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Speaker 1: Good morning. It's Wenesday, the twenty second of November here

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Speaker 1: in London. This is the Bloomberg dayaq AT podcast. I'm

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Speaker 1: Caroline Hepka and.

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Speaker 2: I'm Stephen Carroll. Coming up today, Israel and Hamas back

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Speaker 2: a deal for the release of hostages in exchange for

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Speaker 2: prisoners and a temporary ceasefire.

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Speaker 1: Sam Altman agrees to return to open ai as CEO

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Speaker 1: just days after his shock firing.

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Speaker 2: Plus high stakes politics Jeremy Hunt is expected to target

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Speaker 2: tax cuts and growth in today's Autumn Statement.

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

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Speaker 1: Israel and Hamas have backed a deal that will free

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Speaker 1: dozens of the hostages held in Gaza in return for

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Speaker 1: a four day pause in fighting and the release of

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Speaker 1: a number of Palestinian prisoners. In the initial stage of

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Speaker 1: the deal, mediated by Cutter, Hamas will free fifty Israeli

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Speaker 1: women and children held in Gaza. In return, Israel has

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Speaker 1: agreed to release about one hundred and fifty Palestinian prisoners.

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Speaker 1: But Bloomberg's Bill Ferries says the agreement does not mean

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Speaker 1: the end of the conflict.

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Speaker 3: It's worth emphasizing that this deal is not seen as

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Speaker 3: a ceasefire agreement at all. Israel made that very clear.

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Speaker 3: They've called this and Qatar has called this a humanitarian pause.

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Speaker 3: The purpose is to get aid trucks going in, to

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Speaker 3: get hostages out, to get some prisoners released. But Israeli

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Speaker 3: government made clear in their statement that they view this

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Speaker 3: war as continuing. They said that they are still chasing

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Speaker 3: their goals of getting all the hostages freed, but also

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Speaker 3: to basically eradicate Hamas and its leadership.

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Speaker 1: Bloomberg's Bill Fairies says that a second stage of the

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Speaker 1: deal could see the pause in fighting extended for a

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Speaker 1: further day in exchange for the release of every ten

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Speaker 1: additional hostages held by Hamas. It's believed that as many

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Speaker 1: as children forty people are being held captive in the territory.

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Speaker 1: The developments come as international pressure grows on Israel to

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Speaker 1: end its offensive in Gaza, which authorities in the Hamas

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Speaker 1: run enclave say has killed more than fourteen thousand people

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Speaker 1: and triggered a humanitarian crisis.

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Speaker 2: Sam Altman and members of the Open Ai board have

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Speaker 2: reached an agreement in principle for his return. The two

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Speaker 2: sides reached an agreement for Altman to return within a

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Speaker 2: new initial board that includes Brett Taylor his chair, alongside

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Speaker 2: Larry Summers and Adam de Angelo. Bloomberg Intelligence analyst Matt

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Speaker 2: Bloxham says big questions still remain about the company's future.

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Speaker 4: The board were backed into a corner, and you know,

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Speaker 4: I think they just seeing the company unravel, so I

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Speaker 4: don't think they had really any choice. So I think

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Speaker 4: from here the big questions are going to be, Okay,

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Speaker 4: what's the detail, what you know beyond a new board

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Speaker 4: that looks more supportive of Sam Altman, are they going

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Speaker 4: to be more profound changes to the structure of the company.

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Speaker 4: What does this mean for the possible IPO. How they're

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Speaker 4: going to kind of commercialize things like chat GPT more effectively,

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Speaker 4: to kind of take advantage of the opportunity that sir.

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Speaker 2: According to Matt blocks And, the fate of open Ai

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Speaker 2: had been in limbo after the board of Director's shark

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Speaker 2: decision to fire Altman last Friday, following disagreements on how

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Speaker 2: fast to develop and monetize our official intelligence. Reacting to

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Speaker 2: the news, Microsoft CEO sach Nadala said on x that quote,

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Speaker 2: this is the first essential step on a path to

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Speaker 2: more stable, well informed and effective governance.

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Speaker 1: In the UK, the Chancellor will claim that the economy

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Speaker 1: is quote back on track in an autumn statement that

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Speaker 1: is expected to prioritize tax cuts and growth. Jeremy Hunt

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Speaker 1: insists that the government will be responsible with the country's finances.

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Speaker 1: Everything is on the table.

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Speaker 5: I want to bring down our tax burden. I think

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Speaker 5: it's important for a productive, dynamic, fizzing economy.

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Speaker 1: Hunt is likely to prioritize tax breaks for businesses, including

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Speaker 1: making permanent so called full expensing, and either income tax

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Speaker 1: or national insurance cuts. Labor says that the government's to

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Speaker 1: blame for a quote national scandal of working age adults

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Speaker 1: not in jobs.

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Speaker 2: The Crypto Exchange Finance has paid a guilty to violating

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Speaker 2: US sanctions and anti money laundering rules in a four

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Speaker 2: point three billion dollar settlement. The deal also requires Chang

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Speaker 2: peng Jao to step down as CEO and leaves him

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Speaker 2: facing a prison sentence. The firm broke US sanctions law

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Speaker 2: by allowing transactions from terrorist groups, including Hamas Here's US

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Speaker 2: Attorney General Merrick Garland, this.

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Speaker 6: Is one of the largest penalties we have ever obtained

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Speaker 6: from a corporate defendant in in a criminal matter. We

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Speaker 6: know that corporations only act through the individuals who run them.

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Speaker 6: As CEO of Finance, wilfully violated federal law that requires

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Speaker 6: financial institutions to guard against the money laundering and terrorist financing.

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Speaker 2: Despite the ruling, on Garland's words, the crypto markers was

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Speaker 2: mostly unchanged on the news. Some see the resolution of

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Speaker 2: the dispute as turning a page on the last few

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Speaker 2: years of turmoil. But hours after news of Binance's agreement broke,

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Speaker 2: the US Securities and Exchange Commission accused rival exchange Kraken

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Speaker 2: of violating securities laws.

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Speaker 1: Now. In Vidia's quarterly results were received with cool reaction

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Speaker 1: from investors. The tech company's growth did beat Anisse expectations,

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Speaker 1: but some shareholders want more. Hopes that the AI industry

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Speaker 1: will continue to boost sales have driven the share price

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Speaker 1: to record highs Recently. Speaking to Bloomberg, Matthew Bryson, Senior

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Speaker 1: Vice president for afrety Research at web Bush Securities, said

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Speaker 1: that competitors in the space are still way behind Nvidia.

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Speaker 7: When you look at what Nvidia did in terms of revenue,

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Speaker 7: where you're and where they guided to where you're talking

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Speaker 7: about them doing roughly seventeen billion in data center revenue

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Speaker 7: tied to AI.

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Speaker 5: You look at that versus the competition.

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Speaker 7: So the Intel's talking about doing a billion dollars in

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Speaker 7: revenue next year, AMD guide it is a two billion.

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Speaker 7: I think people are hoping they can do closer to

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Speaker 7: three or four billion, and Nvidia's doing seventeen billion. So

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Speaker 7: whatever they don't ship, it doesn't go elsewhere. It just

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Speaker 7: gets pushed forward and its revenue in the future, which

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Speaker 7: is a good thing.

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Speaker 1: Matthew Bryson also says that data center revenue out the

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Speaker 1: business for Nvidia is tied to AI, and Vidia is

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Speaker 1: the best performing chip stock this year, beating rival Intel,

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Speaker 1: previously the world's largest chip maker.

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Speaker 2: Federal Reserve policymakers united around a strategy to proceed carefully

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Speaker 2: on future interest rate moves at their most recent meeting.

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Speaker 2: Bimberg's Charlie Palett has the story.

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Speaker 8: According to minutes of the October thirty one November one

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Speaker 8: Federal Open Market Committee meeting released in Washington, quote, all

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Speaker 8: participants agreed that the committee was in a position to

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Speaker 8: proceed carefully and that potse decisions at every meeting would

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Speaker 8: continue to be based on the totality of incoming information.

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Speaker 8: The minute show, the committee was willing to take a

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Speaker 8: patient approach toward inflation while making future potseed decisions depended

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Speaker 8: on incoming statistics in New York. Charlie Palette Bloomberg Radio.

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Speaker 1: Okay, there's a few of our top stories for you

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Speaker 1: this morning. In a moment, we'll look ahead to the

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Speaker 1: autumn statement from the Chance of Jeremy Hunt here in

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Speaker 1: the UK with bloombergs Dan Hanson, and also to the

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Speaker 1: latest news on Open Ai, an agreement imprint for Sam

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Speaker 1: Moltman to return as CEO. We'll be speaking to Boomberg's

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Speaker 1: Matt Bloxham about that.

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Speaker 2: Let's get more details for us. So on the latest

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Speaker 2: developments in the Middle East, where Israel and Hamas have

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Speaker 2: agreed a deal to free fifty hostages from Gaza in

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Speaker 2: return for a four day pause in fighting. Bloomberg Simon

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Speaker 2: Marx joins us from Tel Aviv for more. Simon, great

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Speaker 2: to have you with us. What more can you tell

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Speaker 2: us about this deal that's been agreed?

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Speaker 1: Hi?

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Speaker 9: There, So, this deal has been broken overnight in the

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Speaker 9: early hours of the morning. Israel has told us that

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Speaker 9: there's an agreement to release fifty Israeli women and children

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Speaker 9: held in Gaza, and in return, Hamas has put out

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Speaker 9: a statement saying that Israel has agreed to release about

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Speaker 9: one hundred and fifty Palestinian prisoners, also mostly women and children.

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Speaker 9: In return, Qatar, which has been mediating this deal alongside

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Speaker 9: the US quite intensely in recent weeks, have said that

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Speaker 9: they hope this will open up the opportunity to get

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Speaker 9: or aid humanitarian assistance in there. And notably, you know,

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Speaker 9: Israel is calling this a pause, not a cease fire,

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Speaker 9: but obviously you know, four days if it holds, is

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Speaker 9: essentially a ceasefire.

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Speaker 1: Does it pave the way though, for something longer, for

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Speaker 1: a longer ceasefire, perhaps even the possibility of ending the conflict.

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Speaker 9: Well, in the fine print of the deal there is

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Speaker 9: an opportunity for additional days of so called pause. Israel

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Speaker 9: have said that for every ten additional hostages they would

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Speaker 9: be willing to add an additional day of pause in

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Speaker 9: the war.

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Speaker 10: But at the.

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Speaker 9: Same time, Benjamin Nataniahu, the Prime Minister, has been very

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Speaker 9: clear to say this does not mean the end of

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Speaker 9: the conflict, and that their original goals to eradicate har

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Speaker 9: Mass and deradicalize Gaza, etc.

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Speaker 10: Is still very much the state to Daim I mean Alsiman.

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Speaker 2: You've been part of a team that's been looking at

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Speaker 2: what happens in Gaza after this war ends. What sort

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Speaker 2: of scenarios are officials preparing for.

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Speaker 9: Well, it's somewhat of the bottomless pit of ideas with

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Speaker 9: lots of conflicting interests. But you know, the broad strokes

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Speaker 9: or the US President Joe Biden wants to see a

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Speaker 9: more moderate, reformed Palestinian authority from the West Bank move

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Speaker 9: in to Gaza. Israel, on the other hand, for the moment,

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Speaker 9: you know, opposes a Palestinian state and wants to keep

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Speaker 9: the West Bank territories occupied.

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Speaker 10: Territories in Gaza are separate.

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Speaker 9: Israel wants total sort of security control, at least initially

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Speaker 9: over Gaza. There's not a lot of trust, i would say,

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Speaker 9: between Israel and other entities in securing Gaza and creating.

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Speaker 10: Some sort of buffer.

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Speaker 9: So that's acts on October the seventh don't happen again.

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Speaker 9: And then there's you know, essentially a huge debate around

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Speaker 9: who secures are Arab troops involved. There is Arab money

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Speaker 9: from the Gulf involved in securing Gaza alongside US guidance.

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Speaker 9: There's a lot of people pushing in that direction.

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Speaker 1: Too, Simon, what do Palestinians want?

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Speaker 9: Well, the Palestinians, obviously, it's a it's very broad. At

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Speaker 9: the moment, they are being you know, bomb they are

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Speaker 9: obviously pushing for a ceasefire.

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Speaker 10: There's huge civilian casualties.

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Speaker 9: I think the latest the latest figures on that are

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Speaker 9: up towards fourteen thousand now, So their interests at the

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Speaker 9: moment are very much you know, looking in that direction.

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Speaker 9: And it really it all depends on whether or not

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Speaker 9: Israel state todaim of defeating ham As pans out or

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Speaker 9: not will elements of Hamas remain after this war. Certainly

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Speaker 9: a lot of analysts seem to think that their ideology

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Speaker 9: will remain, and then it will boils down to whether

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Speaker 9: or not the Palestinian authority, which is a very weak body,

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Speaker 9: considered rather sclerotic and corrupt, can actually come back and

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Speaker 9: implement something on the ground.

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Speaker 10: So this's huge questions around all of that.

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Speaker 2: Okay, Simon Marx in Tel Aviv, thank you very much

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Speaker 2: for bringing us up to date on the dat of

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Speaker 2: developments in the Middle East this morning.

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Speaker 1: Now let's turn our attention to technology. Open AI has

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Speaker 1: reached an agreement in principle for Sam Altman to return

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Speaker 1: as CEO. This according to a post on x It's

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Speaker 1: a fast developing story. Joining us now to discuss this

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Speaker 1: breaking news. Matt Bloxham, our senior tech analyst for Bloomberg Intelligence.

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Speaker 1: Very good morning to Matt. So just the reaction in

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Speaker 1: terms of Sam Altman returning as CEO.

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Speaker 4: Yeah, personally, I'm not surprised. I mean, I think, given

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Speaker 4: you I mean, it's been a crazy few days. But

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Speaker 4: I think given the strength of reaction from you know,

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Speaker 4: the majority of employees, that they would leave and go

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Speaker 4: follow Sam to Microsoft. If the board didn't resign and

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Speaker 4: reinstate him, then I kind of think that the board

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Speaker 4: were backed into a corner, and you know, I think

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Speaker 4: they risk just seeing the company unravel. So I don't

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Speaker 4: think they had really any choice. I think from here,

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Speaker 4: the big questions are going to be, Okay, what's the detail,

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Speaker 4: what you know, beyond a new board that looks more

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Speaker 4: supportive of Samultman, are they going to be more profound

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Speaker 4: changes to the structure of the company. What does this

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Speaker 4: mean for the possible I po how they're going to

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Speaker 4: kind of commercialize things like chat, GPT more, effectively to

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Speaker 4: kind of take advantage of the opportunity that's there.

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Speaker 2: There are several just to emphasise this as a story

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Speaker 2: that's developing as we're talking to you about at Matt Bloxam,

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Speaker 2: but we have some other details. We've had a reaction

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Speaker 2: from such an Adala from Microsoft praising the Open Ai

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Speaker 2: board and go and changes. That's an important point we

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Speaker 2: returned to in a moment. We've also had the announcement

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Speaker 2: of the new boards at Brett Taylor as chair. Larry

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Speaker 2: Summer is interestingly joining the board of Open Ai with

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Speaker 2: Adam Dangelo as well. So this is something that we'll

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Speaker 2: see changes in the way that this company operates, but

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Speaker 2: also its relationship with Microsoft. How important is it that

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Speaker 2: that relationship has has sort of remained steady throughout this

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Speaker 2: drama in the boardroom.

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Speaker 4: Yeah, I mean it's definitely probably a lot more important

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Speaker 4: to Microsoft maybe is to Open Ai, because I'm sure

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Speaker 4: there's a long list of, you know, alternative companies that

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Speaker 4: would be prepared to kind of put up billions of

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Speaker 4: dollars to support the development. So I think Microsoft's really

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Speaker 4: changed its perception with investors over the last year or

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Speaker 4: two with this big shift you know, firstly into cloud

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Speaker 4: and now you know, a kind of real dark horse

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Speaker 4: if you like, on Ai and the relationship with chat

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Speaker 4: with open Ai and Chat GPT and integrating that into

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Speaker 4: their products has been really important part of that, this

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Speaker 4: big incremental source of growth of Microsoft. So I think

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Speaker 4: the fact that come out of this, I think the

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Speaker 4: Microsoft CEO's reputation has kind of gone up. I think

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Speaker 4: he's handled us incredibly well. You know, they move very

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Speaker 4: quickly and very pragmatically to protect what's kind of a

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Speaker 4: key part of their future.

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Speaker 1: Absolutely, Sam Whatman's saying building on a strong partnership with

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Speaker 1: Microsoft also tweeted out a heart emoji in response to

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Speaker 1: the announcement that he would return as CEO, and then

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Speaker 1: Greg Rotman also saying this morning that he's returning to

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Speaker 1: open Ai and getting back to coding tonight. So yes,

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Speaker 1: this is quite a kind of turnaround, isn't it In

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Speaker 1: terms of.

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Speaker 4: Far today really is unprecedented. I think in kind of

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Speaker 4: corporation we've seen some big kind of boardroom keys, but

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Speaker 4: I think quite there's significant and playing out quite so quickly.

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Speaker 2: Okay, Matt blox And from biblic Intelligence, thank you very

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Speaker 2: much for joining US reacting to that breaking news coming

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Speaker 2: from Open AI.

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Speaker 1: Now here in the UK. Also today, later on will

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Speaker 1: be the autumn statement from the Chancellor, which will aim

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Speaker 1: to boost business investment by twenty billion pounds per year.

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Speaker 1: Now one source has told Bloomberg that it will include

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Speaker 1: making the quote full expensing tax break permanent. This is

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Speaker 1: the one that allows businesses to claim a twenty five

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Speaker 1: percent tax rebate on investment. Other measures to come include

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Speaker 1: the possibility of cuts to National insurance. Our senior UK

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Speaker 1: economist Dan Hansen joins us now to look ahead then

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Speaker 1: to the rest of the day. A focus. In the

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Speaker 1: lead up today, Dan has been on how much money

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Speaker 1: the Chancellor will actually have to play with, you know,

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Speaker 1: the so called fiscal headroom Garci phrase. But there we

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Speaker 1: have it. What's your expectation around that amount?

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Speaker 5: Yeah, more than Caroline morning, Steven. So you know, we

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Speaker 5: run the numbers. We came to a number of about

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Speaker 5: eleven billion pounds, which relative to March to the March

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Speaker 5: budget that the Chancellor Jeremy Hunt had only six point

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Speaker 5: five billion pounds, So an improvement, but still a very

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Speaker 5: small amount of headroom to use. To use the phrase,

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Speaker 5: I think actually listening to everything that's happened, particularly over

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Speaker 5: the weekend and into the early part of this week,

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Speaker 5: he might have a little bit more than that, given

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Speaker 5: given what we're hearing, And I think the reason why

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Speaker 5: that would be the case, and why we've potentially underestimated

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Speaker 5: how much headroom he's got, is that the OBR, which

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Speaker 5: is the UK's fiscal watchdog, is going to take a

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Speaker 5: potentially more optimistic view about the tax take and how

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Speaker 5: much how much revenue the Treasury is going to get in,

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Speaker 5: and that likely is to be will be driven by

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Speaker 5: a much higher inflation forecast, essentially because it's the cash

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Speaker 5: size of the economy that matters for tax receipts. So

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Speaker 5: I think our estimates probably at the low end. You know,

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Speaker 5: we've run some other numbers and we've got if you

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Speaker 5: if you sort of put in our own inflation forecast

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Speaker 5: and forecast for inflation that's similar to the Bank of England,

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Speaker 5: you get something closer to twenty five to thirty billion,

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Speaker 5: so a lot more, which is sort of the sort

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Speaker 5: of normal amount of hidrom that chancellors have had in

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Speaker 5: the past. So I think, basically, given what we've heard

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Speaker 5: and everything we're hearing about policy he's probably sitting prettier

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Speaker 5: than he was in March, where there was only a

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Speaker 5: very small amount of hidrom okay.

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Speaker 2: So that opens up, of course, the possibility for announcements

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Speaker 2: and some of the ones that we have been expecting.

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Speaker 2: Source of telling Bloomberg about full expensing becoming permanent, this

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Speaker 2: is something that business groups had wanted. It had been

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Speaker 2: introduced as a temporary measure earlier this year. If the

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Speaker 2: goal is to boost business investment and boost the economy,

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Speaker 2: how effective is this measure and helping on that goal.

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Speaker 5: So I'm quite excited about this one because I think

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Speaker 5: basically Richie Sunak has changed the way the tax system

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Speaker 5: looks at business investment, and he's when he was Chancellor,

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Speaker 5: he set out this idea that it's not corporation text

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Speaker 5: the boost business investment because we had cuts corporation text

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Speaker 5: through twenty ten to twenty nineteen and we didn't really

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Speaker 5: get much of We got a response from business investment,

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Speaker 5: but we didn't get the sort of response that we

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Speaker 5: might have expected given the falls in the headline rate

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Speaker 5: of tax. We've shifted to these allowances. So full expensing

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Speaker 5: is a capital allowance, and we had this temporary measure

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Speaker 5: coming out of the pandemic, the superdeduction, which appears to

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Speaker 5: have had a very significant impact on business investment. So

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Speaker 5: I think it's this newer version of it. It's not

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Speaker 5: quite as generous, this newer version. Nonetheless, I think it

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Speaker 5: will deliver a pretty significant boost to business investment. And

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Speaker 5: the fact that it is going from temporary to permanent

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Speaker 5: means that the boost is going to be experienced over

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Speaker 5: a longer period of time. You don't get this sort

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Speaker 5: of near term boost where firms are try and take

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Speaker 5: advantage of the policy and then the policy expires. Actually

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Speaker 5: firms know it's in place for a longer period of time,

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Speaker 5: there is certainty about that, and investment moves ont up

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Speaker 5: to a higher level. So I'm quite excited about this

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Speaker 5: and I think it's the right move.

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Speaker 1: Yeah, okay, so that on business investment. What else should

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Speaker 1: we be watching out for? Then? Updated economic forecast? What

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Speaker 1: else do you think might kind of capture attention with

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Speaker 1: the autumn statement later today?

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Speaker 5: Well, we've had the news overnight and with that he's

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Speaker 5: going to potentially cut NIE and National Insurance, which is

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Speaker 5: a payroll tax here in the UK. I mean, it

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Speaker 5: looks quite small. The amount in terms of the app

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Speaker 5: how much it's going to cost five billion pounds, but

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Speaker 5: that's going to be that's going to be a big

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Speaker 5: political point scoring move just on the forecast, Caroline. I mean,

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Speaker 5: I think it's going to be interesting to see first

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Speaker 5: of all, about the fiscal arithmetic, which is sort of

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Speaker 5: in the answer to the first question, and also what

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Speaker 5: the OBR says about the economic outlook, because it hasn't

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Speaker 5: sayn the thing since March and a lot's changed since then,

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Speaker 5: so you know how it needs to take on a

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Speaker 5: much higher level of interest rates, how it sees the

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Speaker 5: economy faring through the course of twenty twenty four, and

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Speaker 5: I think the broader fiscal package as well. When you're

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Speaker 5: thinking of the inflationary impact, you want to know not

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Speaker 5: just what's happening on tax you also want to know

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Speaker 5: what's happening on spending and the overall impact on borrowing,

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Speaker 5: because actually that's what will matter for when the Bank

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Speaker 5: of England looks at this as to whether it thinks

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Speaker 5: it needs to do anything in response.

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

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