Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Daybake podcast, available every morning on Apples, Spotify or whatever
Speaker 1: you listen. It's Wednesday, the eighteenth of September in London.
Speaker 1: I'm Caroline Hepkit and.
Speaker 2: I'm Stephen Carroll. Coming up today. Exploding pagers kill nine
Speaker 2: and injure thousands more in Lebanon as Hezbala blames Israel.
Speaker 1: Twenty five or fifty, the Fed decides today as traders
Speaker 1: lock themselves into record bets on a half point cut.
Speaker 2: Plus the Hedge Fund, Family, Tree, Millennium, and Citadel nurture
Speaker 2: a fourteen billion dollar new generation, but there's no guarantee
Speaker 2: of replicating their elder's success.
Speaker 1: Let's start with a roundup of our top stories.
Speaker 2: At least nine people have been killed and some three
Speaker 2: thousand injured after thousands of pagers exploded across Lebanon. The
Speaker 2: militant group Hezbollah has accused Israel of orchestrating the attack,
Speaker 2: raising fears of an escalation and the conflict that's seen
Speaker 2: near daily skirmishes for much of the last year. Israel
Speaker 2: has declined to comment. Here's how US State Department spokesperson
Speaker 2: Matthew Miller reacted, we.
Speaker 3: Are always concerned about escalation. We are always concerned about
Speaker 3: any type of event that may cause further escalation, and
Speaker 3: it remains our message to both Israel and to other
Speaker 3: parties that they needed to do everything they can to
Speaker 3: try and reach a diplomatic resolution.
Speaker 2: Matthew Miller says the United States was not aware of
Speaker 2: the incident in advance or involved with the device blasts.
Speaker 1: It is not yet clear how the pages exploded, but
Speaker 1: theories range from the batteries being triggered to overheat to
Speaker 1: hidden explosives in the devices. The New York Times reports
Speaker 1: that US officials and others briefed on the operation say
Speaker 1: small amounts of explosive and remote trigger switches were implanted
Speaker 1: into the devices, which had been ordered from a Taiwanese company.
Speaker 1: Bloomberg has not been able to verify those reports, and
Speaker 1: the Taiwanese firm god Apollo has denied it manufactured the
Speaker 1: pages used in the attacks. The firm did confirm it
Speaker 1: licenses its brand to at least one other company, but
Speaker 1: declined to provide any names.
Speaker 2: The attack adds to tentions that have been building since July,
Speaker 2: when Israel assassinated a key commander of his BILA in Beirut,
Speaker 2: the prospect of a wider war in the Middle East,
Speaker 2: Russia's ongoing the invasion of Ukraine, and growing China US
Speaker 2: tensions are now an increasing focus for diplomats and world leaders.
Speaker 2: Speaking yesterday, JP Morgan, Chair and CEO Jamie Diamond, reiterated
Speaker 2: that he believes we should be more concerned about geopolitical
Speaker 2: risks than whether the United States goes into recession. Here
Speaker 2: are some of his key thoughts from a conversation at
Speaker 2: the Financial Markets Quality Conference in Washington.
Speaker 4: The most important thing that dwarfs all other things, that's
Speaker 4: really important, far more important today there's been probably since
Speaker 4: nineteen forty five, is this war Inkra, what's going on
Speaker 4: in Israel, in the Middle East, or americantal Asia with
Speaker 4: China and the attack fundamentally on the rule of law
Speaker 4: there was set up after World War Two. This may
Speaker 4: affect the free and democratic world for the next one
Speaker 4: hundred years. And I think that's the most important thing.
Speaker 4: I think people overly focused on your game for soft
Speaker 4: LANDI and hard landing. Honestly, mosto has been through all
Speaker 4: that stuff. It doesn't matter as.
Speaker 2: Much Jamie Diamond also weighed in on today's highly likely
Speaker 2: FED rate cut. The JP Morgan CEO says that whether
Speaker 2: the center bank goes for a quarter point or half
Speaker 2: point cut, the move is quote not going to be
Speaker 2: earth shattering.
Speaker 1: Record wages have been placed though, on the FED easing
Speaker 1: rates later as the day, with most targeting a half
Speaker 1: point cut. Bets on October. FED fund futures have topped
Speaker 1: any activity since nineteen eighty eight, and some risk sharp
Speaker 1: losses if policymakers opt for a standard sized reduction. Forecasters
Speaker 1: are largely anticipating a quarter point cut to five five percent,
Speaker 1: but economists at JP Morgan expect a bigger half point move.
Speaker 1: The hedge fund founder Ray Dallio says that a quarter
Speaker 1: point adjustment would be beneficial for creditors.
Speaker 5: What does that that have to do. FED has to
Speaker 5: keep interest rate high enough to satisfy the creditors that
Speaker 5: they're going to get a real return without having them
Speaker 5: so high that the debtors have a problem. So, now,
Speaker 5: if we're looking at this, whether it's twenty five or
Speaker 5: fifty basis points, twenty five basis points would be the
Speaker 5: right thing to do. If you look at the whole
Speaker 5: picture as a whole.
Speaker 1: Ray Dallio from Bridgewater Associates speaking there beyond today, investors
Speaker 1: see a more aggressive path of reductions this year than
Speaker 1: the series of quarter point cuts expected by economists. We
Speaker 1: will have live coverage on Bloomberg of the Fed's decision
Speaker 1: at seven pm London time, and have chaired your Own
Speaker 1: Powers press conference at seven thirty pm.
Speaker 2: Blackrock and Microsoft teaming up to invest in data centers
Speaker 2: and other infrastructure supporting artificial intelligence. The story Bloomberg's Charlie Pallace.
Speaker 6: The companies say the strategy, dubbed the Global AI Infrastructure
Speaker 6: Investment Partnership, while aimed to attract thirty billion of private
Speaker 6: equity capital, leveraging that to as much as one hundred
Speaker 6: billion to invest. According to a statement, the infrastructure investments,
Speaker 6: including energy projects, will be mostly in the US, with
Speaker 6: a portion of the funds being deployed in US partner countries.
Speaker 6: The firms are also teaming up with Global Infrastructure Partners
Speaker 6: and Abu Dhabi's MGX, which was created specifically this year
Speaker 6: to invest in AI in New York. Charlie Pellett Bloomberg Radio.
Speaker 1: Steve Cohen has stopped trading fer point seventy two, where
Speaker 1: he will remain Cocio, the billionaire hedge fund founder and
Speaker 1: owner of the New York Mets, plans to focus on
Speaker 1: driving growth and developing talent. The firm that Cohen founded
Speaker 1: manages a record thirty five point two billion dollars as
Speaker 1: of the first of July, by giving him a net
Speaker 1: worth of nearly fourteen point seven billion dollars and making
Speaker 1: him one of the one hundred richest Americans.
Speaker 2: The German finance Ministry is sticking to its commitment to
Speaker 2: sell off its entire stake in Comerence Bank. That's despite
Speaker 2: Unicredit's takeover ambitions. Bloomberg's teama at A Baio has the story.
Speaker 7: Unicredit's sudden move on Commertz Bank may have caught Germany's
Speaker 7: government off guard, but it hasn't altered their plans to
Speaker 7: offload shares in the firm. Bloomberg understands that divesting from
Speaker 7: the lender completely remains the goal, as previously agreed by
Speaker 7: the country's ruling coalition. However, it's not clear whether Chancellor
Speaker 7: Olaf Schultz agrees with the Finance Ministry's intentions. Any decision
Speaker 7: on further stock sales will need approval from a committee
Speaker 7: including officials from his office. For now, at least, the
Speaker 7: path ahead remains uncertain. A ministry representative sent a decision
Speaker 7: on how to proceed will be made in due court
Speaker 7: following further analysis in London. Tea Adebayo Bloomberg Radio.
Speaker 2: In a moment, we'll bring you more on that attack
Speaker 2: using exploding pagers in the Middle East. Plus we'll look
Speaker 2: ahead today's much anticipated Federal Reserve decision. But another story
Speaker 2: that copp Meyer this morning, a household name filing for bankruptcy.
Speaker 2: This provoked an unusual response in the newsroom when the
Speaker 2: headlines came through a little bit earlier this morning. I
Speaker 2: didn't think that so many people were without attach to Topperware.
Speaker 1: No, I've never a bit. Have you been to a
Speaker 1: Topperware party ever? No, No, neither vibe. But obviously it's
Speaker 1: such a huge and well known historic brand in the US.
Speaker 5: Yeah.
Speaker 2: Indeed, And look, it's been a company that's been struggling
Speaker 2: since twenty twenty. Back then it warned of its ability
Speaker 2: to stay in business. As of June this year, the
Speaker 2: plan to close its only US factory and layoff almost
Speaker 2: one hundred and fifty workers. So this bankruptcy filing in
Speaker 2: Delaware has been long in the preparation. They've been long
Speaker 2: negotiations running up to it. The company has more than
Speaker 2: seven hundred million dollars in loans. Founded though in nineteen
Speaker 2: forty six, Yeah, to bring its plastic products to the world.
Speaker 1: Yeah, there were so many plastics makers now though, to compete,
Speaker 1: aren't they? I mean, I think the equivalent in Europe
Speaker 1: is probably TetraPak Switzerland, which was actually founded only a
Speaker 1: few years later in nineteen fifty one. So anyway, that's
Speaker 1: of interest this morning, a historic brand filing for bankruptcy.
Speaker 1: One of the stories you can read on the Bloomberg terminal.
Speaker 2: That's bringing more now in our top story though, the
Speaker 2: exploding pages and Lebanon that have killed a number of
Speaker 2: people and left thousands injured. Hezbela and Labanon have blamed
Speaker 2: Israel for the attack. Our eme Ands director Roslind Matson
Speaker 2: joins us now for more raz How did this attack unfold?
Speaker 8: That is that it seems to have been nearly simultaneous.
Speaker 9: This was not a long series of pages exploding, but largely.
Speaker 8: At the same time. We know that about three thousand
Speaker 8: people were wounded.
Speaker 9: We've heard from one official that about half of those
Speaker 9: were hes Balah fighters and several people have been killed.
Speaker 9: Hospitals have been inundated with people seeking treatment, and these
Speaker 9: explosions took place mainly in the southern area of Beirut,
Speaker 9: and that's where Hesbelah does have a strong presence. Of course,
Speaker 9: Hesbela the militant group that's backed by Iran, and there's
Speaker 9: lots of footage obviously on social media of these blasts happening.
Speaker 9: It's interesting, of course, because most people use mobile phones
Speaker 9: now less so pages, although there are used we understand
Speaker 9: by medical workers in places including Lebanon and hesbler.
Speaker 8: Has relied on these kind of low tech.
Speaker 9: Devices walkie talkies and pages to try and avoid interceptions.
Speaker 8: So it was actually, in the end quite a smart
Speaker 8: target to go for when.
Speaker 9: It comes to Hesbolah. And of course Hesbla and Lebanon
Speaker 9: have immediately blamed Israel for this, and there's been no
Speaker 9: comment back the other way from Israel claiming responsibility.
Speaker 1: What's known though about how this might have been orchestrated, Well,
Speaker 1: it's the.
Speaker 9: Sort of attack that would take many many months to
Speaker 9: play and if not years. This is not something that
Speaker 9: was probably just pulled together in the past week. It's
Speaker 9: one of what we should we say, maybe the more
Speaker 9: creative attacks we can recall in recent times. The initial
Speaker 9: theory was that it had been potentially malware and that
Speaker 9: the pages simply heated up to the point they exploded,
Speaker 9: but that doesn't explain how they did so all at once,
Speaker 9: and so now experts are theorizing and some reports say
Speaker 9: that microscopic amounts of explosive could have been added to
Speaker 9: each page at some point along the manufacturing and supply chain,
Speaker 9: and then they were triggered remotely.
Speaker 8: There were reports that pages could have.
Speaker 9: Been sourced from Towan, although a small manufacturer there has
Speaker 9: denied making the devices. But wherever they originated, there's a
Speaker 9: long and complex supply chain in getting them to Hesbella fighters,
Speaker 9: where anything could have happened by others. So obviously whoever
Speaker 9: carried this out at some point along that supply chain
Speaker 9: has intervened to potentially plant explosives pager.
Speaker 2: Now Hesbela and Lebanon's government have blamed Israel for this.
Speaker 2: What is that the wider significance of this attack? Could
Speaker 2: this lead to an escalation?
Speaker 8: Well, that is the fear.
Speaker 9: Of course, we have reports that US officials, so they
Speaker 9: do believe this was orchestrated by Israel. There's a long
Speaker 9: history of action by Israel. They have claimed publicly the
Speaker 9: killing a few months ago of a senior Hesbela figure
Speaker 9: in Beirut, and of course they've been exchanging fire on
Speaker 9: almost a daily basis across the border from Lebanon. Hesbela
Speaker 9: says they're acting out of solidarity with Hamas, which is
Speaker 9: fighting Israel in Gaza, and so the fears of that
Speaker 9: broader war there, and Hesblo is obviously better trained and
Speaker 9: armed frankly than Hamas, and while you know, fifteen hundred
Speaker 9: injuries is significant, it doesn't really make a dent in
Speaker 9: their fighting force, which is much bigger. And there's been
Speaker 9: those concerns also because Israel is now saying it once
Speaker 9: the residents in the north of Israel who'd been displaced
Speaker 9: by these skirmishes with Hesbelah to return, and that's a
Speaker 9: war objective. So again it's all seemingly building to the
Speaker 9: potential for a more large scale offensive between Israel and
Speaker 9: Hezbalas that would open up the wars that.
Speaker 8: Israel is fighting into two proper fronts.
Speaker 1: Okay, roslyin, thank you so much for being with us.
Speaker 1: That is Blimberg's EMEA News director Roslyn mathieson joining us
Speaker 1: this morning.
Speaker 2: So to another story, Now, will the Federal Reserve cut
Speaker 2: by twenty five or fifty basis points? Markets will finally
Speaker 2: get an answer later to the question that's been occupying
Speaker 2: investors for weeks. Now to help us look ahead to
Speaker 2: the decision, our market's live executive answer, Mark Codmore is
Speaker 2: with us. Mark, great to have you on. So market's
Speaker 2: pricing in around thirty nine basis points of easing today
Speaker 2: from the Fed. That doesn't tell us much. What's your view?
Speaker 10: I think they'll do fifty. I don't think they want
Speaker 10: to surprise the market. In fact, just so walk to
Speaker 10: the studio, we're actually getting closer to forty than thirty nine.
Speaker 10: I think that's kind of the tipping point for them
Speaker 10: to do fifty. And I think that you know, it
Speaker 10: is still in balance, much more in balance than we're
Speaker 10: used to, but this it would be a much bigger
Speaker 10: shock to do twenty five. So I think they will
Speaker 10: deliver fifty, and I think it'll be a boost to
Speaker 10: the market in the short term.
Speaker 1: Yeah, I was going to say, what does that mean
Speaker 1: for markets, which outcome creates more volatility? But it seems
Speaker 1: like you think that the twenty five would would be
Speaker 1: would perhaps have a more volatile reaction.
Speaker 10: Yeah, at this stage, it's absolutely twenty five to be upsetting.
Speaker 10: I think there's a perception in much of the market,
Speaker 10: whether true or not, it doesn't matter. At the perceptions
Speaker 10: out there that the Fed has helped guide towards fifty
Speaker 10: through various media stories over the past week, and therefore
Speaker 10: the twenty five would be really confusing now will be
Speaker 10: more confusing. I accept there's a bit of divice don
Speaker 10: the market either way. So absolutely the much more negative outcome,
Speaker 10: a knee jerk would be on twenty five, much more
Speaker 10: volatility as people recalibrate to that. I will say, though,
Speaker 10: in either outcome, we've got so much rate cuts priced
Speaker 10: into the curve over the next year and a half
Speaker 10: that it doesn't really make a difference. If they do
Speaker 10: twenty five today, everyone assume fifty next time. If they
Speaker 10: do fifty today, everyone assumes twenty five time. So in
Speaker 10: the bigger picture, after the massive volatility we get short term,
Speaker 10: I don't necessarily think it's volatility into next week.
Speaker 2: What are you looking out for then in terms of
Speaker 2: the messaging that we'll get from Jerome Powell when he speaks,
Speaker 2: and what to look for in the quarterly projections.
Speaker 10: So what I think is going to be really really
Speaker 10: interesting today is how they justify the move that they
Speaker 10: go for. With my base case assumption they go fifty,
Speaker 10: is it fifty with a very positive message that we
Speaker 10: are getting more folks in the labor market, but you know,
Speaker 10: we're just being preemptive. We think that the economy, you know,
Speaker 10: rates are high enough and we can slightly ease policy.
Speaker 10: Rather than a panicked message of like concern that is
Speaker 10: my base case. I actually think this will be a
Speaker 10: very very bullish fed meaning I think it'll be like
Speaker 10: December last year, where they didn't seem to be any
Speaker 10: kind of economic validation to the sudden aggressive signaling that
Speaker 10: they are moving towards an easing stance, and that kind
Speaker 10: of extended the economic cycle, which is why we've not
Speaker 10: seen any rate cuts yet. I think that could be
Speaker 10: similar today that if they go fifty, but say look,
Speaker 10: we're trying to get ahead the curve. This extends the
Speaker 10: whole economic cycle again and we get we really push
Speaker 10: out the bull market. Now the bull market formulation will
Speaker 10: change in terms, will be less tech focused, will be
Speaker 10: a broadening at the valley.
Speaker 1: After the FED decision though, Mark interesting what you say
Speaker 1: it sets up the Bank of England meeting of course,
Speaker 1: and the Bank of Japan. I mean we get the
Speaker 1: August reading of CPI for the UK also the day
Speaker 1: before the Bank of England. How does the FED set
Speaker 1: us up for the rest of the decisions this week?
Speaker 10: So obviously the Fed sets the kind of the tone
Speaker 10: of whether we're going to see more dubbishness or more
Speaker 10: hawkishness globally. So if they do deliver on the dubbish
Speaker 10: end of the spectrums, I expect that will kind of
Speaker 10: weigh on yields globally. But again I go back to
Speaker 10: the fact there is so much price in the curve.
Speaker 10: I think we get a douvish FED today. We got
Speaker 10: fifty basis points and the two year yields bottom this week,
Speaker 10: and we actually see yields rising to year end despite
Speaker 10: the fifty basis points cut, because people are going to
Speaker 10: realize they're abandoned. There are complacent non inflation, they're bullish
Speaker 10: on the economy, or at least they're extending the economic cycle,
Speaker 10: and that means that ultimately yields need to price out
Speaker 10: the amount of right cuts that are priced. So I
Speaker 10: run enough. I expect a bigger cut today, and I
Speaker 10: think that'll actually see yields globally tick up towards the
Speaker 10: year end after the new jerk reaction.
Speaker 2: Mark Ledmore, our executive editor for Markets Live, thanks very
Speaker 2: much for joining us on the program. More from Market
Speaker 2: and his team MLIV. It's the function on the terminal.
Speaker 1: With hedge fund titans Citadel and Millennium closed to outside
Speaker 1: cash amid a dearth of talent able to manage their money,
Speaker 1: some of the firm's traders are seizing the chance to
Speaker 1: go it alone, and investors are backing them with an
Speaker 1: avalanche of assets. The choice for the multi strategy funds
Speaker 1: founders Ken Griffin and is the Englander, is whether to
Speaker 1: fight this migration or whether to embrace it. Our senior
Speaker 1: hedge funds reporting Nishan Kumar, joins us now for more
Speaker 1: details on today's Bloomberg Big take. Nichant, really good to
Speaker 1: speak to you. Who are these new hedge fund cubs?
Speaker 5: Then?
Speaker 11: Hi, good morning, So first of all, like, who are cubs?
Speaker 11: You know, it's a female nomenclature in the hedge funds industry.
Speaker 11: You can call it as a group of famed hedge
Speaker 11: fund managers who all trained under Julian Robertson and now
Speaker 11: Julian Robertson was one of his generations most renowned hedge
Speaker 11: fund managers, spawning dozens of cubs, essentially former employees of his,
Speaker 11: who all learned the trade at his firm before heading
Speaker 11: out on their own. He was the founder of Tiger
Speaker 11: Management and played like this sort of a godfather to
Speaker 11: a new generation of hedge fund stars. He unfortunately died
Speaker 11: in twenty twenty. But we are starting to see, you know,
Speaker 11: others taking that role, whether they like it or not,
Speaker 11: and Cedadel and Millennium are dominating that trend at the moment.
Speaker 2: So what sort of money are these newer entrants attracting?
Speaker 11: I mean, it's really unprecedented to say. The list the
Speaker 11: three biggest startups this year, led by Bobby jan who
Speaker 11: comes from Millennium, Diego Megia also from Millennium, and Todd
Speaker 11: Barker who was at Citadel. Between them, they have raised
Speaker 11: fourteen billion dollars. It's a requird amount in such a
Speaker 11: short period of time, and this is at a time
Speaker 11: when the hedge one industry as a whole is bleeding
Speaker 11: tens of billions of dollars, you know for investor withdrawals.
Speaker 11: So it's quite unprecedented. The hedge one industry has never
Speaker 11: seen this sort of activity led by startups ever.
Speaker 1: Okay, so a new generation then coming to the foe.
Speaker 1: How are the giants of the industry then responding? You
Speaker 1: sort of mentioned that.
Speaker 11: Well, they don't have much choice, you know. I mean,
Speaker 11: they are become affcting of their own success. They are
Speaker 11: training this new generation of hedge fund stars who are
Speaker 11: seeing their careers sort of maxed out at those firms,
Speaker 11: and they're always thinking what's next. We have to remember
Speaker 11: these are highly trained, skilled, ambitious people, so they are
Speaker 11: not going to be satisfied within the confines of their
Speaker 11: current homes. So multistrats can't do much about it beyond
Speaker 11: maybe imposing longer non competes to discourage them from spinning out.
Speaker 11: But some are responding by backing the outgoing managers. As
Speaker 11: we have said in the story, the next best thing
Speaker 11: to keeping talent is keeping your money with them so
Speaker 11: that you could continue taking advantage of that talent.
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the
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