dani: good morning, this is "bloomberg daybreak: europe," these are the stories that set your agenda. not done hiking -- a trio of fed officials say more rate creases -- increases are needed for inflation.

china is preparing to boost economic stimulus. fed vice chair michael barr says major banks will need to set aside more money to cushion against losses. plus, turkey agrees to back sweden's nato membership, a breakthrough for the alliance, strengthening defenses amidst russia's war in ukraine. let's dive into these markets on this tuesday morning. risk assets getting a little boost, especially in asia. we will talk to charlotte about this in a moment. we are looking at the american future session trading higher after yesterday's higher ending session. we have some support from china but really what got is going yesterday in the fnt -- s&p 500 cash equity trading session is the data coming in, the new york fed when your expectation of inflation fell to the lowest level since 2021. typically that is an index and not just tracks cpi but sometimes leads it. you can see this rally really

got going in the second half of yesterday and continues into today. when it comes to treasuries, same thing. they got a boost from the new york fed data. let me show you the today chart on the 10 year for that. a run-up in 10 year yields and they have fallen back down, the past two days, down 7.5% -- 7.5 basis points i should say, give or take. we are looking at a treasury rally underway but i want to focus on the risk session in asia. let's get over to charlotte yang. talk as through the rally. charlotte: we are seeing the session in asia, chinese regulators announced they are extending two specific measures for the countries developers, focusing on finance needs, to

make sure they can get homes delivered. we are looking at a more positive session, at hong kong and on shore. the csi 300 up re-.6%. if we look at the bigger developers, we are seeing country garden to other developers, they are all up more than 1%. we have two obama state run -- two state run newspapers talking about confidence. elsewhere in the region, stocks in south korea and taiwan also up. in taiwan, the taiex posting the biggest gain in a month, up more than 1% in south korea as well. better-than-expected second

quarter sales. dani: the ai story not over yet. charlotte, thank you for the asian markets check. let's get to our other top stories this morning. it's time for our morning roundtable. joining me is our editor. christine, before we dive into some of the top stories, i first want to talk about nato. i want to bring in maria tadeo, she joins us on the phone from lithuania because of course turkey has dropped opposition to sweden's nato bid. maria, what does this mean for a summit that is just beginning in lithuania later today? maria: i am on the phone because of a major security check. it signals the importance of the summit but also the location here, where there is maximum security. today we are expecting all of the nato allies to show up to

this meeting. and yes, it is a huge story overnight, president erdogan of turkey has dropped his veto for sweden and that means the turkish parliament will go ahead with the ratification. that means sweden is moving so close to officially joining nato. i should say this was a real development overnight. you should have seen the smile on the face of the swedish prime minister. the day started on a difficult no. president erdogan took everyone by surprise, almost signaling i will say yes to sweden if we start talks about turkey in the european union. no one was prepared for that. there was a real concern at the start of the day that we would enter a long period of deadlock and that would be bad news for sweden. then of course the magic of the meetings behind closed doors, mediated by the nato secretary-general.

they have dropped the veto. yesterday, round of applause for turkey and president erdogan, essentially the star of the show. people asking for a handshake or a picture. the swedish now feeling very relieved. in terms of where we go from here, the turkish parliament ratifying the bid, it is almost assumed that hungary has to ratify and they've not done that yet. that they will also do that and from then on, the swedish would go to d.c., hand over documents and we could see the flag up at the nato headquarters to the end of the month. finland happened very quickly and i suspect for the swedish government it will be getting it done in a matter of days, or a very fast week. dani: maria, thank you for the

update. we are looking forward to the rest of your coverage and you will be back with us later in the program. that is the story for nato. we will set the geopolitics aside for a moment and get to some other top stories. so much fed speak yesterday and we will get so much more before the blackout period. >> in order to ensure that inflation is on a sustainable and timely path back to 2%, my view is the fund rate will need to move up somewhat further from its current level and then hold their for a while as dr. hold there -- and hold there for a while. dani: basically everyone agrees with her except bostick. christine: yeah, and you can tell this is what the markets are heeding as well. i think higher yields on the

long end is a sign that markets are coming to grips with the idea that inflation will be here to stay for a little bit. dani: you can look at them and say they are saying higher for longer. bostick doesn't want more hikes and is saying we need to keep rates restrictive at least into 2024. i feel like there is still repricing to be done. kristine: yes, as the weirdness in the bond market dynamics. i think those cuts are keeping the short end of the curve anchored and that's why we are seeing this steepening set up. it's quite the u-turn -- it's not quite the u-turn they were expecting. it speaks to the idea that the market has been through a rapid change both in terms of actual policy that we've seen the fed deliver, but also in terms of future expectations for rates

and inflation. i think it's really a sign of confusion in the markets where the question being, what is the ultimate economic impact of all of these rate hikes and all of this rapid tightening owing to have on the economy? that's where you get division. some people are still seeing soft landing and some people are bracing for recession. dani: into the conversation could be very different after tomorrow's cpi. it is a weird market. the other top story, it is fed speak that different, it's from michael barr, the fed vice chair for supervisory. i love this quote from him, it's basically a love letter to capital requirements. in his speech yesterday he said the beauty of capital is that it doesn't care about the source of the loss. whatever the vulnerability or shock, capital is able to help absorb the resulting loss. here is a dude who loves capital.

but yeah, changing the rules basically saying capital requirements need to cover $100 billion in assets, it was $700 billion before, so lowering the bar. and losses need to be factored into regulatory capital. kristine: what a guy to write a love letter to capital but you are right. this sounds very much like the overhang from the banking turmoil in march and regulators trying to step up and emphasize the rules and requirements that need to be more stringent if we are going to see more protections for consumers. they really don't want a repeat of what we saw in march. multiple bank failures and deposit flights everywhere. very much putting the pressure on banks to step up those kind of -- adhering to rules and

regulations and protections for consumers. dani: because the beauty of capital fixes all ills. potentially big changes are coming to the nasdaq 100. they had a filing out basically saying the heaviness, the concentration of the index has breached some of their issues in terms of how far the weights can go. they say they will have a special rebalance before the market open on june 24. we don't know exactly what form the redistribution will be, they will announce some changes on friday, this coming friday, july 14. this could potentially shake things up because those seven account for 55% of the index. kristine: absolutely and in terms of rebalancing, that could potentially create shockwaves in the market.

i think it also speaks to the broader question of the u.s. equity market that we've seen this year, is it to concentrated or narrow? that's one argument a lot of stock naysayers are putting forward in terms of we've seen -- in terms of what we seen in the first of the year cannot last. a lot of equity bowls putting their faith in the magnificent seven, but we are coming up to another earnings season and i would be interested to see what the outlook is from these various companies and whether they can keep up with the dominance and what the outlook will be even though we are potentially headed for a tougher second half. dani: i love the argument that it doesn't matter if you are an equity investor. maybe if you have to put together the index it does matter, the concentration. let me take you to the next 24 hours ahead and show you what i'm looking at for the day ahead. u.k. jobs data will hit in under

an hour's time, really will go to whether the boe will do another jumbo rate hike. andrew bailey said yesterday inflation will come down rapidly. we will be getting germany's survey at 10:00 a.m., the last was pretty dour considering germany did into recession in the winter. finally, the nato summit will be continuing. i think the u.k. jobs data is gonna be so important because bailey seems to say that inflation will be coming down but if that comes in hot, the market is not going to believe them. kristine: exactly. interesting timing to be making those comments, especially on the eve of another important jobs data. we've seen time and again the bank of england really getting surprised along with the rest of us in terms of how hot inflation has been. he already is coming into this with a little bit of a credibility problem for the boe. in my view, it's quite

interesting that he is still on this idea that inflation will pull back. i think we are seeing it pullback, we are down to single digits, the problem is it is not pulling back as much as markets expected. this is where the bank of england has landed in hot water. dani: we will be speaking later in the program about one economic proposal from jeremy hunt. should be interesting. thank you so much for joining today, that is our markets today managing editor. for more on these top stories and a general roundup of the stories you need to get your day going, head over to your terminal daybreak page bid coming up, -- page. coming up, u.s. short-term inflation expectations have fallen a third consecutive month. what does it mean for cpi tomorrow?

all of that is next on bloomberg. ♪

>> my view is the fund rate will need to move up somewhat further from its current level and hold for a while as we accumulate more information on how the economy is evolving. >> as we get closer and closer to what we think is a sufficiently restrictive level, that's part of positioning ourselves so we can try to get to that target level in a careful way. >> one of the surprising things about the economy is just how much momentum it continues to have. we will likely need a couple more rate hikes over the course of this year to really bring inflation back into a sustainable 2% path. dani: fed officials signaling that more rate hikes may be needed to bring inflation back to the central banks target.

basically everyone saying that yesterday except for bostick. we will get a fed lockout period at the end of the week so brace yourself are more fed speak. speaking of the fed, there was comforting data that hit yesterday that allowed bonds and some risk assets to rally. you are looking at one year inflation expectations from the new york fed. this is a survey that is the white line. the blue line is cpi. this survey fell to an april 2021 low, just over 4%. the good news is it tends not only to track cpi, sometimes it leads the thing itself. how should we be set up tomorrow? for that, let's get to mark cranfield. how are you thinking about cpi data tomorrow? mark: if i was in the fed's position i would be very happy to see that chart and i would be

hoping it does exactly as expected, that we get a slightly softer cpi number than the previous month, the general trend since the beginning of the year, continues on a downward path, relatively slow but still headed in the right direction from the fed when if you. if those things are achieved, we get a touch lower than expected in the markets will be happy because that's what they been pricing for. the fed can continue their messaging that the july meeting will be at 15 basis points hike and every thing is rosy. there is no disconnect for the market, nothing to be too concerned about. the last thing they want from this cpi is a shock on the upside. that would really unsettle everybody. they might have people talking about possibly a 50 basis point hike and july and nobody in the fed would want that conversation to be happening. everybody will be happy if we get a cpi that comes in pretty much in line. that middle chart helps to

suggest that yes, we will get a number exactly like that. dani: i hope so. i love the picture you paint, everything rosy and easy, it's what we all need. you know who does not have it easy? he spoke at mansion house and his conviction that inflation in the u.k. will come down on its own. >> the interaction of above target inflation with labor tightness in the economy has made underlying develop in goods and services more sticky than previously expected. both price and wage increases are not consistent with inflation targets. some of the tightening is still to come through the policy pipeline. we expect underlying inflationary pressures to reseed as headline inflation falls. dani: kind of the two sides,

saying it is more sticky, it is still too high, but he expects it to come through the lags, we hear it all the time, the lags are still coming and inflation will come down. presumably this is not what the bond vigilantes wanted to hear. something they will even listen to because the thought at the moment is the boe needs to continue hiking. mark: yeah, i think what you have here, a little bit of a situation where you have some aggressive traders in the market that think they are seeing a weak spot with bank of england communications and they are trying to exploit it. you have a central bank governor a little on the defensive and doesn't want to go where the market is trying to lead him. if you look at the derivatives curve, they are trying to price for u.k. rates the go well above 6% in this cycle, maybe as high as 6.5, which is more than 100 basis points above where the bank of england currently are. no central bank governors likes

to be pushed into a corner by the markets. we talked about this briefly yesterday. mr. bailey understandably is pushing back a little bit. he knows that there is anecdotal evidence already in the u.k., particularly in the food sector, the prices are coming down a little bit. when they start to come down, they might come down pretty fast. if you look at the united states, secondhand: car prices were a big factor -- secondhand car prices were a big factor in the first stages of inflation and they are falling. it can come down in a hurry. bailey wants to know when the numbers will come down and he's trying to buy time and he certainly doesn't want to be talking about raising interest rates to 6% unless he really has to that's a terrible scenario for him. hopefully he can continue to be a little more methodical, by a bit more time and then all the market situations calm down a bit. it's going to be a tight rope and it will be hard for him to

follow through on this. dani: yeah. really quickly, the other central bank story we are following as we are doing this whistle stop tour of central banks, the boj, the expectation that the next meeting will be a live meeting, you slacked to us that the end has seen a remarkable rally -- yen has seen a remarkable rally on that. walk me through that. mark: a couple of pieces of data in the past week are starting to meet the bank of japan of japan's minimum requirement of 2% inflation. their base case for making any tweak to monetary policy, they want to see a sustained 2%. we've seen evidence they have to take seriously now, they will have a pretty good discussion on the 28th of july when they meet and the speculation between now and then would increase, are they going to remove the yield curve control policy in place for a while?

if it goes, the yen will be the currency to watch long-term japanese rates will end up much higher than they are right now. dani: mark, thank you. we covered the fed, the boe, the boj. a pro as always. so good we will make you come back later in the show to talk more about central banks. mark cranfield, thank you. coming up, taking the exit. the uber cfo is said to be leaving the company. we will get more on the c-suite changes next on bloomberg. ♪

dani: let's get to some of your top corporate stories this morning. bloomberg has learned that wall street banks are hoping to approach international investors for the syngenta mega ipo in

shanghai. they are working on what could be the world's largest listing this year. a reprieve for the frozen ipo market. the chinese giant wants -- got regulatory approval last week. elsewhere, we have learned that the uber cfo is planning to leave the company. he has informed senior leaders of his intentions to move on. the decision on timing has not been made. he would be the most senior executive to leave since it went public in 2019. as we gear up for cpi tomorrow, i want to bring you a chart mark cranfield mentioned, use car prices. they have fallen 4.2% in june. that's the biggest drop since early in the pandemic. according to mannheim, the company that puts this together, not only was it the biggest drop since early in the pandemic, one of the largest drops ever.

one emphasizes this pandemic will whip we've seen in the economy. it shows why some things seem like they are using while other parts of the economy see the crimp from central bank spared this also helps relieve us of some sticky inflation expectation for the cpi figures tomorrow. coming up, we will talk about nato and turkey agreeing to back sweden's bid. that is next. bridgett is here. she has no clue that i'm here. she has no clue who's in the helmet. are you ready? -i'm ready! alright. xfinity rewards creates experiences big and small, and once-in-a-lifetime.

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>> good morning welcome back to bloomberg daybreak: europe i am dani burger in london. these are the stories you are waking up to. not done hiking a trail of fed officials say more rate increases are needed to quell

inflation but global equities rally on speculation that china is preparing to boost economic stimulus. tighter capital rules vice chair says major banks need to set aside more money to cushion against potential losses. plus turkey agrees to backs sweden's nato membership, a breakthrough for the alliance and strengthens its defenses amid russia's war in ukraine. let me start off your trading day by showing you what equities have been doing over the past two days, yesterday's session in the u.s. just climbed higher into the close. at some positive data when it came to new york fed expectation surveyed for one year ahead inflation. that falls to the lowest since 2021 and boosts risk assets that is holding on to gains today. meanwhile we look to treasuries getting a bit off the back of that too. we had looked at a curve that was bear steve manning -- steepening and again we are going to get cpi tomorrow. it the data we got beat inflation expectations, used car

prices coming in consumer credit contracting or close to. at least slowing down. all of it lends itself to a good day for cpi tomorrow. at the other thing that is supporting risk assets this morning's china, we got more signs of help of stimulus for china from the property sector. property stocks are rallying and we are looking at a strengthening yuan versus the dollar. we have been asking guests all day about china stimulus plans. here is what they had to say. >> i think the domestic china consumption story is intact and there is more upside if there is more cash coupon type of stimulus. >> according to my conversations with people i got the sense that the government probably is not preparing for a massive stimulus program imminently. >> and economic recovery has not come to the level we expected yet but however we maintain an optimistic view, we note with china the government will give

more stimulus measures and that will have to support the public demand and growth from here. >> the demand is there as long as the manufacturing -- i think the demand is weak but it is not as weak as being priced in by the market. >> it is clear that a lot of folks are expecting more stimulus but the massive shock and all stimulus, again expectation seems to be that is not in the cards. let's talk about geopolitics. it turkey has agreed to support sweden's bid to join nato in a major breakthrough for the military alliance. nader -- nato secretary welcome the about-face following months of negotiations. >> completing sweden's accession to nato is a historic step that benefits the security of all nato allies. at this critical time, it makes us all stronger and safer. >> that news came on just the eve of a two day nato summit

that starts this morning in lithuania bringing together 31 at leaders from across the organization. let's go to lithuania for bloomberg's europe correspondent where she is standing by. yesterday we were talking about whether sweden and turkey will have their leaders talk at all and now we have this major progression of turkey agreeing to back sweden's. what has brought this change? >> it is a huge breakthrough in president erdogan has dropped that veto. 24 hours and geopolitics is a long time in the morning started on a difficult note when it seemed to president erdogan had made a connection between yes to sweden and nato but then we had to talk about the european union and turkey. that is a very complicated toxic debate at times, it seems that this is the magic sometimes of diplomacy but also the meetings that take place behind the scenes that they were able to get to this breakthrough.

erdogan has dropped veto in the mediation from the nato secretary-general but also that phone call with president biden. president erdogan and biden will meet today in person here. this is a massive deal for sweden you should have seen the smile on the swedish prime minister yesterday and they say they have a deal that they have now committed to monitor some of the issues that turkey thought were a problem for their national security. they also have a number of guarantees that they wanted to get an will now go ahead with the ratification. should make it clear there is not a date for the turkish parliament to vote on this but it was all about the political signal from president erdogan. as soon as he says yes you know that will get through the turkish parliament. when you get the ratification with the hungarians to get that done things will move fast for sweden and we will have a 32nd

member in the nato alliance. yesterday was a major breakthrough for president erdogan and the swedish. >> it is pretty remarkable to get this breakthrough. even before the nato summit has begun. we are finally going to have it start today and it is not just about sweden there is going to be talk about ukraine, which you have been briefing us on. what are we expecting when the summit actually gets underway? >> yes because it has not even started, it feels like we have been on a roller coaster already but the serious matters will start today. the focus is on ukraine and as bloomberg news reported we know that president zelenskyy will be here. at one point his office said there is no point for the president to go unless there is something in it for ukraine so that may signal there is something being worked on behind the scenes. yesterday when i spoke with lithuania's president, he is the

host of the meeting, he told me this is now the moment of truth. we have to give ukraine some clarity about the future of its nato potential pathway and get them out of what he said was a dangerous gray area. >> the idea to create institutional framework with the ukraine, it will be done in the form of ukraine's nato counsel. then the procedure of entering or integration into nato will be more simple with our members sanction plan. >> that was lithuania's president, he is the host of this nato summit. we know that ukraine will not get a formal invitation. at the war is still going on, that would be a tremendous risk but we do want the equivalent of a political invitation.

we know the u.s. and a number of other allies also have reservations in terms of the potential escalation that could stem from this. there are talks about a ukraine package that could be approved here and we are going to see exercises today in terms of how to give the ukrainians what they want but also make sure that that position that was stated by the united states and other allies, that this war is still going on and you have to factor that in. >> i hope you are buckled and considering how much has already happened before the start of the summit. thank you, that is bloomberg's maria in lithuania. her coverage is going to be continuing of the nato summit throughout the day she will be speaking to u.k. foreign secretary a little later. we will also be speaking to the president of finland so stay with us for those conversations. to fed speak now or officials say policymakers will need to raise interest rates further to

bring inflation back down to their goal. among them san francisco fed president mary daly spoke. >> we are likely going to need more rate hikes over the course of this year to really bring inflation along a sustainable 2% path. >> let's get to mark cranfield from bloomberg. great to speak with you, among the many things that she said is a refrain she said before. it is better we do too much than too little. it does not seem like a market that quite believes that, we are still pricing in one hike this year and cuts to come in 2024. >> i think for all the fed speak you are hearing this week, and you will hear more of it over the next couple days, you have to take it within the context that all of this is aimed at the july meeting. this is not about anything more than that. they have got themselves into a situation where the market is comfortable with the idea the fed is going to raise 25 basis

points this month. let's not talk about anything else beyond that for the time being that there is almost two months between the july meeting in the september meeting. there is a lot that could happen in the meantime, more inflation prints more job numbers, or outside influences from the rest of the world including china. the fed just does not want to have any accident between now in the next fomc there is enough volatility in the markets they don't want traders are speculating on whether it is 25 or 50 basis points in july or nothing at all. it lets keep with 25 basis points let's keep messaging clear and get to that meeting and do what we need to do, and then reassess between then and september. i think what you will hear after that july meeting is out of the way, you will hear different messaging from the fed. i don't think they will be looking far ahead you on september at all. this idea that there might be multiple rate hikes, let's listen to see what they have to

say once they have done 25 this month. i expect their tone will change. >> interesting. i wonder if in that change, at the moment the only voice of disagreement we heard yesterday and throughout this week is bostick who says we have done enough. we are starting to see the impact of the rate come through. when we get that hike in july i wonder if we are not going to hear different in terms of overall tone but differences between fed speakers. do you think some of the cracks in their unity will start to show? >> i think they are doing a good job of papering over it for this meeting. the fact that they paused in may, there was obviously disagreements to get to that position. they have agreed to a truce for july, after that all bets are off every man for himself. you showed a chart earlier of the inflation projections going south. if that is sustained, if that

picture is not interrupted by what we have seen in the cpi print then it will be difficult to argue for multiple rate hikes from the fed. everybody can see that inflation is beginning to respond to all the hikes, the 500 basis points we have had already is beginning to work. it is beginning to have its impact and you can see from the jobs data last week and other bits of evidence, things are getting to cool down in the u.s.. why would you want to keep raising interest rates when it is clear enough has been done already? it is going to be hard to persuade all the fed members to get on board with driving rates somewhere in the direction of 6% when it is not needed. >> so true, how if they paused last time around how are they going to justify continued hikes like if that chart says expectations are coming down etc.. always wanted to catch up with you mark cranfield from our bloomberg mliv team. among the fed speak we got we also heard from michael barr

about not necessarily fed hikes but the major banks and regulations and major banks are facing one of the biggest regulatory overhaul since the financial crisis. it sets up a clash over the amount of capital that they will have to set aside to weather economic turbulence so on this bar at once wall street banks to start using a standardized approach for estimating credit, operational risks, trade in risks rather than relying on their own estimates. >> these changes would increase capital requirements overall but i want to emphasize that they would principally raise capital requirements for the largest most complex banks. we intend to consider comments carefully and any changes would be implemented with appropriate phase in's. >> let's get now to bloomberg su keenan who has more from new york. >> you could say michael barr raising the bar on accountability here. he wants to standardize the approach to the way that banks

assess credit, trading, operational risks. rather than leave it to the banks themselves to come up with these analyses. and he wants that very controversial aspect, higher capital requirements. that means the biggest banks would have to set aside an extra two percentage points of capital or an extra two dollars for every 100 and risk weighted assets. the changes being proposed would be phased in over two years, the -- stress tests would be tougher as what barr says would capture the dangers that they could face. banks are reporting their earnings in just a couple days, and timing of this is interesting. the changes stem from a month-long review with a set of international standards known as basel three. the increased capital requirements really meant for the largest and most complex banks, we are talking banks with more than 100 billion in assets.

right now restrictions apply to slightly smaller global banks. >> the next steps involve the public comment period where a lot of industry folks will be letting it be known what they think and we know that bank industry titans have long fought against higher capital requirements. you may recall this became a political lightning rod after the collapse of silicon valley bank and those other regional lenders. at that time barr said he examined all of the banks, he thought the current system was sound but lawmakers and others were pushing for him to do more and so this appears to be it. it barr says the change will only take effect if they are opposed and approved by auto regulators and that could be a lengthy process. >> bloomberg su keenan there and we are also going to get the big bank earnings later this week but first today it let me tell

you what to watch out for. 7:00 a.m. we are going to be getting u.k. jobs data than at 10 a.m. is the german july -- expectations then 3:00 p.m. the senate is holding a hearing on the pga liv golf deal with liv golf ceo and the saudi public investment fund expected to testify. later today more fed speak in st. louis fed president will be speaking to a national association for business economics meeting and finally, nato's annual summit in lithuania will get underway running through to tomorrow. but first coming up on the show u.k. pension funds agreed to invest 5% of their assets in unlisted stocks unlocking what jeremy hunt says is 5 billion pounds. we are to get the take of the lord mayor of london nicholas lyons next. on bloomberg. ♪

>> the united states continues to support getting on the path to membership to the european union and is seen talks between the eu and turkey unfold in a way that is constructive for both sides. those talks would include discussions of the necessary reforms and steps relative to democratic resilience that every prospective applicant to the european union goes through and that would include turkey as well. [indiscernible] >> we are listening to jake sullivan the u.s. national security advisor who is speaking at the nato summit in lithuania. he said that nato will agree on an increase of the ukraine aid package and moments ago so that biden aims to move forward on s

16's for turkey the fighter jacked -- f-16s. the agreement around turkey agreeing to admit sweden into nato. we will you abreast of those as they come through, coming up we will be speaking to the lord mayor of london nicholas lyons. this is bloomberg. ♪ to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart!

>> u.k. pension funds, about nine have agreed to invest 5% of their assets in start ups 2030. the planet which could unlock about 50 billion pounds of funding -- was announced by the chancellor in a speech delivered at the mansion house here in the city of london. firms including aviva, legal, general and mng have joined which the chancellor says could benefit pension savers to the tune of a thousand pounds a year once they have retired.

the move is strongly advocated by my next guest who called it a historic turning point. it let's get to him joining me now is nicholas lyons lloyd -- lord mayor of the city of london. so kind to speak at your home's we do not have to go too far. last time you are on you talked about this problem that we have this huge pension system, a lot of money but it is invested too conservatively. how far does this go to fix that problem? >> it only goes a small way, but a significant way because as we think about alternative asset classes we are talking about unlisted asset like loans, private credit, real estate in unlisted equity. the unlisted equity is the most difficult piece to unlock. that was the bit that i was keen we should focus on. i am quite sure that these pension funds will look at these other asset classes, many of them already do but we wanted to make it easy for them to invest

in unlisted equities and that is why not only are we getting this commitment from nine pension companies but two thirds of the market, we will then follow-up with setting up a future growth fund which will enable many of those who do not have the capability themselves to invest in our growth economy. >> pensions is obviously a space you know well given where you have come from before taking over as lord mayor. i wonder, jeremy could not mandate anything from these funds. mandate in any u.k. growth companies specifically but given that this is voluntary, not a mandate and they are investing in u.k. firms, that would conflict with fiduciary duties so that makes sense but does it limit the effectiveness in any way or will pensions follow through in making sure these are u.k. unlisted firms they are investing in? >> i think it is important we recognize the motivation for this primarily is to deliver

better returns for pension savers. the byproduct of it is that we have a an opportunity to stimulate the growth economy. this is absolutely fundamentally about getting better returns to pension savers, so the managers of those funds on behalf of pension savers will want to allocate the money that is put aside for unlisted equities to those investments they think are going to deliver the best returns. that has to include international opportunities as well. let's bear in mind we have the highest level of foreign direct investment into the u.k. into our fintech site because the most sophisticated investors in the world think we have got some of the best ip. i have no doubt that are u.k. growth companies will attract a large amount of this equity, this unlisted equity investment because they will be the most attractive destination for that money. >> i was talking to a large private credit manager yesterday who basically said when it comes

to investing in the u.k. they are extremely picky right now given the economic environment. for example they shy away from consumer facing companies. is there a broader thing that needs to be addressed in terms of getting these companies up and running when there is concern about overall growth and inflation in this country? >> the issue about private credit is you are making an assessment of the credit worthiness of the company that you are going to lend to. what we are talking about is long-term patient capital, investing in growth companies that will not be cash generative for a while. these are not companies that will be funded with that for some time. they are dependent on equity, this is about the quality of ip, the quality of people. don't forget we have got four of the best 10 university is in the best 20 in the world -- we are producing great startups and we are not aiming for incubator capital from this. this is later stage accelerator funding. once the startups establish

themselves that is one that this equity kicks in. >> unfortunately we are out of time i know you are about to join the radio team so we are not done with you yet, more conversations to come. thank you that is nicholas lyons the lord mayor of the city of london. that is it for daybreak, up next markets today will walk you up to the european cash equity trade on bloomberg. ♪ it's an amazing thing when you show generosity of spirit to someone.

and you want people to be saved and to have a better life, then you don't stop. the idea that we have saved five million people's lives, it's overwhelming. it's everything.

>> this is bloomberg markets today, i am anna edwards live in london. >> the cash trade is less than an hour away here are your top headlines. a trio of fed officials say more rate increases are needed to quell inflation but global equities rally on speculation china