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Speaker 1: Good morning.

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Speaker 2: It's Tuesday, the twenty second of August in London. This

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Speaker 2: says the Bloomberg Daybreak You're podcast. I'm Stephen Carroll coming

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Speaker 2: up today. UK based chip designer ARM files for the

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Speaker 2: biggest stock market listing of the year in the United States.

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Speaker 2: SNP joins Moodies and cutting credit ratings for a slew

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Speaker 2: of US banks, and reports emerged that Elon Musk told

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Speaker 2: Pentagon officials he spoke to Vladimir Putin. Let's start with

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Speaker 2: a roundup of our top stories. The UK based tech

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Speaker 2: giant ARM has filed to list its shares on the

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Speaker 2: Nasdaq in what's set to become the biggest US stock

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Speaker 2: market launch of the year. SoftBank, which owns the tech companies,

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Speaker 2: expected to secure evaluation of sixty to seventy billion dollars

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Speaker 2: for the chip designer. Phil Hazlitt, the co founder of

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Speaker 2: equity Zen, a marketplace for pre IPO equity, says investors

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Speaker 2: will be watching closely.

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Speaker 3: It serves as a bit of a bell weather for

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Speaker 3: how much do people really think AI is worth and

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Speaker 3: how value was it to the people selling the picks

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Speaker 3: and shovels. And videos certainly indicated that it's worth a lot,

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Speaker 3: but arm will be yet another bowwether and kind of

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Speaker 3: indicate if there are other companies that are building on

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Speaker 3: top of this new AI foundation, they can perform well

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Speaker 3: in this market as well, because we honestly haven't seen

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Speaker 3: a large tech IPO in the last say two plus years,

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Speaker 3: and you know, we had kind of the spac pocalypse

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Speaker 3: that happened in two thus twenty one, twenty two, and

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Speaker 3: so that's not really available anymore. Growth fundings are down,

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Speaker 3: So I know that there's a lot of investors and

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Speaker 3: a lot of founders and CEOs that are eager to

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Speaker 3: see if this is a new channel for fundraising.

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Speaker 2: As Phil as Phil Hazlitt pointed to there the initial

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Speaker 2: offering is poised to be the largest in the US

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Speaker 2: and Rivian's thirteen point seven billion dollar IPO and twenty

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Speaker 2: twenty one then stack listing is a blow for UK

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Speaker 2: politicians who'd lobby the homegrown tech firm to sell its

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Speaker 2: shares on the London Stock Exchange. SMP has followed Moodies

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Speaker 2: and DAN grading and cutting the outlook for a slew

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Speaker 2: of US banks. The ratings agency lowered grades one not

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Speaker 2: for six lenders, including Key Corp. Comerica and umb SMP

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Speaker 2: says declining deposits of squeeze liquidity, while customers moving their

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Speaker 2: funds to higher interest accounts have pushed up costs for banks.

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Speaker 2: Ten year treasury yields hit the highest level since two

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Speaker 2: thousand and seven. As markets reprice for higher rates. For

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Speaker 2: longer nominal and real yields are on the up. Assigned

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Speaker 2: traders are braced for tight monetary policy. Former Federal Reserve

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Speaker 2: economist Claudia Sam says markets are finally getting the message

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Speaker 2: rates are going nowhere fast.

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Speaker 4: I don't think the Fed looks at this as some

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Speaker 4: structural shift again, and I don't think the market should

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Speaker 4: either necessarily like we might be moving, we might be

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Speaker 4: in and continue to be in a higher interest rate environment.

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Speaker 4: I think it's actually hard to make that case right now,

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Speaker 4: you know. So it's like you want to look out,

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Speaker 4: you know, years, Like I think it'll take years for

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Speaker 4: us to get back down to you know, the interest

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Speaker 4: rates really coming down.

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Speaker 1: The Fed funds are coming down.

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Speaker 2: The Sound Consulting founder added, it's an unknown how long

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Speaker 2: it will take to bring inflation down the longer market.

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Speaker 2: Longer term market is shifting on that point as fears

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Speaker 2: of a US recession, EBB and debt supply surges. Charles

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Speaker 2: Schwab will cut jobs or clothes and downsize offices to

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Speaker 2: save at least five hundred million dollars in annual costs

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Speaker 2: as investor pressure mounts. More from Bloomberg's Charlie Palace.

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Speaker 5: Word came in a regulatory filing. It is the latest

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Speaker 5: step by the brokerage to respond to investor pressure. The

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Speaker 5: company said it will close or downsize from real estate

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Speaker 5: and reduce headcount. Schwab said earlier this month that it

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Speaker 5: was experiencing temporarily lower netflows of client money as the

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Speaker 5: brokerage sees attrition of some retail and advisory clients assets

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Speaker 5: while it integrates td ameerror trade into its business in

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Speaker 5: New York. Charlie Pellett Bloomberg Daybreak.

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Speaker 2: Europe is ramping up efforts to support the YU one

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Speaker 2: and stop a sell off from spiraling.

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Speaker 1: The PBOC fix.

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Speaker 2: The value of the currency far stronger than the market

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Speaker 2: expected as the economy struggles. HSBC head of Apac Equity Strategy,

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Speaker 2: Herald Vanderlinda says no stimulus BIZUKA is coming.

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Speaker 6: China has is a difficult position in the sense because,

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Speaker 6: on the one hand, a large part of the economy,

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Speaker 6: which is infrastructure and property, is about say thirty five

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Speaker 6: forty percent of your economy. They don't really want to

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Speaker 6: go and stimulate that. That's been done in the past,

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Speaker 6: that's where the bad debtors ended up. They don't want

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Speaker 6: to do that. They probably have to do more, but

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Speaker 6: they don't want to maybe use all the stimulus in

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Speaker 6: one go at the very beginning of this process, and

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Speaker 6: that needs to be debris scheduling taking place. So my

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Speaker 6: suspicion is they're going to do this is very very

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Speaker 6: carefully held.

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Speaker 2: Vonderlinda added he sees market sentiment as extremely poor. Foreign

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Speaker 2: investors are pessimistic after a prolonged depreciation driven by low

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Speaker 2: yields and increasingly shaky economy. The the CEOs of Britain's

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Speaker 2: biggest companies saw and above inflation pay rise last year,

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Speaker 2: but still earned less than before the pandemic. Blimbrooks un

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Speaker 2: Parts reports the.

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Speaker 7: Bosses of the UK's biggest companies saw their pay jump

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Speaker 7: by sixteen percent last year, according to research by the

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Speaker 7: High Pay Center. Medium pay for foots one hundred CEOs

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Speaker 7: increased to just over three point nine million pounds. That's

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Speaker 7: still seventy thousand pounds short, though of pay packages seen

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Speaker 7: in twenty seventeen. The analysis comes amid soaring inflation that's

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Speaker 7: prompted workers in a number of industries to go on strike.

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Speaker 7: The latest figures also come as some say the UK

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Speaker 7: is becoming a less attractive place to do business. The

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Speaker 7: reports also found the gap between bosses and workers has widened,

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Speaker 7: with the average top CEO now paid one hundred and

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Speaker 7: eighteen times more than the typical full time employee in London.

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Speaker 7: I'm une Pot's Bimberg Daybreak.

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Speaker 2: Europe, it's been reported that Elon Musk told Pentagon officials

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Speaker 2: he had personally spoken with Vladimir Putin in October. According

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Speaker 2: to The New Yorker, Moscovill tier the information while briefing

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Speaker 2: military personnel about the role of his Starlink internet service

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Speaker 2: in Ukraine. Officials were of the view that Musk was

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Speaker 2: becoming nervous about his role in the war and wanted

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Speaker 2: to precate Russian concerns by speaking with the president. In

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Speaker 2: the same month, the billionaire denied communicating with Putin, tweeting

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Speaker 2: they had not spoken for eighteen months. Those are your

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Speaker 2: top stories on the markets. The MSCI A to Pacific

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Speaker 2: index is six tenths of one percent higher, the Hangsng

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Speaker 2: in Hong Kong is up by three tenths of one percent,

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Speaker 2: eurostocks fifty futures are half a percent high, and the

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Speaker 2: tenure treasury yield close to that highest level since two

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Speaker 2: thousand and seven at four point three four percent. So

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Speaker 2: some of the stories that caught my eye this morning

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Speaker 2: threats of theft of luxury watches. In factulikery watches worth

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Speaker 2: more than a billion pounds have been reported as stolen

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Speaker 2: or missing after a serge number of thefts last year,

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Speaker 2: So around eighty thousand watches have been registered as stolen

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Speaker 2: or missing with the Watch, which is a company that

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Speaker 2: helps owners and auction houses to identify stolen time pieces.

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Speaker 2: On that list, they added around six eight hundred watches,

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Speaker 2: which is a sixty percent increase last year compared to

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Speaker 2: the previous year, and of those the most stolen watch

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Speaker 2: brand Rolex. Forty four percent of those stolen were Rolex watches.

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Speaker 2: This is an issue that police services all over the

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Speaker 2: world have been tackling. London's Metropolitan Police Service actually launched

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Speaker 2: an operation last year to address this problem after a

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Speaker 2: number of robberies at knife point. Brands too are also

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Speaker 2: getting on board or trying to address this. Udmapier, the

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Speaker 2: maker of the Royal Oak, set in April that it

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Speaker 2: would offer to replace clients stolen watches. It's part of

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Speaker 2: a new service program that would run for two years.

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Speaker 2: So that is one of the challenges facing the luxury

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Speaker 2: watch industry. Let's turn out to get more details though,

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Speaker 2: on the chip designer ARM filing for its IPO in

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Speaker 2: New York, poised to be the biggest listing in the

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Speaker 2: United States since the electric electric vehicle maker Rivian went

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Speaker 2: public in twenty twenty one. Bloombergs Alex Webb is with

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Speaker 2: us in studio for more on this story. Morning to you, Alex.

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Speaker 2: How big a deal is this?

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Speaker 8: I mean it's massive on several different levels. Of course,

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Speaker 8: there's the political piece. You know, this is a British

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Speaker 8: company that is listing in the US.

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Speaker 1: It was and it still is.

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Speaker 8: It considered Britain's largest tech company. But there is a

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Speaker 8: broader implication just for the IPO market in general. The

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Speaker 8: kind of consensus has been that essentially the IPO market

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Speaker 8: has been shut for some time. In the other words,

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Speaker 8: not open to like big listings where you can get

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Speaker 8: good valuations. This will be a sizeable test of whether

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Speaker 8: that is still true. There are lots of particularly private

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Speaker 8: equity companies sitting on assets not able to find exits

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Speaker 8: as readily as they might previously have done, who are

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Speaker 8: going to be looking at this with a great deal

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Speaker 8: of interest to see that if it goes well or

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Speaker 8: maybe they can think about bringing their companies to market.

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Speaker 8: And we start to see if not floodgates open, then

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Speaker 8: the force it loosened ever so slightly.

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Speaker 2: What did we learn about ARMS business from the filing documents.

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Speaker 8: Ultimately, it's valuation that it's reportedly seeking between sixty and

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Speaker 8: seventy billion dollars would be very very high multiple. It's

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Speaker 8: sort of in the region of what in Vidia and

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Speaker 8: know the huge success story from an equity perspective over

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Speaker 8: the past few months. It would be similar multiple perhaps

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Speaker 8: to what Nvidia is trading at. But crucially, ARM at

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Speaker 8: the moment is not growing. It has not grown in

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Speaker 8: It did not grow in the most recent quarter, It

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Speaker 8: did not grow in the most recent fiscal year. It

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Speaker 8: is trying to position itself very much as an AI play,

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Speaker 8: and we've seen a huge amount of hunger in the market,

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Speaker 8: inevitably over companies that have good AI exposure. But in Vidia,

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Speaker 8: as a company that is growing at one hell of

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Speaker 8: a clip right now, ARM is not, and that is

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Speaker 8: perhaps one of the reasons why we can see a

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Speaker 8: there are loads of banks holding this mandate to try

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Speaker 8: and get the IPO rolling, perhaps they have to work

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Speaker 8: a little bit harder. Secondly, though the size of the IPO,

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Speaker 8: while considerable, it doesn't necessarily look like there's going to

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Speaker 8: be a huge amount of float out there for people

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Speaker 8: to go after. Because it's been reported there are lots

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Speaker 8: of strategics looking to take an anchor steak. So it's

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Speaker 8: been interesting to see how that plays out as we

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Speaker 8: get closer to it, as we have better visibility on

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Speaker 8: how much of the shares are actually going to be available.

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Speaker 8: But the lack of growth is quite remarkable.

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Speaker 2: What about soft bank and all of this as well,

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Speaker 2: How important is this going to be to them to

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Speaker 2: make sure that it's a success.

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Speaker 8: I mean, I think at this stage when you speak

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Speaker 8: to soft bank investors, there was some sort of urge

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Speaker 8: really that they just kind of get it over and

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Speaker 8: done with. The revenue of ARM has more than doubled

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Speaker 8: since soft Bank acquired it back in twenty sixteen. Given

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Speaker 8: they acquired it for thirty billion dollars and they're looking

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Speaker 8: to sell a stake at evaluation between sixty and seventy

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Speaker 8: billion dollars, look like a brilliant return. It's about one

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Speaker 8: hundred and three percent return on what they paid. If

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Speaker 8: you just put that in the Philadelphia Semiconductor Index, you

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Speaker 8: would have got perhaps more than three hundred percent. So

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Speaker 8: at this stage, for Armed, it's probably the case they

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Speaker 8: just want to get it through.

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Speaker 1: They will retain a sizeable.

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Speaker 8: Stake in the company and the hope that perhaps the

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Speaker 8: shares appreciate and then they can divest the rest at

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Speaker 8: a more generous price.

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Speaker 2: Alex much was made at the announcement of this IPO

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Speaker 2: that was going to be in the US that it

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Speaker 2: wasn't happening in London. Lots of hand ringing happening here

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Speaker 2: over that. Do the numbers involved in what we've learned

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Speaker 2: perhaps explain that move even further? Could anything similar have

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Speaker 2: been done in London?

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Speaker 8: I think there's a suspicion that you know, particularly look

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Speaker 8: at that those growth numbers, for instance, UK investors tend

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Speaker 8: to be perhaps a little bit more cautious. The criticism

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Speaker 8: that you often hear is that they are not as

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Speaker 8: tech savvy as investors in the US. It's hard to

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Speaker 8: know whether that's really true or not a little bit unfair.

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Speaker 8: But you know, the broader market numbers almost speak for themselves.

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Speaker 8: Stocks are in the in the foots you one hundred

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Speaker 8: trade at about on average thirteen fourteen times their forward earnings.

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Speaker 8: Stocks in the S and P five hundred trade on

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Speaker 8: average of twenty times their forward EARNINGSTA. Clearly a lot

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Speaker 8: of that is because there's a lot of waiting towards

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Speaker 8: the tech companies, so it's almost a self fulfilling prophecy.

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Speaker 8: But we've seen some UK companies that have listed here

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Speaker 8: tech adjacent companies I would say, such as the Delivery

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Speaker 8: I wouldn't necessarily call it a tech company per se.

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Speaker 8: They have not done brilliantly and that's created a certain

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Speaker 8: amount of skittishness when it comes to thinking about whether

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Speaker 8: you're going to list your company here.

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Speaker 2: Okay, Alex Webb, thank you very much for that. Up

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Speaker 2: next to the growing risk of AI to copyright and

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Speaker 2: Britain's highest taxpayer doubles, here's fortune now.

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Speaker 7: The paper review on blue Bird Daybreak Europe, the news

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Speaker 7: you need to know from today's papers.

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Speaker 2: And bean garrents with us with details of those stories.

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Speaker 2: Let's start in the Financial Times, Leanne the headline there.

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Speaker 2: British media and creative industries quizzed over AI risks to copyright.

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Speaker 1: Stephen, Good morning to you.

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Speaker 9: I'm not an AI bot, Israelly, Leanne Gerrien's here with

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Speaker 9: you today, but artificial intelligence, Stephen.

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Speaker 1: We chat about it a lot, don't we.

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Speaker 9: Now we know British media and creative industries are being

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Speaker 9: contacted by the government and this is over concerns that

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Speaker 9: products generated by AI are infringing their copyright. We did

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Speaker 9: speak about the sort of deep fake style songs, didn't we.

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Speaker 1: Drake.

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Speaker 9: We heard that song and it sounded exactly like him,

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Speaker 9: but it actually wasn't even his voice. Media groups aren't

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Speaker 9: happy that tech firms have been using their news stories

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Speaker 9: and features to train a chatbots without a licensing deal

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Speaker 9: in place. Officials from the Department for Digital Culture, Media

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Speaker 9: and Sport have written to these executives, really wanting to

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Speaker 9: find out what their concerns are.

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Speaker 1: In a letter seen by the FT, the.

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Speaker 9: Government did acknowledge that The use of AI has been

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Speaker 9: a subject of significant debate across creative sectors and of

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Speaker 9: significant concern for many Now there are discussions.

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Speaker 1: Going on at the moment.

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Speaker 9: They very very much in the early stages between tech

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Speaker 9: and media companies over licensing AI generated products based on

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Speaker 9: copyright material. News organizations have also really expressed concerns about

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Speaker 9: the use of.

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Speaker 1: AI to create fake news.

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Speaker 9: Remember we did talk about the ft report last week

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Speaker 9: that Google and Universal Music were in talks over a

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Speaker 9: licensing partner licensing partnership to cover AI generated deep fake

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Speaker 9: style songs. Stephen, there is a lot to get hold

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Speaker 9: of here. I think AI is getting so big so quickly,

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Speaker 9: and I think the government is really looking at ways

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Speaker 9: to tap into how they can help companies and executives.

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Speaker 2: This is Bloomberg day Break Europe, your morning brief on

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Speaker 2: the stories making news from London to Wall Street and beyond.

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Speaker 2: Play Bloomberg eleven thirty. I'm Stephen Carroll. Join us again

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Speaker 2: day right here on Bloomberg day Break Europe