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Speaker 1: This is Bloomberg Daybreak you up for this Wednesday, the

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Speaker 1: thirty first of May in London.

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Speaker 2: Coming up today, No decoupling, Jamie Diamond says the US

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Speaker 2: will trade less with China, but still needs a relationship.

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Speaker 1: Ceiling to the floor. US debtlimit bill clears the first

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Speaker 1: congressional hurdle ahead of a vote today.

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Speaker 2: Grating expectations. UK business confidence falls for the first time

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Speaker 2: in three months.

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Speaker 3: Treat AI like a nuke. That's Asda's price cap and

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Speaker 3: putting the insolvency in CBI. Those other stories we're looking

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Speaker 3: at in today's papers. And I'm Leanne Gerrin's.

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Speaker 1: Plus chips are up in video. Touches a one trillion

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Speaker 1: dollar market cap after beating rivals to the AI boom.

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Speaker 4: That's all straight ahead on Bloomberg Daybreak Europe. The business

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Speaker 4: news you need to start your day in just one

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Speaker 4: fifteen minute podcast on Apple, Spotify, the Bloomberg Business App

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Speaker 4: and everywhere you get your podcast.

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Speaker 2: Yes, good morning, I'm Stephen.

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Speaker 1: Carroll and I'm Caroline Hetcker. Here are the stories that

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Speaker 1: we're following today.

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Speaker 2: The US debt limit deal has passed a key test,

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Speaker 2: clearing a Republican led committee. The next step is a

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Speaker 2: vote in the House of Representatives. Tonight, House Speaker Kevin

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Speaker 2: McCarthy says supporting the bill is an easy vote for Republicans.

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Speaker 5: We couldn't get everything we wanted, and when we had

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Speaker 5: this debate, you couldn't talk about the whole budget, so

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Speaker 5: in essence, we were only able to focus on about eleven

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Speaker 5: percent of the budget. I understand people get upset about

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Speaker 5: walking through a debt ceiling, but this is a House,

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Speaker 5: a Senate, and a presidency. I think when you read

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Speaker 5: the Wall Street Journal, you read the New York Post,

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Speaker 5: you sit back and listen to a lot of economists,

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Speaker 5: they'll say this is the strongest debt ceiling we ever had.

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Speaker 2: Many lawmakers from his own party still disagree with McCarthy, though,

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Speaker 2: The House Freedom Caucus Chairman Scott Perry says the group

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Speaker 2: will do everything in its power to try to stop

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Speaker 2: the deal now.

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Speaker 1: JP Morgan Jamie Diamond says the United States will not

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Speaker 1: decouple from China. In an exclusive interview with Bloomberg, the

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Speaker 1: CEO of America's largest bank told us national security concerns

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Speaker 1: don't equate to all trade.

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Speaker 6: Have you asked me over time? Yeah, there'll be less trade.

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Speaker 6: You know, it'll take years for these things to take place,

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Speaker 6: but it won't be a decoupling, and the world will

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Speaker 6: go on. I think, like I said, I think far

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Speaker 6: more important is what's happening in Ukraine right now.

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Speaker 1: Diamond is in Shanghai for JP Morgan's China Summit. It's

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Speaker 1: the first major event held by a global bank in

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Speaker 1: mainland China since the pandemic. It comes against the backdop

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Speaker 1: of a US China relationship that is at its worst

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Speaker 1: in decades.

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Speaker 2: Well, Diamond isn't the only US CEO in China. Elon

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Speaker 2: Musk has told China's foreign minister in Beijing that the

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Speaker 2: interests of China and the United States are intertwined, echoing

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Speaker 2: recent remarks from the bosses of Apple and Mercedes Benz.

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Speaker 2: Musk is expected to tour Tesla's Shanghai factory later today.

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Speaker 2: In his first post covid visits, it comes as Fidelity

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Speaker 2: now says that Twitter is just worth a third of

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Speaker 2: what Elon Musk paid for the social media platform. Bloomberg's

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Speaker 2: At Baxter has the details.

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Speaker 7: Fidelity has marked down the value of its equity stake again,

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Speaker 7: at first reduced value to forty four percent in November,

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Speaker 7: and even Elon Musk now has acknowledged he overpaid, most

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Speaker 7: recently said it was worth less than half what he paid.

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Speaker 7: Twitter has struggled since Musk became the chief Twit. His

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Speaker 7: erratic behavior regarding content moderation has caused a fifty percent

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Speaker 7: drop and advertising revenue and racked up thirteen billion dollars

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Speaker 7: in debt. In San Francisco, I'm at Baxter Bloomberg Daybreak Europe.

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Speaker 1: Here in the UK, business confidence has fallen for the

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Speaker 1: first time in three months. Bloomberg's un Polts has the story.

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Speaker 8: Business confidence, as measured by Lloyds Bank's Business Barometer, fell

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Speaker 8: five points in May to twenty eight percent. The report

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Speaker 8: says the recent high than expected inflation figure is way

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Speaker 8: on firms sentiments about the economy, and also that inflationary

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Speaker 8: pressures remain sticky for companies. The survey suggests further upward

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Speaker 8: pressure on prices and that will concern the Bank of England.

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Speaker 8: On the labor market, though there were signs of some

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Speaker 8: easing According to the report, staffing expectations edged down from

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Speaker 8: a ten month high in London. I'm une pots of

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Speaker 8: Bloombo day Break.

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Speaker 2: Europe in videos market cap has touched one trillion dollars,

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Speaker 2: becoming of the fifth American company to ever hit the milestone.

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Speaker 2: The chipmaker's shares of sword after a sales forecast predicting

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Speaker 2: incredible demand for its semiconductors, which specialize in language processors

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Speaker 2: like chat gpt arks. Kathy Wood, who missed out on

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Speaker 2: the six hundred billion dollar boom, was one of the

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Speaker 2: few bears.

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Speaker 9: We're onto the next thing. In Vidia is a hardware stock.

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Speaker 9: Ensure it has some software, but the history of hardware

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Speaker 9: and software is the bigger beneficiary. Over time is going

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Speaker 9: to be software.

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Speaker 2: To fit woods skepticism, and Nvidia is also is already

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Speaker 2: moving to capitalize on the AI enthusiasm. The CEO recently

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Speaker 2: unveiled a batch of new products and services tied to

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Speaker 2: artificial intelligence.

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Speaker 1: Okay, those are a few of our top stories for

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Speaker 1: you this morning. Now it's some legal cases that have

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Speaker 1: caught my attention. So Sam Bankman freed, of course, his

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Speaker 1: trial soon. He seems to be mounting an advice of

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Speaker 1: council defense when it comes to these thirteen counts of

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Speaker 1: indictment against him. He's due to face these charges go

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Speaker 1: for trial basically in October, so his defense lawyers are

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Speaker 1: trying to force the prosecutors to hand over documents given

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Speaker 1: to the government from this California law firm called Feneca West,

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Speaker 1: who advised FTX and Bankman freed himself between twenty seventeen

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Speaker 1: and twenty twenty two. So quite interesting that we're now

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Speaker 1: beginning to see the outline of his defense when it

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Speaker 1: comes to the not guilty plea that he has put in.

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Speaker 2: Yeah, a very interesting story to keep across as well.

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Speaker 2: Another one that caught my eye this morning though, was

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Speaker 2: where mortgage deals in the UK and had the number

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Speaker 2: of mortgage deals are being removed from the market again,

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Speaker 2: this as Landers tried to refix I suppose around interest

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Speaker 2: rate expectations. So the number of home loan products in

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Speaker 2: the UK fell by more than three percent over the

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Speaker 2: bank holiday weekend, just over five thousand. This is data

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Speaker 2: from Money Facts being reported by our colleague Damian Shephard.

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Speaker 2: Actually was the biggest one day decline in mortgages on

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Speaker 2: offer in a year. The number of products now is

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Speaker 2: lowest since March, so interesting to see how the mortgage

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Speaker 2: market is again under pressure as we're looking at this

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Speaker 2: hotter than expect inflation prints putting pressure on where but

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Speaker 2: the Bank of England goes next? How high will rates go?

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Speaker 1: Yeah? Absolutely, deals drawing up then okay, those are some

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Speaker 1: stories of interest to us. Let's also bring you though

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Speaker 1: our big interview of the day, JP Morgan CEO Jamie Darmond.

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Speaker 1: He's been speaking to our chief North Asia correspondent, Stephen

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Speaker 1: Engel about well of issues that fed US China relations

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Speaker 1: and his own future ambitions.

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Speaker 6: When when we do visit the country, and we do

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Speaker 6: visit one hundred countries around the world, we are there

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Speaker 6: for the citizens of the country and we're there hopefully

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Speaker 6: through good times and bad times. We tend not to

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Speaker 6: leave other than there's war, civil war, and so we're

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Speaker 6: not predicting any of that here. You know, obviously it's

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Speaker 6: become a far more complex situation. You know, for some

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Speaker 6: for good reason, some not for good reason. And you

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Speaker 6: know there's risk. There's always going to be risk, and

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Speaker 6: I think you'll see companies react to different things for

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Speaker 6: different reasons, some of their own resiliency. Some is obviously

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Speaker 6: national security, you know, will trump all other things. So

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Speaker 6: you know, our government tells us to do AB and C,

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Speaker 6: we're gonna do A, B, and C and support it.

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Speaker 6: And I think there's there's a risk in China itself

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Speaker 6: that you know, if you I've met with several people here,

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Speaker 6: if you have more uncertainty. Some were caused by the

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Speaker 6: Chinese government. Well, of course it's gonna not just change

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Speaker 6: foreign direct investment, which has gone up a little surprisingly,

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Speaker 6: and I don't think they should assume that's continue, but

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Speaker 6: it's going to change the people here, their own confidence,

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Speaker 6: their own ability to invest and do things, and so,

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Speaker 6: like I said, if people have deep conversations, respect each other,

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Speaker 6: engaged properly. I think the American government said all the

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Speaker 6: right things recently, which is because you heard it from

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Speaker 6: Treasury Secretary Yellen, You've heard from President Biden, You've heard

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Speaker 6: it from National Security Advisor Jake Sullivan, you heard it

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Speaker 6: from Secretary at day Tony Blincoln that this is not decoupling,

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Speaker 6: this is de risking. The world's changed a little bit. Obviously.

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Speaker 6: They are concerned about the war in Ukraine. They should be.

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Speaker 6: I think that is probably one of the most serious

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Speaker 6: things affecting the future of the globe, and I mean

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Speaker 6: the future the globe for the next fifty years. And

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Speaker 6: I think they're doing the right things. I'm completely supportive

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Speaker 6: of that. And so you know, China's obviously going to

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Speaker 6: do what they think is good for itself. And business

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Speaker 6: might be a positive attribute, but national security will trump

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Speaker 6: all our issues.

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Speaker 10: Now, I was just at G seven where we heard

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Speaker 10: a lot of that rhetoric where they're de risking, not decoupling.

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Speaker 10: But again, you know, the Chinese say it's one and

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Speaker 10: the same. It's it's America trying to limit China's rise,

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Speaker 10: and you've seen that bifurcation. There's more jargon. Not to

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Speaker 10: over emphasize all this jargon that's going out there, but again,

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Speaker 10: do you see d risking being different from decoupling.

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Speaker 6: Totally? I mean, look, you know, Stevie, I look at

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Speaker 6: the fact trade actually went up and last year, and

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Speaker 6: and I think D risky means national security. Everyone's gonna do.

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Speaker 6: Every country's gonna termin out their own way. You know.

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Speaker 6: Now we're talking about very advanced chips, well kind of reasonable,

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Speaker 6: you know, not to help non allies have things that

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Speaker 6: can help the military. You know, obviously there are you know,

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Speaker 6: rare earths and things like that. So America's gonna look

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Speaker 6: at that. They were very clear they term about it.

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Speaker 6: They used the word, you know, a small garden with

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Speaker 6: high walls as opposed to everything, and let's you know,

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Speaker 6: we should hope that, let's not make it everything. I

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Speaker 6: think the business is trying to help advise them, and

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Speaker 6: that then there's gonna be companies doing things just for

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Speaker 6: their own resiliency. That's a perfectly reasonable thing to do too.

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Speaker 6: And then there's the big one, which is also this

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Speaker 6: constant negotia about trade, unfair trade, free access, fair access

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Speaker 6: that's been going on with for my whole life about

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Speaker 6: every country and countries should learn about where they're legitimate

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Speaker 6: concerns and where they're not legitimate concerns, and like listen

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Speaker 6: to each other deeply and adjust accordingly. So if you

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Speaker 6: ask me, over time, yeah, there'll be less trade. You know,

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Speaker 6: it'll take years for these things to take place, but

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Speaker 6: it won't be a decoupling and the world will go on.

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Speaker 6: I think, like I said, I think far more important

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Speaker 6: is what's happening in Ukraine right now, and so hopefully

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Speaker 6: this will sort out and it will never sort out

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Speaker 6: of people don't talk, So I urge people you have

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Speaker 6: some real deep conversation, you get to know each other

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Speaker 6: a little bit, a little bit each other's concerns about

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Speaker 6: some of these issues, and things would be better if

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Speaker 6: we had them.

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Speaker 10: Yeah, I don't want to keep on harping on the

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Speaker 10: negative side of it, but is there any scenario, the

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Speaker 10: worst case scenario, that would make your investment, and look,

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Speaker 10: it's a sizeable investment in China, make it untenable for you?

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Speaker 6: You know, Steve, you're going here. You're gonna repeat yourself

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Speaker 6: over and over. We're here, We're gonna support the Chinese people,

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Speaker 6: of the Chinese governments. We do business with a thousand

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Speaker 6: companies here. Half are multinationals coming in half are local companies.

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Speaker 6: You know, we always have managed our risk that we

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Speaker 6: can handle almost whatever happens around the world. And I

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Speaker 6: am an American patriot. I will do what my government

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Speaker 6: tells me. I'm gonna salute like anybody else. But I

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Speaker 6: can tell them what I think, and you could imagine

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Speaker 6: that I've been very clear when I sit down with

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Speaker 6: them what I think and what we think matters. And

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Speaker 6: like I said, a lot of the business community think

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Speaker 6: could be very helpful in that this is not a

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Speaker 6: simple matter, and sometimes we oversimplify things in a way

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Speaker 6: which actually damage you know, the ultimate outcomes.

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Speaker 10: Let's pivot to what's happening in the United States. What's

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Speaker 10: your read on inflation, on whether the FED will go

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Speaker 10: beyond the pause and hike again.

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Speaker 6: You know, my simple view is that you know, their

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Speaker 6: right to pause at this point has been a big increase,

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Speaker 6: you know, five hundred basis points to so take a pause.

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Speaker 6: But I do think it's possible they're going to have

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Speaker 6: to raise a little bit more. Then the inflation is

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Speaker 6: kind of stickier. I think people are coming around to that,

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Speaker 6: which means race may have to go up a little

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Speaker 6: bit more. People should be a little prepared for that.

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Speaker 6: There's just as a matter of manage your own business,

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Speaker 6: be a little prepared for that, whether you're a financial

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Speaker 6: company or real estate company, et cetera. I think the

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Speaker 6: other thing I'd be a little prepared for is the

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Speaker 6: volatility that might very well be created by quantitative tightening.

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Speaker 6: We've never really had quantitative easying, which we've had now

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Speaker 6: for the better part of fifteen years, and now you're

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Speaker 6: going to see quantitative tightening, and I think the effects

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Speaker 6: may be a little harsher than people expect, but hopefully

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Speaker 6: we'll get through all of that and I'll be okay.

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Speaker 1: That was Jamie Darmond speaking to put in Bag Steven

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Speaker 1: Angle from JP Morgan's Global China Summit in Shanghai, and.

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Speaker 2: To Chief North ASA correspondent Stephen angel Is here fresh

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Speaker 2: from his big exclusive interview. Stephen, great to have you

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Speaker 2: with us. What stood out for you? A fascinating conversation,

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Speaker 2: so many topics covered.

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Speaker 10: Oh I tried, didn't I I tried by kind of

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Speaker 10: just said, Steven, you can keep on asking the same question.

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Speaker 10: I'm going to tell you he's in China for the

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Speaker 10: long haul. Look, they've they've spent you know, their exposures

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Speaker 10: in excess of ten billion dollars. They over the quietly,

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Speaker 10: I guess you could say, over the course of the pandemic,

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Speaker 10: when China was sort of locked down, they really you know,

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Speaker 10: solidified their ventures there. They had joint ventures as required

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Speaker 10: by the government, but you know, the Chinese government to

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Speaker 10: give them credit, they have said that they want to

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Speaker 10: liberalize and open up to foreign investment the financial services sector,

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Speaker 10: and JP Morgan has taken advantage of that. I mean,

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Speaker 10: they've gotten one hundred percent ownership this year of their

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Speaker 10: mutual fund venture. In twenty twenty one, they got their

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Speaker 10: securities venture, which did turn a profit last year. You know,

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Speaker 10: one of the only few major banks that are foreign,

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Speaker 10: major banks that are in China that did last year.

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Speaker 10: You know, China was kind of locked down last year, right,

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Speaker 10: and then also the Future's ventures. So he he's not

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Speaker 10: I didn't ever expect Jamie Diamond to sit here with

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Speaker 10: me on Bloomberg Television, even though we go way back.

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Speaker 10: Of course we've had about three or four conversations all

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Speaker 10: in China. I wasn't expecting him to tell me that,

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Speaker 10: while it could get untenable, we're going to pull out

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Speaker 10: or we're going to scale down. No, he was pretty bullish.

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Speaker 10: They're in it for the good times and the bad times.

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Speaker 1: Yeah, although I suppose that the counter to that is

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Speaker 1: that maybe others don't feel the same way. I mean,

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Speaker 1: what stood out to me, for example, I'm sure you

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Speaker 1: know better than me even on this, but the American

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Speaker 1: Chamber of Commerce Business Climate survey that showed that China

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Speaker 1: is no longer a top three investment opportunity priority for

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Speaker 1: a majority of US firms. I mean, that was the

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Speaker 1: kind of evidence this year that highlighted the doubts.

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Speaker 10: Well, I think That's where I was kind of going,

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Speaker 10: and you know, in his conversations with his clients, and

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Speaker 10: you know, look, probably a lot of his clients are

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Speaker 10: at the high end and also Chinese clients as well,

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Speaker 10: with significant significant investments. But you know, there's a lot

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Speaker 10: of headwinds for American businesses. Whether we haven't even talked

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Speaker 10: about the potential Biden executive order to you know, basically

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Speaker 10: ban American companies from investing in the Chinese operations in

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Speaker 10: AI quantum computing and semiconductors and the like, and the

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Speaker 10: whole you know, opaque nature of sanctions and tit for

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Speaker 10: tat sanctions. But again, you know, he says that they're

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Speaker 10: they're in it for the long haul despite what's happening.

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Speaker 10: And there's a big crackdown going on right now with

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Speaker 10: consultancies and due diligence firms that that companies need this

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Speaker 10: data and this information. So it's it's a very complex situation.

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Speaker 10: You mentioned American Chamber of Commerce, Eric Jong, he's the

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Speaker 10: head in Shanghai. He said, without proper due diligence, foreign

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Speaker 10: companies will be unable to invest in new projects in China.

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Speaker 10: I tried to kind of get you know, mister Diamond

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Speaker 10: to talk on those name on those ground he wasn't

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Speaker 10: having much of it.

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Speaker 2: Stephen. It was a great conversation. Thank you so much

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Speaker 2: for joining us for your thoughts after your interview with

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Speaker 2: the JP Morgan CEO. That's our chief nord Asa correspondence,

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Speaker 2: you've an speaking to us there.

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Speaker 1: Yeah, absolutely great insights. Interesting interview coming up next. So

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Speaker 1: we're going to talk about these issues. Treat AI like

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Speaker 1: a nuke. That's as the price cap and the CBI's

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Speaker 1: insolvency question.

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Speaker 4: Now the paper review on Bluebird Daybreak Europe, the news

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Speaker 4: you need to know from today's papers.

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Speaker 2: And Blue Brigsley and Gerns is with us with the

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Speaker 2: details of those stories. Morning to you, Leanne. So let's

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Speaker 2: start with the Times. Their top story, AI poses same

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Speaker 2: threat as nuclear wars and pandemics.

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Speaker 3: Experts say, pretty stark warning, isn't it, Stephen, and artificial

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Speaker 3: intelligence leaders are warning about this existential threat that technology

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Speaker 3: does pose for us the whole society. Mitigating the risk

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Speaker 3: of extinction from AI should be a global priority alongside

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Speaker 3: other societal scale risks, says, such as pandemics and nuclear

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Speaker 3: wars he just mentioned. And this is all according to

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Speaker 3: the Center for AI Safety, and they basically brought out

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Speaker 3: the statement highlighting what they think are real concerns, and

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Speaker 3: concerns about AI range from the possibility of it taking

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Speaker 3: over human jobs, which we've spoken about before, to it

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Speaker 3: being used by humans to design things like bioweapons or

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Speaker 3: computer viruses, so really causing a lot of stress to civilization.

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Speaker 3: This is what they're saying could happen. The document was

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Speaker 3: actually signed by more than four hundred executives and researchers,

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Speaker 3: including the Open CEO, Sam Altman, and according to Dan

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Speaker 3: Hendrix now he's the director for the Center, he says,

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Speaker 3: although that they have different views on the severity of

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Speaker 3: the risk when it comes to AI, all of them

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Speaker 3: believe it could have catastrophic outcomes and it needs to

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Speaker 3: be handled.

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Speaker 2: Well.

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Speaker 1: Yeah, and this is all from case right. This is

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Speaker 1: the organization that has written this and that the Times

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Speaker 1: is focused on. It's a San Francisco based research organization,

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Speaker 1: and they've got some really big names who have written

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Speaker 1: about this, including winners of the Cheering Prize and a

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Speaker 1: lot of experts in the AI field. So they're quite

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Speaker 1: a kind of interesting credible organization.

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Speaker 2: Yeah, seeing names like Sam Martman from Open Ai in

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Speaker 2: there as well is really interesting given the focus that

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Speaker 2: we've had on their chatite beach.

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Speaker 3: And also Demi Hasibus. We must remember he's British. He

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Speaker 3: actually started the British arm of Deep Mind, so he's

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Speaker 3: a really interesting voice too in all of this. But

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Speaker 3: what companies are calling for is regulation, and they want

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Speaker 3: this regulation before the technology moves so fast and takes over.

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Speaker 3: So this is almost like a pause, a warning before

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Speaker 3: things becomes lightly out of control.

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Speaker 2: Okay, let's go to the Telegraph next, Lee and the

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Speaker 2: story on the asdabas criticizing Sunak's quote clumsy plan to

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Speaker 2: cap food prices.

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Speaker 3: You can't interfere in the market. The markets will control themselves. Now,

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Speaker 3: that is the warning from asda's chairman Stewart Rose in

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Speaker 3: the Telegraph.

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Speaker 1: Now.

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Speaker 3: Writing in the Telegraph, he says the government needs to

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Speaker 3: be careful of unintended consequences in capping prices and supermarkets

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Speaker 3: and really interfering. As he says he's hit out at

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Speaker 3: clumsy plans by ministers to impose these price caps on supermarkets.

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Speaker 3: And this really comes amid fears that soaring grocery inflation

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Speaker 3: is now becoming entrenched in our economy and it came

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Speaker 3: after the CMA said it will assess how suppliers and

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Speaker 3: supermarkets are making decisions on prices as part of a

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Speaker 3: wider investigation into this system. We do know food inflation

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Speaker 3: hit in nineteen percent in April according to the Office

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Speaker 3: for National Statistics. That's the highest in forty five years.

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Speaker 3: So it's absolutely massive as there's actually one place that's

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Speaker 3: tried to keep its prices, as Stuart Rose explains, at

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Speaker 3: normal rates. He's not trying to raise him and he

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Speaker 3: says this is important for the consumer. But I remember

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Speaker 3: Stephen also just mentoring mortgages earlier. And this is something

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Speaker 3: else in the Telegraph. It says analysts at City suggest

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Speaker 3: Rishie Sunak, the Prime Minister may start offering mortgage subsidies

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Speaker 3: and this is for people who are struggling to get

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Speaker 3: onto the housing ladder. This is all in this Telegraph piece.

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Speaker 3: It's really interesting, okay.

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Speaker 1: And just lastly the Guardian the headline the CBI thought

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Speaker 1: legal advice of a possible insolvency after misconduct scandal.

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Speaker 3: Yes, so members of the Confederation of British Industry do

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Speaker 3: begree voting today on their plans for the future with

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Speaker 3: the boardlining up potential insolvency of reforms are rejected. Listen.

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Speaker 3: We have no ideas what these proposals are yet. The

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Speaker 3: results of the ballot will be announced next week on Tuesday.

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Speaker 3: The Guardian says a business lobby group did a request

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Speaker 3: guidance of insolvency among other restructuring offers, and this really

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Speaker 3: as at battles for survival in the wake of a

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Speaker 3: sexual misconduct allegations Ray Newton Smith. We know she's the

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Speaker 3: new Director General and this folk could determine if people

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Speaker 3: have faith in her.

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

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 2: the Bloomberg Business app, and Bloomberg dot Com.

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Speaker 1: I'm Caroline Hetker and.

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Speaker 2: I'm Stephen Carol. Join us again tomorrow morning for all

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Speaker 2: the news you need to start your day right here

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Speaker 2: on Bloomberg Daybreak.

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Speaker 8: Europe