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

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Speaker 2: They say is the Bloomberg Daybreak Ero podcast. Good morning,

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Speaker 2: It's Monday, the eighteenth of August. I'm Stephen Carroll in London.

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Speaker 2: Coming up today. Ukraine's President Vladimir Zelenski arrives in Washington

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Speaker 2: for crunch talks with President Trump, joined by the UK's

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Speaker 2: Keir Starmer and other European leaders. The median pay for

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Speaker 2: for one hundred CEOs reaches four point six million pounds,

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Speaker 2: but that's still pales in comparison to what their American

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Speaker 2: counterparts earn, plus credit where it's due. We take a

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Speaker 2: closer look at Apollo's fiendishly complicated fund that's finding creative

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Speaker 2: ways to put insurance capital to work. Let's start with

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Speaker 2: a roundup of our top stories. Ukraine's President Vladimir Elenski

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Speaker 2: has arrived in Washington ahead of meetings with President Trump

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Speaker 2: and European leaders. The summit's being attended by top officials

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Speaker 2: including the UK's Ker starmerman Is Fredrick Martz, and Francis

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Speaker 2: Emmanuel Macron. Here's what he's hoping to achieve at the meeting,

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Speaker 2: to strategize.

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Speaker 1: How to keep the pressure agenda alive in case present

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Speaker 1: Putin doesn't come to the final meeting, of the quality

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Speaker 1: of meeting, and how we strategize on the next.

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Speaker 2: Steps as fre as President Emmanuel Macron. President Trump is

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Speaker 2: expected to outline terms for a potential peace deal discussed

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Speaker 2: with Vladimir Putin, with Washington likely to focus on territorial

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Speaker 2: concessions demanded by Russia. The meeting follows a weekend phone

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Speaker 2: call among allies during which Donald Trump is said to

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Speaker 2: have told leaders he's open to US involvement in providing

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Speaker 2: security guarantees for Ukraine. Here's what Trump's Special ENVOYE Steve

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Speaker 2: Whitcoff told CNN's State of the Union program on Sunday.

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Speaker 3: We got to win agreement that the United States and

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Speaker 3: other European nations could effectively of offer Oral five like

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Speaker 3: language to cover a security guarantee work off.

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Speaker 2: They're referring to NATO's Article five, the Alliance's mutual defense clause,

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Speaker 2: requiring member states to respond if any one of them

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Speaker 2: is attacked. More than three months after the US and

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Speaker 2: the UK agreed the first of a string of deals

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Speaker 2: to reduce tariffs, so many trading partners are still waiting

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Speaker 2: for the rhetoric to become reality. Britain, Japan, South Korea

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Speaker 2: and the EU. I'll say the White House has promised

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Speaker 2: them exemptions and trade talks, but hasn't yet signed them

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Speaker 2: into law.

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Speaker 4: Bloomberg Exchange. Wilcock has more.

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Speaker 5: For the Brits. It's steel. Take a listen to Prime

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Speaker 5: Minister Kistama three months ago.

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Speaker 6: Just a few moments ago, I spoke to President Trump,

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Speaker 6: the President of the United States, and I'm really pleased

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Speaker 6: to announce that we've agreed the basis of a historic

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Speaker 6: economic prosperity deal. It will remove tariffs or British steer

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Speaker 6: and aluminium, reducing them to zero.

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Speaker 5: The UK Prime Minister was very clear and no one

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Speaker 5: in the US corrected him. But the steel exemption has

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Speaker 5: never been finalized. So the current tariff on UK steel

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Speaker 5: exported to America is twenty five percent. The Japan, South

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Speaker 5: Korea and the European Union, it's the exact same problem,

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Speaker 5: but with cars. Fears are growing the scale of the

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Speaker 5: US's global trade talks on making delays inevitable and likely

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Speaker 5: causing more economic damage in London. James Wilcock, Bloomberg Radio.

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Speaker 2: Israel's economy slumped in the second quarter, as the country's

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Speaker 2: twelve day war with Iran forced a shut down of

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Speaker 2: many businesses, GDP fell by three point five percent in annualized,

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Speaker 2: seasonally adjusted terms. The worse than expected data came as

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Speaker 2: hundreds of thousands of Israelis took to the streets to

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Speaker 2: protest Prime Minister Benjaminettaniahu's plan to expand operations in the

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Speaker 2: Gaza Strip. Organizers said as many as half million people

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Speaker 2: attended the rally in Tel Aviv. Netania, who, however, insists

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Speaker 2: that calls to end the conflict will only embolden her

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Speaker 2: mass We assume when we.

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Speaker 7: Come up, those who are calling for an end to

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Speaker 7: the war today without defeating her mass are not only

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Speaker 7: hardening her Massa's stance and delaying the release of our hostages.

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Speaker 7: They are also ensuring that the horrors of October the

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Speaker 7: seventh will recur again and again.

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Speaker 2: That was Israeli Prime Minister Bennamin natanie who's speaking through

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Speaker 2: a translator. And you will pay for bosses of forty

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Speaker 2: one hundred companies have has had a record high for

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Speaker 2: the third year in a row with Mario.

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Speaker 4: Here's Bloomberg's Crispett.

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Speaker 8: Medium pay for CEOs that the one hundred biggest companies

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Speaker 8: traded on the London Stock Exchange reached four point six

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Speaker 8: million pounds in the last financial year. That's equivalent to

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Speaker 8: around six point two million dollars. According to the research

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Speaker 8: from the left leaning think tank the High Pay Center,

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Speaker 8: average salaries for top bosses rose by seven percent across

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Speaker 8: the year. Still, the figures four far short of CEO compensation.

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Speaker 8: In the United States. Dates of a median pay a

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Speaker 8: selected sm P five hundred companies shows compensation there has

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Speaker 8: reached sixteen point eight million dollars, and some argue that

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Speaker 8: this pay gap is one reason British companies have been

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Speaker 8: moving their listings to New York. In London, Chris Pitt

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Speaker 8: Bloomberg Radio.

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Speaker 2: Airbus's A three to twenty series is about to overtake

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Speaker 2: the Boeing seven three seven as the most delivered commercial

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Speaker 2: airplane in history. Aviation consultancy firm Syrium says the jet

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Speaker 2: is just twenty sales short of the record. The four

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Speaker 2: decade race between the two firms charts both airbusses rise

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Speaker 2: and also the lack of new plane designs in aviation,

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Speaker 2: and those are our top stories this morning. I check

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Speaker 2: on the markets for you. The MCI ASA Pacific Index

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Speaker 2: up by half of one percent. The Nike in Tokyo

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Speaker 2: is a one percent hire this morning, the MCI China

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Speaker 2: Index one point three percent high. Eurostox fifty futures are

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Speaker 2: up by two tenths of one percent. Watching oil prices

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Speaker 2: holding steady Brent cruise at sixty five dollars eighty seven

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Speaker 2: ahead of that crucial Zelenski Trump meeting coming up a

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Speaker 2: little bit later. The ten year treasury yield DNA basis

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Speaker 2: point in trading today after the big news we saw

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Speaker 2: on Friday, four point three percent is where that's starting

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Speaker 2: the week. We're looking at the Bloomberg Dollar Spot Index

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Speaker 2: a tenth of one percent week, or the euros at

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Speaker 2: one seventeen against the dollar. In a moment, we'll bring

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Speaker 2: you more on what to expect from Ukrainian President's White

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Speaker 2: House meeting, plus how private capital giant APOLLOW and finance

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Speaker 2: firm ACS have devised a fiendishly complicated fund that's found

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Speaker 2: in creative ways to put insurance capital to work. But first,

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Speaker 2: another story that I've been reading this morning about from

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Speaker 2: what may have been the major sporting event of the weekend,

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Speaker 2: depending on your point of view the World Humanoid Robot Games.

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Speaker 2: So the event in Beijing c's robots taking part in

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Speaker 2: things like races, football matches, boxing matches, and well, it's

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Speaker 2: very impressive see the progress being made in this area.

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Speaker 2: Quite funny to see these robots falling over each other,

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Speaker 2: essentially playing football with no skill whatsoever, something I can

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Speaker 2: identify with, and in some cases losing robotic limbs while

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Speaker 2: taking part in these events as well. Now, Vidius Jensenwong

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Speaker 2: has talked about robotics having the potential to grow into

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Speaker 2: a multi trillion dollar industry elon Musk's The's test as

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Speaker 2: optimists having the potential to generate ten trillion dollars in revenue,

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Speaker 2: But it does look like we might be some distance

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Speaker 2: from those massive gains as well. In fact, one of

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Speaker 2: the leading companies at these games in China, Unitrey, the CEO,

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Speaker 2: said earlier this month, and in terms of development, it

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Speaker 2: feels like a point of two to three years before

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Speaker 2: chat ept to put it on a comparison to large

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Speaker 2: language models, But for now, it's funny to watch and

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Speaker 2: to marvel at a key sector as the technology develops.

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Speaker 2: You can read our reporting from the World Humanoid robot

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Speaker 2: games on Bloomberg dot Com and the Terminal will put

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Speaker 2: a link to the story in our podcast show notes

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Speaker 2: as well. Let's bring you more now on the Ukrainian

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Speaker 2: president's meeting with Donald Trump later and the Alaska After

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Speaker 2: the Alaska so much with Russia's Vladimir Putin. Our chief

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Speaker 2: Asier correspondent Raza Mathson is with me now from more Ras.

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Speaker 2: Good morning now. Presidentce Lanski's last over office meeting with

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Speaker 2: Donald Trump was bruising. What is Vladimir's Lansky hoping to

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Speaker 2: achieve today?

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Speaker 9: Well, at the outset, I imagine he's trying to avoid

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Speaker 9: a repeat of that February meeting, of course, and the

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Speaker 9: risk is not insignificant. They're given that Donald Trump is

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Speaker 9: really pushing heavily to get not just to cease far

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Speaker 9: it seems, but a full peace deal and to do

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Speaker 9: so quickly, and as part of that suggesting Ukraine really

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Speaker 9: needs to be prepared to seed territory. So it's to

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Speaker 9: manage that meeting is probably the most overarching objective, and

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Speaker 9: to keep Donald Trump very focused on what this also

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Speaker 9: means for Ukraine and to keep Ukraine's interests in mind.

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Speaker 9: I mean, he'll want to understand even more what exactly

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Speaker 9: was said between the leaders of US and Russia in

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Speaker 9: that meeting. He want to understand what Donald Trump is

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Speaker 9: thinking about land and territory. He'll really want to understand

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Speaker 9: what Donald Trump is thinking when there's these references that

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Speaker 9: we're now hearing to potential security guarantees for Ukraine. What

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Speaker 9: does that actually mean in practice and what would that

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Speaker 9: look like? And so the questions are over what exactly

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Speaker 9: that would entail, and to understand Donald Trump's timeline and

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Speaker 9: to remind him that racing to get a piece steal

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Speaker 9: would probably not be necessarily in Ukraine's interests when it

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Speaker 9: comes to things again like land. But Donald Trump seems

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Speaker 9: very intent on getting the leaders of Russian and Ukraine

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Speaker 9: in the room sooner rather than later, and perhaps Volomia

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Speaker 9: Zelinsky wants to encourage Donald Trump to tap the brakes

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Speaker 9: very slightly on that to get a clearer sense of

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Speaker 9: the road in a way before they all sit down.

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Speaker 2: Vlos Mitsinski is not coming alone to this meeting, as

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Speaker 2: well as being accompanied by a whole range of European

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Speaker 2: leaders including ursul Vandeline and Kris Dharmer. I mean, what's

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Speaker 2: the effect that those leaders are hoping to have on

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Speaker 2: the president by coming along.

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Speaker 9: Well, in a way they'll all be we found out,

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Speaker 9: perhaps a bit like a shield for Vladimi Zelinsky again

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Speaker 9: to avoid that conversation going off the rails that we

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Speaker 9: saw earlier in the year, but also very much to

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Speaker 9: send the message that they're standing with Ukraine on this,

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Speaker 9: and they're standing with the Ukrainian leader in his interests

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Speaker 9: in these conversations, and to endorse the view again that

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Speaker 9: you can't rush into something where you see Ukraine being

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Speaker 9: pressed to seed territory Russia making fairly minimal concessions potentially

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Speaker 9: on land, and a lack of clarity about these security guarantees.

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Speaker 9: And also to again so the role of Europe needs

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Speaker 9: to be heard in all of this, and perhaps there

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Speaker 9: is a role for Europe in post war security for Ukraine.

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Speaker 9: And so it's about helping manage that conversation and again

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Speaker 9: steer it in the direction that they want, which is

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Speaker 9: above all to support Ukraine.

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Speaker 2: So many of our conversations around these series of meetings

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Speaker 2: about who's not in the room. Vladimir Putin is not

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Speaker 2: this version of this composition of a meeting. What has

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Speaker 2: changed since the Trump Putin summit. We only have a

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Speaker 2: limited idea of what was discussed at that meeting.

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Speaker 9: Well, that's right, and we've seem to have leap frog

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Speaker 9: from the idea of a cease far into let's get

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Speaker 9: a full peace steal and do it very quickly. I mean,

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Speaker 9: Donald Trump said he was going into that meeting with

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Speaker 9: Vladimir Putin to come out with the ceasefire, and now

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Speaker 9: he says, actually, we don't need that anyway. Let's just

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Speaker 9: get a full peace steal, and we've got the parameters

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Speaker 9: of it already. So that seems to have shifted the

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Speaker 9: territory very much in the conversation and put Ukraine under

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Speaker 9: a lot of pressure very quickly. And so that's certainly

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Speaker 9: the backdrop again to which these conversations are happening today.

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Speaker 9: And the challenge in all of this is not just

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Speaker 9: for Zelensky but also for the European leaders to stay

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Speaker 9: united him. It's a pretty big gaggle of them going.

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Speaker 9: Some of them have very good relationships with the US president,

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Speaker 9: particularly the NATO Secretary General and the FINISHED President, but

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Speaker 9: they don't always all agree on the path forward for Ukraine.

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Speaker 9: And so you know, understanding exactly where Donald Trump's mind

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Speaker 9: is is probably the number one priority here.

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Speaker 2: In terms of what could emerge from this and how

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Speaker 2: European leaders might be hoping for a win in this.

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Speaker 2: What does a win look like for those who've traveled

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Speaker 2: to Washington today.

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Speaker 9: Well, a win is probably just a feeling that Donald

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Speaker 9: Trump's heard what they've come to say and is taking

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Speaker 9: that on board when he thinks about the next steps

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Speaker 9: in all of this. I mean, it's clear he now

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Speaker 9: wants to move towards a full peace steal and you

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Speaker 9: know his words even to Voladimir Zelensky overnight, where you

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Speaker 9: can have you can make this happen pretty quick if

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Speaker 9: you want so, seems to be putting the pressure back

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Speaker 9: on Ukraine. So a win for Europe is to have

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Speaker 9: Donald Trump really aware of what this means for Ukraine constitution,

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Speaker 9: are able to give up territory, freezing a war in place?

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Speaker 9: What does that mean? What's the future of Ukraine in

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Speaker 9: all of this? So that's probably the number one priority,

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Speaker 9: is to slightly reset the table a bit with Donald

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Speaker 9: Trump and have him really factor in the Ukrainian part

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Speaker 9: of it.

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Speaker 4: After his meeting with Putin a.

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Speaker 10: Few days ago.

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Speaker 2: Okay Razla Matheson Archievaser correspondent, thank you very much for

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Speaker 2: joining us to look ahead to that meeting taking place

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Speaker 2: in Washington.

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Speaker 4: Later stay with us.

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Speaker 2: More from Bloomberg Daybreak Europe coming up after this. Now,

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Speaker 2: in recent years, Apollo and other peers with private equity

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Speaker 2: routes have been buying up swathes of the life assurance

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Speaker 2: and annuity industry, getting their hands on a mountain of savings.

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Speaker 2: But there's a snag. Using this cash for riskier, more

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Speaker 2: lucrative bets on private credit and similar assets often inflicts heavy,

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Speaker 2: hefty capital charges on insurers. So Apollo has created a

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Speaker 2: complex investment vehicle to solve that dilemma, and our senior

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Speaker 2: private credit reporter Silas Brown joins me now to explain. Silas,

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Speaker 2: good morning. What is the goal behind Fox Hedge.

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Speaker 10: Well, it's an intriguing name, isn't it? But I think

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Speaker 10: the goal in essence is insurance companies have a series

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Speaker 10: of needs when they're deploying capital. One of them is

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Speaker 10: to try to match assets with liability. So they haven't

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Speaker 10: you know, long term liabilities with their with their insurance contracts,

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Speaker 10: and it's very very hard to find debt with with

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Speaker 10: equivalent maturities, and so Foxhead, which has a final maturity

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Speaker 10: of forty years, solves solves that problem. I mean, it's

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Speaker 10: quite a rarity actually to find corporate debt with such

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Speaker 10: lengthy maturities. But also given its rated double A and

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Speaker 10: houses a series of different asset classes, including direct lending,

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Speaker 10: a clos a whole sort of smallas board of different

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Speaker 10: assets that Apollo is active in with a heart with A.

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Speaker 10: It's highest rating at double A minus. That also means

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Speaker 10: that they can get exposure to a series of asset

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Speaker 10: classes without inflicting hefty capital charges as you say, to

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Speaker 10: access to them. So they can kind of benefit from

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Speaker 10: the boom of private credit without having without sort of

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Speaker 10: suffering the capital charges that come alongside with investing in

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Speaker 10: these sort of more lower rated asset classes.

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Speaker 2: Okay, so it's sort of a workaround for these insurers.

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Speaker 2: But talk us a little bit, to us a little

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Speaker 2: bit about the mechanics of this.

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Speaker 4: How does it work?

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Speaker 10: This is a real this is very challenging. But basically

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Speaker 10: what Apollo has done along with this, this this small

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Speaker 10: business called Advanced Credit Solutions, which actually came up with

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Speaker 10: the idea. So they've set up an SPV in Bermuda,

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Speaker 10: and the SPV is backed by Apollo originated assets from

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Speaker 10: anything from c those direct loans to real estate to

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Speaker 10: investment grades investment grade assets, and the SPV then sells

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Speaker 10: corporate debt, and the corporate debt is has I think

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Speaker 10: in them sort of average waste maturity of about thirty years,

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Speaker 10: but the final maturity is forty years, and they and

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Speaker 10: they sell the debt and the debt is then sold

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Speaker 10: to the insurance company that owns as well as a

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Speaker 10: number of other insurers. I mean, there's much there's more

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Speaker 10: kind of complicated within that mechanism. There's more complicated processes,

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Speaker 10: but I mean, that's that's the essence of it.

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Speaker 2: Okay, I'm furiously drawing a spider diagram as I'm talking

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Speaker 2: to your status to try and understand this, But I

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Speaker 2: think I've got the outline of a special purpose vehicle.

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Speaker 2: But essentially the complexity is sort of what's unique about

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Speaker 2: this particular move. But is it a risky move for

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Speaker 2: these insurers? What's the sort of risk involved? Yeah, so

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Speaker 2: I think I think I think the Fox edge is

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Speaker 2: an interesting illustration of a phenomena that's been occurring for

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Speaker 2: a few years, which is that private capital firms are

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Speaker 2: buying up insurance companies and using that using that that

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Speaker 2: insurer capital to invest in different alternative markets. Fox Edge

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Speaker 2: is is, I, you know, we think quite a unique fund,

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Speaker 2: but will.

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Speaker 10: I assume be copied and I think there will be

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Speaker 10: similar similar funds from from a number of different private

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Speaker 10: capital firms and another players on Wall Street. I think

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Speaker 10: that's one of the risks. I think one of the

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Speaker 10: risks is that I mean that we've heard from quite

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Speaker 10: a few people, is it's not that Apollos Apollo is

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Speaker 10: a clever you know, full of clever people that that

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Speaker 10: kind of understand the dynamics of when dealing with a

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Speaker 10: liquid investment. It's more that other people may copy and

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Speaker 10: if something's done in a more slap dash way, you

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Speaker 10: can find you can find real dangers when you're investing

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Speaker 10: kind of long term investments in liquid and very complicated

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Speaker 10: asset classes and structures. And so I think that's that

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Speaker 10: seems to me our chief our chief risk that these

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Speaker 10: this is very new ground and you know, billions of

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Speaker 10: dollars of being put to work by private capital firms

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Speaker 10: on behalf of insurance companies and it only takes one

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Speaker 10: you know, poorly structured investment. I think to for regulators

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Speaker 10: to clamp down on kind of burgeoning industries such as these.

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Speaker 4: And have we heard anything from regulators about this.

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Speaker 10: That they have not spoken about Fox Edge directly as

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Speaker 10: a as far as we know, I mean they, I

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Speaker 10: think they. You know, a number of regulators, both in

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Speaker 10: the US and Europe are engaged with the broader concept

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Speaker 10: that I outlined outlined earlier, because I mean, I think

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Speaker 10: it is I mean, you know, from a private credit perspective,

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Speaker 10: I think it is you know, the idea of private

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Speaker 10: capital managing increasingly managing more and more insurance money, I

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Speaker 10: think is one of two big phenomenas that occurring in

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Speaker 10: private credit, the other being an increasing push into retail.

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Speaker 10: And both of those concepts I think regulators are very

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Speaker 10: very interested in. I think the idea from a regulatory

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Speaker 10: perspective on insurer insurer money is to do with capital

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Speaker 10: charges as well. You know, they have rules that if

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Speaker 10: you can't if you invest in sort of some investment

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Speaker 10: grades assets sort of risk riskier loans, then you have

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Speaker 10: to pay capital charge. You have to pay higher charges

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Speaker 10: against it than what you would if you invested in

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Speaker 10: investment grade assets and these kind of structures. So you know,

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Speaker 10: because they're structured in a way that does create a

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Speaker 10: degree of safety for the investors, they can achieve investment grades,

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Speaker 10: ratings through constituent parts, some of which are sub investment grade.

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Speaker 10: Forgive me if this is complicated, but I think that's

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Speaker 10: kind of I think this arbitraging the capital charges, I

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Speaker 10: think is something that regulators are very engaged with.

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Speaker 2: Okay, siders, we appreciate you taking us on this journey

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Speaker 2: through a very complex but really interesting development in the

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Speaker 2: financial plumbing. I suppose in private credits a Sidus brand,

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Speaker 2: our senior private credit reporter. Thank you very much. Well,

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Speaker 2: the time is six twenty two here in London. Let's

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Speaker 2: bring up to speed on what's moving on markets this morning.

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Speaker 2: So we've got Asian shares rising four tens of one

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Speaker 2: percent now in the MSCI Asia Pacific Index, led by

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Speaker 2: gaines in China and Japan. So the Nickken Tokyo's up

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Speaker 2: by nine tens of one percent, the Hang Seng indexes

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Speaker 2: up by half a percent, of the MSCI China Index

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Speaker 2: one percent higher. Seth Korea actually lagging this morning, down

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Speaker 2: by one point three percent in trading in fact, the

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Speaker 2: gage of Shang High list at stocks is set for

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Speaker 2: its highest close in a decade. Ahead of that meeting

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Speaker 2: between Donald Trump and Vladmir Zelenski. Later, we have got

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Speaker 2: oil prices holding pretty steady. Brown Cruise up just a

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Speaker 2: tenth of one percent, sixty five dollars and eighty nine cents.

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Speaker 2: We'll be watching what's going on with European yields later on,

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Speaker 2: because we have that big jump in yields, particularly at

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Speaker 2: the long end of the curve on Friday, ten basis

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Speaker 2: points higher for the ten and thirty year French yields.

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Speaker 3: Eight.

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

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Speaker 4: And I'm Stephen. Carol.

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Speaker 2: Join us again tomorrow morning for all the news you

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Speaker 2: Europe