WEBVTT - Epstein Staley Go-Between Claims & Chinese Bitcoin Mining in Ethiopia

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<v Speaker 1>Good morning. It's Thursday, the eighth of February here in London.

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<v Speaker 1>This is the Bloomberg Daybreak youurate podcast. I'm Caroline Hepki.

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<v Speaker 2>And I'm Stephen Carroll. Coming up today, our finance team

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<v Speaker 2>uncovers claims that former Barkley CEO Jess Daley used to

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<v Speaker 2>go between to stay in touch with disgraced financier Jeffrey Epstein.

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<v Speaker 1>Disney posts better than expected results as Bob Eiger's turnaround

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<v Speaker 1>plan show signs of delivery.

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<v Speaker 2>And in search of a power up. We have a

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<v Speaker 2>special report on why Chinese bitcoin miners are heading to Ethiopia.

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<v Speaker 1>Let's start with a roundup of our top stories.

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<v Speaker 2>The former Barkley CEO Jess Day has long maintained that

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<v Speaker 2>he cut off his friendship with Jeffrey Epstein once he

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<v Speaker 2>became boss of the UK Bank, where of a legal

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<v Speaker 2>documents seen by Bloomberg claim he had indirect contact with

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<v Speaker 2>the late pedophile financier for years after that. Bloomberg's Chris

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<v Speaker 2>Pitt has more.

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<v Speaker 3>According to documents that formed part of a now settled

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<v Speaker 3>US Virgin Isles lawsuit against Jess Staley's former employer, JP

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<v Speaker 3>Morgan and intermediary was used by the two men to

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<v Speaker 3>stay in touch. The filings contradict what Staley told the

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<v Speaker 3>Barclays board about his relationship with Epstein. It also contradicts

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<v Speaker 3>a UK regulatory probe that found no evidence of contact

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<v Speaker 3>between the two men. After October of twenty fifteen, representatives

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<v Speaker 3>for jess Staley and JP Morgan didn't respond to requests

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<v Speaker 3>for comment on the claims. Spokespeople for Barclay's and the

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<v Speaker 3>FCA also declined to comment. In London, Chris Pitt Bloomberg Radio.

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<v Speaker 2>Jess Day left his role as CEO of Barklays in

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<v Speaker 2>twenty twenty one over the scandal, and was later banned

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<v Speaker 2>from the UK Finance Industry for having quote recklessly misled

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<v Speaker 2>the regulator by allowing the banks board to downplay his

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<v Speaker 2>interactions with Epstein. Ess Day is appealing that decision by

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<v Speaker 2>the Financial Conduct Authority.

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<v Speaker 1>Now Citadel has been identified as one of the recipients

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<v Speaker 1>of Morgan stan Lee's leaking of upcoming stock traits. According

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<v Speaker 1>to people with knowledge of the matter, a trader at

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<v Speaker 1>the Hedge Fund was among a number of executives described

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<v Speaker 1>anonymously in Morgan Stanley's settlements with the US government. The

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<v Speaker 1>original probe faulted Morgan Stanley for giving hedge funds advance

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<v Speaker 1>warning when clients plan to sell enough stock to move

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<v Speaker 1>the market. Prosecutors haven't accused by side participants that allegedly

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<v Speaker 1>received tips of any wrongdoing.

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<v Speaker 2>Disney reports learnings that beat expectations in the last three

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<v Speaker 2>months of twenty twenty three. The media company also issued

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<v Speaker 2>a rare profit forecast, predicting more outperformance. CEO Bob Iger

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<v Speaker 2>signaled bigger awards for investors and.

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<v Speaker 4>Pleased to share that The board declared that our next

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<v Speaker 4>semi annual dividend, to be paid in July will be

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<v Speaker 4>fifty percent higher versus the last dividend paid in January.

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<v Speaker 4>The board has also authorized the company to begin repurchasing

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<v Speaker 4>shares for the first time since fiscal twenty eighteen, and

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<v Speaker 4>we plan to start by targeting three billion dollars this

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<v Speaker 4>fiscal year.

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<v Speaker 2>Barbiker was speaking as quarterly revenue and Disney Plus streaming

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<v Speaker 2>subscriber is felt below estimates, despite earnings rising to one

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<v Speaker 2>dollar twenty two a share ahead of expectations thanks to

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<v Speaker 2>cost guarding, Disney says its profit this year will rise

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<v Speaker 2>at least twenty percent, which could help defend off activist

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<v Speaker 2>investors on the company's board.

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<v Speaker 1>It seems that the European Union is already preparing for

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<v Speaker 1>a second chance presidency. A formal evaluation of potential trade

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<v Speaker 1>restrictions that could hit member states is underway. Bloomberg's Tiba

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<v Speaker 1>at Abayo has the details.

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<v Speaker 5>We may be over eight months away from the US

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<v Speaker 5>presidential election, but European officials are making plans for its aftermath.

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<v Speaker 5>The European Commission, the bloc's executive arm, is working on

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<v Speaker 5>an impact assessment charging the consequences of a victory for

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<v Speaker 5>Donald Trump. According to a senior official, a broad to

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<v Speaker 5>a minimum ten percent tariff, as well as possible countermeasures

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<v Speaker 5>against European digital services taxes could come with a second

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<v Speaker 5>term for the Republican front runner. The news comes as

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<v Speaker 5>some European officials embark on a charm offensive with the

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<v Speaker 5>presidential hopeful in a bid to improve relations in London.

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<v Speaker 5>To a added Bayo, Bloomberg.

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<v Speaker 2>Radio shares and softh Bank have jumped by more than

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<v Speaker 2>eleven percent after chip designer ARM forecast revenue far higher

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<v Speaker 2>than had been expected. The investment firm holds a stake

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<v Speaker 2>of about ninety percent in ARM shares jumped by forty

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<v Speaker 2>percent at the end of last year. The chip maker

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<v Speaker 2>also predicted up to nine hundred million dollars of revenue

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<v Speaker 2>in the first three months of twenty twenty four, up

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<v Speaker 2>from the average estimate of just under it seven hundred

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<v Speaker 2>and eighty million. While ARMS share price increases no direct

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<v Speaker 2>impact on the Japanese company's bottom line, it does increase

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<v Speaker 2>the likelihood of new investments well.

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<v Speaker 1>Europe's earning season is off to one of the worst

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<v Speaker 1>starts in at least ten years, is with a majority

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<v Speaker 1>of companies publishing weaker than expected results. But as Mark

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<v Speaker 1>Daniel Davies reports, companies delivering positive surprises are reaping big

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<v Speaker 1>rewards with traders.

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<v Speaker 6>Investors who feared that European firms would disappoint in the

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<v Speaker 6>fourth quarter are richly rewarding those that buck the trend.

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<v Speaker 6>That's according to Bank of America strategists, who estimate that

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<v Speaker 6>European shares are displaying the biggest positive reaction to EPs

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<v Speaker 6>beats since twenty twenty. Firms on the winning signed include ASML,

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<v Speaker 6>which sought to a record high after its results, Santander,

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<v Speaker 6>Deutsche Bank, Shell, and Luxury Giant LVMH also enjoyed rallies

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<v Speaker 6>after their results shot past estimates. The biggest reason, though,

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<v Speaker 6>maybe that the bar of the season was set pretty low.

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<v Speaker 6>Estimates for European earnings had been revised lower for four

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<v Speaker 6>months straight. In London, Mark Daniel Davies, Bloomberg Radio.

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<v Speaker 1>Now, in a moment, am we going to talk a

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<v Speaker 1>bit about one of our key priority features this morning,

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<v Speaker 1>why cryptome miners are moving to Ethiopiah. It's a really

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<v Speaker 1>great story. So we've got one of our reporters to

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<v Speaker 1>speak about that in a moment. But first, our Bloomberg

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<v Speaker 1>opinion columist Dave Lee has been writing about the end

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<v Speaker 1>of the Internet. Cookie.

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<v Speaker 2>Yeah, it's been called the Great cookie Crumble, Cookie Apocalypse.

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<v Speaker 2>Cookie Geddon mcgeddon, Cookie Geddon, I have forgotten possible to look.

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<v Speaker 2>Everyone knows the pop ups that you got on websites,

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<v Speaker 2>and as Dave puts it in the piece, he could

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<v Speaker 2>be knocked unconscious instead instinctively managed to click. Except all

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<v Speaker 2>they are something that are on the way out, though

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<v Speaker 2>they've been disabled already. Third party cookies anyway, which the

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<v Speaker 2>ones that are used by advertisers been disabled already by

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<v Speaker 2>Apple and Mozilla, with their browsers, but Google's Chrome are

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<v Speaker 2>going to phase them out by the end of September

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<v Speaker 2>as well. This can't I cheer at that, you can,

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<v Speaker 2>But as Dave points out, it doesn't mean that there's

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<v Speaker 2>going to be an end to you being tracked on

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<v Speaker 2>the Internet, as as he says, this is Google we're

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<v Speaker 2>talking about, or more up to the point, this is

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<v Speaker 2>the Internet. Ads and data are its lifeblood, and there

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<v Speaker 2>will still be ways worked out by advertisers and by

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<v Speaker 2>companies to be able to share this data to give

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<v Speaker 2>better targeted advertising. He points to a deal between Amazon

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<v Speaker 2>and Reach, the publisher behind The Daily Mirror, which will

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<v Speaker 2>see them share data on what articles people are reading

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<v Speaker 2>as well, so there'll be a way around the cookies even.

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<v Speaker 1>If okay, so I still feel like I'm being followed

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<v Speaker 1>ominously online.

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<v Speaker 2>Let's catch always work thinking about it.

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<v Speaker 1>Yeah, absolutely, all right, it's a good piece on the

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<v Speaker 1>terminal for you to read. Now let's talk about then

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<v Speaker 1>our top story this morning. Legal documents seen by Bloomberg

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<v Speaker 1>claimed that the former CEO of Berkley's, Jess Stay, had

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<v Speaker 1>in direct contact with the disgraced financier Jeffrey Epstein for

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<v Speaker 1>years after the executives said that he'd actually cut off

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<v Speaker 1>their friendship. The filings contradict what Staley told the Barkleays

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<v Speaker 1>Board about the Pairs relationship, as well as a UK

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<v Speaker 1>regulator inquiry that found no evidence of contact after October

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<v Speaker 1>twenty fifteen Bloomberg's journey. Saran, who leads our team of

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<v Speaker 1>finance reporters here in London, joins us now to discuss this. Jenny,

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<v Speaker 1>good morning. What exactly do we know about these documents?

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<v Speaker 1>What do they show?

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<v Speaker 7>Yeah, so these are really interesting documents that are reporters

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<v Speaker 7>on Earth and obviously a really voluminous legal case. And

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<v Speaker 7>they basically outlined that for years after he had assumed

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<v Speaker 7>the CEO role at Barclays, jess Daley was actually still

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<v Speaker 7>communicating with Jeffrey Epstein, but using in an intermediary. So

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<v Speaker 7>the documents basically show that when Epstein wanted to get

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<v Speaker 7>into contact with jess Day, he would email this intermediary,

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<v Speaker 7>who would then go and verbally asked jess Day whatever

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<v Speaker 7>it was that Jeffrey Epstein was asking him about. And

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<v Speaker 7>so that directly contradicts, you know, years of what we've

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<v Speaker 7>heard about his reports to both the Barclays Board and

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<v Speaker 7>the UK regulators where he said that there was no

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<v Speaker 7>contact after he had assumed control of Barclays.

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<v Speaker 2>So what have jess Day and his former employers said

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<v Speaker 2>about these revelations?

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<v Speaker 7>So unfortunately, you know, Staley has actually not responded to

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<v Speaker 7>our requests for comments. JP Morgan has also not responded.

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<v Speaker 7>Barclay's and FCA both declined to comment for our story.

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<v Speaker 7>So you know, this is largely based on these legal

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<v Speaker 7>documents that came out kind of in the aftermath of

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<v Speaker 7>all of the of obviously Jeffrey Epstein's arrest and then

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<v Speaker 7>his death by suicide. So it's all based on these

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<v Speaker 7>legal filings that our reporters have kind of relentlessly flew

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<v Speaker 7>through these past few months.

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<v Speaker 1>Yeah, and the go between is unknown because that information,

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<v Speaker 1>as the team of reporters has been saying, has been redacted,

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<v Speaker 1>So we don't know who the individual might be. But

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<v Speaker 1>what do you think the broader implications of this reporting

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<v Speaker 1>might be. Does this reopen then the questions around Epstein

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<v Speaker 1>and his contacts with the financial world?

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<v Speaker 7>I think so.

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<v Speaker 4>So.

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<v Speaker 7>I think the one ongoing thing we have in terms

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<v Speaker 7>of just Dalley's involvement all of this was that he

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<v Speaker 7>was actually appealing the regulator's findings that he should be

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<v Speaker 7>from the financial industry, and so I do think that

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<v Speaker 7>that kind of throws a lot of that process into question,

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<v Speaker 7>because I think even just that finding that he would

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<v Speaker 7>be barred for life from the financial industry was based

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<v Speaker 7>upon the fact that they were under the impression that

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<v Speaker 7>he had no contact with Jeffrey Epstein after he took control,

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<v Speaker 7>and so the fact that no, in fact, he was

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<v Speaker 7>using this intermediary, kind of using this roundabout way to

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<v Speaker 7>still maintain contacts and his friendship with Jeffrey Epstein, I

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<v Speaker 7>think that's certainly going to be something that regulators will

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<v Speaker 7>have questions about as they review his appeal. So I

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<v Speaker 7>think it definitely throws things into questions for him. And

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<v Speaker 7>then absolutely, I mean I don't think really anything was

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<v Speaker 7>ever put to rest in regards to, you know, Jeffrey

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<v Speaker 7>Epstein's ongoing friendships and contacts with the top echelons of

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<v Speaker 7>power in both the UK and the US. But this

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<v Speaker 7>is just kind of further evidence that, you know, that

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<v Speaker 7>was maintained long after different accusations against him. Arose.

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<v Speaker 2>Okay, Jenny Sarah, you're leading our finance team here in London.

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<v Speaker 2>Thank you very much for joining us the details of

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<v Speaker 2>that story.

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<v Speaker 1>Now to our priority feature, Chinese bitcoin miners, which were

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<v Speaker 1>thrown out of their own government three years ago, are

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<v Speaker 1>rushing into Ethiopia in search of cheap power and benign regulations.

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<v Speaker 1>Our senior crypto editor, Philip Logenkranzer, joins us now for

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<v Speaker 1>more on this story. Philip, good morning. What is Ethiopia's

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<v Speaker 1>current stance on bitcoin mining, on cryptocurrencies in general? Why

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<v Speaker 1>is this a country of interest?

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<v Speaker 8>Yeah, so it's a bit of a mixed bag when

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<v Speaker 8>it comes to Ethiopia. They actually banned cryptocurrency trading, so

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<v Speaker 8>you can't get on finance and entrade bitcoin and ether there. However,

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<v Speaker 8>they made a bit of an exception into twenty twenty

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<v Speaker 8>two for bitcoin mining, so they allowed it under a

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<v Speaker 8>kind of what they call a sandbox regime. And the

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<v Speaker 8>reason is the bitcoin miners pay in dollars for the

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<v Speaker 8>powers that they for the electricity that they use, and

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<v Speaker 8>Ethiopia's government does need foreign exchange. It has a lot

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<v Speaker 8>of foreign exchange that and so it was sort of

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<v Speaker 8>a marriage of convenience here and for the bitcoin miners,

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<v Speaker 8>it's one thing above all, and it's cheap power. Ethiopia

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<v Speaker 8>has some of the cheapest power in the world, and

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<v Speaker 8>it's almost entirely renewable.

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<v Speaker 2>What makes Ethiopia so unique from a mining perspective.

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<v Speaker 8>There is also the political angle. So bitcoin miners were

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<v Speaker 8>thrown out of China in twenty twenty one. It was

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<v Speaker 8>a total ban on bitcoin mining and a lot of

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<v Speaker 8>them had to leave in a hurry. Some of them

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<v Speaker 8>had to leave millions of dollars worth of equipment behind. Now,

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<v Speaker 8>Ethiopia and China have very strong political and economic ties,

0:12:50.920 --> 0:12:54.040
<v Speaker 8>so China is the biggest source of foreign direct investment.

0:12:54.520 --> 0:12:58.040
<v Speaker 8>China is also the biggest creditor to Ethiopia, and so

0:12:58.960 --> 0:13:02.480
<v Speaker 8>they've sort of taken I guess what amounts to a

0:13:02.480 --> 0:13:05.520
<v Speaker 8>political bet that they will be welcome there, even after

0:13:05.679 --> 0:13:09.200
<v Speaker 8>some other countries like Kazakhstan and Iran and to an

0:13:09.200 --> 0:13:12.559
<v Speaker 8>extent Russia cooled on the industry. So there is a

0:13:12.640 --> 0:13:15.480
<v Speaker 8>kind of political gambit there as well. The other thing

0:13:15.600 --> 0:13:20.360
<v Speaker 8>is parts of Ethiopia also have perfect climate for bitcoin mining,

0:13:20.400 --> 0:13:21.920
<v Speaker 8>the right temperature and the right humidity.

0:13:22.360 --> 0:13:26.680
<v Speaker 1>Hmm, okay, so the physical conditions are important too. What

0:13:26.760 --> 0:13:29.760
<v Speaker 1>are some of the biggest global challenges though for bitcoin

0:13:30.280 --> 0:13:31.280
<v Speaker 1>miners right now.

0:13:32.400 --> 0:13:36.240
<v Speaker 8>Well, the biggest one is they use a tremendous amount

0:13:36.280 --> 0:13:40.400
<v Speaker 8>of power. These rigs or computers that they use are

0:13:41.160 --> 0:13:44.199
<v Speaker 8>very power consuming. They're very powerful, but are also very

0:13:44.240 --> 0:13:50.720
<v Speaker 8>electricity consuming. That's caused problems from I guess two perspectives

0:13:50.720 --> 0:13:54.760
<v Speaker 8>you could say. One is that some governments just you know,

0:13:55.160 --> 0:13:58.000
<v Speaker 8>basically tell them you're competing with industry for power and

0:13:58.040 --> 0:14:00.400
<v Speaker 8>we can't have that, or you're competing with household for power,

0:14:00.400 --> 0:14:03.439
<v Speaker 8>which is probably even worse. The other one is the

0:14:03.520 --> 0:14:07.760
<v Speaker 8>global warming phenomenon. So in an in you know, in

0:14:07.800 --> 0:14:12.319
<v Speaker 8>this era, when you know you have rising temperatures around

0:14:12.360 --> 0:14:16.640
<v Speaker 8>the world, it's kind of seen politically as why should

0:14:16.679 --> 0:14:20.920
<v Speaker 8>you use the equivalent to Argentina's power consumption a year,

0:14:21.040 --> 0:14:25.040
<v Speaker 8>say to mine bitcoin, which doesn't really have any I

0:14:25.040 --> 0:14:28.280
<v Speaker 8>guess productive use like a car making factory or something

0:14:28.320 --> 0:14:31.640
<v Speaker 8>like that. So it's it's it all boils down to

0:14:31.720 --> 0:14:33.560
<v Speaker 8>the amounts of power that they consume.

0:14:34.800 --> 0:14:37.880
<v Speaker 2>But what are the risks, then, Philip, for minors going

0:14:37.920 --> 0:14:41.080
<v Speaker 2>into Ethiopia. Are there concerns for those that are moving

0:14:41.120 --> 0:14:42.120
<v Speaker 2>into that country.

0:14:43.080 --> 0:14:46.760
<v Speaker 8>Yeah, it is a bit of a gamble because Ethiopia's

0:14:47.720 --> 0:14:51.920
<v Speaker 8>in regulations around mining they're not really set in stone.

0:14:52.240 --> 0:14:57.680
<v Speaker 8>It's they've adopted this directive, which the regulator wouldn't say

0:14:57.880 --> 0:15:01.160
<v Speaker 8>even whether or not they've actually communenicated to the industry.

0:15:02.000 --> 0:15:06.320
<v Speaker 8>And so the other thing is will they go the

0:15:06.360 --> 0:15:11.080
<v Speaker 8>way that for instance, Kazak standard, which is basically open

0:15:11.200 --> 0:15:13.600
<v Speaker 8>arms in the beginning, and then when you see how

0:15:13.680 --> 0:15:18.560
<v Speaker 8>much energy the sector consumes, you cannot get cold feet

0:15:18.600 --> 0:15:20.280
<v Speaker 8>and say I'm sorry, you know we're gonna pull the

0:15:20.320 --> 0:15:24.760
<v Speaker 8>plug on this. So it's both. It's mostly a regulatory issue.

0:15:25.400 --> 0:15:28.120
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