Speaker 1: Good morning. It's Thursday, the fourteenth of September here in London.
Speaker 1: This is the Bloomberg Day Vacuate podcast. I'm Caroline Hepkin.
Speaker 2: And I'm Stephen Carroll.
Speaker 3: Coming up today, Goldban Sacks fires several transaction banking execs
Speaker 3: for compliance lapses.
Speaker 1: The former Prime Minister Theresa May tells us that Britain
Speaker 1: should look for ways to compromise with China.
Speaker 3: And we take a closer look at the one and
Speaker 3: a half trillion dollar private credit market and why it's
Speaker 3: offering a ray of hope to gloomy investment bankers.
Speaker 1: Let's start with a roundup of our top stories.
Speaker 3: Goldbn Sachs has fired several transaction banking executives over compliance lapses.
Speaker 3: With more, here's Bloomberg's Crispece.
Speaker 4: According to a memo seen by Bloomberg, the Wall Street
Speaker 4: Giants sacked a number of senior figures who'd communicated on
Speaker 4: unauthorized channels and failed to comply with an internal review.
Speaker 4: In a statement, Golden Sachs said they wouldn't comment on
Speaker 4: individual cases, but that they take communications policy serious and
Speaker 4: expect all personnel to comply with it. The news comes
Speaker 4: as financial firms face increasing pressure to police employees interactions
Speaker 4: following a crackdown on the widespread use of WhatsApp and
Speaker 4: other unauthorized apps. Last year, several banks, including Goldman, were
Speaker 4: hit with two hundred million dollar fines over a failure
Speaker 4: to monitor and archive work related messages. In London. I'm
Speaker 4: Chris Pitt Bloomberg Radio.
Speaker 5: Now.
Speaker 1: Citygroup is preparing for a wave of job cuts as
Speaker 1: the bank's CEO, Jane Fraser, looks to restructure the Wall
Speaker 1: Street giant. The company will now operate five main businesses
Speaker 1: and eliminate the three regional chiefs who oversaw operations in
Speaker 1: about one hundred and sixty countries. Jane Fraser says that
Speaker 1: the shakeup will have a big impact on the business.
Speaker 6: The changes are the most consequential changes to how City
Speaker 6: will be organized and run that we've made in almost
Speaker 6: twenty years. And what this move enables me to do
Speaker 6: it not only flatten the organization, but it also enables
Speaker 6: me to be much more directly involved in making sure
Speaker 6: that those businesses are performing.
Speaker 1: Fraser's decision to reorganize the bank will result in a
Speaker 1: number of job cuts in back office functions. Sources tell
Speaker 1: us that it doesn't yet have firm targets for how
Speaker 1: many jobs will be affected.
Speaker 3: The chip designer ARM has priced its initial public offering
Speaker 3: at the top end of its range to raise four
Speaker 3: point eight seven billion dollars in the largest listing of
Speaker 3: the year. Bimberg's Charlie Palace reports.
Speaker 5: It could give a major lift to long suffering equity markets.
Speaker 5: The chip designer, which is owned by SoftBank Groups, sold
Speaker 5: ninety five point five million American Depository shares for fifty
Speaker 5: one dollars a piece. ARM had marketed the shares for
Speaker 5: forty seven to fifty one dollars each. At the IPO price,
Speaker 5: ARM is valued at about fifty four point five billion
Speaker 5: dollars according to Blue News calculations. The shares will begin
Speaker 5: trading on NESDAK under the symbol ARM in New York.
Speaker 5: Charlie Pellett Bloomberg Radio.
Speaker 1: The former Prime Minister Teresa May says that Britain needs
Speaker 1: to find ways to work with China. She teld Bloomberg.
Speaker 1: The world's second largest economy can't be ignored.
Speaker 7: You can't ignore china huge economic presence across the world.
Speaker 7: Although the Deputy Prime Minister identified it is the number
Speaker 7: one state based threat to our economic security. But it's
Speaker 7: a huge presence economically for businesses, but also of course
Speaker 7: in terms of the way it has reached out across
Speaker 7: the world, sometimes been able to take a position in
Speaker 7: countries because the West has not been there. We should
Speaker 7: learn from that.
Speaker 1: May's words come as the current Prime Minister, if She Sunak,
Speaker 1: faces a dilemma over how to respond to allegations of
Speaker 1: Chinese spying in parliament. Hawks in his own party are
Speaker 1: pushing for the government to designate the superpower a strategic
Speaker 1: threat and revoke China's invitation to a key AI summit
Speaker 1: this autumn.
Speaker 3: Elon Mosk has called for an artificial intelligence regulator after
Speaker 3: a closed door send its summit of more than twenty
Speaker 3: technology and other leaders. Speaking to reporters after the meeting,
Speaker 3: the billionaire warned of the dangers of the technology.
Speaker 5: You shoulding in the future as a series of probabilities
Speaker 5: as opposed to certainties.
Speaker 2: But there is some chance that above zero that AI
Speaker 2: will kill us. Well, I think it's low, but it
Speaker 2: there's some chance.
Speaker 3: Musk himself, as a prominent AI investor, He was joined
Speaker 3: at the meeting by organized by Senate Majority leader Chuck Schumer,
Speaker 3: other major tech CEOs included Mark Zuckerberg and Bill Gates.
Speaker 1: The European Central Bank will decide later whether or not
Speaker 1: to deliver a tenth straight interest rate increase. Economists surveyed
Speaker 1: by Bloomberg are split almost fifty to fifty between a
Speaker 1: hold and a quarter point hike, whilst markets believe that
Speaker 1: there's a sixty five percent chance that the the ECB
Speaker 1: will opt to raise rates. So the decisions due at
Speaker 1: one fifteen pm London time, with the ECB President Christine
Speaker 1: Legard due to speak to media half an hour later,
Speaker 1: and we'll bring that to you live here on Bloomberg.
Speaker 3: The UK housing market is continuing to slow, with prices
Speaker 3: in August falling at their fastest rates since two thousand
Speaker 3: and nine. The Royal Institution of Charted Surveyors says inquiries
Speaker 3: from new buyers are down and fewer homeowners are putting
Speaker 3: their properties on the market. Cyberin Rubinson from Ricks says
Speaker 3: rents are also being pushed up by a gap between
Speaker 3: demand and supply.
Speaker 8: When we ask our members up and down the country
Speaker 8: what they think will happen to rents going forward, they
Speaker 8: say they're going up. So it's really almost the reverse
Speaker 8: situation of what we're seeing in the sales market.
Speaker 3: The survey also highlights the growing toll being taken by
Speaker 3: the steep rise and interest rates delivered by the Bank
Speaker 3: of England and its bit to tame inflation.
Speaker 2: Color.
Speaker 3: I was about to ask if you're looking for a
Speaker 3: new job, and I realized how Fastive aggressed that if
Speaker 3: I said it out loud, let me explain, Let me explain.
Speaker 3: So we had been Perhaps you may have seen the
Speaker 3: stories around the set about how Gannett Media Group in
Speaker 3: the US was recruiting a Taylor Swift reporter.
Speaker 2: Well, this one, which I thought might be more up
Speaker 2: your streets.
Speaker 3: They're also looking for a Beyonce reporter now for USA
Speaker 3: Today and the Tennessee. And so this is of course
Speaker 3: part of why these artists are such a massive impact,
Speaker 3: as we've been talking about on this program on the economy,
Speaker 3: is their tours, as well as big ticket prices, involve
Speaker 3: huge spends on things like hotels. People are traveling to
Speaker 3: see these artists perform as well. They're seen now as
Speaker 3: being important enough to have their own dedicated reporters from
Speaker 3: this major US media group as well. So they are
Speaker 3: two separate jobs. You can't do both. You have to
Speaker 3: pick whether you want to be a Taylor Swift reporter
Speaker 3: or a Beyonce reporter.
Speaker 2: And the pay, they're fully remote jobs.
Speaker 3: You'll get the chance to travel internationally to follow the stars.
Speaker 2: I'm saying you again, I'm not trying to get rid
Speaker 2: of you.
Speaker 3: Maybe, And the pay is up to so between twenty
Speaker 3: one dollars an hour. Istion about fifty one dollars an hour,
Speaker 3: so it could add up to as much as one
Speaker 3: hundred thousand dollars at the highest end of the range
Speaker 3: based on a forty hour work week.
Speaker 1: Look, I'm afraid I have been a journalist for long
Speaker 1: enough that I remember when you know, being perhaps a
Speaker 1: fashion writer or being somebody who followed celebrities or pop
Speaker 1: stars was considered on a lighter end of journalism. But
Speaker 1: when you look at the data and the number how
Speaker 1: much money people are spending, you know, to follow that
Speaker 1: the stars that they love the most, to the tune
Speaker 1: of five point four billion dollars in the US economy. Actually,
Speaker 1: you know that this is very very serious business, and
Speaker 1: rightly so.
Speaker 3: I look, there are two artists that kind of epitomize
Speaker 3: how much artists need to be a full business model.
Speaker 3: Now it's not just about making music, it's everything else
Speaker 3: that goes with it that manages to make them such
Speaker 3: a huge impact on the economy as well. So anyway,
Speaker 3: if you're looking for a new job this morning, sorry Caroline.
Speaker 1: No, I still love my own program. Tempted as I
Speaker 1: may be to follow Taylor Swift around the world. Good stuff. Yeah,
Speaker 1: that's it's a really nice piece that we've got on
Speaker 1: the Bloomberg terminal for you this morning. Also, though, I
Speaker 1: want to talk about well, another a woman in a
Speaker 1: prominent woman, Theresa May, the Britain's second female Prime minister,
Speaker 1: who took over from David Cameron. She's got a new
Speaker 1: book out all about her time in Number ten. Of course,
Speaker 1: May's tenure between twenty sixteen and twenty nineteen it was
Speaker 1: dominated by battles over how to negotiate the UK's exit
Speaker 1: from the EU, despite the former Home Secretary having campaigned
Speaker 1: against leaving. Now Teresa May has been speaking to Blomberg's
Speaker 1: Farci Laqua. May discussed the hard line polarization of US politics,
Speaker 1: saying that the Capitol Hill riot by a mob of
Speaker 1: Donald Trump supporters was a quite wake up call, not
Speaker 1: just to the US, but also to Western democracies that
Speaker 1: political stability should not be taken for granted.
Speaker 7: I think politics across the world has been changing in
Speaker 7: recent years. I say in the book, I think we
Speaker 7: live in a more absolutist world, a sense of you're
Speaker 7: either one hundred percent with me or one hundred percent
Speaker 7: against me. I think there are some in politics who
Speaker 7: find it difficult to accept the concept of compromise, whereas
Speaker 7: we know in politics, in business, in everyday life, sometimes
Speaker 7: you actually have to compromise. And I think there has
Speaker 7: been in some senses. If you look at politics today,
Speaker 7: there's less respect than there has been in the past,
Speaker 7: perhaps a courser debate. I don't think that's good, and
Speaker 7: I think sometimes that puts young people off.
Speaker 9: You were very deliberate and precise in your dealings with China.
Speaker 9: Should Rushie Sunek have flown to China actually first year
Speaker 9: in office?
Speaker 7: I think it's the debate about China is often seems
Speaker 7: to be in what I described earlier as those absolutist terms,
Speaker 7: that either you ignored China or you're completely sort of
Speaker 7: in with China. The answer is, of course, that it's
Speaker 7: right to be neither of those you can't ignore china
Speaker 7: huge economic presence across the world, although the Deputy Prime
Speaker 7: Minister identified it is the number one state based threat
Speaker 7: to our economic security. But it's a huge presence economically
Speaker 7: for businesses, but also of course in terms of the
Speaker 7: way it has reached out across the world, sometimes being
Speaker 7: able to take a position in countries because the West
Speaker 7: has not been there. So we should learn from that,
Speaker 7: I think. But we have to balance there are real
Speaker 7: human rights issues with China. You know, I'm involved in
Speaker 7: setting up a Global Commission on Modern Slavery. If you
Speaker 7: look at the recent Global Slavery Index, it identified solar
Speaker 7: panels being created in China and labor exploitation behind those.
Speaker 7: So we have to look very carefully, and businesses can
Speaker 7: make a huge difference in looking at their supply chains.
Speaker 9: But at the moment you think we're too hard on China,
Speaker 9: and is there a danger that if you look at
Speaker 9: the template of what happened with Russia and the Cold War,
Speaker 9: we're repeating that with China today.
Speaker 7: Well, I think what was interesting in if you think
Speaker 7: about Russia and the Cold is in a sense both
Speaker 7: sides knew where the dividing lines were and were able
Speaker 7: to there was an existence that was able to go
Speaker 7: into the future with people understanding those dividing lines. And
Speaker 7: I think maybe we haven't quite got to that point
Speaker 7: with China. And it's very interesting if you look at
Speaker 7: somebody like Kevin Rudd, former Australian Prime Minister, who's very
Speaker 7: knowledgeable on China, he sets out that as one of
Speaker 7: the potential ways.
Speaker 5: Forward President Trump.
Speaker 9: President Trump had given you a hard time. Would you
Speaker 9: think a second presidency if he wins the next election
Speaker 9: means for the world.
Speaker 7: Well, I'm not going to speculate on the result of
Speaker 7: an American presidential election, or indeed on the result of
Speaker 7: parties candidates and who they choose for candidates. I mean,
Speaker 7: what I would say is that it was I would say,
Speaker 7: a presidency like no other when we saw President Trump
Speaker 7: in his position, and it was a more unpredictable, perhaps
Speaker 7: and uncertain presidency. I think what we see now, and
Speaker 7: in a sense the war in Ukraine has helped with
Speaker 7: this is America again with its Western allies standing up
Speaker 7: for Western values.
Speaker 9: But do you see abuse of power in the US.
Speaker 7: What I worry about in the US is the polarization
Speaker 7: of politics. What I would say, the very hard line
Speaker 7: polarization of politics, and I, as many around the world
Speaker 7: in democracies, were deeply concerned about the mob attack on
Speaker 7: the Capitol and what that meant for democracy, and in
Speaker 7: a sense was a wake up call because in recent decades,
Speaker 7: I think those of us in the West have taken
Speaker 7: the view that liberal democracies were in the ascendancy, that
Speaker 7: this was an accepted way forward, and we almost didn't
Speaker 7: need to worry, became complacent. Actually, we have to fight,
Speaker 7: We have to work hard to protect democracies and to
Speaker 7: persuade good generations in our own countries of the importance
Speaker 7: of democracy.
Speaker 1: So that was Teresa May. Her book is The Abuse
Speaker 1: of Power. She was speaking to Bloomberg's France scene Laqua Look.
Speaker 1: I think the points that she makes around the UK's
Speaker 1: attitude to China is immensely important and also kind of
Speaker 1: democratic values. I think it's worth saying the response from China,
Speaker 1: you know, has been quite pointed in terms of the
Speaker 1: UK's concerns around spying. For example, you know, if you
Speaker 1: read the China Daily talking about how the UK media
Speaker 1: too frequently hypes up concerns around intervening in investments that
Speaker 1: China is making in the UK or in these kind
Speaker 1: of claims around spying. The attitude in China is much
Speaker 1: more dubious.
Speaker 3: Indeed, and that's interesting to hear Teresa May's view on
Speaker 3: that as well. Let's turn into a different story now
Speaker 3: and the boom and private credit markets used to be
Speaker 3: a niche area, but rising interest rate environment has turned
Speaker 3: it into a one and a half trillion dollar market
Speaker 3: and everyone wants a slice of it. That has caused
Speaker 3: a wave of consolidation in the spaces. Big players are
Speaker 3: trying to get bigger and smaller firms want to remain
Speaker 3: in the game. Joining us now to discuss is our
Speaker 3: asset management reporter Lukia Giftopolu Lukia, good morning to you,
Speaker 3: m and A.
Speaker 2: And private credit is a hot market right now?
Speaker 10: Why well, private credit has become very popular in general
Speaker 10: because of the rising interest rates. The banks are not
Speaker 10: lending us much anymore and you can charge very high
Speaker 10: fees for these products. So a lot of people who
Speaker 10: are not in the space before want to get in
Speaker 10: and they're trying to get in by acquisition, by buying
Speaker 10: other smaller players do the job for them.
Speaker 1: So who is buying.
Speaker 10: Well, right now m and A is mainly driven by
Speaker 10: the big traditional asset managers who had nothing to do
Speaker 10: with this before. And I'll slightly late to the party.
Speaker 10: So we see a lot of these a lot of
Speaker 10: these guys just trying to find kind of a superablel
Speaker 10: private credit business to buy, and they've been driving acquisitions
Speaker 10: where you speak to consultants, they say, well, you know,
Speaker 10: M and A is a private trend game right now,
Speaker 10: mainly because of them. But then you also have the
Speaker 10: established players like rs Apollo and Autree, and they would
Speaker 10: also be looking to buy kind of more high quality
Speaker 10: staff because they're always on the lookout for for good deals.
Speaker 10: And there's also a sense that the big guys may
Speaker 10: want to try and get bigger before the banks decide
Speaker 10: to come back in and start lending again.
Speaker 3: And on the other side, why do the smaller private
Speaker 3: kind of firms want to sell, Well, you know.
Speaker 10: Several reasons, but mainly they're finding a lot harder to
Speaker 10: raise money so they can't compete as much with the
Speaker 10: bigger players. The current environment is kind of favoring the
Speaker 10: more established players. Investors want to go to the to
Speaker 10: the to the firms that have a longer track record
Speaker 10: that have the experience with a downturn and more resources
Speaker 10: to deal with it. If you know, if very section
Speaker 10: finally caps, so the small the small firms they can
Speaker 10: raise as much money and as a result, they can
Speaker 10: make as many deals and they can pay for top
Speaker 10: talent as well as it.
Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the
Speaker 3: stories making news from London to Wall Street and beyond.
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Speaker 1: I'm Caroline Hepka and.
Speaker 2: I'm Stephen Carroll.
Speaker 3: Join us again tomorrow morning for all the news you
Speaker 3: need to start your day right here on Bloomberg Daybreak Europe.