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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the.

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Speaker 3: Blueberg DAYBAQ podcast, available every morning on Apple, Spotify or

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Speaker 3: wherever you listen. It's Wednesday, the twenty eighth of May

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Speaker 3: in London. I'm Caroline Hepca. Asia faces its Cell America moment,

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Speaker 3: as some of the world's largest money managers tell us

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Speaker 3: and unwind is just getting started. SpaceX starship Rocket disintegrates

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Speaker 3: during a test flight in the latest setback for Elon

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Speaker 3: Musk's Mars ambitions. Plus a special report on the Italian

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Speaker 3: billionaire tycoon trying to block a tie up between Generally

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Speaker 3: and the French asset manager Natixis. Let's start with a

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Speaker 3: roundup of our top stories. Asian investors have told Bloomberg

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Speaker 3: that they are rethinking their previously bullish approach to US assets.

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Speaker 3: The move has been driven by concerns over the US

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Speaker 3: budget deficits political polarization, and the impact of President Trump's

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Speaker 3: policies on the US dollar. The moves could lead to

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Speaker 3: a significant unwinding of Asia's seven and a half trillion

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Speaker 3: dollars worth of investments. Money managers have told our rates

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Speaker 3: reporter Ruth Carson that this is a big change.

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Speaker 4: So almost unanimously. Talking to people across markets. The message

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Speaker 4: is that Donald Trump's trade war two point zero is

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Speaker 4: only accelerating the process of de dollarization, which in a

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Speaker 4: way is dragon for people turning away from the dollar

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Speaker 4: and finding alternatives.

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Speaker 3: Ruth Carson speaking there. It follows a sell off in

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Speaker 3: the dollar that has already seen Tywanese insurers, for example,

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Speaker 3: reporting a six hundred and twenty million dollar loss in

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Speaker 3: April alone. Rajieve Demelo, a portfolio manager at Gamma, summed

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Speaker 3: up the view of many people who spoke to Bloomberg, saying, quote,

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Speaker 3: mark kits are at an inflection point, witnessing the birth

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Speaker 3: pains of a new regime in finance. And you can

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Speaker 3: read today's report our Big Take report on Asia's Cell

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Speaker 3: America moment right now via the terminal or at Bloomberg

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Speaker 3: dot com. And in related news, Japan's latest auction of

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Speaker 3: forty year government bonds has seen its weekest demand in

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Speaker 3: almost a year, driving the yield on the country's thirty

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Speaker 3: year bonds up by ten basis points. The outcome risks,

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Speaker 3: fueling further volatility in global debt markets amid concerns that

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Speaker 3: rising government spending could push deficits into dangerous territory. Japan's

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Speaker 3: debt sale followed aggressive upward pressure on global borrowing costs

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Speaker 3: last week, which drove up yields on long maturity debt

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Speaker 3: from the US to Germany and elsewhere. Bloomberg has learned

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Speaker 3: that Citadel Securities has a reported record profit and trading

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Speaker 3: revenue in the first three months of the year, boyd

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Speaker 3: by recent market volatility. Bloomberg's Ewan Potts has the details.

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Speaker 5: Now the uncertainty emanating from the White House has been

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Speaker 5: a boon for banks and trading desks in the first quarter.

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Speaker 5: We understand market making giants. Citadel has posted three point

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Speaker 5: four billion dollars in net trading revenue in the first quarter,

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Speaker 5: again a roughly forty five percent on the same period

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Speaker 5: last year. Net income rose seventy percent on those increased

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Speaker 5: volumes as investors looked to rebalance their portfolios. The bumber

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Speaker 5: quarter means Citadel's trading turnover top that of some long

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Speaker 5: established banks, including Barklay's and UBS in London. I'm youwing

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Speaker 5: pots Bloomberg Radio.

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Speaker 3: President Trump has warned that Vladimir Putin is quote playing

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Speaker 3: with fire, as the US president weighs imposing sanctions on Moscow.

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Speaker 3: Speaking on his Truth social platform, Trump also stated that

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Speaker 3: he had already prevented bad things from happening to Russia.

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Speaker 3: Evelyn Farcas's executive director at Arizona State University's McCain Institute.

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Speaker 3: She says the White House may have missed calculated the

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Speaker 3: Russian leader's intentions.

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Speaker 6: Clearly, Donald Trump thought that Vladimir Putin was a guy

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Speaker 6: who was willing to make a deal. Putin will make

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Speaker 6: a deal, but only on his terms. And I think

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Speaker 6: what we're going to find out, We're going to see

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Speaker 6: our president realize that Putin doesn't want an end to

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Speaker 6: this war.

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Speaker 3: Ste McCain institutes Evelyn Farcas speaking there. The news comes

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Speaker 3: as the Kremlin has escalated its aerial attacks against Ukraine

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Speaker 3: in recent days, despite the White House urging a cease

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Speaker 3: far in talks mediated by the Vatican. So far, President

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Speaker 3: Trump has resisted efforts led by Senate Republicans and European

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Speaker 3: leaders to intensify measures against Russia, despite saying over the

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Speaker 3: weekend that he would absolutely consider new sanctions. The US

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Speaker 3: Homeland Security Secretary is backing a nationalist opposition candidate to

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Speaker 3: win Poland's upcoming election. Addressing a conservative gathering in southeastern Poland,

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Speaker 3: yes Christy Nomes said that a victory for Karol Navrotsky

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Speaker 3: of the Law and Justice Party would ensure close ties

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Speaker 3: with the United States.

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Speaker 7: You will continue to have a US presence here, a

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Speaker 7: military presence fort Trump, that we can work together for

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Speaker 7: the security of both of our nations. That is what

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Speaker 7: we need Poland to do now. We need you to

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Speaker 7: elect the right leader.

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Speaker 3: US Homeland Security Sector Christie Nomes, speaking there, she went

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Speaker 3: on to criticize Nevrotsky's opponent, the former Warsaw mayor Rafael Tchafskovsky,

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Speaker 3: calling him an absolute train wreck of a leader. Her

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Speaker 3: intervention is the latest in a round of consistent efforts

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Speaker 3: to sway European elections in favor of nationalists and right

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Speaker 3: wing candidates by the Trump administration. Poland's elections are set

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Speaker 3: to take place on the first of June. Recent opinion

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Speaker 3: polls show both candidates on equal footing. SpaceX is the

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Speaker 3: latest starship rocket suffered a leak during a launch and

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Speaker 3: disintegrated in space. First the booster rocket exploded, Then here

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Speaker 3: is the moment on the SpaceX feed that the rocket

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Speaker 3: attempted to re enter the atmosphere.

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Speaker 2: And it's going to make an uncontrolled re entry. Important

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Speaker 2: to note this is a contingency that is in essentially

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Speaker 2: a tumble. We had lost that attitude control, so Starlink

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Speaker 2: when it's able to connect able to feed this down.

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Speaker 2: We are at the phase where we would expect entry

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Speaker 2: to start within the next minute or so, so we

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Speaker 2: are entering uncontrolled.

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Speaker 3: The Starship rocket then fell to pieces into the Indian Ocean.

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Speaker 3: It is the third setback in a row for Elon Musk.

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Speaker 3: Musk has recently declared SpaceX will send a Starship rocket

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Speaker 3: to Mars carrying robots as soon as next year, which

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Speaker 3: experts say is an incredibly ambitious timeline. Now to some

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Speaker 3: news in the UK, the government says that it will

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Speaker 3: cut the planning hurdles faced by small home builders. The

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Speaker 3: move to reduce bureaucracy comes as Deputy Prime Minister Angela

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Speaker 3: Rayner said that the official target of building one point

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Speaker 3: five million new homes by the government was a stretch.

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Speaker 3: Here is Billy Bogs James Walcock.

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Speaker 8: Now, building one point five million homes in five years

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Speaker 8: was always an ambitious target for the Labor government. The

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Speaker 8: UK hasn't built houses at that rate since the nineteen sixties,

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Speaker 8: but since Labour came to power last year, UK building

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Speaker 8: activity has contracted at the sharpest rates since the coronavirus pandemic.

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Speaker 8: That's driven by higher interest rates and a shortage of

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Speaker 8: planning resources. The government now wants to slim down the

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Speaker 8: rules for small builders, but the sector is still questioning

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Speaker 8: how the government reversed a sixty year decline without additional

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Speaker 8: investment incentives or major deregulation and planning reform In London,

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Speaker 8: James Worcock, Bloomberg Radio, and.

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Speaker 3: Those are our top stories for you this morning. Let's

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Speaker 3: have a look at the markets. US and Europeans stock

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Speaker 3: futures edging lower concerns about the fiscal health of the

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Speaker 3: US economy. We also had a disappointing forty year bond

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Speaker 3: auction out of Japan. The sale had been seen as

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Speaker 3: quite a key test for long maturity bonds. Of course,

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Speaker 3: we've seen big moves in the bond markets about worrying

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Speaker 3: developments when it comes to increased government borrowing in places

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Speaker 3: like the US and elsewhere. Looking at JGB yields this morning,

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Speaker 3: two ninety three for that thirty year long bond up

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Speaker 3: six and a half basis points. US yields up more

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Speaker 3: modestly two and a half basis points, So again the

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Speaker 3: long bond in the US trading under five percent four

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Speaker 3: ninety seven. As for Asian markets, actually they remain a

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Speaker 3: little bit resilient. Nicket two two five up by a

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Speaker 3: quarter of one percent. The cost we's up one point

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Speaker 3: two percent this morning. We do have Nvidia earnings which

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Speaker 3: will be closely watched after markets close here in Europe tonight.

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Speaker 3: We'll have more on that in just a moment. Those

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Speaker 3: are the markets. In a moment, I'm going to bring

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Speaker 3: you the latest on a move away from US assets,

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Speaker 3: major story that we're covering for you today, plus also

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Speaker 3: the story of an Italian billionaire who wants to revive

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Speaker 3: generally by preventing a big deal. But before we get

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Speaker 3: into those road trip anyone, chances are you'll be behind

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Speaker 3: the wheel at least a few times this summer, surely

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Speaker 3: to visit some friends, escape the city, maybe get over

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Speaker 3: to the continent or even further afield a big open

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Speaker 3: road trip across America. All sounds great, well, Hannah Elliott

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Speaker 3: has the best advice for you from the car nerds.

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Speaker 3: Of course, she says, think about your passengers who you're

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Speaker 3: traveling with, Choose the scenic route, sort your playlist, use

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Speaker 3: a paper road map. Of course, she says it's good

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Speaker 3: for your cognitive health. She's got a whole piece that

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Speaker 3: is packed full of really great advice. She's also got

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Speaker 3: lots of different apps that she recommends if you're going

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Speaker 3: on the road, breaking it down. It's a beginning, middle,

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Speaker 3: and end, and then picking maybe a fantastic met to

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Speaker 3: have at the finish. Yes, it was inspiration for maybe

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Speaker 3: one of my road trips over the summer.

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Speaker 9: She said.

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Speaker 3: It could be a picnic oysters think about the view.

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Speaker 3: The route is as important as the destination. Anyway, I'll

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Speaker 3: leave you with those thoughts this morning from Hannah Elliott,

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Speaker 3: and I'll add a note to where you can find

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Speaker 3: that piece in our show notes today. But it was

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Speaker 3: a lovely story about what delights maybe in stare for

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Speaker 3: us over the summer holidays. Perhaps now let's think about

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Speaker 3: another major story today. It could be the start of

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Speaker 3: a massive global shift. Asian investors are rethinking their strategy

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Speaker 3: on investing in US assets. Joining me now to discuss

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Speaker 3: is Bloomberg's Asia wealth. Reported Diana Lee on today's Big

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Speaker 3: Take story. Diana, good morning. Firstly, I'd like to sort

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Speaker 3: of rewrap and think about how we actually got to

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Speaker 3: this point in the first place.

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Speaker 10: Yeah, good morning, Caroline. So absolutely, for many years, Asia's

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Speaker 10: big exporting nations had a pretty straightforward stone with the US.

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Speaker 10: So they would sell a massive amount of products to

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Speaker 10: American consumers and businesses, and then with all these US

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Speaker 10: dollars they earned, they would typically reinvest a lot of

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Speaker 10: that money back into American financial assets, you know, typically

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Speaker 10: US government bonds and company stocks. This whole thing really

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Speaker 10: got going after the nineteen ninety seven Asian financial crisis,

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Speaker 10: and that was a huge shock. It really taught these

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Speaker 10: Asian economies they needed a strong cushion of foreign money,

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Speaker 10: especially the US dollars, to protect themselves. So back then,

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Speaker 10: earning the dollars from the exports and then parking them

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Speaker 10: into what they saw as a safe US assets became

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Speaker 10: the key. And this flow of money was at its

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Speaker 10: highest in twenty oh four, back then, when about three

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Speaker 10: hundred and fifty four billion US dollars from Asia went

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Speaker 10: into US assets in just that year. And at that point,

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Speaker 10: it seemed like almost every dollar earned from US sales

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Speaker 10: went straight back to American markets, which eventually led to

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Speaker 10: the Asian investors holding about seven point five trillion US

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Speaker 10: dollars in US investments.

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Speaker 3: I mean, it's such a huge sum, isn't it. It's

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Speaker 3: the mind boggles. But we have started to see this

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Speaker 3: massive trend really beginning to unwind and some pain already.

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Speaker 10: Yeah. Absolutely, we're definitely seeing some clearing science, especially even

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Speaker 10: before the latest trade discussions. The amount of the Asian

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Speaker 10: money flowing into the US has already slowed down from

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Speaker 10: its peak. By twenty twenty four, only about eleven percent

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Speaker 10: of the money Asia earned from its trade surplus with

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Speaker 10: the US was being reinvested there, which is a big drop.

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Speaker 10: And we see that big players are also making moves.

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Speaker 10: You know, Japan's largest life insurance Nippon Life, is looking

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Speaker 10: for alternatives to US bonds, and a major Australian pension

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Speaker 10: fund also said that US investments have already probably picked

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Speaker 10: and China has been steadily cutting its holdings of US treasuries,

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Speaker 10: so the impact could be a lot of financial pain.

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Speaker 10: For example, when the US dollar dropped after the tariff

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Speaker 10: were announced, we see Taiwanese insurers lost about six hundred

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Speaker 10: and twenty million US dollars in just one month, and

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Speaker 10: then we see the sudden search in the Taiwan dollar

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Speaker 10: threaten billions more losses for the unhatched US investments. And

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Speaker 10: we also see the yen carry trade on wind where

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Speaker 10: investors boring cheap yen to invest in the US assets

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Speaker 10: they got squeezed when the yen settling strengthened. And that's

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Speaker 10: the report effect we see through the global financial markets.

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Speaker 4: Yeah.

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Speaker 3: The thing is, though, part of this online is about

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Speaker 3: whether Asia can pivot to more domestic consumption, and this

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Speaker 3: goes to the idea about whether this trend is actually

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Speaker 3: here to stay.

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Speaker 10: Yeah, So if this trend really picks up steam, we

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Speaker 10: could be talking about a huge amount of money moving around,

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Speaker 10: and some analysts assume it's about two point five trillion

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Speaker 10: US dollars we're talking about in terms of where.

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Speaker 9: Could it go.

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Speaker 10: Emergent market currencies could get a boost, and we might

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Speaker 10: see some investing flowing into the stocks in places like

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Speaker 10: Europe or Japan, and we see countries like Australia and

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Speaker 10: Canada could also see more interest in their debt markets,

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Speaker 10: and Japan, for instance, is already seeing record foreign money

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Speaker 10: coming in, and for Asian countries themselves, a big long

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Speaker 10: term change would be to get their own populations to

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Speaker 10: spend more. China, for example, for so long they've been

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Speaker 10: focused on saving and exporting, and if China can boost

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Speaker 10: its home domestic consumption, they would be less reliant on

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Speaker 10: any single export market and better able to handle these

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Speaker 10: kinds of global financial shifts.

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Speaker 3: Yeah, and it does seem to be perhaps we are

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Speaker 3: in the foothills of a major change. Diana, thank you

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Speaker 3: so much for being with me this morning. Bluebags, Asia

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Speaker 3: Welf reported Diana Lee, Now let's go to Europe. There

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Speaker 3: is a bordering battle going on for Italy's largest insurer

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Speaker 3: and Europe's third biggest, with an Italian construction tycoon weighing

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Speaker 3: in against a partnership between a Generali and the French

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Speaker 3: asset manager Natixis and joining me to explain this is

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Speaker 3: Blomberg's Alessandra Migliaccio, Alexandra Comorni. Good to have you with me. Now,

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Speaker 3: who exactly is this Italian billionaire? I'll have a go

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Speaker 3: at saying his name. Francesco Guetano caltagirone. Is that it?

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Speaker 9: Yes, it's calta Girone, and he's quite a character, is

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Speaker 9: eighty two first of all, so he's still very very

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Speaker 9: much involved in Italian politics, in Italian banking and in

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Speaker 9: his family business. He built an empire starting with construction

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Speaker 9: back in the sixties and in Rome, for example, they

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Speaker 9: call him the eighth King of Rome because it said

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Speaker 9: that anyone who doesn't live in the center probably lives

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Speaker 9: in a Girona built house. But it's no longer or

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Speaker 9: just construction. It's also a media empire. He owns Rome's

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Speaker 9: biggest newspaper. He has influence over a lot of people.

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Speaker 9: And it's also you know, banking and finance at this point,

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Speaker 9: because he become an investor with all the money that

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Speaker 9: he's built in these years. So now Tata Girone is,

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Speaker 9: you know, someone to be reckoned with, and he's a

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Speaker 9: figure that's starting to upsset equilibrium in northern Italy, which

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Speaker 9: is more known for its involvement in banking. He's kind

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Speaker 9: of a new center of power in Italy right now.

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Speaker 3: M that's interesting. So why this deal in particular, why

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Speaker 3: is he challenging it and what does he envisage instead?

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Speaker 9: So being eighty two, Kata Girona tells us in the

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Speaker 9: interview that he's not really interested in low level politics

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Speaker 9: or small time stuff. He has a bigger vision, and

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Speaker 9: his vision is one that's linked to a certain type

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Speaker 9: of Italian capitalism, which is a kind of a national capitalism.

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Speaker 9: So it goes hand in hand with the state. It

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Speaker 9: goes hand in hand, particularly with this government, which is

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Speaker 9: also has a national view, nationalistic view of finance. And

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Speaker 9: what he says is basically that he believes Itali, Italy

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Speaker 9: is biggest insure, one of Europe's key insurers, needs to

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Speaker 9: remain Italian. He doesn't want it or pieces of it

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Speaker 9: to fall into the hands of foreigners, even if those

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Speaker 9: foreigners are merely our French friends, allies and you know,

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Speaker 9: common co Europeans in the European Union. He is concerned

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Speaker 9: because Genidali has a huge pile of Italian sovereign bonds

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Speaker 9: thirty six billion, and he'd rather those stay firmly in

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Speaker 9: Italian hands in case of financial issues. Now this is

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Speaker 9: an ongoing issue in Europe. We know that the Germans

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Speaker 9: don't want, for example, Italian Bank, you need credit to

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Speaker 9: take over Commerce Bank. It's not just the Italians, but

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Speaker 9: it's a certain vision of capitalism, and not everyone has

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Speaker 9: that vision. Of course, even within Italy some people say

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Speaker 9: why would that be a problem. In the end, insurers

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Speaker 9: do what's good for the shareholders, they do what's good

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Speaker 9: for business. For example, French BNP Pariba owns Italy BNL Bank,

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Speaker 9: which also contains government bonds, and there's never been a

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Speaker 9: problem with that. They haven't sold the Italian bonds unreasonably.

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Speaker 9: You know, everyone just takes care of business. So there

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Speaker 9: are these two visions of capitalism, and his vision is

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Speaker 9: a national Italian.

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Speaker 3: One, yeah, which in some senses is very much the

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Speaker 3: opposite of what people see is the benefits coming from

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Speaker 3: the European Union and all of these countries binding together

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Speaker 3: and having a much more open and free kind of

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Speaker 3: financial markets, breaking down those barriers. So I wonder where

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Speaker 3: you think this story is going to go next, Alexandra.

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Speaker 9: It's interesting because, as you say, if there's a broader

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Speaker 9: picture and part of the story, which is what is

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Speaker 9: the European Union, you know where is it going. If

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Speaker 9: the Germans don't want only credit to take commerce, the

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Speaker 9: Italians don't want the French involved in their insurance business,

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Speaker 9: et cetera. So that's very important and as far as

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Speaker 9: you know what happens next, we sort of have to

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Speaker 9: see what's going to happen in general in Italy's MNA scene,

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Speaker 9: because there is a lot going on right now. I

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Speaker 9: mentioned Unique Credit. They're bidding for BPM, which is another

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Speaker 9: Italian bank. We have Monte Pasci Diicna, an Italian bank

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Speaker 9: in which Cata Gerona has a stake. So I encourage

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Speaker 9: you to look at our story. We have a huge

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Speaker 9: graph that explains all this, and it's bidding from Mediobanca,

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Speaker 9: which is Italy's most important investment bank. And why is

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Speaker 9: that important. It's important because they in turn own a

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Speaker 9: stake in Genitali, so it all goes back to Genitali.

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Speaker 9: I know it sounds a bit contorted, but it's actually

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Speaker 9: once you look at it, it's actually reasonable. And what

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Speaker 9: we need to see is where all these pieces, you know,

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Speaker 9: fall into place in the coming months, and then we'll

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Speaker 9: be able to see, you know, who has the upper

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Speaker 9: hand and whether Francisca gion It can actually get his

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Speaker 9: way and keep everything Italian.

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