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

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Speaker 2: This is the Blue Big dayba Q your podcast Givebrning.

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Speaker 2: It's Friday, the nineteenth of September. I'm Caroline Hepget in

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Speaker 2: London coming up today, and Vidia's Jensen Wong rounds off

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Speaker 2: a big week for American tech in Britain as Keir

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Speaker 2: Starmer's flattery of the US President pays off with major

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Speaker 2: pitfalls averted and a hint at better trade terms. Donald

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Speaker 2: Trump and China Xijingping get ready for a call to

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Speaker 2: discuss TikTok tariffs and trade curbs. Plus, as US stock

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Speaker 2: indexes close and a simultaneous record high for the first

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Speaker 2: time since twenty twenty one, we look at the hedge

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Speaker 2: America trade that is expected to top a trillion dollars.

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Speaker 2: Let's start with a roundup of our top stories. In

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Speaker 2: Vidia plans to invest two billion pounds to support the

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Speaker 2: UK's artificial intelligence industry. The chip maker is giving the

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Speaker 2: money to venture capital firms to invest in the likes

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Speaker 2: of Wave Revolute and Synthesia. CEO Jensen Wong says Britain

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Speaker 2: is in a goldilocks moment.

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Speaker 3: This is the third largest AI stargs ecosystem in the world,

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Speaker 3: only behind the United States and China. So I think

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Speaker 3: that the moment is right, it's just missing the infrastructure.

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Speaker 3: This is the week. This is the week that I

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Speaker 3: declare that the UK will be an AI superpower.

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Speaker 2: Jensen Wong, speaking there to journalists at a press briefing

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Speaker 2: about the news. And Vidia's investments are part of a

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Speaker 2: slew of AI announcements from US technology companies this week

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Speaker 2: time to coincide with President Trump's visit to Britain. While

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Speaker 2: the UK is the biggest European market for startups by

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Speaker 2: volume and by size of deals, Britain has yet to

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Speaker 2: produce a national AI champion like Open AI in the

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Speaker 2: US or France's mistral President Donald Trump Ampraman is a kistarma,

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Speaker 2: though concluded and historic state visit by hailing the transatlantic

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Speaker 2: relationship with little sign of public disagreement, the two world

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Speaker 2: leaders welcome two hundred and fifty billion pounds of bilateral

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Speaker 2: investment deals and a new tech agreement. After the summit

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Speaker 2: US at President Trump told Fox News that the UK

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Speaker 2: had pushed for lower tariffs on its steel exports.

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Speaker 4: They would like to see if they could make a

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Speaker 4: little bit better were you open to that.

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Speaker 5: I like them.

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Speaker 6: We're making a lot of money.

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Speaker 2: So they're at twenty five percent right now, you're going

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Speaker 2: to go lower than they're actually.

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Speaker 4: Had fifty percent for steal and aluminum, and I want

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Speaker 4: to see them.

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Speaker 5: They're having a lot of difficulty.

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Speaker 2: But talks between the two leaders did not lead to

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Speaker 2: any obvious diplomatic breakthroughs on Ukraine or Gaza. Despite that,

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Speaker 2: one UK official expressed relief to Bloomberg that the UK's

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Speaker 2: Prime Minister kist Salma had got through the visit without

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Speaker 2: any further controversy over the UK's former ambassador Peter Mandelson's

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Speaker 2: relationship with Jeffrey Epstein. The Bank of England's decision to

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Speaker 2: rain in its quantitative tightening plan has shattered any illusion

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Speaker 2: that the policy remains on autopilot. This amid recent volatility

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Speaker 2: in the bond market. Yesterday's announcements or the Bank's Manage

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Speaker 2: Policy Committee reduced the annual runoff of its guilt holdings

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Speaker 2: to seventy billion pounds a year, down from one hundred billion.

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Speaker 2: The Governor of the Bank of England, Andrew Bailey, says

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Speaker 2: that he would take into account the impact of guilt

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Speaker 2: sales on interest rates.

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Speaker 6: We take into account all market conditions, so any effect

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Speaker 6: that our sales have on market conditions and therefore on

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Speaker 6: interest rates going out along the sort of the whole

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Speaker 6: maturity spectrum of interest rates, we will take into account

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Speaker 6: when we set a bank rates, so there wouldn't be

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Speaker 6: an offset there. In other words, if there's a feeling

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Speaker 6: that in some sense quantity of tightening it's pushing rates

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Speaker 6: up in the market, then the effect of that we

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Speaker 6: would take into account when we say bank correct, so

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Speaker 6: there would be an offset there.

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Speaker 2: So that was the Governor of the Bank of England,

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Speaker 2: Andrew Bailey speaking. He announced the changes to a quantitative

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Speaker 2: tightening alongside the bank's decision to hold interest rates at

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Speaker 2: four percent. The bank kept its guidance warning that future

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Speaker 2: cuts will be quote gradual and careful and depend on

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Speaker 2: the extent to which underlying disinflationary pressures continued to ease. Now,

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Speaker 2: Chinese President Shi Jinping and US President Donald Trump will

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Speaker 2: discuss trade tariffs and the future of TikTok on a

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Speaker 2: phone call at two pm London time today. It's the

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Speaker 2: first conversation since June between the leaders of the world's

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Speaker 2: two largest economies. Part of the discussion will focus on

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Speaker 2: plans to shift control of TikTok's US operations from Chinese

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Speaker 2: parent company byte Dance to a group of American investors.

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Speaker 2: Speaking yesterday, Trump tease the head to the deal.

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Speaker 4: The United States is getting a tremendous fee plus. I

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Speaker 4: call it a fee plus for just making the deal.

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Speaker 4: And I don't want to throw that out the window now.

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Speaker 4: I'd rather reap the benefits. I mean, the kind of

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Speaker 4: money we're talking about is very substantial, and it'll be

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Speaker 4: owned by all American investors, and the best investors, and

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Speaker 4: the very rich people and companies are going to be

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Speaker 4: owning it, very very straight, very legitimate companies, and really

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Speaker 4: companies that love America. So they're going to be owning it.

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Speaker 2: It's a big thing, President Trump speaking there, As Bloomberg understands,

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Speaker 2: byte Dance will hold no more than a twenty percent

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Speaker 2: stake in TikTok, while other investors, including Oracle and silver Lake,

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Speaker 2: would be involved. The two leaders will also discuss ongoing

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Speaker 2: trade restrictions when it comes to semiconductors and rare earth.

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Speaker 2: It's hope that the call may lay the groundwork for

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Speaker 2: their first in person meeting since President Trump returned to

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Speaker 2: office in the US. Now, President Trump says that US

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Speaker 2: broadcasters should face licensed scrutiny if they are too critical

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Speaker 2: of him. The comments came as he defended ABC's decision

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Speaker 2: to suspend Jimmy Kimmel's TV show indefinitely following remarks about

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Speaker 2: conservative activist Charlie Kirk. Speaking to reporters on board Air

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Speaker 2: Force one, the president suggested he is often targeted by

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Speaker 2: late night television hosts.

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Speaker 7: I read some places that the networks were ninety seven

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Speaker 7: percent against me. I get ninety seven percent negative, and

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Speaker 7: yet I won easily won all seven s, makes safe popular.

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Speaker 5: WORTE won everything.

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Speaker 7: And if they're ninety seven percent against, they give you

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Speaker 7: only bad bookless or press. I mean they're getting a license.

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Speaker 7: I would think maybe their license should be taken away.

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Speaker 2: So that was Donald Trump's speaking there. His remarks come

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Speaker 2: days after he filed a fifteen billion dollar lawsuit against

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Speaker 2: the New York Times newspaper. The president and his allies

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Speaker 2: have long complained that America's mainstream media is biased against conservatives.

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Speaker 2: Trump has repeatedly called for CBS, ABC and NBC News

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Speaker 2: on networks to get rid of late night comedy hosts,

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Speaker 2: who he says frequently criticize his administration. And lastly, the

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Speaker 2: UK's Secret Surface is aiming to recruit new spies using a.

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Speaker 5: Website on the dark web.

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Speaker 2: Six IS chief Richard Moore is launching a secure messaging

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Speaker 2: platform called Silent Courier, which is designed to target foreign agents.

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Speaker 2: Bloomberg's James Walcock has more.

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Speaker 8: How do you become the next James bond Well? One

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Speaker 8: modern answer is b Russian and download a VPN. Six's boss,

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Speaker 8: who goes by the moniker C is calling on people

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Speaker 8: all over the world to help British intelligence over the

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Speaker 8: Internet in the name of global stability. It's a message

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Speaker 8: being targeted particularly at Russians, with a new website being

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Speaker 8: hosted on the Darkweb for anonymity in London. James Wilcock,

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Speaker 8: Bloomberg Radio.

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Speaker 2: Those are our top stories this morning. Let's get to

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Speaker 2: the markets. Europe In stocks rose eight tens of one

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Speaker 2: percent at the close yesterday, but we didn't quite make

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Speaker 2: the highs that we saw for four of the US's

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Speaker 2: main stock indices yesterday. Huge run up in terms of

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Speaker 2: the S and P five hundred futures. They are consolidating

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Speaker 2: above six seven hundred. Also, we saw the Bank of

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Speaker 2: Japan keep interest rates at half of one percent at

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Speaker 2: the end of a very busy central banking week. That

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Speaker 2: has meant the yen has strengthen, Japanese equities have dropped.

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Speaker 2: You've also heard about the Bank of Japan of floating

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Speaker 2: its ETF holdings or beginning to do that. So that

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Speaker 2: was the other big news from that decision. In terms

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Speaker 2: of treasure yields, ten year treasury yields at the moment

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Speaker 2: upper basis point at four twelve. Right now, the Bloomberg

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Speaker 2: dollar spot indexes flat, all prices are down, and gold

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Speaker 2: is up four tenths of one percent. Those are the markets.

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Speaker 2: In a moment, I'm going to bring you more on

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Speaker 2: the Trump she call that we're expecting at nine am

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Speaker 2: Washington time at two pm in London here, and also

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Speaker 2: the global surge in stocks after a record breaking QS

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Speaker 2: rally yesterday. So we'll get to that in a moment.

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Speaker 2: But another story caught my eye is being marketed as

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Speaker 2: a quick fix for mental health. But behind the slick advertising,

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Speaker 2: the drug ketamine has some unknown, possibly really serious downsides,

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Speaker 2: and it is the subject of Bloomberg Businessweeks. Michelle Luke

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Speaker 2: in a piece that she's written, she describes ketamine as

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Speaker 2: this rapid acting substance that increases the brain's neuroplasticity. It

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Speaker 2: has also got some antidepressant effects. Obviously we know that

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Speaker 2: it has been used as an anesthetic in operations, both

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Speaker 2: for human beings and yes, for horses.

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Speaker 5: But she talks in a.

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Speaker 2: Very interesting way in her piece about how social media

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Speaker 2: has fueled the rise of ketamine is a kind of

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Speaker 2: trendy mental health hack, and that this market staggeringly is

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Speaker 2: worth three point four billion dollars in the US, and

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Speaker 2: she kind of charts the rise of it, but also

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Speaker 2: the massive potential unknowns and downsides, the risks of addiction

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Speaker 2: and misuse, and I just it got me thinking about

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Speaker 2: the UK. Ketamine use here in the UK has also

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Speaker 2: been massively on the rise. It hit a record high

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Speaker 2: in the year to the end of March twenty twenty three.

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Speaker 2: That's why it's got the government thinking about raising it

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Speaker 2: not just from a Class B drug I illegal to

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Speaker 2: buy and sell, but actually to a Class A drug,

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Speaker 2: which would you know, put it into an even more

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Speaker 2: serious category. But it is just staggering, you know how

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Speaker 2: much the online hype has sort of contributed to the

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Speaker 2: rise of ketamine that it really isn't such a straightforward,

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Speaker 2: you know, life hack. Anyway, it's a very piece. I

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Speaker 2: will put a link to it in our show notes

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Speaker 2: to Bloomberg BusinessWeek's Michelle Luke. Now present, Trump will hold

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Speaker 2: a call with Xijingping this Friday. It will include potentially

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Speaker 2: a decision on TikTok and also whyder trade discussions, perhaps

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Speaker 2: setting up an in person meeting. It comes after a

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Speaker 2: state visit to the UK in which policy differences were

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Speaker 2: smoved over. Joining me now is Bloomberg's Chief Asia correspondent

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Speaker 2: Roslyn Matheson to discuss Good morning, was TikTok and transactional diplomacy?

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Speaker 2: What do you think might emerge a US owned but

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Speaker 2: a Chinese controlled algorithm?

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Speaker 9: Well seems to be it'll be owned by a group

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Speaker 9: of US investors. But we don't know a lot of

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Speaker 9: the details yet and Donald Trump did not want to

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Speaker 9: be drawn on it, particularly yesterday. But what we do

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Speaker 9: understand is part of that is bitt dancers holding would

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Speaker 9: go down to less than twenty percent, so potentially under

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Speaker 9: that threshold that would trigger those national security law aspects

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Speaker 9: and Oracle silver Lake and recent Horowitz would have the rest. So,

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Speaker 9: as you're saying, byt Dance essentially licenses its technology to

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Speaker 9: that group for a new platform, so that the people

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Speaker 9: who use TikTok now in the US will be migrated

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Speaker 9: to a new platform that essentially mirrors the experience they

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Speaker 9: have now. And by it, Dance and TikTok as we

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Speaker 9: know it now would help build it because they have

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Speaker 9: to know how. But the US feeling this is an

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Speaker 9: arrangement that protects US users. Well, the Chinese company retains

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Speaker 9: ownership of its technology, which is a key asset in

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Speaker 9: its own right, So those appear to be the parameters

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Speaker 9: for now, at least the understanding going into the call.

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Speaker 9: So of course the majority ownership shifts to those US shareholders,

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Speaker 9: but byt Dance retains control, particularly of its technology.

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Speaker 2: There are lots of wider trade tensions, of course, between

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Speaker 2: the US and China. Will tariffs or chip controls be eased?

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Speaker 9: Well, Trump's been talking in recent days mostly about extending

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Speaker 9: the current trade truth on its existing terms. It's due

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Speaker 9: to expire in November, so perhaps extending it again, which

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Speaker 9: doesn't sound like movement much on tarifs in the minute,

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Speaker 9: but you never know, obviously, when the two of them

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Speaker 9: are on the call together, and perhaps they might prefer

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Speaker 9: to have a big bang announcement on taris if or

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Speaker 9: when they meet in person, because the idea is this call,

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Speaker 9: as you say, paves the way potentially for a meeting

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Speaker 9: in October in Asia.

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Speaker 5: So perhaps this.

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Speaker 9: Lays the groundwork and they want to come out and

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Speaker 9: make a splash with an announcement on tariffs in the minute. Obviously,

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Speaker 9: there are a lot of issues there still to go through,

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Speaker 9: in a lot of potential roadblocks for them, and Chips

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Speaker 9: a particular issue because we have China saying in Video

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Speaker 9: violated anti monopoly laws. They're trying to get Chinese tech

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Speaker 9: companies to stop buying in video products. And no doubt

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Speaker 9: the CEO of in Video, Jensen Huang, who's got a

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Speaker 9: very close relationship with Donald Trump, will be hoping the

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Speaker 9: US President brings it up on the cour But again,

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Speaker 9: you're unlikely to see China change it stance significantly in

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Speaker 9: a minute.

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Speaker 2: In terms of conflicts, do you think the US person

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Speaker 2: will try to press China in terms of support for

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Speaker 2: Russia's war in Ukraine or even on Taiwan, the South

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Speaker 2: China Sea where's the US president on those issues?

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Speaker 7: Now?

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Speaker 9: Well, it's obviously frustrated with Vladimir Putin, the Russian president.

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Speaker 9: He wants traction on ending the war in Ukraine, but

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Speaker 9: his stance seems to be more that it's on Europe

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Speaker 9: to pressure Russia first on the energy side, and to

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Speaker 9: do so perhaps by penalizing China on Russian energy purchases.

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Speaker 9: So it be interesting to see whether or how that

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Speaker 9: comes up, because Trump does want to keep this call

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Speaker 9: as a starting point to that in person meeting, and

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Speaker 9: Russian energy is a very sensitive topic for cgmping.

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Speaker 5: It's something he might bristle.

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Speaker 9: At the idea that he's like, well, this is an

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Speaker 9: issue for China and Russia, this is not an issue

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Speaker 9: for anybody else to get involved in. So be interesting

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Speaker 9: to see how or whether that comes up. And on Taiwan, interestingly,

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Speaker 9: we have this report in the Washington Post that Trump

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Speaker 9: has declined to approve it's a more than four hundred

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Speaker 9: million military aid package for Taiwan, and this include minissions

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Speaker 9: and autonomous drones rejected by the White House, and interesting

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Speaker 9: to see that happen also potentially so close to this

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Speaker 9: call and a potential meeting because Taiwan's a very sensitive

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Speaker 9: issue obviously in the relationship. Beijing sees Taiwan as a

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Speaker 9: self you know, as part of its territory. It is

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Speaker 9: a self ruled democracy, of course, and perhaps you know,

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Speaker 9: gold Trump's just treading a bit carefully. They're also so yeah,

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Speaker 9: it'll be interesting to see how weather that comes up to.

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Speaker 2: Okay, So that's all the kind of anticipation around the

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Speaker 2: US and China.

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Speaker 5: But I do want to get a word in.

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Speaker 2: There about the president's state visit to the UK. What

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Speaker 2: did you make of it? What do you think is

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Speaker 2: the conclusion in Britain certainly around.

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Speaker 9: This well, I imagine quite a few size of relief

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Speaker 9: this morning he's gone. There were no major problems in

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Speaker 9: the it. He got all the pomp and ceremony of

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Speaker 9: the royal family, which he likes. They kind of stepped

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Speaker 9: over the most delicate issues in the minute.

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Speaker 5: Even in their.

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Speaker 9: Press conference yesterday, you know, things came up on the

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Speaker 9: UK stance on a Palestinian state, on free speech, on migration.

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Speaker 9: Trump said he disagreed with Stum on a few things,

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Speaker 9: but they were quite polite about it.

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Speaker 5: And the mood seemed pretty friendly.

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Speaker 9: So this visit probably went as well as it could

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Speaker 9: for the UK Prime Minister, but the hard stuff was

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Speaker 9: also off the table in a way. They punted on

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Speaker 9: steel tariffs, they didn't really get into detail on Ukraine

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Speaker 9: and a path forward from there. So you know, some

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Speaker 9: of the hard stuff was obviously left off the table

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Speaker 9: in order just to have this meeting go as smoothly

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Speaker 9: as possible.

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Speaker 2: Yeah, absolutely, Rolls, thank you so much for being with

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Speaker 2: me this morning. BlueBag Chief Asia correspondent Roslyn Matheson, stay

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Speaker 2: with us. More from Bloomberg dbake Cube coming up after this. Now,

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Speaker 2: the S and P five hundred, NASDAQ one hundred, Dow

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Speaker 2: Jones in dust to average and Russell two thousand small

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Speaker 2: cap indegs all closed together at fresh record highs for

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Speaker 2: the first time since November twenty twenty one. So it

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Speaker 2: turns out that all the Cell America Incs swelling in

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Speaker 2: marcuts earlier this year may have been misplaced. Is the

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Speaker 2: mansion now for global in versus more like Hedge America? Well,

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Speaker 2: that's the question that I'm going to put to Bloomberg's

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Speaker 2: markets were bought of Titel.

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Speaker 5: Good morning val.

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Speaker 2: Rning just forir Sally on the stocks rally and what

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Speaker 2: happened at the end of yesterday's trading. I mean, how

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Speaker 2: rare is this to happen to have all these indices

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Speaker 2: doing so well.

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Speaker 5: Look, it's pretty rare.

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Speaker 10: It's not happened since twenty twenty one, and it's something

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Speaker 10: that's only happened twenty five times in this century that

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Speaker 10: we've seen. The S and P five hundred, the tech

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Speaker 10: heavy NASDAC, the small cap Russell two thousand, and the

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Speaker 10: blue chip Dow Jones all hit record high closing levels

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Speaker 10: at the same time. Now, a lot of it, I

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Speaker 10: think was it maybe a reassessment of the FED yesterday?

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Speaker 10: The fact that they are cutting to protect growth instead

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Speaker 10: of fighting in fla in some way cutting interestrates because

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Speaker 10: they can not necessarily because they have to, led to

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Speaker 10: quite a risk on rally yesterday. Across at the equity market,

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Speaker 10: the Russell two thousand was actually the outperformer yesterday, that's

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Speaker 10: the small cap index. It was up some two and

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Speaker 10: a half percent, which kind of ties into that narrative

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Speaker 10: of domestically led US growth that would benefit small caps

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Speaker 10: the most on the back of this restarted easing cycle

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Speaker 10: from the FED.

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Speaker 2: So why do you think that leaves valuations then.

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Speaker 10: Well, look, that's a hard one to argue. I mean,

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Speaker 10: there are plenty of people who have come on this

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Speaker 10: show and sat around this table and said valuations are

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Speaker 10: stretched in the US, only to get it wrong a

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Speaker 10: few weeks later. I think the issue here, Caroline is

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Speaker 10: is that if you miss a bull market, if you're

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Speaker 10: a portfolio manager, if you're a manager of funds, and

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Speaker 10: you miss a bull market, it's the biggest thing to

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Speaker 10: make up for in your portfolio. So, yes, valuations are stretched,

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Speaker 10: but the FED is kicking off the second round of

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Speaker 10: this easing cycle. And usually when the FED is cutting,

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Speaker 10: if there's no immediate recession on the horizon, that is

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Speaker 10: a good that is a good framework for equity sur rally.

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Speaker 10: And I think that was just was the conclusion yesterday

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Speaker 10: that no matter the valuation, it is looking better and

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Speaker 10: better for US stocks if the interest rate of the

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Speaker 10: Federal Reserve is going to keep decreasing this year.

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Speaker 5: Yeah.

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Speaker 2: Absolutely, And so does that mean the rest of the world,

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Speaker 2: As you say once in on this US Dot market Valley,

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Speaker 2: I mean, what does it mean for other US assets?

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Speaker 10: Well, I think it's interesting what you noted there about

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Speaker 10: inflows into US assets, But a lot of these inflows

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Speaker 10: are becoming hedged on an FX basis, and that's something

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Speaker 10: that's really interesting to talk about because the first time

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Speaker 10: this decade, FX hedged inflows into US assets are now

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Speaker 10: dominating unhedged exposure. And this is a very big shift

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Speaker 10: that's happened in the market in the last six months,

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Speaker 10: really since the tariff tailspin back in April. Because previously,

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Speaker 10: you know, holding unhedged dollar unhedged tech stocks was the

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Speaker 10: biggest winning trade of the century. The fact that we

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Speaker 10: at least in the previous decade had a rising stock

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Speaker 10: market alongside US dollar appreciation really led to foreign investors

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Speaker 10: dropping their FX hedges on a pretty steady basis. But

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Speaker 10: that a lot of that has been spun around. We

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Speaker 10: have some estimates from the street that out of the

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Speaker 10: thirty trillion dollars of US assets held in foreign hands,

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Speaker 10: now one trillion of that is now hedged, which puts

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Speaker 10: the hedging ratio really back in line to where it

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Speaker 10: was a decade ago.

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

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Speaker 5: I'm Caroline Hepka and.

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