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Speaker 1: Good morning.

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Speaker 2: It's Tuesday, the twenty first of November here in London.

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Speaker 2: This is the BlueBag daybak At podcast.

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Speaker 1: I'm Caroline Hepkin and.

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Speaker 3: I'm Stephen Carroll. Coming up today. A senior leader of

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Speaker 3: Hamas says they're close to reaching a truce with Israel,

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Speaker 3: as hostage talks progress.

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Speaker 2: Open AI talks of reunification. The CEO of Microsoft tells

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Speaker 2: Bloomberg that wherever Sam Ortman works, he works.

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Speaker 3: With them, and as the Bank of England's Governor Andrew

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Speaker 3: Bailey warrens another interest rate hike may be needed. We

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Speaker 3: look at how higher for longer rates are crushing global

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Speaker 3: housing markets.

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

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Speaker 3: HAMAS chief Ismail Haniya says his group is close to

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Speaker 3: reaching a truce agreement in talks with Katar and Israel.

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Speaker 3: The rare public comments suggest discussions about freeing some hostages

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Speaker 3: held by the militant group are progressing. Families of some

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Speaker 3: hostages abducted on the seventh of October have been speaking

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Speaker 3: in London. One is Thomas hand, whose young daughter Emily

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Speaker 3: is believed to have been taken by Hamas. She turned

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Speaker 3: nine on Friday.

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Speaker 4: All this time. We knew her birthday was coming up,

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Speaker 4: and of course we're praying to God that she would

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Speaker 4: be released in time to have a birthday party. But

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Speaker 4: unfortunately that didn't happen, so in that respect, was a very,

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Speaker 4: very very dark day.

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Speaker 3: Thomas hand also urged Israel to show restraint.

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Speaker 4: It's totally just a humanitarian issue. It's nothing to do

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Speaker 4: with politics. Their children, they're civilians. You can't act like

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Speaker 4: that in a war. They've gone beyond the line.

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Speaker 3: Thomas Hann speaking there about his daughter and events in Gaza.

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Speaker 3: Today's comments from Hamas come after Axios reported that the

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Speaker 3: militant group's leader in the Gaza Strip has agreed in

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Speaker 3: principle for more than fifty women and children to be released.

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Speaker 3: It's understood that in exchange, Israel would release some Palestinians

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Speaker 3: in Israeli jails and pause its military attacks for a

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Speaker 3: specified time each day.

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Speaker 5: Now.

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Speaker 2: In other news, according to a memo seen by Bloomberg,

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Speaker 2: Open Ai is once again in active discussions to reunify

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Speaker 2: the company and bring back its ousted CEO, Sam Altman.

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Speaker 2: The latest twist in the battle for control of one

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Speaker 2: of the firms at the cutting edge of AI development.

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Speaker 2: Comes after Aortman agreed to run a new artificial intelligence

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Speaker 2: group at Microsoft. Speaking to Bloomberg, the CEO of the

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Speaker 2: tech giant, sat In Adella signaled that he'd be open

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Speaker 2: to Sam Aortman returning to open ai, but under one condition.

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Speaker 6: We really want to partner with open ai, and we

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Speaker 6: want to partner with Sam. And so your aspect of

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Speaker 6: where Sam is, he's working with Microsoft, and that is

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Speaker 6: the case on Friday, and that'll be that's the case today,

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Speaker 6: and we will I absolutely believe that that'll be the

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Speaker 6: case tomorrow.

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Speaker 2: Sat in Adella's interview with Bloomberg came as nearly all

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Speaker 2: of open AI's employees threatened to quit on Monday following

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Speaker 2: Altman to Microsoft unless the current board resigned.

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Speaker 3: The Bank of England governor has warned the UK interest

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Speaker 3: rates may need to go up again. Bloomberg's tewa Adebio reports.

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Speaker 7: Andrew Bailey has warned that food price inflation and energy

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Speaker 7: costs could spike again. Speaking to the National Farmers' Union,

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Speaker 7: he reiterated that it is too soon to be thinking

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Speaker 7: about rate cuts. It's the strongest rebuttal yet of market

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Speaker 7: bets that foresee three interest rate cuts in the UK

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Speaker 7: next year. Bailey warned households to expect further volatility in

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Speaker 7: food bills as climate change, protectionism, and even conflict in

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Speaker 7: the Middle East could affect energy costs and send grocery

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Speaker 7: bills surging in London tiwa Ade Bio Bloomberg Radio.

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Speaker 2: Meanwhile, Jeremy Hunt is setting out his vision for a

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Speaker 2: lower tax, pro business economy with a one billion pound

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Speaker 2: fund for startups. The Chancellor's early announcement comes after the

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Speaker 2: Prome Minister issues soon axt suggested that tax cuts were

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Speaker 2: coming in Wednesday's autumn statement what you will.

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Speaker 5: See on Wednesday, without going into individual measures as a

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Speaker 5: whole range of measures designed to unlock business investment and

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Speaker 5: close that gap with countries like France, Germany in the

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Speaker 5: United States.

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Speaker 2: Despite Hunt's words, the UK has been accused of failing

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Speaker 2: to match its peers commitments of spending on business. America's

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Speaker 2: flagship Inflation Reduction Act dwarfs Britain's amount of spending.

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Speaker 3: The European Union is set to place France on its

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Speaker 3: fiscal watch list. According to Bloomberg reporting, the country risks

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Speaker 3: breaking guidance to limit deficit to three percent of GDP

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Speaker 3: A watch list of countries is scheduled for release by

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Speaker 3: the European Commission today. Source to suggest Belgium, Finland, and

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Speaker 3: Croatia are mentioned, while Germany and France are also deemed

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Speaker 3: not fully compliant. Inclusion on the list has no automatic consequences,

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Speaker 3: but the Commission could pursue financial penalties if resistance continues.

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Speaker 2: And finally, Carlisle has received a supersized payout after selling

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Speaker 2: its twenty eight percent stake in McDonald's China with more

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Speaker 2: his Bloomberg's U and Pots.

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Speaker 8: The world's biggest restaurant Chane is stumping up about one

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Speaker 8: point eight billion dollars to buy Carlyle's steak in McDonald's China.

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Speaker 8: That delivers a return on investment for the private equity

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Speaker 8: giants of more than six and a half times. During

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Speaker 8: Carlisle's six years of part ownership the fast food chain

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Speaker 8: We're Am top store openings there are now more than

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Speaker 8: five and a half thousand in China and invested.

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Speaker 3: In delivery services.

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Speaker 8: Selling the trophy asset Ranks is one of Carlisle's most

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Speaker 8: successful exits in China. In London, a slightly PECKISHU in

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Speaker 8: Pots for Bloomberg Radio.

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Speaker 3: Doziotap stories on the markets. The MSCIAS Pacific Index is

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Speaker 3: six tenths of one percent higher this morning, fifty eurostox

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Speaker 3: fifty futures are up by a tenth of one percent,

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Speaker 3: and the ten year treasury yields three basis points lower

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Speaker 3: at four point thirty nine percent.

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Speaker 2: Okay, So in terms of our top stories this morning,

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Speaker 2: you want to get some more DTA on the Israel

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Speaker 2: Hamas war. Hamas chief Ismail Hanee is saying that the

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Speaker 2: group is close to reaching a quote truth agreement with Israel,

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Speaker 2: as talks continue to secure the release of hostages who

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Speaker 2: have been held in girls since the seventh of October attack.

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Speaker 2: Joining us this morning's boom Bag's Middle East Breaking news

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Speaker 2: editor Danna Krage, Good morning, Thank you for your time.

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Speaker 2: What is the latest that we understand about the progress

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Speaker 2: in these talks and what this particular deal may look like?

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Speaker 9: Good morning. We do seem to be closer to a

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Speaker 9: deal that would see Israel and Hamas exchange hostages and prisoners.

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Speaker 9: So Hamas members have been speaking this morning to Arabic

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Speaker 9: media saying they're close to a deal and that they've

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Speaker 9: submitted their own conditions for that. We have last night,

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Speaker 9: US President Biden also saying that both were closing in

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Speaker 9: on a deal. This is of course mediated by the

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Speaker 9: US and KATA, which also said a few days ago

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Speaker 9: that the talks were progressing. So we are getting somewhere,

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Speaker 9: but of course that all depends on developments. So the

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Speaker 9: deal would probably entail Hamas releasing fifty women and children

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Speaker 9: they've been holding hostage since that October seven attack, and

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Speaker 9: in return, Israel would agree to pauses in its military

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Speaker 9: operations in Gaza for some days and also release of

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Speaker 9: some Palestinians in its jails. It's not a truce per se,

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Speaker 9: but merely some pauses for a longer period of time.

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Speaker 9: And that's of course different than what Israel had been doing,

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Speaker 9: that was allowing Palestinians in Gaza to move to safer

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Speaker 9: areas away from the fighting. So that's what we know

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Speaker 9: so far on the details of the deal or potential deal.

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Speaker 3: What could this open the door to something more akin

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Speaker 3: to a cease fire, something more long long term of

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Speaker 3: this down. What are the hopes that this could perhaps

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Speaker 3: open to perhaps a broader agreement.

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Speaker 9: I don't think there are high hopes for that. Israel

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Speaker 9: has made it clear on several occasions that as cease

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Speaker 9: fire would merely allow Hamas to perhaps regroup or take

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Speaker 9: advantage of it, get more weapons or anything of that sort.

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Speaker 9: So they were very clear about being against a complete ceasefire,

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Speaker 9: and the US has backed that. And you see also

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Speaker 9: Arab countries are in China today. Sorry, Arab ministers are

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Speaker 9: in China today to push for a solution to the crisis,

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Speaker 9: and they are asking for a ceasefire. But that seems

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Speaker 9: very far fetched at the moment, especially that Israel said it's,

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Speaker 9: you know, goal of this entire military operation is to

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Speaker 9: wipe out Hamas and that hasn't happened yet. They you know,

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Speaker 9: have been working in the north of Gaza and all

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Speaker 9: of that, but still that goal hasn't happened yet.

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Speaker 2: Yeah. Dona Bloomberg's Mark Champion opinion columnists this morning rights

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Speaker 2: that Israel risks with the battle and losing the war.

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Speaker 1: The risks. What are the risks for Israel at this point?

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Speaker 9: I think it is the probably rising anti Israel sentiment

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Speaker 9: in the Middle East and putting at risks the deal

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Speaker 9: and the progress that it has made with several Arab

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Speaker 9: countries like the UAE, And but then and of course

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Speaker 9: the deal that with Saudi Arabia that you know would

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Speaker 9: have probably gone through, you know, if it wasn't for

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Speaker 9: for this conflict now, but and that would have been

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Speaker 9: you know, it's it's like in in its advantage, in

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Speaker 9: Israel's advantage to of course set its place in the

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Speaker 9: Middle East and of course boost trade ties. And for

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Speaker 9: Saudi Arabia it would mean you know, creating and expanding

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Speaker 9: its cloud in the region as well. So the risk

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Speaker 9: is is there and of course alienating more probably people

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Speaker 9: in in the Middle East, and and it deals that

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Speaker 9: it's been working on in the progress that you know,

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Speaker 9: these coues have made in the past couple of years.

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Speaker 3: DNA crazy I Medley's breaking He's editor, Thank you so

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Speaker 3: much for joining us with the latest on that story.

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Speaker 2: Okay, let's talk about some business news and now bring

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Speaker 2: you more of our interview with the Microsoft CEO, sat

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Speaker 2: In at Della. So obviously this is the story around

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Speaker 2: open ai that we've been following so closely. He says

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Speaker 2: that regardless of how events play out at open AI,

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Speaker 2: Sam Altman will continue to work with the software giant.

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Speaker 2: Plus Nadella says that the artificial intelligence company needs governance changes.

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Speaker 2: The Microsoft CEO has been speaking to Bloomberg's Emily Chang.

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Speaker 6: We really want to partner with open ai, and we

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Speaker 6: want to partner with Sam. And so you respect you

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Speaker 6: where Sam is, He's working with Microsoft, and that is

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Speaker 6: the case on Friday, and that'll be that's the case today,

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Speaker 6: and we will I absolutely believe that'll be the case tomorrow.

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Speaker 10: To your knowledge, why was Sam fired and was he

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Speaker 10: involved in any roun doing? Has the board given you

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Speaker 10: a reason?

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Speaker 6: As far as I'm concerned, we were, As I said,

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Speaker 6: we have a very confident in Salm and his leadership team.

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Speaker 6: I've not been told about anything. You know, they published

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Speaker 6: internally at open ai that there is not that the

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Speaker 6: board has not talked about anything that Sam did other

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Speaker 6: than some breakdown in communications. And you know, I'm not

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Speaker 6: directly and was told by anyone from their board about

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Speaker 6: any issues. And so therefore I remain confident in Sam

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Speaker 6: and his leadership and capability. And that's why you know,

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Speaker 6: we want to welcome him to Microsoft.

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Speaker 9: Now.

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Speaker 10: We understand that to support a return of Sam mom

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Speaker 10: and too open Ai, Microsoft wants some changes to the

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Speaker 10: board to governance to its overall contract with open AI,

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Speaker 10: So something like this never happens again. And what specifically

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Speaker 10: are you looking for? For example, would you want to

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Speaker 10: board see and if not, what else?

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Speaker 6: Yeah, I mean I think we definitely will want some

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Speaker 6: governance changes, so you know, you know, surprises are bad

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Speaker 6: and we just want to make sure that things are

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Speaker 6: done in a way that will allow us to continue

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Speaker 6: to partner. Well, that's about it, right, You know, this

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Speaker 6: idea that somehow, you know, suddenly changes happen without being

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Speaker 6: you know, in the loop is not good. And we

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Speaker 6: will definitely ensure that some of the changes that are

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Speaker 6: needed to happen and we continue to be able to

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Speaker 6: go along on the partnership with open Ai.

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Speaker 10: So how are you envisioning this role with the sort

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Speaker 10: of you know, advanced AI team that Sam and Greg

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Speaker 10: would be joining and leading. Can you explain that? And

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Speaker 10: are they actually Microsoft employees right now?

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Speaker 5: Like who do they work for?

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Speaker 6: Yeah, so they're all in the process of joining, and yes,

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Speaker 6: I mean the thing is, you know, we have a

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Speaker 6: ton of expertise in this company. You know, in fact,

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Speaker 6: at Aurignite conference last week we talked about all of

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Speaker 6: the great work open a Eyes doing and on Azure

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Speaker 6: and all the models and tools that we built around it.

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Speaker 6: And we also talked about all the open source models

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Speaker 6: that are on Azure from you know, Lama and miss

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Speaker 6: Strall and JAS and everything you know. And then also

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Speaker 6: you know, in fact, not only are we leaders in

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Speaker 6: LLLMS in partnership with open Ai, but we're also leaders

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Speaker 6: in SLMs or the small language models with five and

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Speaker 6: we talked about that, which is all developed by Microsoft Research.

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Speaker 6: So what we am excited about is sort of creating

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Speaker 6: another team that's really going to have high ambition on

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Speaker 6: leading edge advanced DAYI work that Sam and Greg are

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Speaker 6: excited about. This is something that you know, we've talked

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Speaker 6: a lot about with them.

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Speaker 8: You know, what.

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Speaker 6: Happens in twenty five, what happens in thirty What do

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Speaker 6: we do to advance both the system side the science side.

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Speaker 6: And that's the thing that we will be pushing on.

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Speaker 3: Now.

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Speaker 10: Many folks I'm speaking with don't see Sam as a

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Speaker 10: sort of big tech company guy. He has all of

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Speaker 10: these side product projects that you know, we've already heard about,

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Speaker 10: we've reported on new projects. Would he be able to

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Speaker 10: pursue these side projects while being employed by Microsoft?

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Speaker 6: Yeah, I'm sure you know, like you know, Sam has

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Speaker 6: got broad interests and broad investments and so and we'll

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Speaker 6: definitely you know, work through the governance aspects of it.

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Speaker 6: But most importantly, I think you would want to only

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Speaker 6: work at Microsoft if he wants to spend his full

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Speaker 6: time time on really pursuing the mission, just like how

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Speaker 6: he were spending his time on Open AI.

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Speaker 3: And so that's kind.

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Speaker 6: Of the idea behind having him lead this advanced research

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Speaker 6: team around AI with Greg and others, you know, thing

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Speaker 6: for us to look forward to.

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Speaker 2: That's in Adela, the Microsoft CEO. They're speaking to Bloomberg's

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Speaker 2: Emily Chang to.

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Speaker 3: Other news now, housing markets around the world are facing

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Speaker 3: a similar new reality, sharply higher borrowing costs and a

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Speaker 3: shortage of homes that's keeping prices elevated homeowners homeowners are

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Speaker 3: under financial strain as they pay more for their mortgages,

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Speaker 3: and those looking to get on the property ladder or

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Speaker 3: finding it even less affordable than before. Today's Bloomberg Big

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Speaker 3: Take story is looking at how this is playing out

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Speaker 3: in countries around the world, and our personal finance editor

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Speaker 3: Ainsley Thompson joins us now from Wellington in New Zealand.

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Speaker 3: For more. Ainsley great to have you with us on

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Speaker 3: the program. This is a glime gbal look at property

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Speaker 3: markets from the US to the UK, to China to

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Speaker 3: where you are. What similarities did you find among all

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Speaker 3: of these various places.

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Speaker 11: Hello, I think the main similarity is that people with

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Speaker 11: mortgages are increasingly stressed and have been caught out by

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Speaker 11: the sheer speed of these interest rate rises. Also, I

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Speaker 11: think the traditional pathway to building wealth, which has been

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Speaker 11: the property market for most people, is now that option

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Speaker 11: has been removed for a lot of people, whether it

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Speaker 11: be first time first time buyers or also people who

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Speaker 11: want to build a property portfolio. It's just becoming increasingly

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Speaker 11: difficult to do.

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Speaker 2: But New Zealand has been one of the most extreme cases.

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Speaker 2: Why is that it goes.

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Speaker 11: Back to twenty twenty twenty twenty one when interest rates

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Speaker 11: were incredibly low, like there were in many countries, and

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Speaker 11: New Zealand experienced one of the biggest pandemic booms and

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Speaker 11: in twenty twenty one prices rose thirty percent in that

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Speaker 11: year alone, So many people who bought at that time

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Speaker 11: had to borrow a lot of money just to get

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Speaker 11: a house, and interest rates, as I said, were really low,

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Speaker 11: so it gave almost a false sense of financial security,

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Speaker 11: and people were being stress tested by the banks on

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Speaker 11: rates that are a lot lower than they are today.

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Speaker 11: Since then, we've had five hundred and twenty five basis

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Speaker 11: points worth of interest rate rises over just over two

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Speaker 11: year period, and that's putting a lot of stress on households.

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Speaker 11: I think the one saving grace in New Zealand is

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Speaker 11: the fact that employment is really strong and so and

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Speaker 11: wage growth has also been really strong. So while we

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Speaker 11: are seeing stressed households, we aren't seeing distressed sales of

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Speaker 11: properties on any sort of large scale.

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Speaker 3: Yeah, that's very interesting. I mean, the transmission of higher

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Speaker 3: interest rates to higher mortgage costs for homeowners seems sort

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Speaker 3: of that the shortest jump in terms of effect. But

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Speaker 3: talk to us about the effect on home building, because

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Speaker 3: this is another aspect of story as well. How is

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Speaker 3: it affecting the actual number of homes being built on

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Speaker 3: the housing shortage it's experienced in many places.

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Speaker 11: I think Canada is a really interesting example of this,

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Speaker 11: and Canada amateur investors make up a large part.

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Speaker 4: Of the market.

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Speaker 11: I think it's about a third of homeowners and twenty

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Speaker 11: twenty amateur investors, and they often buy pre construction, so

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Speaker 11: it feeds developers. It's a really important source of financing

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Speaker 11: for developers who then go on to build big complexes,

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Speaker 11: et cetera with houses that people who aren't investors are

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Speaker 11: also buying. Now that is stopping that construction happening, which

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Speaker 11: means that there is a housing shortage and that is

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Speaker 11: keeping the prices high in Canada and it's something that

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Speaker 11: is being seen around Europe as well. I think Germany

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Speaker 11: and France the number of building permits is down a

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Speaker 11: lot on past years.

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Speaker 1: I suppose.

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Speaker 2: I mean the other thing for that is what does

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Speaker 2: it mean globally, you know, for the broader rests of

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Speaker 2: the global economy. From this kind of case study, then

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Speaker 2: what it.

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Speaker 11: Means is that people are having to pay more for

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Speaker 11: their housing, whether it be to own a house or

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Speaker 11: through rent, and that means they've got less money to spend.

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Speaker 11: So it's a handbreak on the global economy. It just

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Speaker 11: you know, it's really driving that slow down.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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