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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Daybake podcast, available every morning on Apples, Spotify or whatever

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Speaker 1: you listen. It's Wednesday, the eighteenth of September in London.

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Speaker 1: I'm Caroline Hepkit and.

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Speaker 2: I'm Stephen Carroll. Coming up today. Exploding pagers kill nine

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Speaker 2: and injure thousands more in Lebanon as Hezbala blames Israel.

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Speaker 1: Twenty five or fifty, the Fed decides today as traders

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Speaker 1: lock themselves into record bets on a half point cut.

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Speaker 2: Plus the Hedge Fund, Family, Tree, Millennium, and Citadel nurture

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Speaker 2: a fourteen billion dollar new generation, but there's no guarantee

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Speaker 2: of replicating their elder's success.

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

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Speaker 2: At least nine people have been killed and some three

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Speaker 2: thousand injured after thousands of pagers exploded across Lebanon. The

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Speaker 2: militant group Hezbollah has accused Israel of orchestrating the attack,

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Speaker 2: raising fears of an escalation and the conflict that's seen

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Speaker 2: near daily skirmishes for much of the last year. Israel

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Speaker 2: has declined to comment. Here's how US State Department spokesperson

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Speaker 2: Matthew Miller reacted, we.

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Speaker 3: Are always concerned about escalation. We are always concerned about

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Speaker 3: any type of event that may cause further escalation, and

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Speaker 3: it remains our message to both Israel and to other

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Speaker 3: parties that they needed to do everything they can to

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Speaker 3: try and reach a diplomatic resolution.

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Speaker 2: Matthew Miller says the United States was not aware of

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Speaker 2: the incident in advance or involved with the device blasts.

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Speaker 1: It is not yet clear how the pages exploded, but

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Speaker 1: theories range from the batteries being triggered to overheat to

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Speaker 1: hidden explosives in the devices. The New York Times reports

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Speaker 1: that US officials and others briefed on the operation say

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Speaker 1: small amounts of explosive and remote trigger switches were implanted

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Speaker 1: into the devices, which had been ordered from a Taiwanese company.

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Speaker 1: Bloomberg has not been able to verify those reports, and

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Speaker 1: the Taiwanese firm god Apollo has denied it manufactured the

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Speaker 1: pages used in the attacks. The firm did confirm it

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Speaker 1: licenses its brand to at least one other company, but

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Speaker 1: declined to provide any names.

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Speaker 2: The attack adds to tentions that have been building since July,

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Speaker 2: when Israel assassinated a key commander of his BILA in Beirut,

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Speaker 2: the prospect of a wider war in the Middle East,

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Speaker 2: Russia's ongoing the invasion of Ukraine, and growing China US

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Speaker 2: tensions are now an increasing focus for diplomats and world leaders.

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Speaker 2: Speaking yesterday, JP Morgan, Chair and CEO Jamie Diamond, reiterated

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Speaker 2: that he believes we should be more concerned about geopolitical

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Speaker 2: risks than whether the United States goes into recession. Here

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Speaker 2: are some of his key thoughts from a conversation at

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Speaker 2: the Financial Markets Quality Conference in Washington.

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Speaker 4: The most important thing that dwarfs all other things, that's

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Speaker 4: really important, far more important today there's been probably since

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Speaker 4: nineteen forty five, is this war Inkra, what's going on

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Speaker 4: in Israel, in the Middle East, or americantal Asia with

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Speaker 4: China and the attack fundamentally on the rule of law

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Speaker 4: there was set up after World War Two. This may

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Speaker 4: affect the free and democratic world for the next one

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Speaker 4: hundred years. And I think that's the most important thing.

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Speaker 4: I think people overly focused on your game for soft

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Speaker 4: LANDI and hard landing. Honestly, mosto has been through all

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Speaker 4: that stuff. It doesn't matter as.

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Speaker 2: Much Jamie Diamond also weighed in on today's highly likely

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Speaker 2: FED rate cut. The JP Morgan CEO says that whether

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Speaker 2: the center bank goes for a quarter point or half

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Speaker 2: point cut, the move is quote not going to be

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Speaker 2: earth shattering.

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Speaker 1: Record wages have been placed though, on the FED easing

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Speaker 1: rates later as the day, with most targeting a half

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Speaker 1: point cut. Bets on October. FED fund futures have topped

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Speaker 1: any activity since nineteen eighty eight, and some risk sharp

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Speaker 1: losses if policymakers opt for a standard sized reduction. Forecasters

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Speaker 1: are largely anticipating a quarter point cut to five five percent,

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Speaker 1: but economists at JP Morgan expect a bigger half point move.

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Speaker 1: The hedge fund founder Ray Dallio says that a quarter

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Speaker 1: point adjustment would be beneficial for creditors.

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Speaker 5: What does that that have to do. FED has to

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Speaker 5: keep interest rate high enough to satisfy the creditors that

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Speaker 5: they're going to get a real return without having them

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Speaker 5: so high that the debtors have a problem. So, now,

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Speaker 5: if we're looking at this, whether it's twenty five or

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Speaker 5: fifty basis points, twenty five basis points would be the

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Speaker 5: right thing to do. If you look at the whole

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Speaker 5: picture as a whole.

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Speaker 1: Ray Dallio from Bridgewater Associates speaking there beyond today, investors

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Speaker 1: see a more aggressive path of reductions this year than

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Speaker 1: the series of quarter point cuts expected by economists. We

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Speaker 1: will have live coverage on Bloomberg of the Fed's decision

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Speaker 1: at seven pm London time, and have chaired your Own

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Speaker 1: Powers press conference at seven thirty pm.

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Speaker 2: Blackrock and Microsoft teaming up to invest in data centers

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Speaker 2: and other infrastructure supporting artificial intelligence. The story Bloomberg's Charlie Pallace.

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Speaker 6: The companies say the strategy, dubbed the Global AI Infrastructure

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Speaker 6: Investment Partnership, while aimed to attract thirty billion of private

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Speaker 6: equity capital, leveraging that to as much as one hundred

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Speaker 6: billion to invest. According to a statement, the infrastructure investments,

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Speaker 6: including energy projects, will be mostly in the US, with

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Speaker 6: a portion of the funds being deployed in US partner countries.

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Speaker 6: The firms are also teaming up with Global Infrastructure Partners

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Speaker 6: and Abu Dhabi's MGX, which was created specifically this year

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Speaker 6: to invest in AI in New York. Charlie Pellett Bloomberg Radio.

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Speaker 1: Steve Cohen has stopped trading fer point seventy two, where

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Speaker 1: he will remain Cocio, the billionaire hedge fund founder and

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Speaker 1: owner of the New York Mets, plans to focus on

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Speaker 1: driving growth and developing talent. The firm that Cohen founded

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Speaker 1: manages a record thirty five point two billion dollars as

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Speaker 1: of the first of July, by giving him a net

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Speaker 1: worth of nearly fourteen point seven billion dollars and making

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Speaker 1: him one of the one hundred richest Americans.

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Speaker 2: The German finance Ministry is sticking to its commitment to

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Speaker 2: sell off its entire stake in Comerence Bank. That's despite

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Speaker 2: Unicredit's takeover ambitions. Bloomberg's teama at A Baio has the story.

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Speaker 7: Unicredit's sudden move on Commertz Bank may have caught Germany's

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Speaker 7: government off guard, but it hasn't altered their plans to

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Speaker 7: offload shares in the firm. Bloomberg understands that divesting from

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Speaker 7: the lender completely remains the goal, as previously agreed by

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Speaker 7: the country's ruling coalition. However, it's not clear whether Chancellor

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Speaker 7: Olaf Schultz agrees with the Finance Ministry's intentions. Any decision

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Speaker 7: on further stock sales will need approval from a committee

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Speaker 7: including officials from his office. For now, at least, the

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Speaker 7: path ahead remains uncertain. A ministry representative sent a decision

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Speaker 7: on how to proceed will be made in due court

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Speaker 7: following further analysis in London. Tea Adebayo Bloomberg Radio.

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Speaker 2: In a moment, we'll bring you more on that attack

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Speaker 2: using exploding pagers in the Middle East. Plus we'll look

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Speaker 2: ahead today's much anticipated Federal Reserve decision. But another story

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Speaker 2: that copp Meyer this morning, a household name filing for bankruptcy.

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Speaker 2: This provoked an unusual response in the newsroom when the

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Speaker 2: headlines came through a little bit earlier this morning. I

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Speaker 2: didn't think that so many people were without attach to Topperware.

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Speaker 1: No, I've never a bit. Have you been to a

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Speaker 1: Topperware party ever? No, No, neither vibe. But obviously it's

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Speaker 1: such a huge and well known historic brand in the US.

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Speaker 5: Yeah.

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Speaker 2: Indeed, And look, it's been a company that's been struggling

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Speaker 2: since twenty twenty. Back then it warned of its ability

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Speaker 2: to stay in business. As of June this year, the

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Speaker 2: plan to close its only US factory and layoff almost

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Speaker 2: one hundred and fifty workers. So this bankruptcy filing in

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Speaker 2: Delaware has been long in the preparation. They've been long

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Speaker 2: negotiations running up to it. The company has more than

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Speaker 2: seven hundred million dollars in loans. Founded though in nineteen

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Speaker 2: forty six, Yeah, to bring its plastic products to the world.

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Speaker 1: Yeah, there were so many plastics makers now though, to compete,

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Speaker 1: aren't they? I mean, I think the equivalent in Europe

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Speaker 1: is probably TetraPak Switzerland, which was actually founded only a

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Speaker 1: few years later in nineteen fifty one. So anyway, that's

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Speaker 1: of interest this morning, a historic brand filing for bankruptcy.

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Speaker 1: One of the stories you can read on the Bloomberg terminal.

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Speaker 2: That's bringing more now in our top story though, the

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Speaker 2: exploding pages and Lebanon that have killed a number of

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Speaker 2: people and left thousands injured. Hezbela and Labanon have blamed

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Speaker 2: Israel for the attack. Our eme Ands director Roslind Matson

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Speaker 2: joins us now for more raz How did this attack unfold?

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Speaker 8: That is that it seems to have been nearly simultaneous.

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Speaker 9: This was not a long series of pages exploding, but largely.

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Speaker 8: At the same time. We know that about three thousand

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Speaker 8: people were wounded.

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Speaker 9: We've heard from one official that about half of those

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Speaker 9: were hes Balah fighters and several people have been killed.

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Speaker 9: Hospitals have been inundated with people seeking treatment, and these

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Speaker 9: explosions took place mainly in the southern area of Beirut,

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Speaker 9: and that's where Hesbelah does have a strong presence. Of course,

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Speaker 9: Hesbela the militant group that's backed by Iran, and there's

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Speaker 9: lots of footage obviously on social media of these blasts happening.

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Speaker 9: It's interesting, of course, because most people use mobile phones

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Speaker 9: now less so pages, although there are used we understand

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Speaker 9: by medical workers in places including Lebanon and hesbler.

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Speaker 8: Has relied on these kind of low tech.

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Speaker 9: Devices walkie talkies and pages to try and avoid interceptions.

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Speaker 8: So it was actually, in the end quite a smart

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Speaker 8: target to go for when.

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Speaker 9: It comes to Hesbolah. And of course Hesbla and Lebanon

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Speaker 9: have immediately blamed Israel for this, and there's been no

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Speaker 9: comment back the other way from Israel claiming responsibility.

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Speaker 1: What's known though about how this might have been orchestrated, Well,

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Speaker 1: it's the.

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Speaker 9: Sort of attack that would take many many months to

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Speaker 9: play and if not years. This is not something that

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Speaker 9: was probably just pulled together in the past week. It's

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Speaker 9: one of what we should we say, maybe the more

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Speaker 9: creative attacks we can recall in recent times. The initial

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Speaker 9: theory was that it had been potentially malware and that

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Speaker 9: the pages simply heated up to the point they exploded,

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Speaker 9: but that doesn't explain how they did so all at once,

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Speaker 9: and so now experts are theorizing and some reports say

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Speaker 9: that microscopic amounts of explosive could have been added to

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Speaker 9: each page at some point along the manufacturing and supply chain,

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Speaker 9: and then they were triggered remotely.

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Speaker 8: There were reports that pages could have.

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Speaker 9: Been sourced from Towan, although a small manufacturer there has

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Speaker 9: denied making the devices. But wherever they originated, there's a

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Speaker 9: long and complex supply chain in getting them to Hesbella fighters,

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Speaker 9: where anything could have happened by others. So obviously whoever

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Speaker 9: carried this out at some point along that supply chain

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Speaker 9: has intervened to potentially plant explosives pager.

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Speaker 2: Now Hesbela and Lebanon's government have blamed Israel for this.

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Speaker 2: What is that the wider significance of this attack? Could

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Speaker 2: this lead to an escalation?

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Speaker 8: Well, that is the fear.

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Speaker 9: Of course, we have reports that US officials, so they

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Speaker 9: do believe this was orchestrated by Israel. There's a long

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Speaker 9: history of action by Israel. They have claimed publicly the

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Speaker 9: killing a few months ago of a senior Hesbela figure

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Speaker 9: in Beirut, and of course they've been exchanging fire on

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Speaker 9: almost a daily basis across the border from Lebanon. Hesbela

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Speaker 9: says they're acting out of solidarity with Hamas, which is

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Speaker 9: fighting Israel in Gaza, and so the fears of that

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Speaker 9: broader war there, and Hesblo is obviously better trained and

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Speaker 9: armed frankly than Hamas, and while you know, fifteen hundred

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Speaker 9: injuries is significant, it doesn't really make a dent in

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Speaker 9: their fighting force, which is much bigger. And there's been

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Speaker 9: those concerns also because Israel is now saying it once

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Speaker 9: the residents in the north of Israel who'd been displaced

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Speaker 9: by these skirmishes with Hesbelah to return, and that's a

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Speaker 9: war objective. So again it's all seemingly building to the

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Speaker 9: potential for a more large scale offensive between Israel and

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Speaker 9: Hezbalas that would open up the wars that.

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Speaker 8: Israel is fighting into two proper fronts.

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Speaker 1: Okay, roslyin, thank you so much for being with us.

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Speaker 1: That is Blimberg's EMEA News director Roslyn mathieson joining us

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Speaker 1: this morning.

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Speaker 2: So to another story, Now, will the Federal Reserve cut

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Speaker 2: by twenty five or fifty basis points? Markets will finally

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Speaker 2: get an answer later to the question that's been occupying

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Speaker 2: investors for weeks. Now to help us look ahead to

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Speaker 2: the decision, our market's live executive answer, Mark Codmore is

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Speaker 2: with us. Mark, great to have you on. So market's

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Speaker 2: pricing in around thirty nine basis points of easing today

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Speaker 2: from the Fed. That doesn't tell us much. What's your view?

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Speaker 10: I think they'll do fifty. I don't think they want

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Speaker 10: to surprise the market. In fact, just so walk to

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Speaker 10: the studio, we're actually getting closer to forty than thirty nine.

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Speaker 10: I think that's kind of the tipping point for them

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Speaker 10: to do fifty. And I think that you know, it

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Speaker 10: is still in balance, much more in balance than we're

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Speaker 10: used to, but this it would be a much bigger

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Speaker 10: shock to do twenty five. So I think they will

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Speaker 10: deliver fifty, and I think it'll be a boost to

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Speaker 10: the market in the short term.

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Speaker 1: Yeah, I was going to say, what does that mean

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Speaker 1: for markets, which outcome creates more volatility? But it seems

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Speaker 1: like you think that the twenty five would would be

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Speaker 1: would perhaps have a more volatile reaction.

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Speaker 10: Yeah, at this stage, it's absolutely twenty five to be upsetting.

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Speaker 10: I think there's a perception in much of the market,

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Speaker 10: whether true or not, it doesn't matter. At the perceptions

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Speaker 10: out there that the Fed has helped guide towards fifty

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Speaker 10: through various media stories over the past week, and therefore

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Speaker 10: the twenty five would be really confusing now will be

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Speaker 10: more confusing. I accept there's a bit of divice don

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Speaker 10: the market either way. So absolutely the much more negative outcome,

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Speaker 10: a knee jerk would be on twenty five, much more

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Speaker 10: volatility as people recalibrate to that. I will say, though,

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Speaker 10: in either outcome, we've got so much rate cuts priced

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Speaker 10: into the curve over the next year and a half

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Speaker 10: that it doesn't really make a difference. If they do

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Speaker 10: twenty five today, everyone assume fifty next time. If they

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Speaker 10: do fifty today, everyone assumes twenty five time. So in

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Speaker 10: the bigger picture, after the massive volatility we get short term,

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Speaker 10: I don't necessarily think it's volatility into next week.

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Speaker 2: What are you looking out for then in terms of

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Speaker 2: the messaging that we'll get from Jerome Powell when he speaks,

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Speaker 2: and what to look for in the quarterly projections.

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Speaker 10: So what I think is going to be really really

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Speaker 10: interesting today is how they justify the move that they

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Speaker 10: go for. With my base case assumption they go fifty,

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Speaker 10: is it fifty with a very positive message that we

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Speaker 10: are getting more folks in the labor market, but you know,

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Speaker 10: we're just being preemptive. We think that the economy, you know,

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Speaker 10: rates are high enough and we can slightly ease policy.

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Speaker 10: Rather than a panicked message of like concern that is

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Speaker 10: my base case. I actually think this will be a

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Speaker 10: very very bullish fed meaning I think it'll be like

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Speaker 10: December last year, where they didn't seem to be any

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Speaker 10: kind of economic validation to the sudden aggressive signaling that

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Speaker 10: they are moving towards an easing stance, and that kind

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Speaker 10: of extended the economic cycle, which is why we've not

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Speaker 10: seen any rate cuts yet. I think that could be

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Speaker 10: similar today that if they go fifty, but say look,

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Speaker 10: we're trying to get ahead the curve. This extends the

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Speaker 10: whole economic cycle again and we get we really push

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Speaker 10: out the bull market. Now the bull market formulation will

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Speaker 10: change in terms, will be less tech focused, will be

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Speaker 10: a broadening at the valley.

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Speaker 1: After the FED decision though, Mark interesting what you say

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Speaker 1: it sets up the Bank of England meeting of course,

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Speaker 1: and the Bank of Japan. I mean we get the

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Speaker 1: August reading of CPI for the UK also the day

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Speaker 1: before the Bank of England. How does the FED set

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Speaker 1: us up for the rest of the decisions this week?

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Speaker 10: So obviously the Fed sets the kind of the tone

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Speaker 10: of whether we're going to see more dubbishness or more

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Speaker 10: hawkishness globally. So if they do deliver on the dubbish

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Speaker 10: end of the spectrums, I expect that will kind of

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Speaker 10: weigh on yields globally. But again I go back to

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Speaker 10: the fact there is so much price in the curve.

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Speaker 10: I think we get a douvish FED today. We got

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Speaker 10: fifty basis points and the two year yields bottom this week,

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Speaker 10: and we actually see yields rising to year end despite

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Speaker 10: the fifty basis points cut, because people are going to

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Speaker 10: realize they're abandoned. There are complacent non inflation, they're bullish

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Speaker 10: on the economy, or at least they're extending the economic cycle,

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Speaker 10: and that means that ultimately yields need to price out

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Speaker 10: the amount of right cuts that are priced. So I

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Speaker 10: run enough. I expect a bigger cut today, and I

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Speaker 10: think that'll actually see yields globally tick up towards the

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Speaker 10: year end after the new jerk reaction.

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Speaker 2: Mark Ledmore, our executive editor for Markets Live, thanks very

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Speaker 2: much for joining us on the program. More from Market

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Speaker 2: and his team MLIV. It's the function on the terminal.

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Speaker 1: With hedge fund titans Citadel and Millennium closed to outside

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Speaker 1: cash amid a dearth of talent able to manage their money,

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Speaker 1: some of the firm's traders are seizing the chance to

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Speaker 1: go it alone, and investors are backing them with an

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Speaker 1: avalanche of assets. The choice for the multi strategy funds

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Speaker 1: founders Ken Griffin and is the Englander, is whether to

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Speaker 1: fight this migration or whether to embrace it. Our senior

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Speaker 1: hedge funds reporting Nishan Kumar, joins us now for more

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Speaker 1: details on today's Bloomberg Big take. Nichant, really good to

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Speaker 1: speak to you. Who are these new hedge fund cubs?

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Speaker 5: Then?

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Speaker 11: Hi, good morning, So first of all, like, who are cubs?

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Speaker 11: You know, it's a female nomenclature in the hedge funds industry.

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Speaker 11: You can call it as a group of famed hedge

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Speaker 11: fund managers who all trained under Julian Robertson and now

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Speaker 11: Julian Robertson was one of his generations most renowned hedge

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Speaker 11: fund managers, spawning dozens of cubs, essentially former employees of his,

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Speaker 11: who all learned the trade at his firm before heading

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Speaker 11: out on their own. He was the founder of Tiger

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Speaker 11: Management and played like this sort of a godfather to

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Speaker 11: a new generation of hedge fund stars. He unfortunately died

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Speaker 11: in twenty twenty. But we are starting to see, you know,

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Speaker 11: others taking that role, whether they like it or not,

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Speaker 11: and Cedadel and Millennium are dominating that trend at the moment.

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Speaker 2: So what sort of money are these newer entrants attracting?

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Speaker 11: I mean, it's really unprecedented to say. The list the

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Speaker 11: three biggest startups this year, led by Bobby jan who

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Speaker 11: comes from Millennium, Diego Megia also from Millennium, and Todd

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Speaker 11: Barker who was at Citadel. Between them, they have raised

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Speaker 11: fourteen billion dollars. It's a requird amount in such a

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Speaker 11: short period of time, and this is at a time

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Speaker 11: when the hedge one industry as a whole is bleeding

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Speaker 11: tens of billions of dollars, you know for investor withdrawals.

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Speaker 11: So it's quite unprecedented. The hedge one industry has never

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Speaker 11: seen this sort of activity led by startups ever.

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Speaker 1: Okay, so a new generation then coming to the foe.

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Speaker 1: How are the giants of the industry then responding? You

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Speaker 1: sort of mentioned that.

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Speaker 11: Well, they don't have much choice, you know. I mean,

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Speaker 11: they are become affcting of their own success. They are

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Speaker 11: training this new generation of hedge fund stars who are

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Speaker 11: seeing their careers sort of maxed out at those firms,

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Speaker 11: and they're always thinking what's next. We have to remember

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Speaker 11: these are highly trained, skilled, ambitious people, so they are

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Speaker 11: not going to be satisfied within the confines of their

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Speaker 11: current homes. So multistrats can't do much about it beyond

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Speaker 11: maybe imposing longer non competes to discourage them from spinning out.

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Speaker 11: But some are responding by backing the outgoing managers. As

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Speaker 11: we have said in the story, the next best thing

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Speaker 11: to keeping talent is keeping your money with them so

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Speaker 11: that you could continue taking advantage of that talent.

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