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Speaker 1: This is the Bloomberg Day ba QT podcast, available every

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Speaker 1: morning on Apple, Spotify or wherever you listen. It's Thursday,

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Speaker 1: the twenty fifth of April in London. I'm Caroline Hepka.

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Speaker 2: And I'm Stephen Carroll. Coming up today. Meta shares tank

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Speaker 2: as Zuckerberg tries to reassure investors over the social media

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Speaker 2: giants increase spending on AI.

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Speaker 1: Mining giant BHP considers a takeover of Anglo American in

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Speaker 1: what could be the biggest deal of this year.

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Speaker 2: Plus defending TikTok on TikTok, the social media firm says

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Speaker 2: it will win its fight against a possible US ban.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: Shares in Meta have dropped by as much as nineteen

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Speaker 2: percent in after hours trading after the social media giants

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Speaker 2: said it plans to spend billions of dollars more than

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Speaker 2: expected this year. The parent company of Facebook and Instagram

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Speaker 2: says investments will increase meaningfully, with capital expenditure of up

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Speaker 2: to forty billion dollars this year. Mark Zuckerberg warned investors

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Speaker 2: it could take some time for the bets to pay off.

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Speaker 3: As we're scaling capex and energy expenses for AI. We

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Speaker 3: all continue focusing on operating the rest of our company efficiently,

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Speaker 3: but realistically, even with shifting many of our existing resources

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Speaker 3: to focus on AI, will still grow our investment envelope

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Speaker 3: meaningfully before we make much revenue from some of the

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Speaker 3: new product.

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Speaker 2: Zuckerberg's comments and the news and expenditure overshadowed what was

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Speaker 2: an otherwise solid first quarter for Meta. Revenue increased by

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Speaker 2: twenty seven percent to thirty six and a half billion dollars,

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Speaker 2: with profits more than doubling to twelve point four billion dollars.

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Speaker 1: The world's largest mining company has made a takeover bid

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Speaker 1: for its UK rival Anglo American. Anglo says that it

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Speaker 1: has received an unsolicited all share merger proposal from BHP

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Speaker 1: after Bloomberg reported that the jant was considering an offer.

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Speaker 1: Bloomberg's James Willcock has more.

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Speaker 4: It could be the biggest take up in mining for

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Speaker 4: a decade, and copper is at the heart of it.

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Speaker 4: Anglo American has long been seen as an m and

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Speaker 4: a target. The thirty four billion dollar company owns big

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Speaker 4: South American copper operations, which are a key metal for

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Speaker 4: electrification and renewable energy. It's possible the BHP's bid for

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Speaker 4: Anglo could prompt other giants to make a move.

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Speaker 5: Regardless.

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Speaker 4: If it happens, it may be the largest M and

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Speaker 4: A deal of the year. In London. James Wilcock Blueberg Radio.

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Speaker 2: We've got some breaking news from European banks this morning.

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Speaker 2: Deutsche Bank reporting fixed income trading revenue above estimates of

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Speaker 2: two point five two billion euros for the first three

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Speaker 2: months of the year. The bank also sees its twenty

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Speaker 2: twenty four investment bank revenue higher year on year, but

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Speaker 2: the corporate bank revenue will beat slightly lower year on year.

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Speaker 2: The bank has announced plans to raise buybacks and dividends

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Speaker 2: by at least fifty percent a year on year in

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Speaker 2: twenty twenty four.

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Speaker 1: And also breaking on the Bloomberg terminal, the French bank

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Speaker 1: BNP Paribat has reported fixed income, currencies and commodities trading

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Speaker 1: revenue that missed expectations in the first quarter. That number

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Speaker 1: came in at one point six billion euros versus estimates

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Speaker 1: of one point seventy four billion. Now overall, the lender

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Speaker 1: saw net income and revenue that came in ahead of

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Speaker 1: estimates and in terms of other BNP Pariba lines loan

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Speaker 1: loss provisions significantly lower than expected.

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Speaker 2: The US has been secretly sending Ukraine its long range

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Speaker 2: army tactical missile systems or attack ems for sure since February.

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Speaker 2: President Joe Biden signed a new aid bill to provide

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Speaker 2: Ukraine sixty one billion dollars in military aid. Last night

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Speaker 2: was expected to include the ordinance. However, the State Department

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Speaker 2: spokesman Vedant Patel said the US leader had privately already

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Speaker 2: given the green light for the ballistic missiles to be sent.

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Speaker 6: The United States provided Ukraine with long range attackers at

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Speaker 6: the President's direction. He quietly directed his National security team

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Speaker 6: to send attackers to Ukraine for use inside Ukrainian sovereign

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Speaker 6: territory in February. They started moving as part of the

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Speaker 6: military aid package we announced on March twelfth, and those

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Speaker 6: missiles arrived in Ukraine this month.

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Speaker 2: The US had avoided sending the missiles, Patel spoke of

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Speaker 2: until now, because the Biden administration considered that it would

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Speaker 2: be seen as escalatory by the Kremlin. The missiles can

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Speaker 2: hit targets over a range of three hundred kilometers. The

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Speaker 2: New York Times reports they were used for the first

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Speaker 2: time in recent days to strike an airfield in Crimea.

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Speaker 1: President Biden signed a fine aid package which includes a

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Speaker 1: measure that could ban TikTok in the US by next

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Speaker 1: year unless it's Chinese owner, Byte Dance sells it. The

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Speaker 1: flock is now ticking with the deadline in two hundred

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Speaker 1: and seventy days. Lawmakers say TikTok poses a security threat

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Speaker 1: to the US and to its users because China requires

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Speaker 1: its companies, upon request, to share any national security related

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Speaker 1: data with the government. But TikTok CEO show two says

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Speaker 1: that the law infringes the free speech rights of the

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Speaker 1: apps one hundred and seventy million monthly US users.

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Speaker 5: It's obviously a disappointing moment, but it does not need

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Speaker 5: to be a defining one. It's actually ironic because the

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Speaker 5: freedom of expression on TikTok reflects the same American values

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Speaker 5: that make the United States a beacon of freedom.

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Speaker 1: CEO Show two says the company will fight the US

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Speaker 1: measure in court. He says that the facts and the

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Speaker 1: US Constitution are on their side.

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Speaker 2: That legislation on TikTok comes as US Secretary of State

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Speaker 2: Anthony Blincoln is in China. He says the two countries

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Speaker 2: must collaborate and manage their relationship responsibly.

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Speaker 7: I think it's.

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Speaker 8: Important underscore the value, in fact of the necessity engagement,

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Speaker 8: of sustained engagement of speaking to each other, laying out

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Speaker 8: our differences which are real, seeking to work through them,

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Speaker 8: as also looking for ways to build cooperation where we can.

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Speaker 2: The US Secretary of State Anthony Blincoln speaking in Shanghai,

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Speaker 2: where he'll meet with American business leaders and students. His

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Speaker 2: visit comes as a tense time for Chinese American relations

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Speaker 2: after President Biden called Beijing xenophobic and vowed to impose

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Speaker 2: more tariffs on China. Last week. Blincoln expected to discuss

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Speaker 2: Chinese trade that could be strengthening Russia's industrial defense base,

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Speaker 2: as well as Beijing Beijing's claims over the island of Taiwan.

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Speaker 2: During his trip.

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Speaker 1: Russia has vetoed a UN Security Council resolution on not

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Speaker 1: deploying nuclear weapons in space. China abstained. The proposal would

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Speaker 1: have reconfirmed a global commitment that dates back to nineteen

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Speaker 1: sixty seven, which bans nuclear weapons in orbit. The vote

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Speaker 1: comes just months after the US told allies that Russia

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Speaker 1: could deploy a real or mock warhead into space as

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Speaker 1: early as this year. The kremlins alleged ambition underscores what

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Speaker 1: security experts and Washington say is growing competition between the US, Russia,

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Speaker 1: and China to develop anti satellite weapons. Now, in a moment,

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Speaker 1: we'll bring you more details about Meta's results, plus are

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Speaker 1: reporting around the potential deal in the mining industry. But

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Speaker 1: another story caught Haai this morning had us all chatting.

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Speaker 1: A really lovely read from our Bloomberg opinion columnist Howard

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Speaker 1: jua Ewan, who has been in the UK six years

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Speaker 1: and he now wants your help, our help.

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Speaker 2: He has to pick a football team and it's one

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Speaker 2: of those things that if it's sort of an experience,

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Speaker 2: it speaks very well to one of those of being

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Speaker 2: a foreigner in London and encountering this absolutely massive wave

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Speaker 2: of social pressure when people ask you the question who

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Speaker 2: do you support and you don't basically have an answer

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Speaker 2: for them, yeah, and then you have to sort of

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Speaker 2: talk yourself around us.

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Speaker 1: Well, the column made me laugh out loud, which is

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Speaker 1: just recommendation and of itself to you know, thinking about

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Speaker 1: the footy sort of obsession, I think that actually choosing

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Speaker 1: the football team in the way that Howard's gone about

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Speaker 1: thinking about it actually is incredibly kind of revealing, and

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Speaker 1: I think that's why people actually choose a football club

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Speaker 1: in the end. Anyway, it kind of reveals something about

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Speaker 1: people's personality and their love and passion that you might

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Speaker 1: not see in another part of their life.

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Speaker 2: Look, I suppose the thought process most people don't have

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Speaker 2: because essentially they feel like they're born into some sort

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Speaker 2: of dynasty. But look, it's a great read. It's a

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Speaker 2: really lovely insight into that experience. He's even asking readers

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Speaker 2: of his column to email them with who they support

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Speaker 2: and why, and I can't wait to see who he picks.

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Speaker 2: It definitely worth the read this morning from Howrod Chowe

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Speaker 2: there on the Bloomberg Ternel from Bloomberg Opinion.

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Speaker 1: Absolutely right. Let's think about the tech space now. A

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Speaker 1: disappointing set of earnings from Meta has technology investors on edge.

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Speaker 1: The Facebook owners outlook for weaker sales and higher costs

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Speaker 1: has underlined questions about the impact of artificial intelligence. Meta

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Speaker 1: share price slumped fifteen percent in after hours trading. Amazon,

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Speaker 1: Alphabet and Microsoft also slipped on the back of that,

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Speaker 1: and so too did other social media companies. So It's

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Speaker 1: had a widespread impact and we get more tech results

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Speaker 1: from Microsoft, Alphabet and Intel today. Joining us now has

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Speaker 1: been very tech editor Vlad Savov, Vlad, great to have

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Speaker 1: you on the program. Lots of reasons, it seems why

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Speaker 1: investors were unhappy with Meta, the Facebook parent company, and

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Speaker 1: with Mark zuckerbergerg It seems.

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Speaker 9: Well is the two big priorities that he has set

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Speaker 9: out for the company is one is the virtual reality

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Speaker 9: labs and the other one is AI. Both of them

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Speaker 9: have a challenge which is kind of different from what

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Speaker 9: Meta has been to this date. When you think about

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Speaker 9: digital internet companies, one of the great advantages is that

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Speaker 9: profit revenues are infinitely scalable, whereas costs are really under control.

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Speaker 9: What he's doing, what the company is undertaking, is a

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Speaker 9: project where there's a lot of capital intensity. If you're

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Speaker 9: going to build those virtual reality goggles, if you're going

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Speaker 9: to do all the R and D, he's going to

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Speaker 9: cost your money. And that's what we saw with the earnings.

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Speaker 9: He said is still going to cost billions of dollars.

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Speaker 9: And when you read analyst notes and when you look

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Speaker 9: at the investor reaction, it is questionable about what the

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Speaker 9: payoff is going to be there. And then on the

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Speaker 9: other side with AI, there's a lot of investment that

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Speaker 9: needs to go in to compete with the likes of

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Speaker 9: Amazon and Google and so on.

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Speaker 2: But this is a question that a lot of companies

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Speaker 2: in this space are having, is the question about the

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Speaker 2: costs of investing in our ANAI versus the potential benefits

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Speaker 2: and how they convince their investors are the same.

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Speaker 9: Yeah, exactly. I mean, I've been noticing the divergence because

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Speaker 9: I'm based in Hong Kong here in NASA. One of

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Speaker 9: the really fun things is just tracking the component suppliers

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Speaker 9: and how they're rocketing up into the share price in

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Speaker 9: terms of revenue. S k Heinex, one of the leading

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Speaker 9: memory made has just reported this morning their revenue more

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Speaker 9: than doubled for the first quarter and that's because of

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Speaker 9: AI demand. So the suppliers and video Heinex et cetera.

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Speaker 9: They're going up and that isn't going to slow down

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Speaker 9: and anytime soon. But then their customers, the likes of Meta,

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Speaker 9: they need to demonstrate that when they get all that

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Speaker 9: hardware in, when they do order development, it turns into

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Speaker 9: monetizable products. Mark Zackerbug said, Smart investors, He added the

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Speaker 9: word smart can see that the monetizable product is there.

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Speaker 9: It's just going to take probably longer than most investors

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Speaker 9: are willing to wait for that to happen.

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Speaker 5: Yeah.

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Speaker 1: Absolutely about time scales, isn't it.

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Speaker 7: Yeah?

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Speaker 1: What of alphabet then? And how competitive Google is in AARI?

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Speaker 9: Well, this is the thing. We don't really have a

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Speaker 9: great metric, So I can't tell you how competitive anybody

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Speaker 9: is because there are no milestones that we can say

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Speaker 9: these people achieve that and that company didn't. The interesting

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Speaker 9: thing with Google is they have the Gemini product and

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Speaker 9: they're installing that. They're having Android manufacturers installed that by

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Speaker 9: the vault on their phones. When the likes of Samsung

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Speaker 9: order Chinese manufacturers want to differentiate and say they have

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Speaker 9: a quote unquote AI smartphone, they use Google Gemini. What

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Speaker 9: that means is as AI and AI processing moves to

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Speaker 9: the mobile ecosystem and arena, Google is going to be

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Speaker 9: in the lead, is going to be the default option

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Speaker 9: for many and even Bloomberg reporting said that Apple is

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Speaker 9: negotiating to put Gemini on the iPhone. So it may

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Speaker 9: be the case that in a year or two we

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Speaker 9: look around and the landscape is Google is the leader

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Speaker 9: just because it's the first option on smartphones.

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Speaker 2: Okay, very much something in focus as we look ahead

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Speaker 2: to those results coming from ath about later Vlad Sava

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Speaker 2: for an how our tech editor.

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Speaker 1: Thank you, Yeah, absolutely, very nice to speak to. Lad. Also,

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Speaker 1: he's got a really great piece on the Bloomberg terminal

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Speaker 1: that you should read about. It's I mean, I suppose

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Speaker 1: I'm not enormously surprised, but I still think that it's

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Speaker 1: interesting that we've got the data, which is that most

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Speaker 1: global tech leaders actually think that they're come plies are

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Speaker 1: unprepared for AI. So there's been a lot of talk

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Speaker 1: about AI. There is investment now and when that starts

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Speaker 1: to pay off, But the research shows that actually a

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Speaker 1: lot of IT leaders worldwide don't feel their businesses already yet.

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Speaker 2: I'm sure those outside the art sector as well feeling

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Speaker 2: the same. Let's turn to our the big story this morning,

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Speaker 2: and are we heading for a big shake up in

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Speaker 2: the mining industry. With the price of copper soaring this year,

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Speaker 2: BHP has approached rival Anglo American about a takeover. Anglo's

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Speaker 2: board is reviewing what it described to Bloomberg as a

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Speaker 2: merger proposal with details we've got Bloomberg Commodities reporter Martin

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Speaker 2: Ritchie with us. Now, Martin, what do we know about

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Speaker 2: the deal that's on the table.

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Speaker 7: This is a big deal for mining and it could

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Speaker 7: be one of the biggest Emmy transactions this year. It's

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Speaker 7: a deal that's really an essence of about copper, which you've

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Speaker 7: I guess pointed to already. BHP is one of the

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Speaker 7: biggest copper miners. It's going to take over a slightly

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Speaker 7: smaller arrival, but not much smaller, and it's going to

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Speaker 7: create the biggest global copper you sir, this is a

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Speaker 7: time when all the global mining companies are sort of

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Speaker 7: scouring the world trying to get more exposure to copper.

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Speaker 7: So BHP's really put its mark out there under the

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Speaker 7: relative and new CEO Micing.

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Speaker 1: Okay, so that's what BHP then would gain from it.

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Speaker 1: Anglo America has been seeing as a takeout of target

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Speaker 1: for some time, so why why now for this deal?

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Speaker 7: It has been a takeover target for some time, you know,

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Speaker 7: partially because it's been building up its copper profile, but

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Speaker 7: it's also got nickel, and it's also got other assets

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Speaker 7: to iron ore, especially in Brazil. That's quite valuable. The

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Speaker 7: reason why some people say it's not the people that

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Speaker 7: the BHP, for example, is going in now rather than earlier,

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Speaker 7: is because Angle's always seen as a bit of a

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Speaker 7: trickier asset to swallow. It's got a number of different

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Speaker 7: commodities don't always quite match together. So it's got diamonds business,

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Speaker 7: it's got platinum group metals, it's got iron ore in

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Speaker 7: South Africa that's got and all of these businesses we've

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Speaker 7: got sort of tangled ownership. Now, what BHP appears to

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Speaker 7: be doing, according to the preliminary statement we have from

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Speaker 7: Anglo BHP hasn't said anything yet, is that they're going

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Speaker 7: to spin off some of these South African businesses before

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Speaker 7: they go ahead with the merger. That will simplify things.

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Speaker 7: And I think that the fact they had to do

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Speaker 7: that speaks to, you know, the difficulties in taking over.

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Speaker 7: Other companies have been busy with their own efforts to

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Speaker 7: get copper. Rio Tinto has been building its own huge

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Speaker 7: mine and Mongolia, and it has indicated it might not

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Speaker 7: be so interested in large scale transaction. Glen Core is

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Speaker 7: trying to take over in a Canadian company to try

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Speaker 7: and get its copper and Metals Business.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Streets and beyond.

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Speaker 1: I'm Caroline Hepka.

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