'The Pulse With Francine Lacqua' (07/12/2023)

[Music] newsmakers and Market Movers this is the pulse with Francine Lockwood well good morning everyone and welcome to the pulse I'm Francine lacro here in London with the conversations that matter and here's what's coming up on today's program now the dollar drops treasury's gain as investors look ahead to a U.S inflation report expect it to show headline and core CPI easing in June the latest key data before the next fed decision Ukraine's President says he plans to fight more security guarantees from G7 allies as NATO outlines plans for its future membership plus Microsoft moves closer to finalizing its 69 billion dollar bid for Activision winning a U.S court fight and an unprecedented review in the UK so let's take a look now at the European markets map but a lot of the drivers were seeing today's trading session really driven by technology but also some of the Commodities the big story as always is not only what's happening with China but also a little bit of pressure across the board then we have CPI have a great terminal chart looking at volatility ahead of that U.S inflation print but we also have Andrew Bailey the governor of the bank England speaking right now on the financial stability report so here he is let's listen in the judgments that the FPC has made on the resilience of the UK banking system including obviously the results of the stress test and the decision we've taken as we always do on the camp cyclical Capital buffer moving then on to the lessons we've learned to date from the recent stress in the global banking system and then finishing up on the continued importance of addressing vulnerabilities in the non-bank financial world so on that list let me start on key developments so far this year so we've had a also further rises in global interest rates um reflecting um actual and expected increases in Central Bank policy rates um in the UK returning inflation to Target sustainably will of course support the fpc's objectives as well as the NPC's objectives because it will support protecting and enhancing Financial stability in the UK now the increase in interest rates and Market volatility volatility over the past 18 months has as we've seen created stress in some parts of the financial system and we did of course in March have the failure of free mid-sized U.S banks and Credit Suisse um that caused a rise in risk premium and volatility around around March but our judgment is that the impact of that stress in March on the UK banking system was limited and that since then globally Market risk sentiment has stabilized and more broadly the UK economy and financial system has so far been resilient to interest rate risk compared to previous periods of high interest rates households and businesses are less likely to cut back on spending and default on loans and I think there are really two reasons important reasons to draw out here for this the first one is the resilience of the banking system and that means that the banks have options to offer support to their customers a more resilient banking system has more options in that sense to support its customers and the second reason I draw out is that the FBC and the fca's mortgage Market measures have limited the buildup of household indebtedness and increased borrower resilience so the point two points I'm drawing out really are lender resilience and borrower resilience locals go together very closely but it is the case that elements of the Global Financial system do remain vulnerable to increased interest rates and uncertainty surrounding the economic Outlook and of course tensions geopolitically speaking and really as as we point to in the FSR we point to riskier corporate borrowing and financial markets such as leverage lending as an area of vulnerability that has to be followed closely global commercial real estate markets which face a number of short and longer term headwinds that are pushing down on prices and making refinancing more challenging in that world and I think we do have to bear in mind that it will take time for the full impact of higher interest rates to come through both in the UK and in other advanced economies and so the FPC will remain Vigilant to these risks and these processes taking effect so let me move on then to the UK banking sector and its resilience and the stress test and the ccyb decision so in the UK we've taken steps over time of course to ensure that the banking system is resilient to these risks and that it maintains robust Capital ratios and liquidity buffers and the results of the stress test that we've published Today Show that the major UK banks are resilient to a severe stress scenario that scenario Incorporated deep simultaneous recessions with materially higher unemployment in the UK and Global economies increasing Global interest rates persistently higher Advanced economy inflation and sharp Falls in asset prices now I would particularly note that while interest rates are higher today and therefore closer to those which we published in the scenario that is higher than when we first outlined the scenario scenario is significantly more severe than today's conditions and a very important point there is that it's the combination of higher interest rates and simultaneous recessions around the world and in this country and materially higher unemployment that makes the stress it's not one thing on its own that's the key point I would bring out there second we're announcing that the FPC has decided to maintain the UK cancer technical Capital buffer rate at two percent this will help to ensure that banks have sufficient capacity to absorb future shocks without unduly restricting Lending and of course as ever We Stand ready to vary that ccyb rate in either direction in line with the evolution of Economic and financial conditions underlying vulnerabilities and the overall environment for risk now we have observed some tightening of lending standards from Banks over the past few quarters but our judgments we have to make this judgment every time is that that reflects appropriate risk management and line with changes in the outlook for the economy and the world it's not a case of restricting lending primarily to protect Capital positions and it's that distinction between risk management and and capital protection that is critical here because we will continue to monitor credit conditions for any signs of tightening which are not explained satisfactorily By changes in the macroeconomic Outlook so the overall risk environment is challenging and that said we continue to judge that the UK banking system has the capacity to support households and businesses through a period of higher interest rates and that the stress test shows that that would be the case even if economic conditions were substantially worse than we currently expect well you can continue watching Andrew Bailey's press conference on the boe's financial stability report on your Bloomberg terminal on live go live go the governor they're talking about Rising rates having created stress on the financial system this is of course something that we've been watching very closely he also says households and businesses are less likely to cut back uh the global real estate faces a number of headwinds and I think also in earlier remarks he was mentioning Shadow banking now joining us to talk about the UK and of course looking forward to the CPI data a little bit later from the US we're joined by Anna catrion Chief Economist at van lautch and kempin and Bloomberg's John stepek so thank you both for joining us John you've been writing extensively about mortgages and of course about this conundrum in which the bank of England is at I mean it seems that the governor is now pointing to where he's you know outside the financial system the non-regulated shadow banking things could it get ugly I mean in terms of Milwaukee cheese that that's unlikely um I think one of the interesting things about this and also from the the stress uh tests this is very clear that the the mainstream banking sector in the UK is resilient it's very hard to make the argument that that of any obvious issues there and I'm going to say that I mean that does make you think well some of these risks must have migrated elsewhere um but at the end of the day most mortgage land in the UK comes from the mainstream Banks so I can't see any major issues kind of horizon from um the kind of Shadow banking sector from that point of view um as far as you know other areas go then you know possibly potentially um but I think you can see that that's something that the bank England will be trying to focus on a bit more it's just very difficult to get a handle on that particular sector yeah so and again when you look at the bank of England you know outside the stability report of course they still have to deal with the higher inflation figure than many other parts of the world how difficult will it be for governor Bailey to get it just right my Francine well I mean let's let's zoom out the UK is one of the only major economies in the world where inflation is actually still accelerating and that makes this whole thing very very complex because other countries have actually surpassed that Peak and it's still a price Discovery environment and the last CPI Prince was a shock and I think it's all about core inflation and if you look at the levels of core inflation we're out in the UK today and remembering what Rishi sunak said back in October he was committed to halfing inflation because we all know how painful it is it's it's not an easy one to tackle given the stickiness that's around yeah and of course a million dollar question to John I'll start with John is an end to tightening but when um we also spoke to Adam Posen actually former NPC member one of you know the most respected economists out there and this is what he had to say it's our morning must listen in in the City Podcast so we basically talked about the terminal rate and he says they have to get to well above six percent if anything the fact that inflation is proving more persistent May mean that they will have to go higher one of the investment Banks publish something saying maybe seven percent I would not rule that out that was Adam Posen I mean it's pretty Punchy this is after JP Morgan said they could go go down to seven percent what does seven percent interest rates terminal rate a mean for mortgage holders oh yeah seven percent temporary for somebody that has a mortgage would be it'd be brutal um you know I mean one of the the problems here is the the mortgage Market the housing market itself is actually very resilient in aggregate relative to the last crashes in the 90s and 2000s and that is because basically fewer people have mortgages it's only about 28 no um whereas it used to be kind of nearad like 35 36 percent before the 2007 crash also those mortgages are more conservative so the people who have them are wealthier um they were written uh they you know kind of hired so lower loan to value ratios um before the 2007 crash there were significant numbers that interests the only 100 mortgages now that are basically nine um so the point is that that's all that that's all good the problem is that if part of the transmission mechanism is is meant to be you drive up the cost of living so that people spend less and you reduce demand in the economy that nicely makes it much harder because it's that transmission channel is it's almost clogged up because and also all the fixed rate mortgages because they don't come off I mean some of them won't be coming off until 2026. um so it just takes a much longer time to pass through so Annika what does this mean and we hear this more and more if you look at valuations there's been you know so much said about the fact that UK is going through troubles is it now actually a buying opportunity because things could get easier quicker than people think yep well it's two things and it's also what Andrew Bailey was referring to one thing is time lags the transmission mechanism of you know sharper rate hikes and how that impacts the real economy there's a huge time like around that six to 12 months if not longer so we're yet to see what the pain is and that also applies to corporate earnings if you look at the General in aggregate corporate earnings season we keep anticipating that the next one is going to be painful and it never is and you're starting to see earnings downgrades come in but that's that's critical and the other thing that Andrew Bailey said which is important is it's not just one thing and one of the reasons why it appears that the economy is actually holding up reasonably well despite these horrific inflationary numbers it's because you've also got the fiscal policy side of things so while central banks might be very very hawkish lifting rates if fiscal policy is as it is today accommodative and remains accommodative to protect the consumers whose real wages are continuously declining even though labor market strong because inflation is so high that is an offsetting factor and that's why from a stock selection perspective looking at UK equities you need to go really nitty-gritty and see what's happening on the idiosyncratic basis with those two forces all right and again John thank you so much John stepek Anna Katrina both stay with us coming up at U.S June CPI due later today we look ahead to whether the FED is winning its fight against inflation that's next and this is Bloomberg [Music] investors look ahead to a U.S inflation report expected to show headline on core CPI easy in June the latest key data before the next fed decision Now Stocks mostly higher the dollar hits the lowest since February now still with us van la shot kempen Chief Economist Anna catrion and Bloomberg's John stepek so when you look Annika at some of the the I guess the headline inflation the fact that they're coming down but a lot of questions on when the FED can cut rates is it one and done and then they wait to see to see the full impact of tightening they've done so far yeah and then it's all about whether we're going into the terminology of pause or Skip and actually there Howell made a slip of tongue in the in the in the previous meeting which was fascinating because he referred to um a skip versus a pause and then corrected himself and that's what it's all about and it all hinges upon one thing and that is the core inflation number and that core inflation number has been moving quite sideways the 4.6 is way above what the target is and the question is are we going to continue to be hawkish Central Bank officials themselves are expecting two more rate hikes this year to manage that or are we simply going to tolerate the fact that two percent is just not realistic for the coming period yeah and John it goes back to the fact that actually we've had and I think we have four fed speakers today so that'll be interesting to see how they you know how they position that but they keep on saying look we're not done tightening uh inflation is still sticky and even if it goes to five percent then the five to two percent is going to be quite painful but the markets still don't believe them yeah well I think that's I mean that's partly a hangover because I still think that the marketing has got can't quite get over the fact that the 2008 era is over so the way we even talk about this is you know so there's gonna be a peak and then immediately rates are going to start coming down oh why you know there's no reason for them to start coming down unless the FED actually triggers a recession so I think it makes sense for the FED to at least present uh as it were to at least keep markets on the tours but is there a transmission mechanism problem and you know I was in sintra you keep on hearing from central banks I also hire for longer because I guess they're worried that what they're saying doing isn't really translating to Consumers well I think I mean the the things of consumer consumer spending is healthy the only way to stop consumers from spending is to actually reduce the amount of money in their pockets and of course part of the problem with that is that you know it's politically unpopular that is almost no way that a Central Bank in any of the countries is now going to get the idea that okay if we want to stop people spending we're going to need to trigger job losses I mean you've seen lots of stuff about how all the tailored rules made up and you know there's no you know there's no necessarily relationship between unemployment and inflation but at the end of the day if they need to battle it down the only way to buy it owners by causing recession the question then has gone back to Anika's point do we just let inflation hang around about fear four percent rather than two percent we can't state that I think it's important yeah and also I guess consumer shopping habits I mean we had a fun little story about Barbie and Oppenheimer how the young kids are seeing like both back to back one on nuclear war the one Barbie Barbie and Ken are you doing that I'm looking forward to feministry interpretation at Barbie absolutely yeah I'm booking them both Attica we just don't really 100 still understand how people are shopping differently if it's you know of overhang not with sending Barbie an overhang of of covid yeah and it's exactly what John said I totally concur it's all about what's happening to Consumers pockets and while the FED is raising rates fiscal policy is still doing its thing there's more than a trillion dollars being spent eventually leading to job creation through inflation reduction act national security measures infrastructure measures January households continue to receive checks and that's continuing also in in the recent months so that that that that creates the sort of juxtaposition and therefore we shouldn't be surprised that consumers are still spending if they've got the cash flow to now coming up we'll bring you the latest from the NATO Summit where allies have agreed a plan on Ukraine's future membership bid that's next and this is Bloomberg [Music] [Music] NATO leaders continue their meeting in Lithuania today after allies agreed to offer Ukraine a faster path to membership when allies agree and conditions are met however that risks falling short of Ukraine's hopes for the summit so let's get more from Bloomberg's Maria todayo in Vilnius Maria you've also spoken to a number of leaders there on the ground to what extent does the current agreement by allies fulfill Ukraine's wishes uh yes Francine and president zielinski is now here in fact he had a bilateral meeting one of the many that he will have today with the German Chancellor remember today will be about those bilateral and potentially even G7 security guarantees for the country but when it comes to the communique you expressed it very well as that sentence when allies agree and conditions are met that is not something that has well been widely accepted by the Ukrainian delegation it was palpable in the body language from the Ukrainian president today he briefly spoke to the media and repeated I have a three-point message that I want to convey it's more weapons to Ukraine security guarantees but also that invitation to Nato quote I want to make sure we're on the same page the problem for president zielinski at this point is that the text has been endorsed by NATO it is closed it is done and this negotiation in the eyes of NATO allies is done but as you can see from that that wording today from the president of Ukraine he is not willing to drop this fight yet now we'll see at the end of this meeting between NATO and Ukraine whether he's able to get something more before the time being you do see this frustration from the Ukrainian delegation thank you so much our Maria today they're on the ground in vilnews so now stay with us as we speak to the Latvian prime minister a little bit later today also on the sidelines of that NATO Summit coming up we discuss the AI boom with Raj Verma he's chief executive of database company single store that's coming up next and this is Bloomberg [Music] the dollar drops treasury's gain as investors look ahead to a U.S inflation report expected to show headline and core CPI easing in June the latest key data before the next fed decision Ukraine's President says he plans to fight more security guarantees from G7 allies as NATO outlines plans for its future membership plus Microsoft moves closer to finalizing its 69 billion dollar bid for Activision winning a U.S court fight and an unprecedented review in the UK so good morning everyone and welcome to the pulse I'm Francine lacquer here in London now as we've been discussing on the show this week the AI boom is a key driver of this year's rally on the NASDAQ one of the most prominent names calling for caution and artificial intelligence Elon Musk is speaking with two prominent U.S lawmakers today about the benefits and downsides of the technology now joining us now to discuss all of this is Raj Verma he is chief executive of single store a database company whose software Powers the likes of uber Siemens and a number of banks so thank you so much and welcome to the polls I know you are one of the the leading voices to understanding Ai and janitor of AI it's often just very simplistic is it good or is it bad does it take time to actually understand what we're dealing with yeah I think overall generative AI is good good for Humanity good for business good for society like with anything uh Francine you know there are going to be people who are going to take advantage of that if that is not used um in an ethical Manner and as I have always said that I think the three E's of generative AI which is education uh most importantly ethics which are you know I think Tech leaders like us and many others would be faced with that decision whether you could use AI for quote unquote nefarious purposes or to do good and I do think that overall generative AI is good for society good for business and Mankind Russia there'll always be someone trying to use technology for the bad right for nefarious things so how do you regulate that and can you only regulate the bad part the dark part of AI yeah I do think that this is going to be a unprecedented challenge that we Face Francine the society and civilization has actually never really faced a challenge like that and this is not being hyperbolic in any way shape or form uh fortunately I have access to uh some of the upcoming versions of you know chat GPT and other tools and some of the power that it has if put in the wrong hands could have a pretty dark impact on actually funnily enough the more vulnerable in society unfortunately and we've seen examples of that we were talking about kids yeah yeah is this do you think this is fake I mean one of the funniest but also most tragic stories I think is one of the first reporters in GPT they basically convinced him that he should leave his wife because he was in love with software I know will come a long way but again had we know what's in it yeah I do think that that is probably a edge case of an example but it gains a lot of popularity it's very funny and I I found that entertaining as well however I mean you don't even have to go that far I mean we've already seen in society in something which is very very close to my heart the mental health issues in teenage girls I mean you and I were talking about kids right before the show started I'm father of two girls and the suicide rates in Girls teenage girls has gone up 10x in the last decade and a lot of that is attributable and that's by the way 10 times since we started keeping records for the last 120 years and a lot of that is attributed to social media and to the fact that they have propagated a certain body image a certain sort of fear of missing out propaganda and that is in a large way attributable to data and data being used for a certain purpose which is really profits and as long as companies do not take a broader view of the impact that data has on society we are going to have those issues I'm not one for regulation but I do think that we should have a robust and energetic conversation about the you know the sort of s word even sanctions when it comes to use of air but this would be what for again countries that that are non-friendly countries or is it for private companies as well oh private companies so much data right I mean and you don't really know once you put the data even on education we'll have this conversation with an education specialist saying you lose a lot of the cultural subtleties right if it's all generated by one program so you reach much more you know parts of the world through education but then it all becomes one one Society almost yeah it does I I think some of the organizations with the data that they have can be more dangerous than some of the countries and in fact a lot of countries put together so I do think that it's not only countries I think it is organizations as well because I think they have uh outsized influence on society and on yeah the way uh yeah we perceive data you know Russia how do you think AI actually changes your business and tech companies in general I don't know how many jobs will be lost again it's unclear how fast or how much of an early adoption this will happen or and whether the numbers we look at are too cautious or actually just a bit crazy yeah I think there are multiple questions all good ones here Francine first and foremost I do think that Ai and all the buzz around AI is very very Justified and I do think that if you are going to see generative Ai and AI as a silver bullet which is going to makeup for the sins of the past that your organization has had not putting data in the center of your strategy I think that is a false premise if you haven't put data in the center of your strategy for the last few years you are going to find the adoption of AI that much more difficult however for organizations who have had a pretty good robust data estate they would actually take advantage of this AI boom and be very very successful with whatever it is that they do one of the things that I have been propagating is there isn't a greater time to align your value proposition with your values proposition and I think it is more more important and pertinent now than ever before but what does that mean put it put pushing ESG products into your ass and because of the backlash are now too afraid of doing it so it values are subjective certainly in a divided society and chief Executives sometimes try away from it if it means lack of business I I completely agree with you I I do think that this is not an easy problem to solve for I do think that you know the values at at the highest of level Francine are you know I don't think you should harm people I mean that's not even expecting too much from Corporate America or the corporations at large I do think that a lot of this happens without the office of the CEO involved so I do think that clear communication which aligns your value proposition to your values proposition is important and I do think that a lot of good organizations are communicating a lot more about how they would use Ai and by the way just one last aspect a lot of people tend to think of AI as something absolutely magical Star Wars like one of my favorite examples is a very large automotive company in Europe they were like what do we do for AI and one smart engineer said you know I came back to the board in a week's time and said let me show you a demo he put all the manuals of that car manufacturers for the last 30 years into a corpus of data and then you could actually have agent of tech on it so now the latest models that you're going to get is you could actually press a button and say how do I change the oil in my car or unlock the child seat or what have you and it just speaks back at you so you aren't going to be peering into you know sort of manuals and doing it so that's a very simplistic use case which has a huge impact on customer static sector I mean I love that I knew that for the IKEA furniture building so how does it impact a lot of your customers I know you have Uber Disney how does it change single store going forward yeah for us our cost one thing that is extremely important in AI is ultimately speed and the recency of data and what single store is built for is the ability to be able to transact analyze and contextualize data in one platform without moving data in millisecond response times and very very low I mean sixty percent of our revenues come from Fortune 500 customers but I I want to be extremely clear I do think that AI does democratize the playing field between the Fortune 500 companies and the rest of the companies a large number of our customers are known Fortune 540 percent of them and they are using AI very effectively for personalization for customer you know sort of interaction for customer sat most importantly for risk for compliance for governance and and as I have said companies with a very very pristine data estate are able to get onto that a lot quick you're also an entrepreneur or heart and this is like a fiber in your body's entrepreneur whether you worry about a lack of funding because of the collapse of svb and and whether that's and we're hearing some of the big Banks or trying to you know hire strategically here and there but what's it mean for the fabric of Entrepreneurship in Silicon Valley yeah so I want to make a couple of points Silicon Valley Bank was a unbelievable partner to us to me so I owe them a lot of gratitude in fact we took out ads and all the rest of it when it collapsed and it's very sad to see that bank collapse it was you know you couldn't orchestrate a a better Bank Run if you run at the bank if you if you tried operationally I mean they some stuff that they made mistakes it was accentuated by you know the the current sort of sort of social media Etc I mean we do have to understand that that was Venture debt for the most part I do think Sandhill Road and the Venture Capital world is is very very buoyant with money in fact every few hours I hear of yet another you know fund being raised to fund AI I was just reading this morning that some a very dear friend of ours raised two billion dollars only to be invested in AI so I don't think Silicon Valley is going to have a dearth of of venture capital uh in the in the near future does it feel like it's in a bubble sometimes I mean I was also reading there there is a you know a French company that I think has been on its feet for about three months raising a lot of money like how do you know where this ends if it's only a fad by the way I think that French company you're talking about is a large customer of ours and we are very proud to have them the fact really is that Venture Capital just uh by virtue of what it is a large amount of their Investments fail so they are dreamers they are the ones who sort of tend to push the envelope and the one that strikes is is the big one so that that is just the the business model does it feel like a bubble uh I live there my kids live there um yeah sometimes it does it's sometimes just uh you know living on the edge however I do think that um the the basic fiber of uh you know people who change the world are the people who believe they can is uh probably more true in the valley than anywhere else that I have lived and I've lived in six different countries um so I do think that the valley is just about getting started um so the demise of the valley is highly exaggerated all right watch out world thank you so much for coming on for a fantastic conversation executive of single store coming up game on the FTC is leaning towards appealing a U.S ruling approving the Microsoft Activision deal so we'll have plenty more on regulation and of course that space this is Bloomberg foreign [Music] like we're here in London now a U.S judge has given Microsoft 69 billion dollar Bid to Buy Activision the green light but Bloomberg has also learned that the FTC is leading towards appealing that decision while joining us now is Alex Webb from Bloomberg quick take of course he focuses on all things technology so Alex How likely and how fast could we actually see an appeal and good morning good morning and it's hard to know how fast we'll see an appeal it's according to Bloomberg's reporting the FCC is leaning towards an appeal it's interesting if they do because Lena Khan the head of the fgc is pretty strategic she on the whole doesn't go for cases that she doesn't think she can win but this is quite a big Clinic quite a big deal for the FTC they have been slightly changing the way the way they approach big Tech in particular in the past there were there's perhaps a view that some mistakes were made maybe they shouldn't have approved Google's acquisition of doubleclick maybe they shouldn't approve Facebook's acquisition of WhatsApp and Instagram because of what they've become what they let those companies will come and let them dominate the space so perhaps that's why they're willing to sort of to a very phrase go to the blankets on on this we'll go to the mattresses I've always on this one um so what does it mean for the deal actually I mean at the moment it looks pretty likely this deal is going to happen particularly given what we're seeing in the UK in addition to that what's happened is that the UK is essentially giving them a stay of execution giving them another chance to come back and offer some concessions there have been some question marks about the way that the UK regulator had approached it from a legal perspective maybe they hadn't been quite as prepared as they might have been um but there's some political involvement here as well that is kind of hard to it's not impossible but it's hard to block something when the US is kind of letting it go and at the same time we also have the ft reporting that arm is in talks with Nvidia for it to be its anchor investor for the IPO yes which we've seen SoftBank trading up on this as a consequence there's a lot of there's been some pressure from activists over the years to just kind of get arm off the books they haven't really managed to do as much as they had promised when they acquired it a few years ago the interesting thing here is that the reporting from the Ft suggests that they're looking to come in at a price between 35 and 40 billion dollars which is kind of very close to what um SoftBank paid to acquire arm how many years ago I'm seeking something closer to 80 billion and of course when Nvidia don't forget they had agreed to buy arm that was blocked by Regulators the price they had agreed to buy it at was essentially 66 billion dollars so quite a discount to that but nonetheless it would provide that sort of grounding which would help it at the IPA as overall when we look at some of the reporting that we have for for these IPOs but also these Mega mergers like does it feel like we're in a bubble or what does your reporting suggest the thing that's interesting about the IPO stuff is that particularly if you look at stuff that's privately held and stuff that's held by private Equity if you think about Yahoo for instance also reportedly they have said publicly that they're looking to IPO currently owned by Apollo because there are lots of um private active firms and maybe you could include softbanking that looking to actually return some money to investors cash out a bit the assets that aren't the premier assets the ones that they actually you know don't want to hold on and put to in perpetuity they're looking to find next you know it's very hard to find buyers for these assets right now which leaves the IPO Market nonetheless we've not seen many of these companies go to market in that sense but it does really seem like the uh the option of Last Resort Alex thanks so much as always Alex Webster from Bloomberg quick take now another story we're watching Microsoft also says a china-based hacking group intent on conducting Espionage breached a series of email accounts linked to government agencies in Western Europe now it says the group was actually able to remain undetected for a month after gaining access to email data from around 25 organizations in mid-may Microsoft only discovered the breach following an investigation mid-june after being alerted by customer reports about abnormal male activity coming up the sounding back to PGA live golf merger comes Under Fire in a U.S Senate hearing we'll bring you the details next and this is Bloomberg [Music] [Music] the conversations that matter and the insights you need this is a pulse I'm Francine Aqua here in London now paying for the pif as it emerges at Saudi Arabia's Auburn wealth fund lost about 11 billion dollars on investment activities last year as Global markets sank now let's get the details from Matthew Martin who heads up our Saudi Arabia Bureau Matt thank you for joining us so what more can you actually tell us about the loss for The Sovereign wealth fund hi Francine well yeah look as you say the The Sovereign made this big 11 billion dollar a loss from investment activities uh over the course of 2022 that pushed the fund overall into a big loss a turnaround from um making big profits in 2021 which was all driven by um the uh the stock market gains that it had in the post-pandemic era that obviously turned to um turn to losses last year as investors started to worry about the the big geopolitical concerns and rate Rises and that had a big impact on markets I mean was probably worth noting that the markets have recovered this year so pif is probably recovering some of those losses uh that uh that it took on on 2022 um but I think I suppose the other interesting thing to sort of put in this in context is that even in the with losses last year it doesn't seem to have done anything to Dent the pif's appetite for going out and spending money and making a big splash on International deals just like the pif sorry the live golf and PGA merger and we also see pif putting money into deals all around the world at the moment so Matthew let's turn to the PGA live tie up which was criticized in the US first of all take a listen Americans very simply deserve to know what this agreement means for the future of golf as well as for the future of the Saudi Arabian government's investment in sports and other autocratic regimes that may choose to do the same so what exactly is going on well look the um uh the the the the PGA and live came to this deal really as a way and I think this came out from the hearing uh yesterday and from some of the um the evidence that was gathered as part of that it was really all done to try and put an end to this um uh the these long costly and potentially damaging lawsuits between uh PGA and Liv um uh so the bringing the two golf tournaments together was a way of trying to end that however it's possibly brought even greater scrutiny as this now gets a lot of um a political interest there's a lot of concerns through the hearing yesterday about how much will uh if players in the PGA or American citizens want to criticize Saudi Arabia and its human rights record um is the PGA going to get involved in trying to silence that criticism we've seen examples of some of that with sporting events that get links to China in the past so there's a deep concern around that I think really what it what would it all demonstrated is that the the Saudis still have a fairly bad reputation in the US and getting this deal through in the face of some of that political operation um political opposition will probably be quite a um quite a difficult Challenge and will be a big big lobbying effort from the Saudis to get this done so much Matthew you're a chief now be sure to subscribe also to Bloomberg's in the City Podcast that I host along David Merritt on Apple podcast Spotify or wherever you get your podcast today we actually have a bonus episode of featuring the former bank of England monetary policy Committee Member Adam post and let me tell you he does not mince his words he tells us that Central Bank needs to keep raising rates and he talks like seven percent for terminal rate it's really something that we could be looking at the other chart outside of course the bank of England and what that means for Sterling is the CPI data out of the US and now thank you Dan Curtis for bringing me this chart which is basically looking at the info the vix spiking ahead of the CPI even though it's expected ease somewhat today this is Bloomberg foreign

Channel: Bloomberg Television

Views: 3,086

Keywords: Activision, Andrew Bailey, Anneka Treon, BOE, Bank of England, CPI, Francine Lacqua, Generative A.I., Inflation, LIV Golf, Microsoft Corp., NATO, Raj Verma, Saudi Arabia, Ukraine, Van Lanschot Kempen, Wealth fund, artificial intelligence (ai), banks, rate hikes, technology

Id: AWlo-M4q-Oc

Length: 42min 36sec (2556 seconds)

Published: Wed Jul 12 2023