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Speaker 1: Good morning. It's Friday, the third of November here in London.

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Speaker 1: This is the Blueberg Day Recurate podcast.

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Speaker 2: I'm Caroline Hepke and.

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Speaker 3: I'm Stephen Carroll. Coming up today. Sam Bankman Freed has

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Speaker 3: found guilty. The founder of FTX convicted of massive fraud

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Speaker 3: over the crypto exchange's collapse.

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Speaker 1: Garls, a city encircled Israel's military offensive, continues as the

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Speaker 1: US Secretary of State meets with Benjamin Netanyahoo.

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Speaker 3: Today Boe blues traders bet on UK rapcots after a

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Speaker 3: bleak outlook from Andrew Bailey.

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Speaker 1: Let's begin with a roundup of our top stories. Sam

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Speaker 1: Bankman Freed has been found guilty of fraud and conspiracy.

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Speaker 1: It took Duras less than five hours to convict him

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Speaker 1: on all seven charges relating to the collapse of the

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Speaker 1: crypto exchange FTX. Prosecutor said that Bankman Freed directed the

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Speaker 1: transfer of FTX customer money into an affiliated Hedge fond

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Speaker 1: Alameda Research for other investments. Bloomberg's legal reporter Ava Benni Morrison,

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Speaker 1: was in the courtroom to see Bankman Fried's reaction.

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Speaker 4: He was pretty emotionless. He was asked to stand up

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Speaker 4: by the judge. When the jury delivered its verdict, he

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Speaker 4: faced the jury box. He held his hands in front

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Speaker 4: of him and it looked like he was stearing down

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Speaker 4: at the floor as the jury. As the fourth person

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Speaker 4: for the jury confirmed guilty to each of the seven charges,

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Speaker 4: he then sat back down. When the jury walked out

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Speaker 4: of the room, he was whispering with his lawyers. He

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Speaker 4: was nodding a lot. While he wasn't very emotional. His

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Speaker 4: parents were. They were holding each other. His dad doubled

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Speaker 4: over at one point.

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Speaker 1: That was Ava Benny Morrison, Bloomberg's legal reporter, speaking well.

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Speaker 1: Sam Bankman Freed will be sentenced in March and could

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Speaker 1: face a maximum sentence of one hundred and ten years

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Speaker 1: in prison. His lawyer says he will consider an appeal.

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Speaker 3: During the trial. Prosecutor's courage Bankman Free is the mastermind

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Speaker 3: of a scheme designed to make him quote the king

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Speaker 3: of crypto. Bloomberg business Week's investigative reporter Zike Foe, wrote

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Speaker 3: a book on ftx's crypto roller Coaster. He told us

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Speaker 3: Bankman Freed struggled under cross examination.

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Speaker 5: When his own lawyer was questioning him. He had a

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Speaker 5: lot to say, but when the prosecution had there turned

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Speaker 5: a cross examine. He suddenly didn't remember anything and in

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Speaker 5: one moment that was dramatic, I mean, especially for me.

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Speaker 5: The prosecutor asked her that she asked him about the

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Speaker 5: statement there was more leeway, and he said, I don't

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Speaker 5: remember saying anything like that. She whipped out her copy

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Speaker 5: of my book, number go up and walked it over

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Speaker 5: to him like a hard copy, and was like, turn

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Speaker 5: to page two twenty four fell out of that.

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Speaker 3: The conviction is the first in a wave of legal

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Speaker 3: action against crypto companies. The sector now faces questions over

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Speaker 3: its future and if the verdict is a reflection on

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Speaker 3: the wider industry.

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Speaker 1: The Israeli military says that a ceasefire is quote not

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Speaker 1: on the table. The head of US Sectory of State,

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Speaker 1: Anthony Blincoln's visit to the Middle.

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Speaker 3: East, Israeli troops encircled the north of the Gaza Strip

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Speaker 3: as the death toll mounted. Blinken told reporters he wants

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Speaker 3: to talk to Israel about better protecting civilians.

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Speaker 5: We're determined that this conflict not spread, and we'll be

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Speaker 5: talking to both the Israeli government partners in the region

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Speaker 5: about what all of us are doing to prevent that

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Speaker 5: from happening.

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Speaker 3: The trip by America's top diplomat comes as House Republicans

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Speaker 3: passed an Israel only aid bill. President Biden has vowed

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Speaker 3: to veto any aid plan that leaves off Ukraine.

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Speaker 1: Apple has warned that revenue in the holiday quarter, usually

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Speaker 1: its biggest of the year, will be about the same

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Speaker 1: as last year. Wall Street had projected about five percent growth.

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Speaker 1: The company's been trying to pull out of its longest

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Speaker 1: sales slow down in decades, including a deceleration in China.

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Speaker 1: A principal analyst at Lopez Research Marabell Lopez, says that

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Speaker 1: there's no silver bullets.

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Speaker 6: We do have Bawai coming on as competition. We do

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Speaker 6: have a general slow down in smartphone selves globally, as

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Speaker 6: we've seen also with the PCMAC business, and then we

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Speaker 6: have some pricing effects, right. So when you put all

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Speaker 6: these together with the currency is slowed down in some

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Speaker 6: of the consumer spending, and a competitive environment, it's hard

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Speaker 6: to point at any one specific thing that makes it

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Speaker 6: difficult for Apple. They're actually facing multiple challenges at the

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Speaker 6: same front.

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Speaker 1: Lopez Research is Marabell Lopez there well. Apple reported revenue

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Speaker 1: for the fourth quarter that fell to eighty nine point

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Speaker 1: five billion dollars, it's fourth straight revenue decline. The tepped

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Speaker 1: outlook also sent the stockdown as much as four point

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Speaker 1: six percent post market.

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Speaker 3: The Bank of England's gloomy economic forecast has traders betting

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Speaker 3: on rate cuts tenure Guiltyhil's fell as much as eighteen

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Speaker 3: basis points after the governor's press conference, despite rates staying

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Speaker 3: unchanged at five and a quarter percent. In an interview

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Speaker 3: with Bloomberg, Governor Andrew Bailey pushed back against the market reaction.

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Speaker 7: We still see the risks to inflation as being on

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Speaker 7: the upside at the moment, and it's important not for

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Speaker 7: that message not to get lost. If the market has

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Speaker 7: taken from what we have published today a view that

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Speaker 7: we are leaning towards more cuts, and I'm afraid I

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Speaker 7: will lean against that.

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Speaker 3: Despite that warning, the Governor's forecast points to a flatlining economy.

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Speaker 3: In downgraded growth forecasts, the Bank of England now expects

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Speaker 3: no growth in twenty twenty four and acknowledge the growing

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Speaker 3: head from previous monetary tightening.

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Speaker 1: And finally, Goldman Sachs has named six hundred and eight

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Speaker 1: executives to the managing director rank. That's five percent fewer

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Speaker 1: than the last raft of promotions, which was announced in

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Speaker 1: twenty twenty one. The title is seen as a stepping

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Speaker 1: stone to the firm's highest rank of partner. Godman has

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Speaker 1: suffered in recent quarters amid a deal making slump and

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Speaker 1: a costly failed effort to expand into consumer businesses. So

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Speaker 1: a spectacular fall. It's one of our key stories this morning.

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Speaker 1: Sam bankman Fried who was the face of crypto, the

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Speaker 1: company he founded at just twenty five. FTX was valued

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Speaker 1: at thirty two billion dollars in earning twenty twenty two,

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Speaker 1: but then FTX and its affiliated hedge fund, Alameda Research,

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Speaker 1: collapsed into bankruptcy last year. And now, after a month

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Speaker 1: long trial, he has been found guilty of seven counts

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Speaker 1: of fraud and conspiracy. Joining us now to discuss this

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Speaker 1: is our Crypto reporter sid Arthur Shuckler. Sid Arthur, good morning,

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Speaker 1: thanks for being with us. So the jury found him

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Speaker 1: guilty of these counts. What did they conclude then from

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Speaker 1: these weeks of the trial. What did they find him

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Speaker 1: guilty of?

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Speaker 8: Yes, So, after the month long trial, the jury members

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Speaker 8: reached a unanimous verdict and found a bagman Field guilty

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Speaker 8: on all seven counts, which included charges like buyer fraud

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Speaker 8: and conspiracy to commit securities fraud and money laundering. So

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Speaker 8: Sam Banking Freed, as we all know, had directed the

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Speaker 8: transfer of FTX customer money into Alameda Research, which was

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Speaker 8: a hitch fund in which he owned ninety percent of

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Speaker 8: the state. And also the money from FTX customers was

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Speaker 8: misappropriated for other risky investments, political donations, and also to

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Speaker 8: purchase expensive real estate for the company and for him

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Speaker 8: as well.

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Speaker 3: Yeah, the Sam Banking Freed gave evidence during this trial

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Speaker 3: seen as a high risk strategy. What was it that

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Speaker 3: we heard from Sam Bankman Freed when he spoke at

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Speaker 3: this trial.

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Speaker 8: So during the course of the trial and even before that,

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Speaker 8: Sam had insisted that it was the lack of proper

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Speaker 8: risk hedging at Alameda that led to the collapse of

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Speaker 8: FTX and Alameda, Whereas during the trial we saw an

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Speaker 8: overwhelming amount of evidence as well as the testimonies from

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Speaker 8: his colleagues, showed that the misappropriation of funds was to

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Speaker 8: a great extent and it was deliberately done. So I

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Speaker 8: think Sam's argument that you know, the risk wasn't properly

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Speaker 8: hedged somewhat falls shot against the evidence and testimonies that

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Speaker 8: we saw during the course of the last one month.

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Speaker 1: Yeah, do you think then that it tarnishes crypto overall,

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Speaker 1: because in some senses, you know, although this is a

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Speaker 1: kind of very relatively new and a kind of modern

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Speaker 1: iteration in the financial markets, actually the trial was about

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Speaker 1: kind of old fashioned forward. So how wide does this

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Speaker 1: go in terms of tarnishing crypto.

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Speaker 8: I don't think this will tarnish crypto or the applications

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Speaker 8: that are being built on crypto assets over the long term,

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Speaker 8: as we've seen that after the route of last year,

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Speaker 8: crypto assets have charted a strong rally in twenty twenty three.

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Speaker 8: And also what we saw last year after the entire

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Speaker 8: FTX thing unrapied, was that it reinforces the ideas behind

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Speaker 8: applications built on crypto that you know, you established trust too, transparency,

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Speaker 8: and we saw that after the collapse of FTX, a

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Speaker 8: lot of customers had started to move their funds onto

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Speaker 8: more decentralized exchanges away from centralized counterparts like FTX and binance.

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Speaker 3: What about the where we go next with this process

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Speaker 3: as well? What are the next stages in the trial

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Speaker 3: of Sam Bankman Free that we need to be watching

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Speaker 3: out for.

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Speaker 8: I think we'll get more clarity on Sam's sentencing in

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Speaker 8: March next year. We are definitely going to keep an

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Speaker 8: eye out on that because as he's been found guilty

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Speaker 8: on all seven counts, he is expected to spend a

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Speaker 8: couple of decades in prison. Also, we will have to

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Speaker 8: keep an eye out on what's going to be the

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Speaker 8: verdict for Caroline Ellison, Gary and Mishah, the three colleagues

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Speaker 8: who played a crucial role in the verdict, and all

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Speaker 8: three of them had needed guilty to the crime themselves

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Speaker 8: as part of a cooperation deal with the prosecutors, So

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Speaker 8: we'll have to see what kind of self things they

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Speaker 8: get as well. The criminal defense lawyers that we've spoken

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Speaker 8: to till now, they suggest that all three of them

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Speaker 8: will likely get no jail time or very little, but

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Speaker 8: there's a good chance that they will be forced to

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Speaker 8: writurn the money they made from fraud, and they'll also

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Speaker 8: have to pay a restitution to the victims. But you

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Speaker 8: get more clarity on this sentencing I think only after

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Speaker 8: March next year.

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Speaker 1: Okay, So, Arthur Shukla, thank you so much for being

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Speaker 1: with us this morning. Bloomberg's Crypto reporter then on as

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Speaker 1: we say that spectacular fall and the Ford trial of

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Speaker 1: Sam Bankman freed.

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Speaker 3: Well, let's turn to the Middle East next. Israeli's troops

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Speaker 3: say they've encircled Gaza City, where authorities in Gaza say

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Speaker 3: that more than nine thousand people have now died due

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Speaker 3: to the war. That's according to Gaza's Hamas controlled health ministry.

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Speaker 3: Israel has intensified its ground offensive against Hamas there. The

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Speaker 3: US Secretary of State is due to arrive in Israel

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Speaker 3: this morning and he's set to meet with Prime Minister

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Speaker 3: Benjaminetta Nia. Who Let's get the latest now from Sylvia Westall,

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Speaker 3: who's our managing editor for economy and government news in Russia, Africa,

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Speaker 3: in the Middle East. Sylvia, great to have you with

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Speaker 3: us on the program. What is in terms of the

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Speaker 3: situation in Gaza? Un special rapporter is saying that time

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Speaker 3: is running out to prevent genocide and humanitarian catastrophe this

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Speaker 3: as the fight is getting worse. What do we know

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Speaker 3: about what's happening in Gaza this morning?

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Speaker 2: Well, overnight, ground operations from the Israeli military continued in

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Speaker 2: northern Gaza and around Gaza City. The military said encircled

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Speaker 2: Gaza City, which says is the main base for Hamas

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Speaker 2: in Gaza, and there's been intense bombardment overnight. That's all.

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Speaker 2: Also according to the UN's Office for the Coordination of

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Speaker 2: Humanitarian Affairs, they do daily updates, they said that in

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Speaker 2: a roughly twenty four hour hour period, two hundred and

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Speaker 2: fifty six Palestinians were killed in Gaza. And that bring

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Speaker 2: you up to that toll that you mentioned earlier from

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Speaker 2: the authorities in Gaza, which is run by Hamas. And

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Speaker 2: then we had to Israeli soldiers killed in Gaza on Thursday,

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Speaker 2: and that brings a total number of soldiers killed since

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Speaker 2: the startup ground operations up to seventeen. In terms of

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Speaker 2: the situation, it's a besieged territory. The UN has warned

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Speaker 2: about the difficulty of moving people from our hospitals and

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Speaker 2: other facilities, and that's going to be something that's high

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Speaker 2: on the agenda of the humanitarian situation, high on the

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Speaker 2: agenda for Anthony Blincoln as he arives in Israel shortly.

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Speaker 1: Yeah, absolutely, What do you think that Blincoln can say

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Speaker 1: to NETANYAHUO, what do you think is going to perhaps

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Speaker 1: emerge from from those meetings. I mean, we know that

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Speaker 1: Blincoln was in Israel and the Middle East on you know,

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Speaker 1: Shuttle diplomacy mission only a few weeks ago. Now he returns,

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Speaker 1: what might we expect from that meeting? Will there be

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Speaker 1: another press conference?

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Speaker 2: Let's say, well, I think the message that the US

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Speaker 2: has been emphasizing, it's sort of in more detail on

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Speaker 2: the broader ideas. They've been wanting to see what they

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Speaker 2: term as a humanitarian pause. So they haven't been using

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Speaker 2: the word a ceasefire, but the idea would be to

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Speaker 2: have a pause and fighting to make sure more medical

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Speaker 2: evacuations can happen, as well as seeing if the hostages

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Speaker 2: that are held by Hamas in Gaza, remaining hostages can

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Speaker 2: be freed. There's been a trick or of people, a

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Speaker 2: very small number of people that have been allowed to leave.

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Speaker 2: So that's something that Biden has talked about ahead of

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Speaker 2: this visit, and we would expect that Blincoln would also

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Speaker 2: bring this up. And you know, it goes along with

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Speaker 2: this broader theme of when Blincoln was in Israel last time,

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Speaker 2: that Israel has the right to defend itself, but how

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Speaker 2: Israel does this matters, So it will be going deeper

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Speaker 2: into that, and now that the ground operations have started

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Speaker 2: in Gaza.

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Speaker 3: Sylvia, thinking about the more regional view on this as well.

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Speaker 3: There's been continued exchange of fire between Israel and Hezbollah

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Speaker 3: and Lebanon as well. How is the situation playing out

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Speaker 3: on Israel's northern border.

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Speaker 2: That's right, I mean something that everyone is watching very

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Speaker 2: closely is this northern border and whether the conflict is

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Speaker 2: really spilling over into other parts of the Middle East.

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Speaker 2: For some people, it started already. The spill over has

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Speaker 2: already started to happen. It has been quite intense. I

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Speaker 2: think today people will be looking quite closely to the

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Speaker 2: expected speech by the leader of Hezbolla, who's expected to

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Speaker 2: speak in the afternoon Beroute time today, for a sense

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Speaker 2: of where of how Hezbolla might be taking us forward,

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Speaker 2: and that that's happening later on today, and they'll be

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Speaker 2: looking for clues in terms of what that means for

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Speaker 2: the spread of the conflict or not.

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Speaker 7: Yeah.

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Speaker 1: Absolutely, Former US National Security Advisor hr McMaster speaking to

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Speaker 1: Bloomberg only yesterday, talking about it being a regional war already.

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Speaker 1: A last thought though then on what the discussion might

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Speaker 1: be about how Gaza is actually run after the war.

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Speaker 1: Is there any significant thinking about that.

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Speaker 2: It's briefly, Sylvia. I mean, we reported earlier this week

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Speaker 2: that the US and Israel exploring options for the future

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Speaker 2: of the Gaza Strip that includes potentially the possibility of

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Speaker 2: a multinational force that may involve American troops if Israeli

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Speaker 2: force to succeed in Austingham ass But you know, these

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Speaker 2: are very much theoretical conversations, and the emphasis right now

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Speaker 2: really is on what's happening on the ground. And you know,

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Speaker 2: among people that you know would discussed these plans, and

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Speaker 2: many are very skeptical about whether anything like this could

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Speaker 2: possibly happen, But there are starting to be fledgling ideas

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Speaker 2: and discussions about what could happen next. I think in

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Speaker 2: the region itself, the view is that, you know, the

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Speaker 2: only real solution for this conflict is the original solution,

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Speaker 2: which is a two state solution. But that's you know,

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Speaker 2: it's a very difficult time right now, so I think

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Speaker 2: that's what people are looking for right now.

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Speaker 3: Okay, Sylvia Westar, thank you so much for managing editor

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Speaker 3: for Economy and Government News in russ Africa and the

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Speaker 3: Middle East.

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Speaker 1: Okay, let's send our attention to the Bank of England,

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Speaker 1: which kept interest rates unchanged for a second consecutive meeting

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Speaker 1: yesterday at five and a quarter percent, so in line

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Speaker 1: with expectations. The Bank of England Governor Andrew Bailey, though,

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Speaker 1: has pushed back against the market's reaction, as he warned

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Speaker 1: traders that it's much too early to be thinking about

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Speaker 1: interest rate cut. He's been speaking to bluebased Guy Johnson

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Speaker 1: about the Central Bank's decision to keep its benchmark on hold.

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Speaker 7: Well, the message we're giving it is that we have

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Speaker 7: our job is to get inflation down to the two

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Speaker 7: percent target. Now, we've made a lot of progress this

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Speaker 7: year and I believe we'll make more progress in the

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Speaker 7: rest of this year. But we've still got a long

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Speaker 7: way to go. So you know, very clear messages. We

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Speaker 7: think the policy is having a restrictive effect at the moment.

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Speaker 7: I'm afraid we're going to have to maintain this stance

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Speaker 7: for what we describe as an extended period of time is.

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Speaker 9: What is an extended period of time? Is that a

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Speaker 9: year is six months? How do you how do you

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Speaker 9: make that language?

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Speaker 7: What I described, we described in the report is really

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Speaker 7: to We talked two approaches. One is to take the

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Speaker 7: market curve as it was, you know, a week or

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Speaker 7: so ago, and love delivers inflation coming back to target

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Speaker 7: broadenly on the sort of two year horizon. We also

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Speaker 7: taught the took a constant rate path, just maintain it

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Speaker 7: throughout the next three years. At the current rate brings

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Speaker 7: it back a little bit quicker, but there's not much

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Speaker 7: between them. So the key point here is we're going

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Speaker 7: to have to maintain their stance to be absolutely assured

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Speaker 7: that inflation is coming back to two percent.

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Speaker 9: The point in there is though, that the market forecast,

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Speaker 9: which does have cuts priced into it, albeit it was

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Speaker 9: a week ago and there was only one of them,

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Speaker 9: it does have a cut price in and that gets

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Speaker 9: you to a situation where you've got inflation basically back

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Speaker 9: down to targets within two years. It significantly reduces the

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Speaker 9: risk of a recession. Isn't that therefore the most probable

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Speaker 9: outcome when it comes to the interstrate path I at

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Speaker 9: least pricing in one cut during that horizon.

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Speaker 7: Actually neither of those two paths had a recession in them.

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Speaker 7: What they both have is very subdued growth. That's because

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Speaker 7: at the point when we did the reduced risk of

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Speaker 7: a recession. Well, I mean they are slightly reduced. There

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Speaker 7: was only about twenty five basis points difference between the

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Speaker 7: two piles if you average it out over three years.

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Speaker 7: So there's not much between these paths, and that supports

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Speaker 7: the story that we're saying, which is, look, we're going

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Speaker 7: to have to maintain this stance for an extended period.

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Speaker 9: To ensure today that you've needed to reiterate that so strongly,

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Speaker 9: the language is a little bit more hawkish.

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Speaker 7: Well, I think for two reasons. One is because we

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Speaker 7: still see the risks to inflation as being on the

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Speaker 7: upside at the moment, and it's important not to that

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Speaker 7: message not to get lost. And there are several reasons

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Speaker 7: why we think the risks are on the upside, but

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Speaker 7: they are still on the upside. Secondly, if you don't

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Speaker 7: mind me saying safe, because everybody started to ask the

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Speaker 7: question about cuts, so in a way, I think I

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Speaker 7: have to and we have to sort of lean against

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Speaker 7: that and say no, you know, we've got to maintain

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Speaker 7: restrictive policies.

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Speaker 9: Let's come back to that. Everybody started to talk about cuts,

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Speaker 9: the marketers price it started to price cuts. You're saying

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Speaker 9: you do need to therefore lean in on that.

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Speaker 7: Well, I'm not leaning against the curve that we use

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Speaker 7: the other when we did at the forecast, because ferrently

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Speaker 7: was there wasn't a lot of difference between those two

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Speaker 7: views of the constant throughout on the market then.

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Speaker 9: But any more than that, would you want to lean

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Speaker 9: in on.

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Speaker 7: That if the market has taken from what we have

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Speaker 7: published a day a view that we are leaning towards

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Speaker 7: more cuts, and I'm afraid I will lean against that.

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Speaker 9: Yes, In terms of the other message that you may

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Speaker 9: be giving today, and that may be a broader message,

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Speaker 9: inflation expectations have probably become more d anchored here than

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Speaker 9: maybe elsewhere. Is there therefore a reason a need to

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Speaker 9: reiterate that restricted policy will be with us for longer

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Speaker 9: in order to make sure that you do the policy

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Speaker 9: does reanchor policy back to where you would like it

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Speaker 9: to be. Do you need to make that message crystal

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Speaker 9: clear at this point?

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Speaker 7: I don't think that inflation expectations have become more d

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Speaker 7: anchored here. Actually, I think we've all most central banks

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Speaker 7: have had pretty similar experiences, and I think we're all

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Speaker 7: having to give a variance of these messages because frankly, yes,

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Speaker 7: we've got to see inflation come down, and there is

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Speaker 7: a you know, you're right in highlighting that. There's an

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Speaker 7: important link obviously between today's inflation, the expectations that people form,

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Speaker 7: and therefore what inflation is going to be in the future.

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Speaker 7: So it's an.

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Speaker 9: Important is the pain worth the gain? Is that another?

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Speaker 9: But do you need to reiterate that side of things

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Speaker 9: as well, that yes, we're going to have restricted policy,

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Speaker 9: we are going to reanchor policy, but it's going to

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Speaker 9: be worth it.

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Speaker 7: Well, I do. I do strongly believe that, because I

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Speaker 7: do say often and it's important to say that. Of course,

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Speaker 7: if we continue in a situation where inflation is above target,

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Speaker 7: then that's going to be a worse outcome.

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Speaker 9: Do you think we are heading for an environment where

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Speaker 9: rates are higher for longer? Let's talk a little b

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Speaker 9: about the curve. I know you don't want to lean

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Speaker 9: in curve, but let's talk about the curve. The curve

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Speaker 9: over the certainly since the last meeting has steepened significantly

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Speaker 9: at the long end, we've got a bear steepening longer

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Speaker 9: rate to come up, curves flat as a pancake. Why

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Speaker 9: do you think that is? Firstly, Jpal's talked about term premium.

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Speaker 9: There's deficit pricing going in there. You talked in the

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Speaker 9: introduction about maybe a higher pastar neutral rate, it could

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Speaker 9: be stickier inflation. Firstly, why do you think that has happened?

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Speaker 9: What message is the long end of the curve sending.

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Speaker 7: I think there's one or two things that we're picking

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Speaker 7: up from there. I do think that the higher for

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Speaker 7: longer message has been absorbed over this period that you're describing,

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Speaker 7: so you go back to the summer. I think it's

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Speaker 7: a fair fair point to sort of start. I do

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Speaker 7: think that the market has absorbed this from central backs

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Speaker 7: in the plural has absorbed this message and it's got

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Speaker 7: reflectively in curves. I think there's a term premium element

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Speaker 7: as well, as you rightly say what I would say

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Speaker 7: there is that there is a very large one I

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Speaker 7: call sort of global element to that. And interestingly, I

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Speaker 7: think if you look at the UK and the euro

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Speaker 7: Area together in terms of curve movements, pretty similar sorts

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Speaker 7: of numbers. US so quite a lot.

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