Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: day Break, your podcast, available every morning on Apple, Spotify
Speaker 1: or wherever you listen. It's Monday, the sixth of January
Speaker 1: here in London. I'm Caroline Hepki and.
Speaker 2: I'm Stephen Carroll. Coming up today, the world's richest man,
Speaker 2: Elon Musk takes aim as Reform UK leader Nigel Farage
Speaker 2: in an abrupt u turn.
Speaker 1: Sam Altman in the Spotlight, the Open AI founder, talks
Speaker 1: to Bloomberg about chat GPT's first two years and AI
Speaker 1: under Trump.
Speaker 2: Plus, in a world that's rife with conflict, the market
Speaker 2: for insuring ships against acts of war is thriving.
Speaker 1: Let's start with a roundup of our top stories.
Speaker 2: After months of attacks on the British government, Elon Musk
Speaker 2: now says Reform UK's Nigel Farage doesn't have what it
Speaker 2: takes and should be replaced. It's a sudden new turn
Speaker 2: for the world's richest man, who previously heaped praise on Farage,
Speaker 2: saying only his populist party can save Britain. In an
Speaker 2: interview before Musk's change of heart, Nigel Farrag was asked
Speaker 2: about the recent explosive comments from the Tesla CEO in
Speaker 2: which he said the Prime Minister Kerstarmer was quote complicit
Speaker 2: in the rape of Britain over his handling of child
Speaker 2: sex abuse scandal while he was Director of Public Prosecutions.
Speaker 2: Here is Farag speaking to the BBC.
Speaker 3: I think I made it perfectly clear, but I don't
Speaker 3: agree with everything he stands for, but I do believe
Speaker 3: in free speech.
Speaker 2: I think he's a hero and I said that well
Speaker 2: before any potential money was offered. Faraj has talked up
Speaker 2: the possibility of a multi million pound donation from Elon
Speaker 2: Musk in response to Musk's social media post criticizing him.
Speaker 2: The Reform UK leader described Musk as a remarkable individual,
Speaker 2: but repeated his position that far right activist Tommy Robinson
Speaker 2: should not join Reform UK.
Speaker 4: Now.
Speaker 1: UK business confidence has dropped to its lowest level since
Speaker 1: Liz Trust is disastrous many budget Just under half of
Speaker 1: companies surveyed by the British Chambers of Commerce expect revenues
Speaker 1: to increase in the coming year. The BCC also says
Speaker 1: that a majority of firms expect to increase prices over
Speaker 1: the next three months as companies pass on higher taxes
Speaker 1: and the minimum wage increase. The findings will make uncomfortable
Speaker 1: reading for Charles of Rachel Reeves, who has said that
Speaker 1: businesses stepping up investment is key to UK economic growth.
Speaker 2: Open AI's co founder Sam Altman has told Bloomberg he
Speaker 2: doesn't believe Elon Musk will use his political influence and
Speaker 2: the Trump administration to damage his business competitors. He was
Speaker 2: speaking as part of a wide ranging interview in the
Speaker 2: latest edition of BusinessWeek. Bloomberg's team out of Bio has
Speaker 2: more real deception.
Speaker 5: That's how the man at the helm of one of
Speaker 5: the fastest growing companies in history described the circumstances surrounding
Speaker 5: his firing in twenty twenty three. Since then, Sam Altman
Speaker 5: has led open AI's chat GPT to more than three
Speaker 5: hundred million users. Speaking to bloom the tech ceo says
Speaker 5: safety is a priority at the firm, which he believes
Speaker 5: is continuing to make technical progress. Asked about the prospect
Speaker 5: of working with Donald Trump, Oltman made clear he'd work
Speaker 5: with any president for the good of the country. He
Speaker 5: expects artificial general intelligence AI, which matches or surpasses human capabilities,
Speaker 5: to be developed under the President elect underscoring the importance
Speaker 5: of the relationship in London, Tewa, added Bayo Bloomberg Radio.
Speaker 1: Austria's far right leader, Herbert Kickel is set to become
Speaker 1: the country's first Freedom Party chancellor. The Conservative People's Party
Speaker 1: is now willing to form a coalition with the pro Russian,
Speaker 1: anti immigrant and climate skeptic group after reversing its previous stance.
Speaker 1: Kikel is due to meet with Austria's president this morning
Speaker 1: in Vienna to discuss forming a government. It would be
Speaker 1: the first far right led Austrian government since World War II.
Speaker 2: Canada's Prime Minister Justin Trudeau is reportedly expected to announce
Speaker 2: his resignation. That's according to The Globe and Mail newspaper.
Speaker 2: The Canadian publication says the announcement could possibly come as
Speaker 2: early as today. This would trigger a race for the
Speaker 2: party leadership, with the leader becoming Prime Minister. Trude has
Speaker 2: been under pressure from lawmakers in his party to quit
Speaker 2: for months. Scrutiny grew last month aster his Finance minister,
Speaker 2: Christia Freeland quis.
Speaker 1: Today marks four years since the assault on the US capital,
Speaker 1: with Donald Trump downplaying its severity and denouncing prosecutions more
Speaker 1: on that story now from Bloomberg's Doug Chrisner.
Speaker 3: The president elect has downplayed the severity of the attack
Speaker 3: and denounced its prosecutions, and he's expected to fulfill his
Speaker 3: promises of swift clemency for the one thousand plus people
Speaker 3: convicted and the hundreds more with pending cases. The question
Speaker 3: is how such a move would impact democracy and the
Speaker 3: rule of law. Mass pardons would also set the tone
Speaker 3: for how Trump might wield the presidency to reward loyalist
Speaker 3: and ridick sphere punished opponents. This year's January sixth election
Speaker 3: certification has for the first time been designated a National
Speaker 3: Special Security Event in New York. I'm Doug Prisner, Bloomberg Radio.
Speaker 2: Those are your top stories on the markets. On Friday,
Speaker 2: we saw Wall Street climbing to finish higher. Late in
Speaker 2: the session. We had the Nasdaq closing up one point
Speaker 2: seven percent. Treasuries climbed three basis points as well after
Speaker 2: stronger than expected ism manufacturing data. In Asian trading today
Speaker 2: at Japanese shares are in the red, the Nikes down
Speaker 2: by one point four percent. The en is three times
Speaker 2: weaker against the dollar this morning at one hundred and
Speaker 2: fifty seven seventy four PBOC maintaining support for the yuan
Speaker 2: with a stronger fix than seven point two against the dollar.
Speaker 2: That comes after the sudden move weaker in the one
Speaker 2: on Friday. Eurostock fifty features half a percent higher this morning.
Speaker 1: Well, in a moment, we're going to bring you more
Speaker 1: on Elon Musk's latest comments on UK politics, plus why
Speaker 1: the niche market for ensuring ships against acts of war
Speaker 1: is thriving. It's something that London specializes in. But first,
Speaker 1: markets are buckling up for a month that has in
Speaker 1: the past traditionally been positive for US stocks.
Speaker 2: Try to positive to say about January. Basically, we're all
Speaker 2: back at work. Good morning everyone.
Speaker 1: This is the January effect. I mean, there've been quite
Speaker 1: a lot of bits of research into this, but the
Speaker 1: January effect has actually faded over time. It's sort of
Speaker 1: less dominant now. But there's a great quick take explainer
Speaker 1: on the origins and history of the trend, why it matters,
Speaker 1: and why it might affect things this January.
Speaker 6: Yeah.
Speaker 2: Indeed, the latest Hamlife Pull survey, though, stead of finding
Speaker 2: plenty of bulls out there in the stock market, sixty
Speaker 2: one percent of the investors taking part in the survey,
Speaker 2: saying they expect the S and P five hundred to
Speaker 2: rise this year, boosted by Donald Trump's policies, but also
Speaker 2: the FED continuing to cut interest rates, but a warning
Speaker 2: from the Oxford based investor Steve Jegler says we should
Speaker 2: be bracing for flatility as well now. He became famous
Speaker 2: for making billions during the global financial crisis, and he
Speaker 2: says threats to market stability are at a level not
Speaker 2: seen since two thousand and eight. He's setting up a
Speaker 2: hedge fund to bet on this as well. He's saying
Speaker 2: there are a number of fault lines out there today
Speaker 2: are even greater than during the financial crisis, and the
Speaker 2: chances of going wrong. Talking about this being a sort
Speaker 2: of analogous situation to where we were in two thousand
Speaker 2: and five to two thousand and seven.
Speaker 1: I'm not sure I can remember that far back. Is
Speaker 1: only the first day back in It's a good period,
Speaker 1: absolutely right. Let's send our attention then to our top
Speaker 1: story this morning. Elon Musk has been a fierce critic
Speaker 1: of Kirs Starmer and the Labor Party since it came
Speaker 1: to power in July, but on Sunday he turned on
Speaker 1: a supposed ally Nigel Farage, the leader of Reform UK,
Speaker 1: and yet another barrage of social media commentary on British
Speaker 1: political affairs joining us now is Blomberg's UK correspondent Lizzie Burden.
Speaker 1: Good morning, Lizzie and happy new year to you.
Speaker 4: Thank you.
Speaker 1: Why the pivot or Nigel Pharage saying that he doesn't
Speaker 1: have what it takes, But.
Speaker 6: Indeed it does seem that Musk's becoming a headache not
Speaker 6: just to keirse Armer, but to the right wing in
Speaker 6: British politics as well. Just a few days ago he
Speaker 6: said that only Farage's reform in UK could save Britain.
Speaker 6: This is when he was calling for fresh elections in
Speaker 6: the UK, and he had Musk and Farage recently going
Speaker 6: to Mary Lago and Farage touting this big fat check
Speaker 6: that Musk was going to write to Reform. So, as
Speaker 6: you say, it is a big u turn. But look,
Speaker 6: far be it from me to attempt to read the
Speaker 6: mind of Elon Musk. This is the topsy turvy world
Speaker 6: of Trump politics and he hasn't given an explanation so far.
Speaker 6: Farage has only said that Musk's entitled to his own opinion.
Speaker 6: So I think the big question is whether the Musk's
Speaker 6: going to back far right activist Tommy Robinson to become
Speaker 6: the reform leader. He's already called for Robinson to be
Speaker 6: released from prison. Musk seems to be kind of toying
Speaker 6: with Farage here. Faraj has distant from Robinson repeatedly, and
Speaker 6: we've been reporting that several senior politicians on the right
Speaker 6: wing in UK politics with links to Donald Trump have
Speaker 6: been warning their Republican counterparts against endorsing Robinson. But it's
Speaker 6: still a big question because at the moment Musk has
Speaker 6: only suggested that Rupert Low, the reform MP, should succeed Fararar.
Speaker 6: So definitely one we're going to watch this.
Speaker 2: Week of Corzeland. Musk not limiting his commentary to reform UK.
Speaker 2: He the government has spent the weekend trying to respond
Speaker 2: to other comments made by the world's righteous man about
Speaker 2: prosecutions in child sex abuse cases.
Speaker 6: Here, yeah, Musk accusing Starmer of being complicit in the
Speaker 6: rape of Britain because Labour's rejected calls for a public
Speaker 6: inquiry into the child's sex abuse scandal, even though Starmer
Speaker 6: was as head of the Crown Prosecution Service part of
Speaker 6: the team that began the prosecution into grooming gangs in
Speaker 6: British towns, so this is hugely controversial. Doesn't want to
Speaker 6: get dragged into a soap opera with Elon Musk, though,
Speaker 6: so he's brushed off Musk's attacks, like when Musk said
Speaker 6: that civil war is inevitable during the Summer Riots.
Speaker 4: But this raises another question.
Speaker 6: How does the so called special relationship between the US
Speaker 6: and the UK play out under Trump and Starmer? And
Speaker 6: it's an interesting question for the newly appointed UK ambassador
Speaker 6: to Washington, Lord Mandelson.
Speaker 4: Peter Mandelson, of course a key blair Wite.
Speaker 6: He'd suggested previously that Farah should be used as a
Speaker 6: bridgehead between Labor and Trump. The kind of bottom line
Speaker 6: I think is Musk is one of the most powerful
Speaker 6: people in the world right now. And you could ask,
Speaker 6: is it any surprise that Musk's attacking Starmer when you know,
Speaker 6: somehow the Trump Starmer call gets leaked and Trump's apparently
Speaker 6: deranged and going off peace talking about windmills, and Sekire
Speaker 6: is trying to keep him on track. Think about all
Speaker 6: the Foreign Secretary David Lammy and the Deputy Prime Minister
Speaker 6: and Angela Rayner have had to say about Trump recently,
Speaker 6: and then you've got the Chancellor Rachel Reeves and the
Speaker 6: Governor of the Bank of England Andrew Bailey, off to
Speaker 6: Beijing this week to court Trump's nemesis. So is this
Speaker 6: just Musk being Trump's attack dog?
Speaker 1: Yeah, and certainly with inflammatory language. I mean, what hope then?
Speaker 1: Does the government have to try to focus on its priorities?
Speaker 1: Was meant to be talking about NHS policy today for
Speaker 1: the National Health Service?
Speaker 6: Yeah, He's set to give a speech chet on the
Speaker 6: NHS today.
Speaker 4: Whatever that means, I think it's.
Speaker 6: Trying to avoid the confusion that surrounded all the missions
Speaker 6: and priorities and foundations and first steps and milestones that
Speaker 6: we've had in twenty twenty four. There definitely seems to
Speaker 6: be a deliberate focus in twenty twenty five on the
Speaker 6: domestic agenda because, as we have reported, Starmer traveled a
Speaker 6: lot last year. We've crunched the numbers and he was
Speaker 6: abroad more than any of his immediate predecessors in their
Speaker 6: first six months in office.
Speaker 4: So you kind of had to.
Speaker 6: Wonder at times why he was bothering going to some
Speaker 6: of these events when there are hardly any other high
Speaker 6: profile leaders like at koppin Azerbaijan, and many of the
Speaker 6: leaders that he's met on the international circuit have waning
Speaker 6: influenced Joe Biden, just In Trudeau in the news this morning,
Speaker 6: and being absent when the economy is in the doldrooms
Speaker 6: is hardly a look that you want to bed in.
Speaker 6: So instead, as I say, it's Rachel Reeves going to
Speaker 6: China this week, and it hasn't been interestingly decided who's
Speaker 6: going to represent the UK at Trump's inauguration.
Speaker 2: Okay, busy burden are UK correspondent, Thank you very much.
Speaker 1: Now, in a world that is rife with conflict in
Speaker 1: Ukraine and the Middle East, the market for ensuring ships
Speaker 1: against acts of war is thriving, with London specializing in
Speaker 1: maritime insurance. Joining us now is Bloomberg's oil and derivative
Speaker 1: supporter Alex Longley, who has a long piece on this
Speaker 1: out this morning. Alex, thanks for your time. How important
Speaker 1: is this war insurance market for global trade?
Speaker 7: Well, in the world we're in at the moment, it's
Speaker 7: become ever more important. I think perhaps the most recent
Speaker 7: although its a little while ago now, but the diversions
Speaker 7: that we've seen in the Red Sea that have continued
Speaker 7: even in their kind of twelve month anniversary, to hugely
Speaker 7: disrupt world trade. You need this backstop of insurance to
Speaker 7: ensure that goods are getting from A to B. Now,
Speaker 7: insurance in London has existed for hundreds and hundreds of years.
Speaker 7: War risk insurance is nothing new, but the scale of
Speaker 7: some of the conflicts we're seeing and the risk of
Speaker 7: products getting trapped in different ports across the world or
Speaker 7: different regions has meant that this market has sort begun
Speaker 7: to thrive and entered a kind of new level over
Speaker 7: the last couple of years, particularly following the invasion of
Speaker 7: Ukraine in twenty twenty two and then, as I said before,
Speaker 7: the disruption in the Red Sea last year.
Speaker 2: So what sort of growth are we talking about? How
Speaker 2: big is the market now?
Speaker 7: Well, it's one of those markets where, much like much
Speaker 7: like many things with Lloyds of London and the insurance
Speaker 7: insurance industry, it's hard to pin an exact number that
Speaker 7: some of the people we spoke to say that the
Speaker 7: global market for marine hull war is insurance. So that's
Speaker 7: that the risk of your ship being hit in an
Speaker 7: act of war is reaching up to a billion dollars
Speaker 7: at the moment, and that'll be up from just a
Speaker 7: few hundred million dollars a couple of years ago, the
Speaker 7: low sort of hundreds. So we're seeing a significant number,
Speaker 7: significant volume of growth there, and that's just in the
Speaker 7: premiums that are earned. Now, the risk that comes with
Speaker 7: that is exactly how many ships don't get hit, right,
Speaker 7: because the risk of conflict is that you're in an
Speaker 7: extremely dangerous global maritime environment. So although the total premium
Speaker 7: written has been very, very large, and certainly in the
Speaker 7: last couple of years we've seen some good returns, I
Speaker 7: think you're seeing insurance starting to worry given that kind
Speaker 7: of exponential level of growth that we've seen over the
Speaker 7: last couple of years.
Speaker 1: And surely insurance is a long game. I mean, what
Speaker 1: are the risks? Presumably there must be some dangers in
Speaker 1: offering cover against acts of war and we started talking about,
Speaker 1: you know how life conflict.
Speaker 7: Is, Yeah, exactly. I mean there's a couple of dangers here.
Speaker 7: I think the first one is, as we've already seen.
Speaker 7: Last year, we've had some of those incidents in the
Speaker 7: Red Sea that have led to not only vessels sinking,
Speaker 7: but also crew deaths and also pollution events around them.
Speaker 7: That's obviously the biggest risk for the insurers, and we've
Speaker 7: seen a few of them, and I think some of
Speaker 7: those companies that are expecting to see sort of the effects
Speaker 7: of those ripple through to their results coming into twenty
Speaker 7: twenty five. The other effect is that, frankly, this market
Speaker 7: has been doing so well, it's attracted a whole host
Speaker 7: of new entrants, different types of players that weren't previously
Speaker 7: there but that can now provide cover. And many insurance
Speaker 7: officials say that the big risk there is that they
Speaker 7: take on more sort of cover than they perhaps should be,
Speaker 7: or slightly less worried about the cover that they're taking
Speaker 7: on because of the money they're making, and that that
Speaker 7: has a ripple through effect as well and leads to
Speaker 7: some more losses within the market. Insurance is a very
Speaker 7: cyclical business. When times are good, lots of people tend
Speaker 7: to flood into the market and provide a new cover,
Speaker 7: and then that kind of tends to naturally dampen it
Speaker 7: back down again, and some worry that we're kind of
Speaker 7: at the start of were reaching the peak, and are
Speaker 7: at the start of a possible downturn in the next
Speaker 7: eight twelve to eighteen months, but that will all depend
Speaker 7: on how risky the world remains and whether we remain
Speaker 7: kind of ripe with conflict.
Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the
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Speaker 1: I'm Caroline Hepka and.
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Speaker 2: on Bloomberg day Break Europe.