Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Davi Cate podcast. Good morning, It's Thursday,
Speaker 2: the sixth of August. I'm Caroline hepkea in London.
Speaker 3: And I'm Stephen Caroline Brussels. Coming up today, some of
Speaker 3: the world's biggest hedge funds are targeted in a wave
Speaker 3: of sophisticated cyber attacks.
Speaker 2: Iran and o'man agree on a proposed route for shipping
Speaker 2: through this strait of Homuz.
Speaker 3: Plus the Kremlins squeeze. Vladimir Putin exerts growing pressure on
Speaker 3: Russia's Central Bank as cracks emerged in the country's wartime economy.
Speaker 2: Let's start with a roundup of our top stories.
Speaker 3: Hackers have launched a major cyber campaign against some of
Speaker 3: Wall Street's biggest money managers. Sources tell us the attacks
Speaker 3: featured voice phishing known as vishing, to mimic people in
Speaker 3: calls and messages in an effort to trick employees into
Speaker 3: revealing sensitive information or granting access to internal say systems.
Speaker 3: Hima Parmer is one of the reporters who broke the story.
Speaker 4: We're seeing some of the world's biggest hedge funds attacked
Speaker 4: in this attempt to end We're talking Citadel, Millennium point
Speaker 4: seventy two, to Sigma, and you know these firms collectively
Speaker 4: manage hundreds of billions of dollars. We do know that
Speaker 4: Point seventy two sent a letter to investors telling them
Speaker 4: that initial indicators were that there were no client information stolen,
Speaker 4: and then to Sigma also said in a statement that
Speaker 4: they have no indication of any impact to its systems.
Speaker 3: Our Head Fund Reporterhema Parmer, when asked about Bloomberg's reporting,
Speaker 3: spokespeople from Millennium point seventy two and Citadel declined to comment. Meanwhile,
Speaker 3: sources tell us that Wall Street's financial regulator FINRA has
Speaker 3: been in touch with member firms following the attempted breaches.
Speaker 3: The campaign is the latest sign that hackers are using
Speaker 3: increasingly sophisticated techniques to target financial firms.
Speaker 2: Well. Just days after narrowly avoiding the collapse of his
Speaker 2: hedge fund, Leopold ashen Brenner is back and making bets.
Speaker 2: Situational Awareness has committed another four hundred million dollars to
Speaker 2: a privately held company. The move follows the force sale
Speaker 2: of most of its public stock portfolio to ken Griffin
Speaker 2: Citadel after a barrage of margin calls. The AI focused
Speaker 2: firms assets have plunged from forty five billion dollars at
Speaker 2: the start of July to about ten billion dollars. The
Speaker 2: turmoil also hit the wider hedge fund industry, with several
Speaker 2: AI focus firms reporting steep losses in July.
Speaker 3: Iran says that has reached an agreement with Oman on
Speaker 3: a proposed route for shipping through the Strait of Jamus.
Speaker 3: A joint statement between the two countries is currently being drafted.
Speaker 3: According to Iran's Foreign Ministry spokesperson A smile Baguy, Bloomberg's
Speaker 3: at Stewart Livingston Wala says this doesn't mean an instant
Speaker 3: return of traffic through the strait.
Speaker 5: So Iran has made it clear this doesn't mean shipping
Speaker 5: is about to resume at a normal pace, and it
Speaker 5: has made this rather ominous remark that that the timing woman,
Speaker 5: depending on us actions done. Quite what that means, we
Speaker 5: don't know. Doesn't mean they have to lift the blockade.
Speaker 5: Does that mean they have to do other things? In
Speaker 5: otherwise it seems to be conditional. However, relative so let's
Speaker 5: say three or four days ago Stephaniel, step.
Speaker 3: Forward, Livingston, Wilas Rons. Blomberg's coverage of the Middle East,
Speaker 3: North Africa and Russia Oil held its lastes after a
Speaker 3: Run announced the agreement, which it says doesn't involve the
Speaker 3: United States. While fighting between the two sides as paused
Speaker 3: for now, there's been no formal agreement to restart negotiations.
Speaker 3: A number of other issues remain unresolved, including around the
Speaker 3: nuclear program.
Speaker 2: Now to some breaking news, Germany's commers Bank has reported
Speaker 2: second quarter earnings and announced plans for a share buyback
Speaker 2: up to one point two billion euros. Commers Bank's second
Speaker 2: quarter net interest income came in just below estimates at
Speaker 2: two point zero six billion euros. Second quarter operating profit
Speaker 2: was a beat of one point three seven billion euros
Speaker 2: versus estimates of one point three to two billion, and
Speaker 2: net income for the second quarter was also a beat
Speaker 2: at eight hundred and ninety eight million euros. The results
Speaker 2: come after CEO Bettina Orlop confirmed Commerce Bank will soon
Speaker 2: hold talks with UniCredit over the Italian lenders takeover approach.
Speaker 3: A drone carrying explosives has been found near a Ukrainian
Speaker 3: plane at an airport in Germany. Police said the device
Speaker 3: at Leipzig Airport has been diffused with Germany's Interior Minister
Speaker 3: Alexander dobrint says it represents a new type of danger.
Speaker 6: Dawn and Sichtungen drone sightings, drone threats, including in a
Speaker 6: hybrid context as something that we know from the past,
Speaker 6: and a drone armed with an explosive at an airport
Speaker 6: is a new threat. Look after Glinda befinded, desist and
Speaker 6: NOIUSS scenario went just.
Speaker 3: Speaking via translator, the German Interior minister added there will
Speaker 3: be an investigation and hinted that foreign powers may have
Speaker 3: been involved. The airport's used by the German Army and
Speaker 3: NATO allies transport military goods. Western officials have accused Russia
Speaker 3: and its proxies are staging dozens of attacks and other
Speaker 3: incidents across Europe since the full scale of invasion of
Speaker 3: Ukraine began more than four years ago. Russia has denied
Speaker 3: any involvement in those incidents.
Speaker 2: Finally, FIFA president Johnny Infantino has received internal backing at
Speaker 2: a crisis meeting in Morocco. Football's governing body said in
Speaker 2: a statement yesterday that senior staff and attendance at that
Speaker 2: gathering reaffirmed their full support for his position. The news
Speaker 2: comes after Infantino's plans to sell profits in the World
Speaker 2: Cup through a commercial subsidiary drew widespread criticism. Canadian Prime
Speaker 2: Minister Mark Carney says he no longer supports the FIFA boss.
Speaker 7: The idea that proper governance is not to disclose to
Speaker 7: your closest advisors, your chief operating officer, your fellow born members,
Speaker 7: something of consequence that you're even considering, let alone proposing
Speaker 7: that's fatal should be fatal, and you lose confidence in
Speaker 7: that individual. They have their own procedures for making those determinations,
Speaker 7: but certainly I don't have confidence in mister Infantino after
Speaker 7: this point.
Speaker 2: Canada's Mark Carney, speaking yesterday the country was one of
Speaker 2: the World Cup hosts over the summer. FIFA said that
Speaker 2: a letter had been sent to FIFA Council and member
Speaker 2: associations apologizing for errors and committing to ensure they do
Speaker 2: not happen again. Infantino is aiming to win a fourth
Speaker 2: and final term in office at elections to be held
Speaker 2: in March. Those are our top stories in terms of
Speaker 2: the markets this morning. So Global stocks have lived after
Speaker 2: five days a very strong gays your country. World Index
Speaker 2: today is down two tenths of one percent. You've seen
Speaker 2: the costs be plunging as much as five and a
Speaker 2: half percent, currently down about three point eight percent, Hang
Speaker 2: saying dropping two as notable decline as included the memory
Speaker 2: maker sand Disk, and of course sk Heinex and Samsung
Speaker 2: Electronics in South Korea, obviously such dominant stocks in that market.
Speaker 2: Gold is about ten dollars higher this morning, four thousand
Speaker 2: children sixty dollars. Europeans stop futures up two tenths of
Speaker 2: one percent, Deutsche Telecom increasing its share by back news
Speaker 2: this morning, and oil prices bring CRUD to seventy nine
Speaker 2: dollars twenty down three tenths of one percent.
Speaker 3: Stephen, In a moment, we'll bring you more on those
Speaker 3: cyber attacks targeting hedge funds, plus why businesses in Russia
Speaker 3: are no longer able to keep up with the higher
Speaker 3: wages driven by the country's wartime economy. But another story
Speaker 3: that we've been reading this morning, in case you are
Speaker 3: looking for an incongruous matching of destination and food, ra
Speaker 3: Avitasin has been writing about the growth and I suppose
Speaker 3: popularity of gelato in Edinburgh. She starts with the wonderful
Speaker 3: line Scotland has never followed logic when it comes to food,
Speaker 3: and goes on to report that despite being one of
Speaker 3: the coldest capital cities in Europe, Edinburgh has become a
Speaker 3: hub for gelato, now more than a dozen gelato parlors
Speaker 3: in the city, partly driven by the number of tourists,
Speaker 3: of course, that passed through Edinburgh, but also Laura points
Speaker 3: out that Scotland is a long history with ice cream,
Speaker 3: dating back to the arrival of Italian immigrants at the
Speaker 3: start of the twentieth century. Such gelato scene as a
Speaker 3: natural progression, and local places like Mary's Milk Bar I
Speaker 3: have given it a Scottish twist. Flavors like fried banana
Speaker 3: in butter and licorice caramel. Plenty of recommendations to pick
Speaker 3: up there. I've always wondered why I've had such excellent
Speaker 3: Italian food in Edinburgh, and now I know.
Speaker 2: Yeah, absolutely, I love that well. And also this is
Speaker 2: the month of the Fringe, isn't it the common massive
Speaker 2: comedy festival at tracks you know, thousands of tourists. No,
Speaker 2: I love that idea. I mean there are lots of
Speaker 2: such a lottery as popping up in London, although I
Speaker 2: must see the one on my high street. It's just
Speaker 2: shut down. I'm very sad about. But yeah, how delightful.
Speaker 2: What's your favorite flavor of ice cream?
Speaker 3: Sim caw oh, startled caramel?
Speaker 2: Yeah, greatly love it.
Speaker 3: I think it's very exciting. I don't know if I
Speaker 3: were trying the liquorice caramel version.
Speaker 6: We'll see.
Speaker 2: Well, yeah, I mean, in fact, we've tried soy and
Speaker 2: ketch up ice creams avant garde in London. There you go.
Speaker 3: Very good subjects Mayor is much further discussion, but let's
Speaker 3: turn back to some of the new stories, even covering
Speaker 3: this morning and more on that wave of cyber attacks
Speaker 3: targeting hedge funds. Matthew Thomas lead's our team covering investing
Speaker 3: in Asia. He joins us now for more on the story. Matthew,
Speaker 3: what do we know then about these attacks? Who was
Speaker 3: affected and what information was accessed?
Speaker 8: So we have learnt that some of the biggest hedge
Speaker 8: funds in the world were targeted and these attacks so
Speaker 8: names like zero point seventy two, Millennium, Citadel and two
Speaker 8: Sigma these are the names we know were targeted. Of course,
Speaker 8: it's possible some smaller hedge funds were also targeted, but
Speaker 8: at the very least they started with the big fish.
Speaker 8: VISEA are some of the biggest hedge funds, pod shops
Speaker 8: and quants in the world. They have the ability at
Speaker 8: times to move markets, and yeah, this will be causing
Speaker 8: a lot of alarm, particularly for smaller hedge funds who
Speaker 8: perhaps don't have the same level of cyber defenses. So
Speaker 8: what we know about these attacks is, in some ways
Speaker 8: there it kind of sounds reassuringly old fashioned. What the
Speaker 8: AI was doing in this case was really picking up
Speaker 8: the phone and trying to worm its way into getting information.
Speaker 8: Where it becomes more high tech is it was doing
Speaker 8: that by impersonating real human beings that work at these companies.
Speaker 8: So it may have personated impersonated executives after listening to
Speaker 8: interviews or watching YouTube videos of those guys. It may
Speaker 8: have impersonated staff on the help desk after making a
Speaker 8: series of phone calls and recording them, and likely it
Speaker 8: did both. But you know, whatever approach it took, it
Speaker 8: attempted through these phone calls to kind of escalate itself
Speaker 8: up a chain and get some sensitive information. You know,
Speaker 8: as I say, it's quite an old fashion. This is
Speaker 8: social engineering, right, People were trying to do this before
Speaker 8: computers even existed. The difference in this case is when
Speaker 8: you can automate it, you can do it thousands, tens
Speaker 8: of thousands of times a day, and your attack surface
Speaker 8: is absolutely huge because you can target so many different
Speaker 8: funds at once.
Speaker 2: Yeah, and it's also that we were worried about the
Speaker 2: idea of mimicry being so much easier now, but this
Speaker 2: is perhaps a real life example of that actually happening.
Speaker 2: And how prepared Matthew, do you think that the industry
Speaker 2: actually is for attacks like these?
Speaker 8: So, I mean, the good news here is the big
Speaker 8: funds we know were targeted. It looks like the score
Speaker 8: is one nil to them so far, right. Zero point
Speaker 8: seventy Too told investors it was attacked, but it said
Speaker 8: no client information was stolen. Two Sigma said it thwarted
Speaker 8: an attempt to access sensitive information. Big funds like these
Speaker 8: have world class cybersecurity teams, so they will be as
Speaker 8: prepared as anyone can be at this point. You know,
Speaker 8: the reality is, with these programs making such historic advances
Speaker 8: in their ability is always a work in progress, right.
Speaker 8: There's no kind of static sense in which the firm
Speaker 8: can be prepared for any level of cyber attack. They're
Speaker 8: always having to improve and kind of buston up their defenses.
Speaker 8: But these guys at least will be among the best prepared.
Speaker 8: As I said a moment ago, it's for smaller funds.
Speaker 8: They are the guys that will be looking at this
Speaker 8: story and really starting to worry. A lot of hedge
Speaker 8: funds have just a handful of people working for them,
Speaker 8: and if you're running a hedge fund, you're probably spending
Speaker 8: almost all of your time thinking of trade ideas, right,
Speaker 8: thinking of arbitrage, thinking of economic data. This is a
Speaker 8: reminder that the reality is for anyone who wants to
Speaker 8: set up and manage a hedge fund, there's a lot
Speaker 8: more you need to do than simply picking stocks to buy.
Speaker 8: Cybersecurity right now is going to be front and center
Speaker 8: of how you kind of de risk yourself from some
Speaker 8: of the stuff that's happening in the world.
Speaker 3: Yeah, a really fascinating story, Matthew, thanks for bringing his
Speaker 3: details up at Matthew Thomas there, who leads our team
Speaker 3: covering investing in Asia, stay with us more from Bloomberg
Speaker 3: Daybreak Europe coming up after this.
Speaker 2: Now, as Russia's full scale invasion of Ukraine extends for
Speaker 2: a fifth year, Russian businesses can no longer afford to
Speaker 2: keep pace with the Kremlin's war machine in the wage race.
Speaker 2: Years of acute labor shortage have pushed salaries well ahead
Speaker 2: of productivity growth. Now, with the wartime economic boom at
Speaker 2: an end, businesses are slashing costs. Tony Happen leads Bloomberg's
Speaker 2: team covering Russia's economy, and he's with us for more. Tony,
Speaker 2: good to speak to you. What has happened to wages
Speaker 2: in Russia during the war.
Speaker 1: Well, as you've noted, there's been a wage boom, and
Speaker 1: that's a spiral that's largely been driven by the huge
Speaker 1: demand of the military and defense industries for additional people,
Speaker 1: mainly men. Each month, something like thirty forty thousand people
Speaker 1: have to be recruited into the army in order to
Speaker 1: just fight in Ukraine. And then there's defense industries sucking
Speaker 1: in talent anything from welders to computer programmers, and that's
Speaker 1: made it very difficult for the civilian industries to compete.
Speaker 1: So they've had to raise wages, and that was fine
Speaker 1: while the economy was growing, while there was this war
Speaker 1: inspired boom as the government spent so much money to
Speaker 1: support its war in Ukraine. But that's now petered out
Speaker 1: and they're finding that they can't compete, and the more
Speaker 1: inefficient businesses are facing a struggle now either to recruit
Speaker 1: people or to cut back on their production because they
Speaker 1: can't find the people they need.
Speaker 3: So what's the bigger consequence of that then for Russia's economy.
Speaker 3: If businesses can't keep up with the wage demands, well.
Speaker 1: It becomes a vicious cycle. Really. I mean, part of
Speaker 1: the problem, and part of the reason that the Bank
Speaker 1: of Russia has been high king as interest rates is
Speaker 1: that the bank was trying to push inefficient businesses basically
Speaker 1: to become either more efficient or go out of business
Speaker 1: and let labor transfer to more efficient workers more efficient work.
Speaker 1: But the government has been subsidizing a lot of industries
Speaker 1: that they consider to be important, and so that mechanism
Speaker 1: hasn't been as effective as the Bank of Russia wanted.
Speaker 1: So you've got high interest rates which make it very
Speaker 1: difficult for businesses to invest in more efficient productivity, and
Speaker 1: at the same time, they can't get any more out
Speaker 1: of their workers. So the medium term perspective for the
Speaker 1: economy is little if no growth. That's very difficult for
Speaker 1: Vladimir boosing when he's still spending so much money the war.
Speaker 2: And this is analysis by Bloomberg Economics of what is
Speaker 2: happening in this wartime economy. And so we are also
Speaker 2: reporting at the same time that there is fresh pressure
Speaker 2: from President Putin on Russia's Central Bank governor Alvira and Abulina.
Speaker 2: This is to cut interest rates.
Speaker 1: Yes, and professionally because of that, so many businesses feel
Speaker 1: that they're in this vice between low growth and very
Speaker 1: high interest rates, which make it hard for them to
Speaker 1: invest and to actually keep servicing their debts. And Putain
Speaker 1: historically has not put much pressure on the Bank of
Speaker 1: Russia government via a Nabulina. But what we've reported, what
Speaker 1: we've noticed is that the most recent decision in July,
Speaker 1: there was a change of tone. A couple of times
Speaker 1: before that decision, he was signaling quite clearly that he
Speaker 1: liked interest rates to be lower, and parlsymakers did cut
Speaker 1: the base rate by twenty five basis points to fourteen percent,
Speaker 1: and much of their explanation for that was based on
Speaker 1: things they hadn't previously relied on. So it seems like
Speaker 1: too many handless at least, that the bank's somewhat blinked
Speaker 1: here and that other data like inflation and growth didn't
Speaker 1: really justify that decision, And so many people are watching
Speaker 1: to see what they'll do in September at the next meeting,
Speaker 1: to see there's a similar move.
Speaker 3: Interesting because of course, I Varianableena has been such a
Speaker 3: kind of important figure in the Russian management of the
Speaker 3: economy and has you know, attracted a lot of attention
Speaker 3: because of the changes that she's had to make leading
Speaker 3: Russia's center bank during this period as well. I mean,
Speaker 3: is this a change and opinion of her in her position.
Speaker 1: Well, we've got some source report in that indicates that
Speaker 1: she might have accepted some of the arguments that have
Speaker 1: been put to her, that the bank can show a
Speaker 1: bit more flexibility on inflation. It's got a long standing
Speaker 1: target of four percent, which hasn't it for years, and
Speaker 1: the arguments that were being put to the bank as well.
Speaker 1: We're in a wartime situation, the economy is flatlining, you know,
Speaker 1: pay less attention to inflation for a bit and use
Speaker 1: rape so that companies can survive. And it was notable
Speaker 1: that last month the Bank did in fact raise their
Speaker 1: inflation forecasts from four and a half five and a
Speaker 1: half to six and seven percent by the end of
Speaker 1: the year, and that was another signal really I think
Speaker 1: for many people that this argument of ali need to
Speaker 1: ease rates was being one despite some of the data
Speaker 1: which would suggest that it wasn't really justified.
Speaker 3: Thanks for listening to Bloomberg Daybreak Europe.
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