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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Day BAQ podcast, available every morning on Apple, Spotify or

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Speaker 1: wherever you listen. It's Wednesday, the sixteenth of October. Here

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Speaker 1: in London, I'm Caroline Hepkat coming up today. Shares in

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Speaker 1: ASML plunge as global chip stocks shared more than four

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Speaker 1: hundred and twenty billion dollars in market value. Donald Trump

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Speaker 1: makes the case for huge increases in tariffs in an

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Speaker 1: exclusive interview with Bloomberg. Plus. Here in the UK, chance

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Speaker 1: of Rachel Reeves faces growing cabinet on ease over her

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Speaker 1: hunt for forty billion pounds as pressure over the budget mounts.

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Speaker 1: Let's start with the roundup of our top stories. Shares

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Speaker 1: in Europe's most valuable tech company ASML have plunged after

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Speaker 1: the firm booked orders worth around half what analysts had expected.

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Speaker 1: The maker of the world's most advanced chip making machines

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Speaker 1: load its guidance for next year. Had reported bookings of

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Speaker 1: two point six billion euros. The results caused ASML shares

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Speaker 1: to drop by sixteen percent in Amsterdam. The company didn't

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Speaker 1: give a detailed explanation of why it had fallen so

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Speaker 1: short of expectations for BlueBag Intelligence is Man Deep Singh

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Speaker 1: says the prospect of more US restrictions on its China

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Speaker 1: business is one likely factor.

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Speaker 2: The fact that their buyers are so concentrated and the

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Speaker 2: geopolitical tensions continue and the second half estimates the comps

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Speaker 2: are tougher. To me, this is just a sign of

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Speaker 2: expectations kind of going up to the point where you

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Speaker 2: will not see any positive revisions from the print this quarter.

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Speaker 1: Man Deep sing and analysts across the industry found themselves

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Speaker 1: unexpectedly scouring through the ASML numbers yesterday after the company

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Speaker 1: mistakenly released its financial results a day earlier than scheduled. Well,

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Speaker 1: the fall in ASML's stock price has helped to fuel

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Speaker 1: a wider sell off in the sector, that seeing global

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Speaker 1: chip stocks shed more than four hundred and twenty billion

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Speaker 1: dollars in market value. The route continued in Asia overnight,

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Speaker 1: with Tokyo Electrons sliding bar as much as ten percent

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Speaker 1: and shares in TSMC also dropping. The negative sentiment around

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Speaker 1: the sector comes after Nvidia's stock price hit a fresh

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Speaker 1: high on Monday on optimism around their latest Blackwell AI chips.

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Speaker 1: Since then, the company's share price has fallen by four

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Speaker 1: point seven percent, wiping out close to one hundred and

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Speaker 1: fifty nine billion dollars of Nvidia's market cap. Former President

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Speaker 1: Donald Trump has defended his plan to dramatically increase tariffs

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Speaker 1: on foreign goods, saying the proposals would help to protect

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Speaker 1: companies in the US. Speaking exclusively to Bloomberg's editor in

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Speaker 1: chief John Micklethwaite at the Economic Club of Chicago, the

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Speaker 1: Republican nominee for president proclaimed his belief in the policy.

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Speaker 3: To me, the most beautiful word in the dictionary is tariff,

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Speaker 3: and it's my favorite word. It needs a public relations firm.

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Speaker 1: Trump says that he will carry out an aggressive campaign

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Speaker 1: of deregulation, renew expiring tax cuts, lower the corporate tax rate,

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Speaker 1: and offer fresh tax reductions and benefits to bolster domestic

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Speaker 1: US manufacturing. The former president also was asked for his

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Speaker 1: thoughts on the relationship between the Federal Reserve and the

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Speaker 1: US President.

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Speaker 4: I think it's the greatest job in government. You show

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Speaker 4: up to the office once a month and you say,

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Speaker 4: let's see flip Oca, and everybody talks about you like

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Speaker 4: your god, Oh, what will he do? I think that

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Speaker 4: if you are a very good president with good sense.

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Speaker 4: You should be able to at least talk to him.

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Speaker 4: I don't say make the decision at all.

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Speaker 1: Trump also moved the markets when he was asked about

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Speaker 1: breaking up Google, saying that he is not a fan

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Speaker 1: and the company, and he treats him quote very badly.

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Speaker 1: Shares of Alphabet paired gains as Trump was asked about

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Speaker 1: the company. Now, those comments from Trump come as the

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Speaker 1: European Union has prepared a list of US goods that

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Speaker 1: it would target with tariffs if Trump were elected US president.

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Speaker 1: Bloomberg has learnt that the Bloc has drawn up private

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Speaker 1: plans on how to retaliate against Donald Trump if he

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Speaker 1: makes good on his trade threats. The Republican nominee has

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Speaker 1: proposed a ten percent tariff on all imports and a

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Speaker 1: crackdown on EU regulators taking on US tech giants. The

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Speaker 1: latest data shows that EU imports total three hundred and

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Speaker 1: fifty billion euros worth of US goods a year and

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Speaker 1: exports five hundred billion. Their appetite four high end purchases

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Speaker 1: once seemed insatiable, but now China's economic woes appear to

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Speaker 1: be seeping into luxury profits. Bloomberg's here Adebayo has that

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Speaker 1: story now.

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Speaker 5: Luxury Bellweather LVMH is seeing sales in China. According to

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Speaker 5: the group's CFO, consumer confidence in the region is at

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Speaker 5: an all time low, sinking to levels not seen since

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Speaker 5: the pandemic and hammering high end revenue. Analysts had expected

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Speaker 5: a small third quarter gain for the fashion giant, but

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Speaker 5: instead were met with the worst performance over the period

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Speaker 5: since twenty twenty. Second quarter. LVMH's American deposit receipts plunged

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Speaker 5: by as much as ten percent after the announcement, as

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Speaker 5: did the likes of Gucci owner Carrings. US rivals Ralph

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Speaker 5: Lauren and St. Lauder saw shares fall in New York.

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Speaker 5: Training two in London teaware at a Bayo Bloomberg Radio here.

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Speaker 1: In the UK, cabinet ministers have been alarmed by the

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Speaker 1: scale of spending cuts being proposed by Chance of Rachel

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Speaker 1: Reeves in the upcoming budget. Bloomberg has learned that Reeves

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Speaker 1: is asking departments to find steep spending cuts to fill

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Speaker 1: the twenty two billion pound fiscal black hole. Bloomberg's James

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Speaker 1: Wilcock has.

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Speaker 6: More downing street faces bleak warnings from all sides from

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Speaker 6: cabinet ministers who say proposed cuts are not feasible. Then

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Speaker 6: from non doms who are meeting the Prime Minister today

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Speaker 6: to say they'd rather move their wealth elsewhere than pay more,

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Speaker 6: And from the IMF, who says Britain could face a

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Speaker 6: market backlash unless it stabilizes its national debt and fast.

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Speaker 6: It's difficult to imagine a way to please all three

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Speaker 6: of those without breaking tax pledges made in the election.

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Speaker 6: But that is the fiscal straight jacket the government and

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Speaker 6: the Chancellor have been warning about for months. Getting out

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Speaker 6: of it is likely to be very painful in London.

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Speaker 6: James Wilcock, Bloomberg Radio.

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Speaker 1: Now in a moment we're going to get more on

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Speaker 1: the fiscal strait jacket that Chancellor Rachel Reeves must deal

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Speaker 1: with under pressure from all sides over the budget on

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Speaker 1: the thirtieth October Bloombigs. Bloomberg's UK correspondent Lizzie Burden will

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Speaker 1: be with me for more on that. But first, this

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Speaker 1: story really grabbed attention. So this is a new study

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Speaker 1: that shows just how bad gender diversity is in private equity.

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Speaker 1: Bloombergs Isabella Ward has been writing about a new study

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Speaker 1: that has the data that shows that private equities driving

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Speaker 1: women out of board roles and leadership positions at European companies.

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Speaker 1: It's pretty fascinating. This study is from the consultancy l

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Speaker 1: CAP Group and they looked at one thousand, four hundred

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Speaker 1: and twenty four European companies. That is, they find that

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Speaker 1: the average percentage of women in leadership positions has tumbled

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Speaker 1: sixteen percent by the end of the private equity investment

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Speaker 1: holding period. So that's down from an average of about

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Speaker 1: twenty percent before they invest I mean twenty percent is

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Speaker 1: already pretty weak and a low proportion, but that it

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Speaker 1: gets worse over that that timeframe, I think is pretty fascinating.

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Speaker 1: I think it's quite remarkable. Also, the drop in female

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Speaker 1: representation likely due to leadership teams and boards being expanded

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Speaker 1: during the investment period of private equity, and that the

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Speaker 1: majority of the new hires are mailed. This according to

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Speaker 1: the l CAP report. You can read that story Isabel Award,

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Speaker 1: as I say, has written it up on the Terminal

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Speaker 1: and you could also sign up for the Equality newsletter

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Speaker 1: for more stories on this. They report weekly on how gender, race,

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Speaker 1: and class are shaping capitalism, a story I read on

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Speaker 1: the Terminal today. Now, let's think about then the big

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Speaker 1: story in market. Shares in semiconductor equipment maker ASML plunged

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Speaker 1: the most in twenty six years after it saw only

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Speaker 1: about half the orders that analyst had expected. It's a

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Speaker 1: startling slowdown for one of the key bell weathers in

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Speaker 1: this industry. Joining me now to discuss as Bloomberg anchor

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Speaker 1: Critty to Good Morning Critty. How bad were the ASML

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Speaker 1: figures and what is driving it?

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Speaker 7: Brutal, I think is the perfect way to describe it.

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Speaker 7: When you talk about the numbers of the reported on

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Speaker 7: bookings alone Kron, I'll just get right to a two

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Speaker 7: point six billion euros for twenty twenty five that is

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Speaker 7: less than half of what analysts had expected. When it

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Speaker 7: comes to the same period of the third quarter, five

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Speaker 7: point four billion euros was the estimate. So you can

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Speaker 7: really see where the pain is coming from. This wasn't

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Speaker 7: just a miss. This was a miss by massive proportions.

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Speaker 7: It's worse when you look at their forward looking guidance

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Speaker 7: as well. It's not just about their bookings for the

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Speaker 7: third quarter as well, and the forward looking guidance numbers

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Speaker 7: aren't very good either. When you look at the breakdown

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Speaker 7: for the whole of twenty twenty five, they're expecting net

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Speaker 7: sales to be between thirty to thirty five billion euros.

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Speaker 7: It was forty billion euros previously. I think what we're

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Speaker 7: really seeing here and what's indicative, is broad or slow

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Speaker 7: down in the industry that is not just showing up

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Speaker 7: an ASML as a chip equipment maker, but in the

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Speaker 7: core chip makers. You're seeing n Video, you're seeing an AMD,

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Speaker 7: you're seeing an Intel Qualcom. Even there's a lot of

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Speaker 7: geopolitical uncertainty that's weighing over all of this, not to

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Speaker 7: mention a slow down and a market that is slightly oversupplied.

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Speaker 1: With chips right now, Okay, how much those SML stuck

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Speaker 1: in Washington's ship will against base.

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Speaker 7: It is nestled right in there, stuck between a rock

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Speaker 7: and a hard place, for lack of a better term.

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Speaker 7: But this is really important because it's not just between

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Speaker 7: what's going on in Washington versus China and Beijing, but

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Speaker 7: also how the Dutch government plays a role in this

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Speaker 7: as well. And that's really where you're seeing a lot

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Speaker 7: of pushback because yes, the United States is looking to

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Speaker 7: impose export controls, really trying to limit some of that

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Speaker 7: to ASML exposure to China and given that they're the

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Speaker 7: only player in the lithography machines that can create the

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Speaker 7: kind of chips that the US wants to create and

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Speaker 7: that really the whole world wants to create. But on

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Speaker 7: top of that, they have about thirty percent of the

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Speaker 7: revenue that comes from China, so they're stuck there from

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Speaker 7: their bottom line. On top of that, they're dealing with

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Speaker 7: pressures that push back against expansion that the ASML is

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Speaker 7: trying to look for. So for example, trying to potentially

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Speaker 7: list in London as opposed to an Amsterdam is one issue.

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Speaker 7: Increasing foreign labor. That's getting a lot of pushback from

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Speaker 7: the Dutch government as well, given some of the more

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Speaker 7: far right policies that have been put in place. So

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Speaker 7: in addition to being stuck in this geopolitical war that

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Speaker 7: actively affects all for one third of their income, you

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Speaker 7: are also seeing pushback in terms of being able to

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Speaker 7: grow and diversify and get access to other pools of

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Speaker 7: capital because of local politics.

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Speaker 1: Okay, I think that's really fascinating. Thank you so much

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Speaker 1: Critty for being in the studio and talking us through

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Speaker 1: well the latest on ASML. Of course, this is Europe's

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Speaker 1: most valuable tech company, and their shares are now down

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Speaker 1: by a third since they hit a record high in July.

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Speaker 1: So a story that we are looking at closely. Let's

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Speaker 1: send our attention though to the UK the disquiet over

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Speaker 1: the contents of the upcoming budget. It seems to only

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Speaker 1: be growing chance of Rachel Reeves's faces pressure from the

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Speaker 1: cabinet over the scale of spending cuts. Meanwhile, Kirs Starmer's

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Speaker 1: aides are planning to meet the Fine Investors for Britain

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Speaker 1: lobby group about proposed changes to the non dom system.

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Speaker 1: And you've got an IMF warning as well that there

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Speaker 1: could be a market backlash if debt of one hundred

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Speaker 1: percent of GDP isn't stabilized. Joining me now to discuss this,

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Speaker 1: Bloomberg's UK correspondent Lizzie Burden. Morning, Lizzie Reeves faces This

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Speaker 1: fiscal straight jacket looks ever so tight.

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Speaker 4: Yeah.

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Speaker 8: Well, we were almost joking, weren't we, Caroline, about how

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Speaker 8: many times Rachel Reeves had talked about the twenty two

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Speaker 8: billion pound black hole. So it was a bit of

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Speaker 8: a shock yesterday when we heard that there was disqu

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Speaker 8: over raising forty billion pounds lots of people asking, oh,

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Speaker 8: was it doubled overnight. Well, the reason that she wants

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Speaker 8: to raise forty billion pounds on October the thirtieth is

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Speaker 8: to give herself a buffer so that she can make

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Speaker 8: sure that day to day spending is covered by tax revenues.

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Speaker 8: And that means that she's going to have to make

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Speaker 8: as she keeps telling us these difficult decisions on tax

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Speaker 8: spending and welfare savings to raise this bigger number. But

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Speaker 8: it is not going down well with the cabinet. They

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Speaker 8: met on Tuesday morning, various senior ministers saying the savings

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Speaker 8: that they're asked to make are not feasible. But what's

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Speaker 8: significant is it's not just the usual suspects complaining the

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Speaker 8: ones who are in charge of, you know, the departments

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Speaker 8: with the highest capital spending. This is a broad range

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Speaker 8: of departments. But on the flip side, if she doesn't

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Speaker 8: make these savings, the IMF is warning that she needs

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Speaker 8: to raise taxes and cut spending to stabilize the national debt,

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Speaker 8: or else she risks triggering an adverse market reaction. Hence

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Speaker 8: why she does not want to look in any way

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Speaker 8: likely to trust at them any budget.

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Speaker 1: Hmm. Okay. Meanwhile, the Non Doms Lobby Group or a

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Speaker 1: lobby group for wealthy investors set up because the worries

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Speaker 1: around non dom status, they get a hearing at least

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Speaker 1: virtually with the government.

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Speaker 8: Yeah, and to be fair you would expect so they're

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Speaker 8: a stakeholder in this policy.

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Speaker 9: But you'll remember the report.

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Speaker 8: That said these people are going to leave the UK

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Speaker 8: if you raise taxes on them. So actually the policy

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Speaker 8: would cost the Treasury money. And the bit that is

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Speaker 8: offensive to them is that the Labor government wants to

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Speaker 8: go even further than the previous Conservative government policy of

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Speaker 8: meaning that non doms pay tax on their overseas earnings

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Speaker 8: after living in the UK for four years instead of

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Speaker 8: fifteen years. Labour wants to cut inheritance tax breaks on

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Speaker 8: assets in overseas trusts as well. So this is what

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Speaker 8: they're going to be talking about in this meeting. We

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Speaker 8: understand that they're meeting the Foreign Investors for Britain group,

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Speaker 8: who have been working with Oxford Economics on some research

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Speaker 8: about the impact of these policies and actually it showed

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Speaker 8: that the inheritance tax changes would be a real reason

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Speaker 8: they would leave the country and when they surveyed seventy

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Speaker 8: non doms. They found that almost all of them would

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Speaker 8: speed up their plans to leave the UK if these

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Speaker 8: tax plans aren't tiered so away round this would a

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Speaker 8: be to tier it or B to impose the rules

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Speaker 8: on new non doms but not on the existing trust

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Speaker 8: structures for non doms overseas assets.

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