Speaker 1: This is Bloomberg day Break Weekend, our global look at
Speaker 1: the top stories in the coming week from our Daybreak
Speaker 1: anchors all around the world. Straight ahead on the program,
Speaker 1: a jobs report or maybe not, we get a preview
Speaker 1: of what to expect. I'm Tom Busby in New York.
Speaker 2: I'm Caroline Hepe. You here in London, where we're looking
Speaker 2: ahead to the UK's party political conferences.
Speaker 3: I'm Kaylie Lyons, getting ready to make the trip from
Speaker 3: Washington to New York for the start of the trial
Speaker 3: of Sam Bankman Freed.
Speaker 4: I'm Doug Prisner, the first woman to lead the Reserve
Speaker 4: Bank of Australia, will guide a decision on interest rates
Speaker 4: this week.
Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend, the business
Speaker 5: news you need to wrap up your week in just
Speaker 5: one fifteen minute podcast available on Apple, Spotify, The Bloomberg
Speaker 5: Business Appen everywhere you get your podcasts.
Speaker 1: Who I'm Tom Busby. We begin today's program with a
Speaker 1: look at the September jobs report coming out this Friday
Speaker 1: or is it. With the government shut down, a lot
Speaker 1: of data critical to Wall Street investors will not be
Speaker 1: released until a bill, even a short term stopgap bill
Speaker 1: to fund the federal government is passed. To talk about
Speaker 1: what we can expect with Washington and to stand still,
Speaker 1: we welcome Bloomberg International Economics and Policy correspondent Michael McKee. Michael,
Speaker 1: thank you.
Speaker 6: Happy to be here. At least I'm here.
Speaker 1: Yeah, yeah, that's right. Someone's working well, Michael, we've all
Speaker 1: been here before. Twenty government shutdown since nineteen seventy seven,
Speaker 1: the latest one thirty five days long. That was in
Speaker 1: late twenty eighteen. It's horrible, but let's talk. Let's start
Speaker 1: with what is not affected. Social Security and the Postal Service.
Speaker 7: Right right, well, and Medicare goes forward. The programs that
Speaker 7: our entitlements are funded separately from all of this. There
Speaker 7: is no mechanism to reauthorize them, so they will go out.
Speaker 7: The problem is if enough people at the Social Security
Speaker 7: Administration come in to lick.
Speaker 6: The stamps, I guess.
Speaker 7: But the Postal Service is also self funded. The Federal
Speaker 7: Reserve will be open because they are self funded, so
Speaker 7: not everything is closed, and most parts of the government
Speaker 7: that the public would interact with will be closed, although
Speaker 7: there are exceptions for workers in what they call public
Speaker 7: safety facing or jobs like air traffic controllers.
Speaker 6: People like that.
Speaker 1: Well, that's I think that's a good thing. But there
Speaker 1: are nearly three million workers who will be out of
Speaker 1: work or told to stay.
Speaker 7: Home essentially, whether it's just over two point nine million
Speaker 7: federal workers and about the guess is eight hundred thousand
Speaker 7: or so will be told to stay home. Others will
Speaker 7: come to work but will not get paid. Now that
Speaker 7: includes one point three members of the active duty military
Speaker 7: who are going to be putting their lives on the
Speaker 7: line for you for free for the time being. Now,
Speaker 7: everybody gets paid according to law that was actually adopted
Speaker 7: after that last government shutdown. It was customary before. Now
Speaker 7: it's a law that back pay is made up, so
Speaker 7: they will get paid eventually. But it does create a
Speaker 7: hardship for all those people because they have to tell
Speaker 7: the credit card company, I don't have the money this month.
Speaker 6: I'll have it maybe next month.
Speaker 1: Yeah, call me next month. I mean, that's a lot
Speaker 1: of spending power as we enter the fourth quarter of
Speaker 1: people who and these people need that money.
Speaker 7: Yeah, that's a problem for the economy if it goes
Speaker 7: that long. I'm not the political correspondent in Washington these days,
Speaker 7: but there does seem to be a feeling that this
Speaker 7: one could be longer than the ones in the past,
Speaker 7: and if that's the case, then you have an issue
Speaker 7: for the economy. Now, what we find in the past
Speaker 7: is that most of that is made up right away
Speaker 7: because people get their back.
Speaker 6: Pay and they go out and spend the things.
Speaker 7: The people who get hurt are the people who might say,
Speaker 7: run a restaurant or something like that because you don't
Speaker 7: have money, you're not going to go out to dinner.
Speaker 7: Well you can't redo that dinner because the day is passed.
Speaker 6: So there will be hardships around the country.
Speaker 7: And one of the things that people don't realize is
Speaker 7: that the federal government has spread all over These two
Speaker 7: point nine million people are in every fifty states, every
Speaker 7: one of the fifty states. They're all across the country,
Speaker 7: so you'll feel it in your own state.
Speaker 1: Well, there's also you know, like you say, the restaurant
Speaker 1: right outside Elgin Air Force Base, you know, the store
Speaker 1: right outside where everybody gets you know.
Speaker 7: One of the big problems, of course we laugh about it,
Speaker 7: is that they always close the national parks because that
Speaker 7: provides a sign that says closed that the TV people
Speaker 7: can take a picture of and represent the shutdown. But
Speaker 7: there are a lot of tourist businesses outside of national
Speaker 7: parks that.
Speaker 6: Will be in trouble. And in California they're talking.
Speaker 7: About using some of the money that they get from
Speaker 7: a state lottery to keep some of those places open
Speaker 7: because they will be in trouble if this goes on
Speaker 7: for a long time.
Speaker 1: Yeah, it's a real hardship for a lot of business owners,
Speaker 1: not congress members, though they still get paid.
Speaker 7: Congress members get paid, and the President gets paid because
Speaker 7: there are constitutional provisions that would keep them from.
Speaker 6: Not getting paid.
Speaker 7: But everybody else at the White House and all the
Speaker 7: staffers on Capitol Hill are not getting paid. The interesting
Speaker 7: thing about the law time too, is that people can't volunteer.
Speaker 7: You're not allowed to volunteer to work for free. If
Speaker 7: they send you home, your home.
Speaker 1: Your home, that's it, and you'll wait until it's over.
Speaker 1: Until it's over. Let's talk about how this could impact
Speaker 1: Wall Street investors and the economy. And let's talk about
Speaker 1: we'll start with Wall Street.
Speaker 7: The SEC. You know there's going to be well, the SEC.
Speaker 7: Most of their work will shut down. You'll still be
Speaker 7: able to if you have to file, You'll still be
Speaker 7: able to upload files to Edgar and so that work
Speaker 7: will go on, but there won't be anybody in the
Speaker 7: office at the SEC, and so a lot of their
Speaker 7: enforcement stuff will go by the boards for.
Speaker 6: The time being.
Speaker 7: If you want to get a passport, you're not going
Speaker 7: to be able to do that while it's shut down
Speaker 7: or anything like that. Government records will not.
Speaker 6: Be accessible if you need to get.
Speaker 7: Your military retirement or a new Medicaid care card or
Speaker 7: something like that. So a lot of things that are
Speaker 7: sort of day to day mundane things won't be happening,
Speaker 7: and that'll start to build up some frustration. But history
Speaker 7: shows Wall Street tends to overlook all of this, and
Speaker 7: the last two, which were the longest ones that we've
Speaker 7: had shutdowns, the market's finished up from the time that
Speaker 7: they shut down to the time that they reopened. So
Speaker 7: it's kind of the figure this is a temporary thing
Speaker 7: that won't last. If it lasts longer, then maybe you
Speaker 7: do have an effect because investors start thinking that consumers
Speaker 7: aren't going to be able to spend as much money,
Speaker 7: and corporate profits go down.
Speaker 1: Big concern. Also, I mean there's some critical data coming out.
Speaker 1: I mean it's always coming out from the government, But
Speaker 1: next week, you know, including the biggie, the jobs report,
Speaker 1: and after a very dismal I would say September for
Speaker 1: the markets, I mean investors accounting on some of this
Speaker 1: coming out, but we may not see.
Speaker 6: We may not see it.
Speaker 7: All of the September data after today is in, and
Speaker 7: they could release it on time if they got a
Speaker 7: quick deal, or they could release it with only a
Speaker 7: few days delay if they don't, but still get settled
Speaker 7: in the coming way. But if it goes longer than that,
Speaker 7: then we won't get the jobs report for a while.
Speaker 7: You've got the CPI coming up on October twelfth, the
Speaker 7: PCE inflation data on October twenty seventh. Those numbers could
Speaker 7: in theory not come out, and then the FED is
Speaker 7: going to be left flying blind at their November first meeting.
Speaker 7: And as one observer said, quite accurately, how are you
Speaker 7: supposed to have a soft landing if the pilots are blind?
Speaker 6: And so for the Fed it'd be difficult.
Speaker 7: Probably means that they don't they don't move on November
Speaker 7: first because they might feel they don't have enough data.
Speaker 7: All the private sector data comes out, the isms, the ADPs,
Speaker 7: things like that, but the government data will not come out,
Speaker 7: and that could be a problem. And then longer term,
Speaker 7: if everybody's off work, then nobody's collecting data. The way
Speaker 7: the jobs numbers work, most of that data would come in.
Speaker 7: But inflation data is what a price is on a
Speaker 7: particular date, and if they don't have that, then if
Speaker 7: they don't collected that date, it would be hard to
Speaker 7: backfill it. So we could end up seeing a month
Speaker 7: without without inflation data, which only makes the fed's job
Speaker 7: even harder.
Speaker 1: That's not good, and we've actually gotten some encouraging data
Speaker 1: about inflation.
Speaker 7: And yeah, last week. Last week the PCE numbers came
Speaker 7: in very low. The core PC was up only tenth
Speaker 7: of a percent, and on an annualized basis, that would
Speaker 7: be inflation of about one percent for the year. So
Speaker 7: we've had a dramatic drop in the Fed's favorite inflation indicator.
Speaker 7: And if that continues, then that may mean the Fed
Speaker 7: is done and may mean the higher for longer longer
Speaker 7: becomes a little shorter.
Speaker 6: But the problems we may not know.
Speaker 1: No, and also, jobless claims have been you know, to
Speaker 1: four to five for a couple of weeks, and we
Speaker 1: haven't seen that in a while.
Speaker 7: Well, that's probably going to change because if you're on strike,
Speaker 7: you can't file for job as claims. But if some
Speaker 7: workers at your plant are on strike and that means
Speaker 7: your plant shuts down so you're just furloughed, then you can.
Speaker 7: And so we will probably see distortions start to come
Speaker 7: in that as the UAW strike expands.
Speaker 1: Well, we got a lot to look forward to and
Speaker 1: a lot to be worried about. Michael, thank you so much.
Speaker 1: In coming up on Bloomberg day Break weekend, we look
Speaker 1: ahead to the UK's political party conferences. I'm Tom Busby
Speaker 1: and this is Bloomberg. This is Bloomberg day Break Weekend,
Speaker 1: our global look ahead of the top stories for investors
Speaker 1: in the coming week. I'm Tom Busby in New York.
Speaker 1: Up later in our program the rise and fall of
Speaker 1: FTX and a preview of the trial of its founder
Speaker 1: and former CEO, Sam Bankman Freed. But first, the UK
Speaker 1: has had a turbulent time with four prime ministers in
Speaker 1: four years and significant economic challenges. Now a general election
Speaker 1: emerging into view in the next sixteen months, so the
Speaker 1: annual party political conference season is getting extra attention. Let's
Speaker 1: bring in Bloomberg Radio anchor Caroline Hepger and Anna Edwards
Speaker 1: in London, with more tom.
Speaker 8: Party leaders, activists, press and all sorts of politicos dispersed
Speaker 8: to various cities across the UK in October for these
Speaker 8: annual party conferences. In the next few days, the Conservatives
Speaker 8: gather in Manchester, and Bloomberg Radio will be there to
Speaker 8: cover it all, including the set piece speeches from the
Speaker 8: Prime Minister Rishi Sunak and Chancellor Jeremy Hunt.
Speaker 2: Well ahead of that, we've been speaking to Bloomberg Opinion
Speaker 2: columnist Adrian Wooldridge about why this year may be different,
Speaker 2: what Wooldridge describes as a feeling of profound change in
Speaker 2: the air in Britain, and we began by asking him firstly,
Speaker 2: what party conference season is really like.
Speaker 9: Well, it used to be something that was really serious,
Speaker 9: particularly on the Labour side, that policy was actually made
Speaker 9: at the party conferences. Now they don't make policy, policies
Speaker 9: made in secret enclaves, but they do so some quite
Speaker 9: important things. One is that they create a certain momentum.
Speaker 9: You know, if you have a good party conference, that's
Speaker 9: good for you. Another is that they create enthusiasm amongst
Speaker 9: the party base, the people who actually knock on the
Speaker 9: doors do all the work. You know, the party conference
Speaker 9: is fun, you know, you get that, you have hi
Speaker 9: japes and you come away enthused. And it's also a
Speaker 9: sort of talent show. The Prime Minister or the leader
Speaker 9: of the opposition has to prove themselves with their speech
Speaker 9: that matters, and also all the other people who are
Speaker 9: maneuvering for a preferment also have to show their wares.
Speaker 8: Okay, so a bit of a showcase then, very much.
Speaker 8: When I've been at these conferences and I've been in
Speaker 8: the sort of large rooms, the larger auditory of where
Speaker 8: they're doing these big set piece speeches, it's really interesting
Speaker 8: because they're talking to the converted, so you'd expect there
Speaker 8: to be lots of applause and appreciation, but sometimes there isn't.
Speaker 8: And I wonder this year with some divisions within the
Speaker 8: Conservative Party, what it is that Suna can Hunt really
Speaker 8: have to get across in their speech is to try
Speaker 8: and win the rooms over.
Speaker 9: I think what Hunt has to get over is the
Speaker 9: idea that things are on the mend. That's the process
Speaker 9: of mopping up the mess that was left by predecessor
Speaker 9: has gone on and they have a vision for the
Speaker 9: future that it's not just an endless process of cleaning
Speaker 9: up and cutting people's living standards. What reci has to do.
Speaker 9: What Sunak has to do is to introduce himself to
Speaker 9: the party. This is his first party speech and people
Speaker 9: don't have a very clear idea of who he is.
Speaker 9: They know a few cliches about him, but they don't
Speaker 9: have a sense of him as a person. And he
Speaker 9: needs to introduce himself to the party but also to
Speaker 9: the country, both as a person but also somebod who
Speaker 9: has a vision of where we need to go in
Speaker 9: the future, not just five things to be ticked off,
Speaker 9: but a natural vision of the country.
Speaker 2: Yeah, of course there's five pleasures from the start of
Speaker 2: this year about what is going to do with the economy. Okay,
Speaker 2: So look, he's not just the Conservatives. The lib Dems
Speaker 2: have already had their party conference in Born, with the
Speaker 2: SMP also a significant force in UK politics overall. And
Speaker 2: then there's Kiss Darma, the Labor Party, very hotly tipped
Speaker 2: in the polls at least for now. What is he
Speaker 2: going to be focused on at conference.
Speaker 9: We have a sense of who he is because he's
Speaker 9: been around for some time. We know his sort of
Speaker 9: conventional Stade fairly boring, but a decent sort of guy.
Speaker 9: And he's more avoiding mistakes than doing anything else. So
Speaker 9: he has to create confidence that he's capable of delivering change,
Speaker 9: that he won't give in to the to the left
Speaker 9: of the party, that he's a safe pair of hands,
Speaker 9: and that he knows how to translate his general vision
Speaker 9: of things into a set of policies that might work.
Speaker 9: His great mistake or his great weakness, I think he's
Speaker 9: talked for too long. I mean the last conference speech
Speaker 9: that I ever that I saw of his life life speech,
Speaker 9: it was a good speech, as a well written speech,
Speaker 9: but just went on and on and on and on.
Speaker 9: You're just waiting for it to end and then you
Speaker 9: start again.
Speaker 2: Well, that's a danger for the whole.
Speaker 9: It is, and I think soon next speeches is being
Speaker 9: trailed as being a very long speech. I think that's
Speaker 9: a mistake. You know, this is not North Korea. You
Speaker 9: know we're supposed to We're supposed to have some sort
Speaker 9: of democratic right to a short attention span.
Speaker 8: But I'm sure that's somewhere an unwritten constitution. Absolutely, let
Speaker 8: me ask you about comparisons with Blair. As we're talking
Speaker 8: about labor. We did a big piece just this week
Speaker 8: on the Big Take Peace. On comparisons with Blair, there
Speaker 8: are some, but then there's also a very different fiscal
Speaker 8: situation that he'll be inheriting.
Speaker 10: I mean, how far do those comparisons get.
Speaker 9: Not very far, really, partly because they're very different people.
Speaker 9: I mean they're both lawyers and they're both middle of
Speaker 9: the road. Tony Blair is more to the right, but
Speaker 9: both sensible politicians. But they're really quite different people. Blair
Speaker 9: was a showman, you know. He you know, he played
Speaker 9: in a rock band at Oxford. He liked as an actor,
Speaker 9: he liked to perform. Kir Starmer isn't like that. He
Speaker 9: is somebody who you know, is more of a sort
Speaker 9: of backroom man in some ways. He doesn't like the
Speaker 9: stage naturally.
Speaker 10: A lot for a back room man. He's picked a
Speaker 10: lot of front room.
Speaker 9: Jobs he has, indeed, But I don't think it's you know,
Speaker 9: he wants power, but I think, and you know, to
Speaker 9: get power you have to do this sort of thing.
Speaker 9: But I think that actually appearing before large groups of
Speaker 9: people is not natural metire in the way that it
Speaker 9: obviously is with Blair. I think the other big difference
Speaker 9: is that the circumstances in nineteen ninety seven were right
Speaker 9: for Blair. They're right for a progressive realignment, both in
Speaker 9: terms of you know, you had a young president of
Speaker 9: the United States with a new set of ideas. You
Speaker 9: had the talk of the Third Way, You had a
Speaker 9: lot of economic room for an sort of expansionist policy.
Speaker 9: All of those things don't exist. We have Joe Biden,
Speaker 9: who's not exactly young in the United States, and we
Speaker 9: have a real shortage of money, not very much room
Speaker 9: to do things. So they keep talking, you know, about
Speaker 9: progressive moment or spending forty billion a year on a
Speaker 9: green revolution and things like that, or you know, getting
Speaker 9: rid of not getting rid of but shoving taxes on
Speaker 9: public schools. And then they come backreat, they retreat, they
Speaker 9: keep retreating, and basically, it's not time for a progressive realignment.
Speaker 9: It's time for a set of pragmatic policies to deal
Speaker 9: with with with with particular problems.
Speaker 2: Well, no doubt, we'll hear this phrase working people many
Speaker 2: many times, hard working people indeed, and who doesn't want
Speaker 2: to be that? But I've heard it. We hear a
Speaker 2: lot from the Labor Party. But actually increasingly. I've heard
Speaker 2: that phrase now from the Prime Minister themselves. So this
Speaker 2: seems to be taking on what are working people and
Speaker 2: voters in the UK do you think, you know, in
Speaker 2: as far as we can take of reading, what do
Speaker 2: you think they're thinking about now? Will they pay any
Speaker 2: attention to party conference?
Speaker 9: Well, one of Tony Blair's great statements was that people
Speaker 9: spend about thirty seconds a year thinking about politics. People
Speaker 9: don't think about politics as much as politicians think that
Speaker 9: they do. And also we're getting a general turn off
Speaker 9: from politics at the moment. I just saw the host
Speaker 9: of the Today program, you know, complaining that people were
Speaker 9: just turning off politics because it's too too awful. So
Speaker 9: I think that people are basically worried about their living
Speaker 9: standards and they want somebody to address those living stats
Speaker 9: that they're want inflation to be brought under control. They
Speaker 9: want the price of food to be more reasonable than
Speaker 9: it might seem at the moment, and I think more broadly,
Speaker 9: they want a sense of order in society. And they
Speaker 9: says if you look at politics, this is chaotic. You know,
Speaker 9: things are falling apart. We go through prime ministers like
Speaker 9: some people go through wives it's.
Speaker 2: Well four and four years, yeah, exactly.
Speaker 9: It's an incredibly unstable environment, so I think people do
Speaker 9: wants stability in a sense of practical policy, right.
Speaker 8: And one thing we'll be watching for, I suppose as
Speaker 8: the conferences get underway is some of the wedge issues
Speaker 8: that will likely feature in the campaigns towards the next election.
Speaker 8: We've heard a bit about net zero from the Conservatives
Speaker 8: and a different take, shall we say on net zero
Speaker 8: around certainly on EV's is this going to be an
Speaker 8: effective wedge issue? Do you think for dividing the population?
Speaker 10: Adrian? Is that is this going to be the one
Speaker 10: that works for the Tories?
Speaker 9: Yes, but I don't think it will work in the
Speaker 9: sense that they'll win the next election. That seems very
Speaker 9: unlikely to me.
Speaker 10: Thanks to Bloomberg's Adrian Wooldridge, I'm Anna.
Speaker 2: Edwards and I'm Kroin Hepker here in London and you
Speaker 2: can catch us every weekday morning for Bloomberg Daybreak. You're
Speaker 2: at beginning at six am in London. That's one am
Speaker 2: on Wall Street.
Speaker 1: Tom, Thanks Caroline and Anna, and coming up on Bloomberg
Speaker 1: Daybreak weekend. Sam Bankman Freed is import this week we'll
Speaker 1: get you the latest. I'm Tom Busby and this is Bloomberg.
Speaker 1: I'm Tom Busby in New York with your global look
Speaker 1: ahead at the top stories for investors in the coming week.
Speaker 1: Sam Bankmin Freed is accused of orchestrating one of the
Speaker 1: biggest white collar crime cases in US history this week.
Speaker 1: The trial starts on Tuesday. For what we can expect,
Speaker 1: let's head to our Bloomberg ninety nine to one newsroom
Speaker 1: in Washington and Bloomberg Sound On. Co host Kaylee lines.
Speaker 3: Yeah, Tom, that's right. Next week, I won't be spending
Speaker 3: the whole week here in Washington because there is a
Speaker 3: big event going on in New York City. Sam Bankman Freed,
Speaker 3: the once billionaire founder of FTX, the now fallen crypto exchange,
Speaker 3: is going to be on trial. It starts this coming Tuesday.
Speaker 3: Ava Benny Morrison, who's one of our great legal reporters
Speaker 3: here at Bloomberg, is joining me to talk about this
Speaker 3: case and what it could mean for Bankman Freed. But first,
Speaker 3: I feel like I need to remind everyone about how
Speaker 3: we got here. Remember, Bankman Freed founded FTX in May
Speaker 3: of twenty nineteen. By October of twenty twenty one, the
Speaker 3: company raised capital out of valuation of twenty five billion dollars,
Speaker 3: and at the end of that year it said it
Speaker 3: had more than five million users globally, about one point
Speaker 3: two million of them in the US. By early twenty
Speaker 3: twenty two, its valuation was thirty two billion dollars. Sam
Speaker 3: Bankman Freed, who then was just thirty years old, was
Speaker 3: worth more than twenty six billion dollars, making him one
Speaker 3: of the world's riches people, and FTX was one of
Speaker 3: the world's biggest crypto exchanges. But in November of last year,
Speaker 3: it unraveled very quickly. It all started with a report
Speaker 3: from coindesk about Alimeta Research, which was a crypto hedge
Speaker 3: fund also founded by Bankman Freed in twenty seventeen, and
Speaker 3: the article found a significant portion of Alameda's assets were
Speaker 3: made up of FTT, that is a token that FTX created.
Speaker 3: In response, cz the CEO of rival crypto exchange Binance,
Speaker 3: said he was going to sell his company's entire holding
Speaker 3: of FTT. That triggered a massive wave of withdrawals, sort
Speaker 3: of like a run on the bank, and FTX didn't
Speaker 3: have the fun to meet them, so in a rescue attempt.
Speaker 3: It reached a deal with Finance to sell itself. Binance
Speaker 3: then backed out and so by November eleventh it was over.
Speaker 3: FTX filed for bankruptcy and bankment. Freed resigned as CEO.
Speaker 3: Just over a month later, on December thirteenth, Sam Bankman
Speaker 3: Freed was indicted accused of misappropriating billions of dollars at
Speaker 3: the cryptocurrency exchange. And this is where we pick the
Speaker 3: story backup with Ava so Eva. If you will just
Speaker 3: remind us of the charges that he is facing.
Speaker 11: So Sam Bankman Freed is facing seven charges in total.
Speaker 11: He's pleaded not guilty to all of them. Those charges
Speaker 11: include wyre fraud, conspiracy to commit security fraud, and conspiracy
Speaker 11: to commit money laundering. Among them, I'd say wireford is
Speaker 11: the most serious that he faces, each attracting a maximum
Speaker 11: penalty of twenty years in prison.
Speaker 3: So he could spend a lot of time in prison
Speaker 3: for this. If the prosecution is able to prove this right,
Speaker 3: what do they needed to prove for him to be
Speaker 3: found guilty.
Speaker 11: One of the key elements they need to prove here
Speaker 11: is intent. But Sam Banateman Freed set out to defraud
Speaker 11: people to steal billions of dollars to co mingle customer funds,
Speaker 11: and that he knew what he was doing was wrong.
Speaker 11: This will be the biggest hurdle that they have to overcome.
Speaker 11: Sam Bateman Freed will likely turn around and argue that
Speaker 11: he didn't have that intent and that he acted in
Speaker 11: good space and he didn't know that he was inadvertently
Speaker 11: committing fraud. Yeah.
Speaker 3: Remembering here that Sam Bankman Freed was someone who practiced
Speaker 3: what we call effective altruism, or what he called effective altruism,
Speaker 3: the idea that he wanted to do good with all
Speaker 3: this money he had. And I wonder how that's going
Speaker 3: to come up over the course of this trial. How
Speaker 3: long do we expect this trial is going to last,
Speaker 3: how long it's going to take his defense team to
Speaker 3: make their case and for the prosecution to make theirs.
Speaker 11: The trial is expected to last at around six weeks.
Speaker 11: We heard that the prosecution's case could go from three
Speaker 11: to four weeks and the defense will go for a
Speaker 11: week to a week and a half. So we're looking
Speaker 11: into a way into November.
Speaker 3: And so when we think about what's going to happen, First,
Speaker 3: as I said, this trial begins this coming Tuesday. What
Speaker 3: happens on that day? How long is it going to
Speaker 3: be before we start getting into the meaty part of
Speaker 3: these proceedings.
Speaker 11: The first day is set aside for a administrative process,
Speaker 11: but a very important one. This is when the jury
Speaker 11: will be impaneled. So a whole bunch of everyday New
Speaker 11: Yorkers will come into a big room at the courthouse
Speaker 11: em Lower Manhattan and they will go through the process
Speaker 11: of being appointed to the jury. The prosecution and the
Speaker 11: defense will have the opportunity to object to specific jurors
Speaker 11: being as part of that trial. By the end of
Speaker 11: the day, hopefully we will have a jury of twelve
Speaker 11: men and women who are ready to get things started.
Speaker 11: The following day, on the Wednesday, that's when and we'll
Speaker 11: really see all of the duty details start to emerge.
Speaker 11: That's when the prosecution will open their case and we
Speaker 11: will hear the full extent of the allegations against Sam
Speaker 11: Bateman Freed. The defense will also have an opportunity to
Speaker 11: give an opening statement.
Speaker 3: I'd like to return to your point about the idea
Speaker 3: of selecting this jury. Given the high profile of this case,
Speaker 3: we're talking about something that has been dubbed one of
Speaker 3: the biggest financial fraud cases in history. You know, we
Speaker 3: put this kind of in a basket at least in
Speaker 3: common thought with and Ron or Birdy meat Off. How
Speaker 3: hard is it going to be to select an unbiased jury?
Speaker 11: That's a good question. We got a little bit of
Speaker 11: an insight into the types of questions the defense and
Speaker 11: the prosecutions want to ask this jury. For the defense,
Speaker 11: they have asked the judge if the jury can be
Speaker 11: asked certain questions about the crypto industry. Have they ever
Speaker 11: invested in crypto? Have their friends or family been the
Speaker 11: victims of a financial forward before? Do they think that
Speaker 11: a person who is that the head of a company
Speaker 11: should be held responsible if that company fails. There was
Speaker 11: also a question in there about affect of altruism, what's
Speaker 11: their views on a person a massing wealth? And then
Speaker 11: giving that away, So that gives us a little bit
Speaker 11: of an insight into the kind of jura that sat
Speaker 11: Bankman Freed's defense may want to see as part of
Speaker 11: that trial. On the prosecution side, the questions were a
Speaker 11: lot more general. Have they been a victim of the
Speaker 11: crime of a crime? Do they know anyone within the DOJ?
Speaker 11: What are their views on crypto. So I think there's
Speaker 11: been so much publicity about this case, it'll be hard
Speaker 11: to pick someone who hasn't heard of Sam Bankman Freed.
Speaker 11: The challenge will be really drilling down to see if
Speaker 11: anyone has any very strong views that they can't put
Speaker 11: aside on crypto or on fraud that won't allow them
Speaker 11: to be able to carry out that exercise without bias.
Speaker 3: Okay, So it might be a little tough to get
Speaker 3: the jury together, But once it is, let's talk about
Speaker 3: what they're going to hear and who they're going to
Speaker 3: hear from. Talk to me about the witnesses in this case,
Speaker 3: because I know that there's three really important ones, former
Speaker 3: really close associate associates of Sam Bankman Fried, former executives
Speaker 3: of FTX and Alameda related enterprises. Tell us why these
Speaker 3: witnesses may be key.
Speaker 11: They are really at the heart of the prosecution's case here,
Speaker 11: and certainly who we are really looking forward to hearing from.
Speaker 11: The three witnesses Caroline Ellison, who was, like you said,
Speaker 11: the head of Alameda, Mishad Singh who was the director
Speaker 11: of engineering at FTX, and Gary Wong, who was Bateman
Speaker 11: Freed's high school friend and helped co found FTX. The
Speaker 11: three of them together are going to give a very
Speaker 11: powerful insight into what was happening at FTX, almost in
Speaker 11: the foundation, but also in those final days before a
Speaker 11: file for bankruptcy. For Nishad Sing and Gary Wong in particular,
Speaker 11: they're going to speak about They're likely to speak about
Speaker 11: the code at FTX, and that they were asked to
Speaker 11: change the code to give Alameter a loophole essentially to
Speaker 11: access customer funds whenever it wanted. Caroline Ellison is a
Speaker 11: little bit different in that she was leading Alameda Research,
Speaker 11: and one of the key allegations in this case is
Speaker 11: that Sam Bateman free misled investors about their relationship between
Speaker 11: FTX and Alameter, that Alimeda was using customer funds however
Speaker 11: it wanted for Irish Trading for lowing two executives. So
Speaker 11: she'll be able to give a little bit of an
Speaker 11: insight into how that dynamic actually operated. The prosecutors have
Speaker 11: said that they've got up to fifty potential witnesses that
Speaker 11: they could call. Of course, it is highly unlikely that
Speaker 11: they will call every single one of them, but we
Speaker 11: think we're going to hear from other former employees, investor victims,
Speaker 11: FBI agents, and some forensic accountants as well, who will
Speaker 11: try to walk the jury through Alameda's financials, ftx's financials
Speaker 11: to make it this case as simple as possible.
Speaker 3: All right, Well, the eyes of Washington and probably a
Speaker 3: lot of other places around the world will be on
Speaker 3: New York for this trial beginning this coming week. Thank
Speaker 3: you very much to Bloomberg Legal reporter Eva, Benni Morrison,
Speaker 3: and Tom. We'll send it back to you.
Speaker 1: Thank you, Kaylee. That was Bloomberg's sound on co host
Speaker 1: Kaylee Lines, reporting from our Bloomberg ninety nine to one
Speaker 1: newsroom in Washington, and you can hear sound on weekdays
Speaker 1: one to three pm on Bloomberg Radio. Coming up here
Speaker 1: on Bloomberg day Break weekend, we head to Australia and
Speaker 1: preview what we can expect from the RBA. This is Bloomberg.
Speaker 1: This is Bloomberg day Break Weekend, ourk lobal look ahead
Speaker 1: at the top stories for investors in the coming week.
Speaker 1: I'm Tom Busby in New York. Australia's monthly inflation gauge
Speaker 1: accelerated in August, So what do we expect from the
Speaker 1: new Reserve Bank of Australia Bank governor at her first
Speaker 1: board meeting next week. For more, let's go to Bloomberg
Speaker 1: Daybreak Asia anchor Doug Krisner, Tom.
Speaker 6: And the week ahead.
Speaker 4: The new Governor of the Reserve Bank of Australia, Michelle Bullock,
Speaker 4: will lead her first meeting of the Central Bank. Bullock,
Speaker 4: by the way, is the first woman to serve as
Speaker 4: governor of the RBA. She was appointed back in July,
Speaker 4: and like many central bankers around the world, Bullock is
Speaker 4: being confronted with stubbornly high inflation. For a closer look
Speaker 4: now at the RBA decision, I'm joined by James McIntyre,
Speaker 4: Bloomberg's economist covering Australia and New Zealand. James joins us
Speaker 4: from our studios in Sydney. Thanks for being with us, James.
Speaker 4: Before we get to the story on inflation, I want
Speaker 4: to try to apply a little context here, because Bullock
Speaker 4: is taking over from Phil Lowe. Now, he had been
Speaker 4: facing calls to resign in recent months. Before his departure,
Speaker 4: he had been condemned by the public and accused of
Speaker 4: missus leading Australians about future rate increases. Now I know
Speaker 4: Bullock was at the RBA when those decisions were made.
Speaker 4: But I'm wondering whether restoring credibility is kind of job one.
Speaker 12: Well, that's a really good point. Not only was Bullock
Speaker 12: at the RBA, but she was actually as Deputy governor,
Speaker 12: was at the board meetings, was at those meetings when
Speaker 12: those decisions were made, not only to raise rates as
Speaker 12: they've done in the fastest height tightening cycle in the
Speaker 12: inflation targeting era. So the RBA has been targeting inflation
Speaker 12: since the nineteen nineties more than thirty years now. So
Speaker 12: not only was she there for those rate hype decisions,
Speaker 12: but also part of the decision making around that communication
Speaker 12: that ended up tripping up pil Low. Now, it's been
Speaker 12: tough going the last couple of years for central bankers,
Speaker 12: and if you think that your economy might be locked
Speaker 12: up for three years, you know, you could make an
Speaker 12: a credible case that that was going to be the
Speaker 12: where policy might go. But then as the situation changed,
Speaker 12: I think fill those a bit tonity make that communication
Speaker 12: change obviously didn't didn't flow or didn't flow in a
Speaker 12: way that people like who really does like interest rates rising,
Speaker 12: especially on their home loans. The way they work here
Speaker 12: in Australia, so that's been what happened to Low and
Speaker 12: it's also the challenge, it's not the only challenge that
Speaker 12: Governor Bullock faces over her term, which lasts for seven years.
Speaker 12: So her first board meeting this coming week, she will
Speaker 12: be implementing these reforms to the RBA, including this new
Speaker 12: Monetary Policy Committee staffed by external monetary policy experts. That's
Speaker 12: something that the RBA hasn't had to deal with before.
Speaker 12: So it's not just a credibility restoration communication challenge for
Speaker 12: Governor Bullock. But as the review rolls in and as
Speaker 12: a term rolls on, communication I think is going to
Speaker 12: be the theme for her home in the chair.
Speaker 4: Well let's take a quick look at the overhaul as
Speaker 4: a result of that government review. What are some of
Speaker 4: the major changes she must implement.
Speaker 12: Well, I guess one of the changes is she'll have
Speaker 12: less to do. Rather than monthly meetings eleven of them
Speaker 12: a year, which the RBA used to do, they'll be
Speaker 12: moving to eight. And that's pretty consistent with other central
Speaker 12: banks around the world. You know, the RBA did like
Speaker 12: to have the opportunity to communicate month to month and
Speaker 12: do things a bit more gradually, so that step change.
Speaker 12: That's a communication challenge as to how to nuance what
Speaker 12: might be slightly more lurching changes in communication, in policy direction,
Speaker 12: press conferences after every meeting, that's going to be something
Speaker 12: that will be a little bit different, and we'll get
Speaker 12: to see how Buller candles those. But also this new
Speaker 12: Monetary Policy Committee, the experts or the external appointees, they're
Speaker 12: expected to be out there communicating about monetary policy to
Speaker 12: the community at large and so having a whole range
Speaker 12: of different voices, whereas up until now the RBA has
Speaker 12: been had a monopoly on monetary policy and explaining it
Speaker 12: and explaining the direction.
Speaker 4: James, thank you so much for helping us set up
Speaker 4: the RBA meeting. James McIntyre Bloomberg's economist covering Australia and
Speaker 4: New Zealand. I'm Doug Prisner. You can join Brian Curtison
Speaker 4: myself weekdays here for Bloomberg Daybreak Asia, beginning at six
Speaker 4: am in Hong Kong six pm on Wall Street.
Speaker 1: Tom Well, thank you, Doug, and that does it for
Speaker 1: this edition of Bloomberg day Break Weekend. Join us again
Speaker 1: Monday morning, five am Wall Street time for the latest
Speaker 1: on markets overseas, and the news you need to start
Speaker 1: your day. I'm Tom Buzby. Stay with US. Top stories
Speaker 1: and global business headlines are coming up right now.