WEBVTT - Musk's Starlink Black Market Problem & Traders Bet BOE Cuts First

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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<v Speaker 1>DABA Acurate podcast, available every morning on Apples, Spotify or

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<v Speaker 1>wherever you listen. It's Tuesday, the twenty sixth of March

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<v Speaker 1>in London and Caroline Hepka coming up today. Exclusive reporting

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<v Speaker 1>from Bloomberg uncovers evidence that Elon Musk's Starlink terminals are

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<v Speaker 1>falling into the wrong hands. Traders bet that the Bank

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<v Speaker 1>of England will start cutting interest rates before its appeers

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<v Speaker 1>as inflationary risks ease and Bailey goes dubvish plus. Donald

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<v Speaker 1>Trump's wealth has risen by four billion dollars and it

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<v Speaker 1>happened on the same day his business empire was supposed

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<v Speaker 1>to be in peril like never before. We have the details.

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

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<v Speaker 1>Bloomberg News investigation is uncovered multiple examples of Starlink terminals

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<v Speaker 1>being traded and activated illegally in the likes of Russia, Yemen,

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<v Speaker 1>and Venezuela. Our exclusive reporting has found that these satellite

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<v Speaker 1>links are being activated in territories where the US company

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<v Speaker 1>has no agreement to operate. Bloomberg's senior editor, Alan Crawford

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<v Speaker 1>has been tracing the sales of Starlink terminals.

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<v Speaker 2>There are many countries around the world where there's no

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<v Speaker 2>licensing agreement between the government and Starlink, and the trouble

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<v Speaker 2>is that people are turning to the black market to

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<v Speaker 2>obtain Starlink devices in away.

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<v Speaker 1>The work of Alan Crawford and colleagues or across Bloomberg

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<v Speaker 1>has raised questions about the company's control of a system

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<v Speaker 1>with clear national security dimensions. SpaceX has not responded to

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<v Speaker 1>Bloomberg's requests for comment on the investigation. Now, trade is

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<v Speaker 1>are betting that the Bank of England could beat its

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<v Speaker 1>European and US peers to interest rate cuts. Money markets

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<v Speaker 1>have raised wages on easing at its next monetary policy decision,

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<v Speaker 1>putting the probability of cut in the UK at twenty percent.

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<v Speaker 1>Bloomberg's James Orcock has more.

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<v Speaker 3>Britain was supposed to be lagging behind in the rate

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<v Speaker 3>cut in race, but these words from Bank of England

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<v Speaker 3>Governor Andrew Bailey as made markets reevaluates.

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<v Speaker 4>Yeah, we don't have to actually get inflation all the

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<v Speaker 4>way back to target sustainably to cut rights, for instance.

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<v Speaker 4>What we have to do is be convinced that it

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<v Speaker 4>is going to go there. We should act ahead of

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<v Speaker 4>time in that sense, because we have to be forward looking.

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<v Speaker 3>He also told the FT rate cuts were in play

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<v Speaker 3>at future meetings. That shift in tone has markets repositioning

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<v Speaker 3>the odds of a quarter point rate cuts in May

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<v Speaker 3>and now double that of the FED or the ECB.

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<v Speaker 3>It's a big shift, with the BOE having overtaken the

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<v Speaker 3>other two during the course of this year. In London,

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<v Speaker 3>James Orcock Bloomberg Radio.

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<v Speaker 1>The US and UK are accusing state backed Chinese hackers

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<v Speaker 1>of cyber attacks spanning years and stealing the data of

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<v Speaker 1>some forty million British voters. American officials charged seven Chinese

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<v Speaker 1>nationals with attacks on politicians and companies that Washington and

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<v Speaker 1>allies have linked to present Sijingping's government. Former UK National

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<v Speaker 1>security advisor Mark Lyle Grant says that formerly accusing China

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<v Speaker 1>is an important step.

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<v Speaker 5>The fact they're now calling out China rather than saying

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<v Speaker 5>we don't know where it's from, or just raising it

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<v Speaker 5>with the Chinese ambassador privately, I think is a sign

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<v Speaker 5>of a greater willingness to use intelligence to prevent hostile

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<v Speaker 5>activity against the UK.

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<v Speaker 1>So Mark Laya Grant speaking there. Both the US and

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<v Speaker 1>UK have announced sanctions against two Chinese individuals and a

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<v Speaker 1>firm in wu Han. China Prime Minister Vishisunak says that

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<v Speaker 1>the attacks present an epoch defining challenge. Boeing's CEO of

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<v Speaker 1>four years, Dave Calhoun, is stepping down. According to those

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<v Speaker 1>familiar with the matter, his departure was spurred by the

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<v Speaker 1>CEO at the manufacturer's three largest US customers pressuring board

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<v Speaker 1>members to control its safety crisis. Bloomberg's Guy Johnson says

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<v Speaker 1>Calhoun's successor will face a number of challenges.

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<v Speaker 6>The real question now is who could ultimately replace him.

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<v Speaker 6>He will be there until the end of the year,

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<v Speaker 6>in some ways as a lame duck CEO. The name

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<v Speaker 6>that is being floated Larry Culp from GE. But our

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<v Speaker 6>understanding is that maybe Larry Culp doesn't want the job.

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<v Speaker 6>Why would he want such a tricky job at such

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<v Speaker 6>a tricky time, particularly after he has just fixed GE

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<v Speaker 6>and put it back into a much better place.

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<v Speaker 1>That was Bloomberg Anca Guy Johnson Berring chairman Larry Kellner

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<v Speaker 1>will not stand for re election, and Stan Deal, who

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<v Speaker 1>heads the company's commercial airplane division, is departing immediately Now.

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<v Speaker 1>Adam Newman has reportedly made an offer to buy the

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<v Speaker 1>bankrupt company we Work More from Bloomberg's Doug Krisner.

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<v Speaker 7>Newman as We Work's former CEO. He's also a company

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<v Speaker 7>co found Five years ago. Newman was ousted by the board,

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<v Speaker 7>and he's been trying to regain control ever since. The

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<v Speaker 7>Wall Street Journal says Newman recently submitted an offer to

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<v Speaker 7>buy the company for more than five hundred million dollars.

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<v Speaker 7>It wasn't immediately clear how Newman would finance the acquisition.

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<v Speaker 7>The journal says Newman's lawyer sent a letter to Wei

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<v Speaker 7>Works Advisors last month saying he was joining with Dan

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<v Speaker 7>Loebe's hedge fund, Third Point and other investors in exploring

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<v Speaker 7>a bid. I'm Doug Prisner, Bloomberg Radio.

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<v Speaker 1>Monday was also a big day for Donald Trump. His

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<v Speaker 1>fortune hit a record six and a half billion US dollars,

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<v Speaker 1>and a bond payment of more than five hundred billion

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<v Speaker 1>dollars was cut by more than half. The former president's

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<v Speaker 1>social media company, Trump Media and Technology Group, wrapped up

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<v Speaker 1>to twenty nine month long merger process, so that increased

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<v Speaker 1>Trump's net worth by more than four billion dollars, adding

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<v Speaker 1>Trump to the ranks of Bloomberg's Billionaires Index for the

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<v Speaker 1>very first time. At the same time, a state appeals

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<v Speaker 1>gave him a lifeline. He was facing a deadline to

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<v Speaker 1>post a bond of more than five hundred million dollars

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<v Speaker 1>in a New York fraud lawsuit. The court slashed the

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<v Speaker 1>sum to one hundred and seventy five million dollars and

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<v Speaker 1>amount that Trump said he'll cover. The net resulted that

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<v Speaker 1>for the first time ever, Donald Trump has joined the

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<v Speaker 1>ranks of the world's wealthiest five hundred people on Bloomberg's

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<v Speaker 1>Billionaires Index. So those are some of our top stories

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<v Speaker 1>then for you this morning. Now in a moment, we're

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<v Speaker 1>going to bring you more on the misuse of Elon

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<v Speaker 1>Musk's Starlink delivering broadband internet to countries that have no

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<v Speaker 1>agreement to operate it. But first I saw this on

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<v Speaker 1>the Bloomberg terminal, And of course I'm always interested in property.

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<v Speaker 1>Property in London may have become more affordable in the

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<v Speaker 1>past five years, but homes in England are still eye

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<v Speaker 1>wateringly expensive if you compare them to earnings, which Bloomberg's

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<v Speaker 1>Tom Reas and Andrew Atkinson have done for us. I've

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<v Speaker 1>been looking at the OERNS data and they have found

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<v Speaker 1>that London homes still costs all almost twelve times earnings.

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<v Speaker 1>London may have been the worst performing region in England

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<v Speaker 1>for house prices in twenty twenty three, but it still

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<v Speaker 1>doesn't stop it being immensely difficult. Kensington and Chelsea in

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<v Speaker 1>West London have the least affordable homes. The median price

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<v Speaker 1>paid for home in just that little neighborhood thirty four

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<v Speaker 1>times average annual earnings. So that story on London property

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<v Speaker 1>on the Bloomberg terminal for you this morning. Now let's

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<v Speaker 1>get more on Bloomberg's exclusive reporting that to smuggled kits

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<v Speaker 1>from Elon Musk's Starlink are falling into the wrong hands.

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<v Speaker 1>These satellite links are being activated in territories where the

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<v Speaker 1>company has no agreement to operate, places like Russia, Yemen

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<v Speaker 1>and Venezuela. It is the subject of today's Big Take.

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<v Speaker 1>Joining me now to discuss it is our global business

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<v Speaker 1>reporter Bruce Einhorn. Bruce, good morning. I suppose the first

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<v Speaker 1>question is how are these unapproved groups and countries actually

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<v Speaker 1>getting hold of these units.

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<v Speaker 8>Starlink has over about fifty five hundred I think even

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<v Speaker 8>more satellites circling the Earth. If you get a dish

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<v Speaker 8>which you can buy in some location where perhaps it

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<v Speaker 8>is available, then you can get your dish back into

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<v Speaker 8>your country where it's not authorized, you can access the signal.

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<v Speaker 8>There are some countries in the world, the UK, other

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<v Speaker 8>countries in Europe, the United States, Japan where starlink has

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<v Speaker 8>a license, But there are many other places in Africa

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<v Speaker 8>and Asia, Latin America, where Middle East, where the governments

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<v Speaker 8>have not authorized this, so technically it is illegal to

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<v Speaker 8>use starlink in those places.

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<v Speaker 1>Yeah, okay, I mean that these countries, some of them

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<v Speaker 1>at least have in common the fact that they're at war.

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<v Speaker 1>How big an issue is this whole idea of using

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<v Speaker 1>these kits illegally, of smuggling these kits and why do

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<v Speaker 1>they want the units so much these places?

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<v Speaker 8>Well, it is very good system. So the appeal of

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<v Speaker 8>starlink is that you're independent of the cellular network, you're

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<v Speaker 8>independent of the landline. You can access the Internet via

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<v Speaker 8>these lower orbit satellites and have high speed access to

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<v Speaker 8>the Internet, and so it is something that appeals to

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<v Speaker 8>people in all sorts of places, whether it's in a

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<v Speaker 8>war zone, say in occupied Ukraine, where the Ukrainian government

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<v Speaker 8>has said that Russians have been using it, something that

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<v Speaker 8>Starlink says is not something they've authorized at all, or

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<v Speaker 8>in other places like Yemen, like Sudan where the infrastructure

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<v Speaker 8>is just not very good and so suddenly if you've

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<v Speaker 8>got a starlink terminal, you're independent of that.

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<v Speaker 1>Yeah, absolutely, your head and shoulders above everybody else. But

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<v Speaker 1>surely they can be tracked. Can't they just be turned

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<v Speaker 1>off remotely?

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<v Speaker 8>That is a question of just what is the ability

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<v Speaker 8>of SpaceX to turn these off? And SpaceX has said that,

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<v Speaker 8>uh that for instance, if there's use by Russian forces

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<v Speaker 8>that that is not something that they authorize, SpaceX has

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<v Speaker 8>taken action.

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<v Speaker 4>Uh.

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<v Speaker 8>In some cases, The question is just how much are

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<v Speaker 8>they aware of what's going on, because it is something

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<v Speaker 8>that keeping an eye on all the the unauthorized use

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<v Speaker 8>is a high task.

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<v Speaker 7>Yeah.

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<v Speaker 1>Absolutely so. Then how are starlink and elon Musk responding?

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<v Speaker 1>Have they responded to these findings this report?

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<v Speaker 6>We are.

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<v Speaker 8>They did respond in earlier this year when there were

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<v Speaker 8>the reports out of out of Ukraine about Russian use.

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<v Speaker 8>Elon Musk and SpaceX did come and then saying that

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<v Speaker 8>this is not something that they approve of as far

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<v Speaker 8>as use of it in places like uh yeah, in Sudan,

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<v Speaker 8>or even in places like South Africa must birthplace where

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<v Speaker 8>the government has not authorized it, but yet there is

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<v Speaker 8>a thriving black market. It's unclear what the company's position

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<v Speaker 8>is on whether they're obliged to do anything more.

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<v Speaker 7>Yeah.

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<v Speaker 1>Absolutely, Bruce, Thank you so much for being with us

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<v Speaker 1>and for your reporting. Bruce Einhorn's peace, along with his colleagues,

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<v Speaker 1>is on the Blouemig terminal this morning. Elon Musk's Starling

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<v Speaker 1>terminals are falling into the wrong hands. The effectiveness is

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<v Speaker 1>a communication tool makes the satellite internet service a target

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<v Speaker 1>for a growing trade on the black market. Really fascinating, Bruce.

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<v Speaker 1>Thanks for being with us, and I know that you'll

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<v Speaker 1>keep us up to date with any response that we

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<v Speaker 1>do get, perhaps from Starlink or from Elon Musk or

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<v Speaker 1>any of the others that we've reported about. Right I's sot.

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<v Speaker 1>My attention then also to the UK and trade is

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<v Speaker 1>betting on the Bank of England could be the first

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<v Speaker 1>major central bank to cut interest rates this year. That's

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<v Speaker 1>a big shift, isn't it from many a few months

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<v Speaker 1>ago where mates in the UK were expected to stay

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<v Speaker 1>high for longer than in the US and in Europe.

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<v Speaker 1>Garfield Reynolds, our lead for our Asia Markets live coverage,

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<v Speaker 1>joins us now. Garfield, very good morning to you, thanks

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<v Speaker 1>for being on radio. Is this more to do than

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<v Speaker 1>with the weakness of the UK economy than with the

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<v Speaker 1>Bank of England managing to beat back inflation?

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<v Speaker 9>Well, I mean there's a bit of both, and certainly

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<v Speaker 9>one of the paths to taming inflation is to hurt

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<v Speaker 9>the economy. That's, for example, the attitude taken by New

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<v Speaker 9>Zealand's central bank governor, who's been quite happy to see

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<v Speaker 9>a recession, well at least willing to see a recession

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<v Speaker 9>in order to try and tame inflation. So you know,

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<v Speaker 9>the Gooe is looking at the potential to cut rates

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<v Speaker 9>sooner than a lot of people, possibly you're including inside

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<v Speaker 9>the bank. After all, it was only the last meeting

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<v Speaker 9>when we had a couple of the Hawks stop voting

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<v Speaker 9>for rate hikes. So it has been a rapid evolution,

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<v Speaker 9>and that's because inflation in the UK k has continued

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<v Speaker 9>to slow down in a way that it hasn't quite

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<v Speaker 9>done especially in the US, so they don't face as

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<v Speaker 9>many concerns about lingering inflation.

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<v Speaker 1>Yeah, although the banking has been concerned about the second

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<v Speaker 1>round effects, are these now being seen as less of

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<v Speaker 1>an issue by traders? I mean, why are trade is

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<v Speaker 1>sort of shifting now?

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<v Speaker 9>Well, I think because one of the big things was

0:13:26.520 --> 0:13:30.120
<v Speaker 9>the words we had from Governor Bailey earlier in the

0:13:30.160 --> 0:13:32.160
<v Speaker 9>program when he was talking about how we don't need

0:13:32.200 --> 0:13:36.720
<v Speaker 9>to get back to the target before we actually cut

0:13:36.800 --> 0:13:38.840
<v Speaker 9>rates if we have confident we're going to get there.

0:13:39.240 --> 0:13:44.760
<v Speaker 9>So that's more open to rate cuts than Chairman Powell

0:13:44.840 --> 0:13:48.800
<v Speaker 9>has sounded, even than Christine Legarde has sounded, And in particular,

0:13:49.080 --> 0:13:52.560
<v Speaker 9>I was looking Bloomberg Economics and others have been saying

0:13:52.600 --> 0:13:57.280
<v Speaker 9>they expect the UK inflation rate to be back at

0:13:57.360 --> 0:14:00.280
<v Speaker 9>or under the target by about June, and then before

0:14:00.280 --> 0:14:03.000
<v Speaker 9>that was when they were thinking that rate cuts would come.

0:14:03.360 --> 0:14:06.280
<v Speaker 9>But if you say you think that inflation will be

0:14:06.280 --> 0:14:09.760
<v Speaker 9>where it needs to be by June or roundabout or

0:14:09.760 --> 0:14:12.520
<v Speaker 9>maybe very early in the second half, and Governor Bailey

0:14:12.600 --> 0:14:15.520
<v Speaker 9>is saying we could cut before we get there, well

0:14:15.559 --> 0:14:18.920
<v Speaker 9>then you know that does bring in the odds for

0:14:19.400 --> 0:14:23.880
<v Speaker 9>a May cut, even which would definitely be before anybody

0:14:23.960 --> 0:14:25.080
<v Speaker 9>else looks likely moving.

0:14:26.040 --> 0:14:28.960
<v Speaker 1>Okay, speaking of which I mean the Fed is June

0:14:29.000 --> 0:14:30.760
<v Speaker 1>still the base case. I mean, Friday is going to

0:14:30.760 --> 0:14:32.840
<v Speaker 1>be awkward. We get both a PC but also jo

0:14:32.960 --> 0:14:35.840
<v Speaker 1>and Powell is speaking on Friday even though markets are closed.

0:14:36.560 --> 0:14:39.800
<v Speaker 9>Yeah, the market's being closed, you know, could make for

0:14:39.840 --> 0:14:43.240
<v Speaker 9>an exciting open to next week once we get going.

0:14:43.760 --> 0:14:48.120
<v Speaker 9>But it's also the data has been jumping around a bit,

0:14:48.840 --> 0:14:51.680
<v Speaker 9>you know, in the US, but the Fed has been

0:14:51.720 --> 0:14:57.960
<v Speaker 9>emphasizing that they still see the path to softer inflation intact,

0:14:57.960 --> 0:15:02.160
<v Speaker 9>and in particular to some extent, I think they've proved themselves,

0:15:02.480 --> 0:15:06.840
<v Speaker 9>perhaps against too much of a reaction by the latest

0:15:06.840 --> 0:15:09.440
<v Speaker 9>dot plots. They stuck with seventy five basis points for

0:15:09.480 --> 0:15:14.520
<v Speaker 9>this year. They kept their inflation forecasts recently contained, but

0:15:14.640 --> 0:15:18.240
<v Speaker 9>they also lifted their growth forecasts, So they're kind of

0:15:18.280 --> 0:15:24.920
<v Speaker 9>forecasting a Goldilock's outcome of okay inflation, okay growth, even

0:15:24.960 --> 0:15:29.000
<v Speaker 9>if they cut interest rates three times this year. With

0:15:29.120 --> 0:15:31.480
<v Speaker 9>that being the case, you need to see some pretty

0:15:31.520 --> 0:15:35.840
<v Speaker 9>extraordinary shifts in the data, and you need to see

0:15:36.160 --> 0:15:39.400
<v Speaker 9>more than just two or three data points. You probably

0:15:39.440 --> 0:15:43.720
<v Speaker 9>need to see four or five. So with that again,

0:15:43.760 --> 0:15:47.720
<v Speaker 9>people are girding themselves for this could be really rock markets.

0:15:48.040 --> 0:15:51.280
<v Speaker 9>The FED has done their absolute best to set things

0:15:51.360 --> 0:15:54.000
<v Speaker 9>up so that markets cannot be rocked.

0:15:54.800 --> 0:15:57.520
<v Speaker 10>This is Bloomberg Daybreak Europe, your morning brief on the

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