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

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Speaker 1: Daybreak europ podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Friday, the twentieth of December in London.

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Speaker 1: I'm Stephen Carroll coming up today. Republicans and Democrats reject

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Speaker 1: a last minute proposal from Donald Trump and Elon Musk

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Speaker 1: to suspend the US debt ceiling, leaving a government shutdown

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Speaker 1: now just hours away. Kers Darmer gets set to appoint

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Speaker 1: Peter Mandelson, one of the leading figures of the Blair

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Speaker 1: Brown years, as the UK's ambassador to the United States.

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Speaker 1: Plus Keeping Things Private, we take a closer look at

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Speaker 1: why so many firms are opting against listing and why

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Speaker 1: it's creating a headache for public markets. Let's start with

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Speaker 1: a roundup of our top stories. A US government funding

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Speaker 1: plan backed by President elect Donald Trump and Elon Musk

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Speaker 1: has been rejected by the Republican Ledhouse of Representatives. The

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Speaker 1: two men insisted Republican lawmakers abandoned an earlier bipartisan deal

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Speaker 1: and instead back a proposal to suspend the debt ceiling

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Speaker 1: for two years. Over thirty eight members from Trump's party

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Speaker 1: voted with Democrats against the proposal. Here's the Republican House

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Speaker 1: Speaker Mike Johnson speaking after the vote.

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Speaker 2: The only difference on this legislation was that we would

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Speaker 2: push the debt ceiling to January of twenty twenty seven.

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Speaker 2: I want you all to remember that it was just

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Speaker 2: last spring that the same Democrats be rated Republicans and

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Speaker 2: said that it was irresponsible to hold the debt limit

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Speaker 2: the debt ceiling hostage. What changed it is? I think

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Speaker 2: really irresponsible for us to risk a shutdown over these issues,

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Speaker 2: on things that they have already agreed upon. I think

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Speaker 2: you need to be asking them the questions about that.

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Speaker 2: We will, we will regroup, and we will come up

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Speaker 2: with another solutions.

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Speaker 1: Mike Johnson, speaking after Elon Musk had called the bipartisan

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Speaker 1: version of the stopgap funding deal a crime. In a

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Speaker 1: post on social media. He'd urged lawmakers to shut down

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Speaker 1: the government rather than pass it. His Democrat representative Jamie

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Speaker 1: Raskin on why he voted against the subsequent revised plan

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Speaker 1: from Republicans.

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Speaker 3: We are an independent branch of government, and the US

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Speaker 3: Congress had an agreement that Democrats on both sides, Republicans

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Speaker 3: on both sides agreed too, and it was blown up

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Speaker 3: by a tweet by Elon Musk and so there's no

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Speaker 3: way we can reward that behavior.

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Speaker 1: Jimmie Raskin making his feelings clear as the rejection of

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Speaker 1: the revised bill by lawmakers sets the stage for a

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Speaker 1: potential government shutdown, with funding set to lapse on Friday

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Speaker 1: night unless a new solution is found. Peter Mandelson is

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Speaker 1: set to be appointed as the UK's ambassador to the

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Speaker 1: United States in an effort to spare Britain from being

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Speaker 1: hit by trade tariffs under Donald Trump. Bomberger's learned the

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Speaker 1: Labor Party veteran and former EU Trade commissioners expected to

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Speaker 1: take the post next month. Prime Minister cair Starmer set

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Speaker 1: out the number one job for any new ambassador yesterday.

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Speaker 4: I'm not a fan of tariffs.

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Speaker 5: We have to make sure that we avoid tariffs. We want.

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Speaker 5: We've got very good trade with the US, as we've

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Speaker 5: got trade, very good trade with other countries around the world.

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Speaker 5: I want to improve on that.

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Speaker 1: Aldos Darmer has met Trump, relations between the two are

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Speaker 1: seen as difficult. In a podcast last month, Mandelson said

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Speaker 1: if he were in government, he'd be trying to build

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Speaker 1: a relationship with Elon Musk the UK government as welling

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Speaker 1: tougher election finance rules. As rumors swirl of Omega donation

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Speaker 1: from Elon Musk, the tech billionaires reportedly weighing a donation

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Speaker 1: of as much as seventy eight million pounds to the

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Speaker 1: right wing Reform UK party. Bloomberg ex James Wilcock has more.

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Speaker 4: Ten million pounds. That's the largest amount ever given to

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Speaker 4: any UK political party in one go. Elon Musk met

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Speaker 4: with Reform UK's Nigel Ferrat this week and apparently was

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Speaker 4: eyeing that record. Reforms Deputy leader Richard Tice says, all

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Speaker 4: parties take donations.

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Speaker 5: I think an international business and as long as it's

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Speaker 5: legal under the Electoral Commission laws, as the Labour Party

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Speaker 5: of accepted donations, as the Tory Party of accepted donations

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Speaker 5: from international businessmen, yes it's absolutely fine.

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Speaker 4: But it's those rules that Tys mentions that Labor are

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Speaker 4: thinking about tightening. The election watchdog has long wanted to

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Speaker 4: limit donations from companies like Twitter UK to how much

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Speaker 4: they earn in Britain. Whether Labour choose to change those

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Speaker 4: rules or not, it's yes another sign of the threat

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Speaker 4: their party faces from reform if they can't deliver. In

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Speaker 4: London James Wilcock Blueberg.

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Speaker 1: Radio, the Bank of England is promising a gradual approach

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Speaker 1: to future interest rate cuts after it's held right steady

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Speaker 1: In its decision yesterday. Three of the nine members of

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Speaker 1: the Monetary Policy Committee voted for a cost Despite two

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Speaker 1: surprise overshoots in pay and inflation data this week, it's

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Speaker 1: assign the Central Bank has becoming less sensitive to data

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Speaker 1: sharks and is shifting to rely more on its own forecasts.

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Speaker 1: Here's b a week. Governor Andrew Bailey A caution.

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Speaker 5: Of bit on the numbers we've seen this week. There

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Speaker 5: were a bit of a surprise, I think inspy to

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Speaker 5: everybody actually now, there was quite a bit of noise

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Speaker 5: in the data coming from things that happened a year ago.

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Speaker 5: There was a funny unusual fall in the rate of

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Speaker 5: growth of wages lost this time last year. It didn't

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Speaker 5: last and that's coming out of the service. So just

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Speaker 5: a bit of caution there.

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Speaker 1: Bailey was speaking after policymakers rejected traders analysis that inflation

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Speaker 1: in the coming months will prove too persistent to allow

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Speaker 1: further reductions in borrowing costs. Markets are now pricing in

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Speaker 1: two quarter point rate cuts next year. The UK has

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Speaker 1: recorded its worst November car production numbers in forty four

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Speaker 1: years amid lackluster demand. According to the Society of Motor

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Speaker 1: Manufacturers and Traders, output plunged thirty percent from a year earlier,

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Speaker 1: marking the ninth straight month of decline. The sector has

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Speaker 1: been facing a downturn for years owing to higher costs

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Speaker 1: and Brexit related trade costs, further complicating the electoral electric

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Speaker 1: vehicle transition. Last month, policy makers pledged to re view

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Speaker 1: the UK's EV sales mandate. Critics say the government hasn't

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Speaker 1: done enough to stimulate demand, and the French Prime Minister,

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Speaker 1: Froswobayriu is aiming to present a new cabinet this weekend.

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Speaker 1: The Prime minister is also hoping to deliver a budget

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Speaker 1: by mid February, warning that failure to navigate the country's

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Speaker 1: current political challenges could be catastrophic. He's been holding consultations

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Speaker 1: with party leaders to form a new administration after the

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Speaker 1: previous government fell in a no confidence vote earlier this month.

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Speaker 1: And those are your top stories on the markets. US

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Speaker 1: equity markets closed in the red for a third day running.

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Speaker 1: The SMP five hundred eraising earlier gains to finish down's

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Speaker 1: zero point one percent. FedEx shares sored nine percent after

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Speaker 1: the bell on news of a spinoff of its freight business.

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Speaker 1: Nike shares jump by as much as eleven percent before

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Speaker 1: tracing on its earnings release as well. Tenure yields on

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Speaker 1: treasuries climbed as high as four point five to nine percent,

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Speaker 1: up five basis points. The dollar also resuming its uptrend,

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Speaker 1: touching the highest in over two years. After the Bank

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Speaker 1: of English decision, we saw sterling weekend zero point six percent.

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Speaker 1: Today it's another tenth of a percent week or at

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Speaker 1: one twenty four to ninety against the dollar. Front end

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Speaker 1: yields also moved lower on that Dubvish vote count. In Asia,

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Speaker 1: equities are trading in the red. The mscis specific indexten

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Speaker 1: by six tenths of one percent. In a moment, we'll

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Speaker 1: bring you more on the US looming government shutdown, plus

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Speaker 1: why some of the world's fastest growing companies are choosing

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Speaker 1: to stay private. But first, another story that caught our

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Speaker 1: eye this morning. This is about the music that gets

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Speaker 1: played in luxury shops at Stapely from our Pursuit's team

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Speaker 1: has been writing about this. He's been talking to an

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Speaker 1: agency called gray v. They're specialized in creating playlists for

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Speaker 1: retail and hospitality brands. Now, in their eyes, the music

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Speaker 1: that you hear when you're shopping or dining has three

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Speaker 1: goals when it's first of all, to get you into

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Speaker 1: the shop. Secondly, to create an environment that aligns with

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Speaker 1: the brand's identity and quote emotionally resonates with the audience.

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Speaker 1: And thirdly, to provide seasonal inspiration on upcoming collections. Lots

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Speaker 1: of interesting thoughts in the science of the philosophy behind

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Speaker 1: this as well. When the agency is targeting younger audiences,

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Speaker 1: they want to pepper in new music with things that

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Speaker 1: might sound familiar because perhaps they're trending on TikTok. Some

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Speaker 1: clients actually send twenty to thirty page briefings, including color samples,

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Speaker 1: to help them design what you should be listening to

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Speaker 1: the course you might as you might imagine, some brands

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Speaker 1: of very specific requirements as well, For example, no songs

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Speaker 1: that reference breakups in Tiffany's on Christmas music often a

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Speaker 1: controversial choice, a tough call. Most luxury brands, though, don't

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Speaker 1: want to offer what people are getting elsewhere. You can

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Speaker 1: read more in Ed's piece how music and Luxury Stories

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Speaker 1: has chosen to steer shopper behavior at on Bloomberg dot

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Speaker 1: com and on the terminal. Now, the United States government

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Speaker 1: heading towards a shutdown tonight unless a new funding pack

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Speaker 1: just agreed. That's after the plan backed by Donald Trump

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Speaker 1: was rejected by the Republican Lighthouse. Our senior editor Bill

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Speaker 1: Ferries joins us now for more bill, a temporary funding

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Speaker 1: bill was meant to keep things going until March. What

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Speaker 1: went wrong?

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Speaker 6: Well, you're right, this is a meltdown that is still

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Speaker 6: in progress here. So there was a second bill that

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Speaker 6: was proposed that really kind of fell more in line

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Speaker 6: with what Donald Trump has wanted. It had some of

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Speaker 6: the It had basically an extension of the increase in

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Speaker 6: the debt ceiling, and that was one of the key

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Speaker 6: provisions Trump wanted. But there are core Republicans, conservative Republicans

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Speaker 6: who basically, under no circumstances ever support increasing the debt ceiling,

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Speaker 6: and you saw a group of those come out. So

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Speaker 6: you had a basically Democrats vote in mass against this

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Speaker 6: changed bill that Trump wanted. And then you had I

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Speaker 6: think a three dozen or so Republicans who went against

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Speaker 6: their party leader. They went against Donald Trump's direct threat

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Speaker 6: that they would face opponents in their next election and said, no,

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Speaker 6: We're not going to vote to extend the or increase

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Speaker 6: the debt ceiling by two years. That ceiling is expected

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Speaker 6: to affect the US government in the spring, but really

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Speaker 6: the Treasury can make some maneuvers to extend it until

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Speaker 6: early summer. Donald Trump and the Republicans don't want to

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Speaker 6: have that fight next summer in his first few months

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Speaker 6: in office, but there are core Republicans that were unpersuaded

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Speaker 6: by this argument.

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Speaker 1: So what happens now? I mean, it's the twentieth of December,

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Speaker 1: presumably a lot of these lawmakers were hoping to leave

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Speaker 1: Washington for Christmas. Is another deal possible?

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Speaker 6: Well, anytime, as long as there's more time, a deal

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Speaker 6: is possible. The deadline before you have a partial government

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Speaker 6: shut down is late Friday night. So I think everyone

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Speaker 6: in Congress, particularly Speaker Mike Johnson, going to be working

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Speaker 6: to try to see if they can kind of thread

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Speaker 6: that needle between what Trump wants wants and what both

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Speaker 6: some Democrats and more Republicans can support. So I'm not

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Speaker 6: exactly sure how we does that. Maybe there's a partial,

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Speaker 6: a shorter term extension of the debt ceiling an increase

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Speaker 6: so that doesn't come up quite as soon. But Democrats,

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Speaker 6: of course have little incentive to make a deal here.

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Speaker 6: The debt ceiling fight is something that will potentially do

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Speaker 6: some damage to Donald Trump next year. Democrats are going

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Speaker 6: to let Republicans sustain that damage if they can.

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Speaker 1: I mean, Donald Trump's not president. Yes, we should remind

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Speaker 1: ourselves how damaging is it for him?

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Speaker 6: Yeah, you're really You're only supposed to have one government

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Speaker 6: at a time in any country. It will be a

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Speaker 6: damaging fight, I think for Republicans if Donald Trump cannot

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Speaker 6: get an increase in the debt ceiling pushed back further.

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Speaker 6: That's it's kind of it's not a symbolic fight, but

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Speaker 6: the debt ceiling increase is something that you know, Congress

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Speaker 6: appropriates spending and then usually later on they hit that

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Speaker 6: debt ceiling. It's it's kind of one of these backward

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Speaker 6: things that the party that is not in power likes

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Speaker 6: to use as a cudgel against the White House. But

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Speaker 6: it will be a damaging fight for Donald Trump, and

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Speaker 6: it is this whole fight right now is really testing

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Speaker 6: his strength even with his own party, when he's heading

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Speaker 6: into into a presidency and administration in which he will

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Speaker 6: control the White House, the Senate, and the House of Representatives.

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Speaker 6: It just goes to show you don't have complete power

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Speaker 6: even when you have a majority.

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Speaker 1: What about Elon Musk and all of this because he

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Speaker 1: had supported this revised plan, the one that didn't get through.

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Speaker 1: Is he learning the realities of Washington politics before he

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Speaker 1: takes up his new role.

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Speaker 6: Well, Elon Musk has, among his many tweets in the

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Speaker 6: last several days about this, he said that he's okay

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Speaker 6: with the government going into a shutdown and staying that

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Speaker 6: way until Donald Trump takes office on January twentieth. That

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Speaker 6: would be, if it happened, one of the longest government

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Speaker 6: shutdowns in history, and it would also make it very

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Speaker 6: hard to plan Donald Trump's inauguration. So that's unlikely. But

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Speaker 6: Elon Musk is taking a, you know, burn your ship's

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Speaker 6: approach to this, and I think there's going to have

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Speaker 6: to be whether it's Speaker Johnson, Donald Trump, or other

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Speaker 6: Republican leaders of the House and Senate, there's going to

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Speaker 6: have to be some reality injected into this because you

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Speaker 6: do need to have a function in government between now

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Speaker 6: and Trump's inauguration.

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Speaker 1: Okay, both ferries, our senior editor, thanks very much for

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Speaker 1: joining us now. IPO bankers are gearing up for a

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Speaker 1: bumper year in twenty twenty five, but even in the

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Speaker 1: US and Nation of Public offerings are still recovering from

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Speaker 1: the interest rate hiking cycle. At the same time, there's

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Speaker 1: been an explosion in private credit. Apollo estimates the industries

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Speaker 1: already were at twenty trillion dollars and could reach forty

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Speaker 1: trillion in the next five years. And with that expanse

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Speaker 1: and some of the world's most exciting companies are remaining

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Speaker 1: in private hands. Think SpaceX, are open AI, both worth

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Speaker 1: over one hundred billion dollars, but show no signs of

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Speaker 1: going public. I've been discussing this with Bloomberg's Bailey Lipshaltz.

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Speaker 1: It covers how companies go public, and I asked them

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Speaker 1: how deeply this trend of staying private goes.

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Speaker 7: It is a widespread trend that has been really taking

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Speaker 7: place over the last two two and a half decades.

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Speaker 7: When you look at the US alone, the number of

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Speaker 7: publicly traded companies has been cut in half from about

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Speaker 7: seventy five hundred to four thousand. So this is something

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Speaker 7: that has been a real sea shift that has been

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Speaker 7: taking place again, really when you go back to the

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Speaker 7: mid two thousands with companies preferring to stay private after

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Speaker 7: the fallout of the dot com bubble.

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Speaker 1: So why are they making this decision? Why are they

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Speaker 1: choosing to stay private? Easier access to capital.

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Speaker 7: We've seen such a big push from some of the

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Speaker 7: biggest investors to wanting to get a piece of some

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Speaker 7: of these companies earlier. You also don't have to deal

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Speaker 7: with activist investors, deal with journalists kind of dig through

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Speaker 7: filings and financial updates. And also it costs a lot

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Speaker 7: of money to be public. So if you can be

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Speaker 7: data Bricks who just raised ten billion dollars at a

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Speaker 7: sixty two billion dollar valuation. You mentioned SpaceX, Open Ai,

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Speaker 7: and a number of other companies, they really, when you

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Speaker 7: talk to management, an IPO could be the path at

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Speaker 7: some point, but they prefer to state private just because

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Speaker 7: they can continue to give investors early investors, employees access

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Speaker 7: to liquidity, ability to sell some of their shares to

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Speaker 7: actually turn paper profits into real cash, and they're not

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Speaker 7: dealing with the headaches that come with being a public company.

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Speaker 1: But it seems like in a lot of cases these

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Speaker 1: companies are sort of keeping the option open that they

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Speaker 1: could go public at some point down the line. Do

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Speaker 1: we have any idea of how much money is tied

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Speaker 1: up in these private companies that could, in theory list

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Speaker 1: if they wanted to.

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Speaker 7: So we've seen data with private equity owned companies alone,

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Speaker 7: there's about two point nine trillion dollars worth of value

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Speaker 7: that needs to be either sold through a sale or

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Speaker 7: brought public through an IPO, and you have a number

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Speaker 7: that's pretty similar on the venture capitalist side of things.

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Speaker 7: So this is trillions of dollars in terms of companies

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Speaker 7: that are tied up and these private investments, it's just

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Speaker 7: a question of when they would go public, what that

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Speaker 7: would look like, and whether valuations make sense for venture capitalists,

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Speaker 7: private equity firms, or if they want that branding event

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Speaker 7: where they're ringing the bell at the stock exchange here

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Speaker 7: in New York and have the ability to point to

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Speaker 7: a ticker that trades on the New York Stock Exchange

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Speaker 7: or on the NASDAQ.

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Speaker 1: Mean mentioned valuations there, How reliably can we value a

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Speaker 1: company that stays.

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Speaker 7: Privus it's a hotly contested debate because when you look

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Speaker 7: at companies like open Ai being valued to one hundred

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Speaker 7: and fifty seven billion dollars, that means they found enough

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Speaker 7: investors who thought that that was worth writing a check for.

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Speaker 7: If you're publicly traded, you're getting kind of marked to

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Speaker 7: market every second that a market is open for trading,

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Speaker 7: So it's a bit opaque. It's a bit of a

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Speaker 7: black box in terms of how some of these valuations

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Speaker 7: end up. But presumably the investors, the thrive capitals of

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Speaker 7: the world, the venture capitalists, these private equity firms who

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Speaker 7: take these companies private, they have an expectation and kind

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Speaker 7: of a specialization that those numbers do make sense. But

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Speaker 7: the big debate we've been seeing and why we've seen

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Speaker 7: such a dearth of offerings and really the last three

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Speaker 7: years partly has been companies were either taken private by

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Speaker 7: private equity or have remained private in venture capital, and

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Speaker 7: they don't like what they would get if they were

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Speaker 7: to go public and sell shares to public investors and

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Speaker 7: have to deal with being kind of re rated on

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Speaker 7: an ongoing quarterly basis.

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Speaker 1: Are there regulatory concerns involved here as well? If we

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Speaker 1: have companies that are this valuable, talking about some that

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Speaker 1: are hundreds of billions of dollars that aren't subject to

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Speaker 1: the same oversize that publicly listed firms are.

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Speaker 7: I don't think so the expectation. It depends kind of

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Speaker 7: who your stakeholders are. Securities regulations are there to protect

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Speaker 7: unsophisticated investors, So you have to be an accredited investor,

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Speaker 7: you have to actually have access to buying a SpaceX,

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Speaker 7: and you have to kind of have the ability to

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Speaker 7: get in the door with an open AI to actually

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Speaker 7: write a check. So there are some regulatory walls put

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Speaker 7: up in terms of investing in some of these companies.

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Speaker 7: And just broadly speaking, as it relates to reporting, if

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Speaker 7: you're publicly listed, you obviously have to have earnings every

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Speaker 7: quarter and have to be kind of in the books

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Speaker 7: and have lawyers and consultants and other people on the payroll.

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Speaker 7: If you're private, you can kind of operate at least

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Speaker 7: to some extent how you would like.

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Speaker 1: Broadly speaking, is it a problem if these companies don't

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Speaker 1: ever go public? You know, we think about some of

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Speaker 1: the really high profile ones like SpaceX or open AI.

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Speaker 7: It depends who you talk to, If you are a

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Speaker 7: company or if I talk to lawyers and investors, as

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Speaker 7: long as the earlier stage investors or employees have the

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Speaker 7: ability to take advantage of the equity they've built up

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Speaker 7: in the company, then there's really no reason to go public.

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Speaker 7: When I talk to advisors, the question when they're talking

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Speaker 7: to management teams are why do you want to go

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Speaker 7: to public? What do you gain from being publicly listed?

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Speaker 7: The downside, though, is if you don't have a strong

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Speaker 7: public markets, you don't have that transparency that you mentioned,

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Speaker 7: You don't have the ability to kind of hold some

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Speaker 7: companies accountable, and you also don't have the ability for

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Speaker 7: people to actually buy some of these companies. So by

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Speaker 7: the time open AI or to go public via IPO,

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Speaker 7: by the time SpaceX could go public or Starling could

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Speaker 7: go public, a lot of that valuation and kind of

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Speaker 7: growth could be sapped out of the market. And now

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Speaker 7: you're bringing a company that already is one of the

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Speaker 7: biggest companies in the world straight to the public markets,

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Speaker 7: and investors at least in the public markets who don't

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Speaker 7: have the ability to have access to it or can't

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Speaker 7: afford to pay someone for those private investments.

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Speaker 1: Is joining the party late? Is this becoming a question

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Speaker 1: of prestige. Is it just a sort of badge of

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Speaker 1: honor to be a public company or is even that dwindling.

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Speaker 7: It feels like that is dwindling, depending who you talk to. Obviously,

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Speaker 7: the exchanges want companies to continue listing. But if open

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Speaker 7: Ai can be valued one hundred and fifty seven billion dollars,

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Speaker 7: if SpaceX can get its funding round, and employees, according

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Speaker 7: to Elon Musk, don't want to sell shares. Everyone knows

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Speaker 7: who some of these companies are. There is still a

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Speaker 7: branding event with being publicly listed. There is some validity

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Speaker 7: depending on the industry you operate in, where you can

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Speaker 7: talk to customers and clients say hey, we're publicly listed,

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Speaker 7: we train on your stock exchange. Here are our quarterly results.

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Speaker 7: But for some of these name brand companies, some of

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Speaker 7: the top kind of upper echelon firms, the question really

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Speaker 7: is what would be the reason to go public? And

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Speaker 7: if there's not a good business reason, then France as

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Speaker 7: a purposes sustained private makes a lot of sense.

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Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 1: stories making news from London to Wall Street and beyond.

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