head of HIA since twenty eleven last week, the
Kakaran's been under performing, pressure on banks, homebuilders, domestically focused stocks.
The longer the uncertainty goes on, the worse this situation
is likely to get.
Speaker 7 (14:15):
There are a few very imminent deadlines.
Speaker 2 (14:17):
You've got ratings reviews in the coming week, including from
Fitch this Friday. Could they move to downgrade French government
debt That could make the situation worse, And the budget
process has to proceed no matter what. France has to
submit a budget to the European Commission by mid October,
which will give whoever will be prime minister about a month,
perhaps less than to formulate a plan.
Speaker 3 (14:38):
Well, it's all very nail biting.
Speaker 4 (14:40):
Stephen.
Speaker 3 (14:40):
Thank you so much for being with us then and
talking us through the stresses for France and this government
a vote of course later today, Thank you so much.
You're going to be with us throughout the day, of course,
taking us through everything that's happening in the politics in France.
Stephen Cowe their live in Paris, stay with us. More
(15:03):
from Bloomberg Daybaquobe coming up after this. Now, let's go
to one of our deep dive stories this morning. HSBC
CEO George L. Hendrie has spent his first year at
the bank in a massive shakeup. Thanks share price has surged,
but expenses have also soared and now there are some
doubts emerging. Joining us now to discuss this is Boomberg,
(15:24):
Senior Asia Finance correspondent and Brien Chowdry And Brian, thank
you so much. You've done this long story in depth
with a number of colleagues about George L.
Speaker 7 (15:33):
Hendrie.
Speaker 3 (15:33):
I mean, he's just about a year into this job.
What has l Hendri done in terms of shrinking refocusing
the business. The overhaul was quite unexpected.
Speaker 9 (15:45):
Yes, good morning.
Speaker 7 (15:45):
That's right.
Speaker 9 (15:46):
It's been around a year since he took over as CEO,
and you know, to a huge extent, many people viewed
him as the continuity chief because he's been at the
bank for over the twenty years and all these have
taken investors by surprise. So essentially, over the past twelve months,
(16:06):
like a man on a mission, the new CEO is
embarked in the biggest overhauled bank has seen in at
least a decade. So he's ripped up much of his
his inheritance. He first of all, reorganized the bank into
four new divisions. He shot some businesses his predecessors once
considered key to the lenders future, and essentially he stripped
(16:28):
out layers of middle management to streamline decision making. And
in that process he's cut hundreds of jobs, made a
lot of people unhappy. And then, most importantly, in January,
he basically upended life for the firm's investment bankers by
gutting the majority of the investment banking business in Europe
(16:48):
and the Americas, which again has caused a lot of
issues with morale amongst staff at the bank over the
past year.
Speaker 3 (16:56):
But then the share but I seem to welcome all
of this chair. There are some doubts emerging about the
future though, why that's right.
Speaker 9 (17:05):
So the shares have ridden a wave of investor confidence
in UK lenders, surging around forty four percent to record
since he became CEO in early September. However that rally
is you know, slowly losing momentum. Investors, professional sorry analysts,
they're sarring on HSBC stock, most betting they will barely
(17:28):
budge this year. So they've got a lot of challenges ahead.
One is, you know, there's quite a few. So first
of all, we reported last month that HSBC's cutting ties
with more than one thousand wealthy Middle East clients and
that's linked to its private bank amid a Swiss probe
into suspected money laundering. Then, as you say, they've got
(17:51):
rising expenses and that's linked to restructuring that was quite
large in the most recent results. And also it's got
this background in its markets of Hong Kong and mainland
China where it's battling a commercial real estate downturn in
the property and of course they've got you know, the
ongoing geopolitical uncertainty which is keeping the Bank on edge
(18:16):
of the posture.
Speaker 3 (18:18):
Absolutely, I'm in the ongoing US China trade war.
Speaker 7 (18:20):
Just briefly.
Speaker 3 (18:21):
The next big test replacing the chairman, Mark Tucker, Yes,
that is right.
Speaker 9 (18:27):
Is due to leave in the next few weeks, and
so far, you know, we've not least seen any sort
of public statement on who they're appointing, permanent or interim.
It's one of the reasons, maybe because you know, finding
a replacement for Mark Tucker may be difficult to find.
He actually oversaw four CEOs during his tenure at the bank,
(18:48):
including three appointed, and he's wielded the type of hands
on control that most non executive chairmans rarely assert. So investors,
I guess, are waiting with the interest's interest on who
the next person may be.
Speaker 2 (19:02):
Internal awards to This is Bloomberg Daybreak Europe, your morning
brief on the stories making news from London to Wall
Street and beyond.
Speaker 3 (19:10):
Look for us on your podcast feed every morning on Apple,
Spotify and anywhere else you get your podcasts.
Speaker 2 (19:16):
You can also listen live each morning on London DAB Radio,
the Bloomberg Business app, and Bloomberg dot Com.
Speaker 3 (19:22):
Our flagship New York station is also available on your
Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty.
I'm Caroline Hepka, and.
Speaker 2 (19:31):
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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