WEBVTT - Goldman Fires Execs,  A $1.5 Trillion Behemoth & May Talks China

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<v Speaker 1>Good morning. It's Thursday, the fourteenth of September here in London.

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<v Speaker 1>This is the Bloomberg Day Vacuate podcast. I'm Caroline Hepkin.

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<v Speaker 2>And I'm Stephen Carroll.

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<v Speaker 3>Coming up today, Goldban Sacks fires several transaction banking execs

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<v Speaker 3>for compliance lapses.

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<v Speaker 1>The former Prime Minister Theresa May tells us that Britain

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<v Speaker 1>should look for ways to compromise with China.

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<v Speaker 3>And we take a closer look at the one and

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<v Speaker 3>a half trillion dollar private credit market and why it's

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<v Speaker 3>offering a ray of hope to gloomy investment bankers.

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

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<v Speaker 3>Goldbn Sachs has fired several transaction banking executives over compliance lapses.

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<v Speaker 3>With more, here's Bloomberg's Crispece.

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<v Speaker 4>According to a memo seen by Bloomberg, the Wall Street

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<v Speaker 4>Giants sacked a number of senior figures who'd communicated on

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<v Speaker 4>unauthorized channels and failed to comply with an internal review.

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<v Speaker 4>In a statement, Golden Sachs said they wouldn't comment on

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<v Speaker 4>individual cases, but that they take communications policy serious and

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<v Speaker 4>expect all personnel to comply with it. The news comes

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<v Speaker 4>as financial firms face increasing pressure to police employees interactions

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<v Speaker 4>following a crackdown on the widespread use of WhatsApp and

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<v Speaker 4>other unauthorized apps. Last year, several banks, including Goldman, were

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<v Speaker 4>hit with two hundred million dollar fines over a failure

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<v Speaker 4>to monitor and archive work related messages. In London. I'm

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<v Speaker 4>Chris Pitt Bloomberg Radio.

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<v Speaker 5>Now.

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<v Speaker 1>Citygroup is preparing for a wave of job cuts as

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<v Speaker 1>the bank's CEO, Jane Fraser, looks to restructure the Wall

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<v Speaker 1>Street giant. The company will now operate five main businesses

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<v Speaker 1>and eliminate the three regional chiefs who oversaw operations in

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<v Speaker 1>about one hundred and sixty countries. Jane Fraser says that

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<v Speaker 1>the shakeup will have a big impact on the business.

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<v Speaker 6>The changes are the most consequential changes to how City

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<v Speaker 6>will be organized and run that we've made in almost

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<v Speaker 6>twenty years. And what this move enables me to do

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<v Speaker 6>it not only flatten the organization, but it also enables

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<v Speaker 6>me to be much more directly involved in making sure

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<v Speaker 6>that those businesses are performing.

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<v Speaker 1>Fraser's decision to reorganize the bank will result in a

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<v Speaker 1>number of job cuts in back office functions. Sources tell

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<v Speaker 1>us that it doesn't yet have firm targets for how

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<v Speaker 1>many jobs will be affected.

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<v Speaker 3>The chip designer ARM has priced its initial public offering

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<v Speaker 3>at the top end of its range to raise four

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<v Speaker 3>point eight seven billion dollars in the largest listing of

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<v Speaker 3>the year. Bimberg's Charlie Palace reports.

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<v Speaker 5>It could give a major lift to long suffering equity markets.

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<v Speaker 5>The chip designer, which is owned by SoftBank Groups, sold

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<v Speaker 5>ninety five point five million American Depository shares for fifty

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<v Speaker 5>one dollars a piece. ARM had marketed the shares for

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<v Speaker 5>forty seven to fifty one dollars each. At the IPO price,

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<v Speaker 5>ARM is valued at about fifty four point five billion

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<v Speaker 5>dollars according to Blue News calculations. The shares will begin

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<v Speaker 5>trading on NESDAK under the symbol ARM in New York.

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<v Speaker 5>Charlie Pellett Bloomberg Radio.

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<v Speaker 1>The former Prime Minister Teresa May says that Britain needs

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<v Speaker 1>to find ways to work with China. She teld Bloomberg.

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<v Speaker 1>The world's second largest economy can't be ignored.

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<v Speaker 7>You can't ignore china huge economic presence across the world.

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<v Speaker 7>Although the Deputy Prime Minister identified it is the number

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<v Speaker 7>one state based threat to our economic security. But it's

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<v Speaker 7>a huge presence economically for businesses, but also of course

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<v Speaker 7>in terms of the way it has reached out across

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<v Speaker 7>the world, sometimes been able to take a position in

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<v Speaker 7>countries because the West has not been there. We should

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<v Speaker 7>learn from that.

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<v Speaker 1>May's words come as the current Prime Minister, if She Sunak,

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<v Speaker 1>faces a dilemma over how to respond to allegations of

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<v Speaker 1>Chinese spying in parliament. Hawks in his own party are

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<v Speaker 1>pushing for the government to designate the superpower a strategic

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<v Speaker 1>threat and revoke China's invitation to a key AI summit

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<v Speaker 1>this autumn.

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<v Speaker 3>Elon Mosk has called for an artificial intelligence regulator after

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<v Speaker 3>a closed door send its summit of more than twenty

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<v Speaker 3>technology and other leaders. Speaking to reporters after the meeting,

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<v Speaker 3>the billionaire warned of the dangers of the technology.

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<v Speaker 5>You shoulding in the future as a series of probabilities

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<v Speaker 5>as opposed to certainties.

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<v Speaker 2>But there is some chance that above zero that AI

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<v Speaker 2>will kill us. Well, I think it's low, but it

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<v Speaker 2>there's some chance.

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<v Speaker 3>Musk himself, as a prominent AI investor, He was joined

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<v Speaker 3>at the meeting by organized by Senate Majority leader Chuck Schumer,

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<v Speaker 3>other major tech CEOs included Mark Zuckerberg and Bill Gates.

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<v Speaker 1>The European Central Bank will decide later whether or not

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<v Speaker 1>to deliver a tenth straight interest rate increase. Economists surveyed

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<v Speaker 1>by Bloomberg are split almost fifty to fifty between a

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<v Speaker 1>hold and a quarter point hike, whilst markets believe that

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<v Speaker 1>there's a sixty five percent chance that the the ECB

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<v Speaker 1>will opt to raise rates. So the decisions due at

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<v Speaker 1>one fifteen pm London time, with the ECB President Christine

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<v Speaker 1>Legard due to speak to media half an hour later,

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<v Speaker 1>and we'll bring that to you live here on Bloomberg.

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<v Speaker 3>The UK housing market is continuing to slow, with prices

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<v Speaker 3>in August falling at their fastest rates since two thousand

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<v Speaker 3>and nine. The Royal Institution of Charted Surveyors says inquiries

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<v Speaker 3>from new buyers are down and fewer homeowners are putting

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<v Speaker 3>their properties on the market. Cyberin Rubinson from Ricks says

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<v Speaker 3>rents are also being pushed up by a gap between

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<v Speaker 3>demand and supply.

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<v Speaker 8>When we ask our members up and down the country

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<v Speaker 8>what they think will happen to rents going forward, they

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<v Speaker 8>say they're going up. So it's really almost the reverse

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<v Speaker 8>situation of what we're seeing in the sales market.

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<v Speaker 3>The survey also highlights the growing toll being taken by

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<v Speaker 3>the steep rise and interest rates delivered by the Bank

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<v Speaker 3>of England and its bit to tame inflation.

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<v Speaker 2>Color.

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<v Speaker 3>I was about to ask if you're looking for a

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<v Speaker 3>new job, and I realized how Fastive aggressed that if

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<v Speaker 3>I said it out loud, let me explain, Let me explain.

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<v Speaker 3>So we had been Perhaps you may have seen the

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<v Speaker 3>stories around the set about how Gannett Media Group in

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<v Speaker 3>the US was recruiting a Taylor Swift reporter.

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<v Speaker 2>Well, this one, which I thought might be more up

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<v Speaker 2>your streets.

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<v Speaker 3>They're also looking for a Beyonce reporter now for USA

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<v Speaker 3>Today and the Tennessee. And so this is of course

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<v Speaker 3>part of why these artists are such a massive impact,

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<v Speaker 3>as we've been talking about on this program on the economy,

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<v Speaker 3>is their tours, as well as big ticket prices, involve

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<v Speaker 3>huge spends on things like hotels. People are traveling to

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<v Speaker 3>see these artists perform as well. They're seen now as

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<v Speaker 3>being important enough to have their own dedicated reporters from

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<v Speaker 3>this major US media group as well. So they are

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<v Speaker 3>two separate jobs. You can't do both. You have to

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<v Speaker 3>pick whether you want to be a Taylor Swift reporter

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<v Speaker 3>or a Beyonce reporter.

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<v Speaker 2>And the pay, they're fully remote jobs.

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<v Speaker 3>You'll get the chance to travel internationally to follow the stars.

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<v Speaker 2>I'm saying you again, I'm not trying to get rid

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<v Speaker 2>of you.

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<v Speaker 3>Maybe, And the pay is up to so between twenty

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<v Speaker 3>one dollars an hour. Istion about fifty one dollars an hour,

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<v Speaker 3>so it could add up to as much as one

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<v Speaker 3>hundred thousand dollars at the highest end of the range

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<v Speaker 3>based on a forty hour work week.

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<v Speaker 1>Look, I'm afraid I have been a journalist for long

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<v Speaker 1>enough that I remember when you know, being perhaps a

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<v Speaker 1>fashion writer or being somebody who followed celebrities or pop

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<v Speaker 1>stars was considered on a lighter end of journalism. But

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<v Speaker 1>when you look at the data and the number how

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<v Speaker 1>much money people are spending, you know, to follow that

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<v Speaker 1>the stars that they love the most, to the tune

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<v Speaker 1>of five point four billion dollars in the US economy. Actually,

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<v Speaker 1>you know that this is very very serious business, and

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<v Speaker 1>rightly so.

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<v Speaker 3>I look, there are two artists that kind of epitomize

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<v Speaker 3>how much artists need to be a full business model.

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<v Speaker 3>Now it's not just about making music, it's everything else

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<v Speaker 3>that goes with it that manages to make them such

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<v Speaker 3>a huge impact on the economy as well. So anyway,

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<v Speaker 3>if you're looking for a new job this morning, sorry Caroline.

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<v Speaker 1>No, I still love my own program. Tempted as I

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<v Speaker 1>may be to follow Taylor Swift around the world. Good stuff. Yeah,

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<v Speaker 1>that's it's a really nice piece that we've got on

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<v Speaker 1>the Bloomberg terminal for you this morning. Also, though, I

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<v Speaker 1>want to talk about well, another a woman in a

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<v Speaker 1>prominent woman, Theresa May, the Britain's second female Prime minister,

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<v Speaker 1>who took over from David Cameron. She's got a new

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<v Speaker 1>book out all about her time in Number ten. Of course,

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<v Speaker 1>May's tenure between twenty sixteen and twenty nineteen it was

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<v Speaker 1>dominated by battles over how to negotiate the UK's exit

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<v Speaker 1>from the EU, despite the former Home Secretary having campaigned

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<v Speaker 1>against leaving. Now Teresa May has been speaking to Blomberg's

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<v Speaker 1>Farci Laqua. May discussed the hard line polarization of US politics,

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<v Speaker 1>saying that the Capitol Hill riot by a mob of

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<v Speaker 1>Donald Trump supporters was a quite wake up call, not

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<v Speaker 1>just to the US, but also to Western democracies that

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<v Speaker 1>political stability should not be taken for granted.

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<v Speaker 7>I think politics across the world has been changing in

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<v Speaker 7>recent years. I say in the book, I think we

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<v Speaker 7>live in a more absolutist world, a sense of you're

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<v Speaker 7>either one hundred percent with me or one hundred percent

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<v Speaker 7>against me. I think there are some in politics who

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<v Speaker 7>find it difficult to accept the concept of compromise, whereas

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<v Speaker 7>we know in politics, in business, in everyday life, sometimes

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<v Speaker 7>you actually have to compromise. And I think there has

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<v Speaker 7>been in some senses. If you look at politics today,

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<v Speaker 7>there's less respect than there has been in the past,

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<v Speaker 7>perhaps a courser debate. I don't think that's good, and

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<v Speaker 7>I think sometimes that puts young people off.

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<v Speaker 9>You were very deliberate and precise in your dealings with China.

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<v Speaker 9>Should Rushie Sunek have flown to China actually first year

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<v Speaker 9>in office?

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<v Speaker 7>I think it's the debate about China is often seems

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<v Speaker 7>to be in what I described earlier as those absolutist terms,

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<v Speaker 7>that either you ignored China or you're completely sort of

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<v Speaker 7>in with China. The answer is, of course, that it's

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<v Speaker 7>right to be neither of those you can't ignore china

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<v Speaker 7>huge economic presence across the world, although the Deputy Prime

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<v Speaker 7>Minister identified it is the number one state based threat

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<v Speaker 7>to our economic security. But it's a huge presence economically

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<v Speaker 7>for businesses, but also of course in terms of the

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<v Speaker 7>way it has reached out across the world, sometimes being

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<v Speaker 7>able to take a position in countries because the West

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<v Speaker 7>has not been there. So we should learn from that,

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<v Speaker 7>I think. But we have to balance there are real

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<v Speaker 7>human rights issues with China. You know, I'm involved in

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<v Speaker 7>setting up a Global Commission on Modern Slavery. If you

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<v Speaker 7>look at the recent Global Slavery Index, it identified solar

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<v Speaker 7>panels being created in China and labor exploitation behind those.

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<v Speaker 7>So we have to look very carefully, and businesses can

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<v Speaker 7>make a huge difference in looking at their supply chains.

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<v Speaker 9>But at the moment you think we're too hard on China,

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<v Speaker 9>and is there a danger that if you look at

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<v Speaker 9>the template of what happened with Russia and the Cold War,

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<v Speaker 9>we're repeating that with China today.

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<v Speaker 7>Well, I think what was interesting in if you think

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<v Speaker 7>about Russia and the Cold is in a sense both

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<v Speaker 7>sides knew where the dividing lines were and were able

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<v Speaker 7>to there was an existence that was able to go

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<v Speaker 7>into the future with people understanding those dividing lines. And

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<v Speaker 7>I think maybe we haven't quite got to that point

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<v Speaker 7>with China. And it's very interesting if you look at

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<v Speaker 7>somebody like Kevin Rudd, former Australian Prime Minister, who's very

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<v Speaker 7>knowledgeable on China, he sets out that as one of

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<v Speaker 7>the potential ways.

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<v Speaker 5>Forward President Trump.

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<v Speaker 9>President Trump had given you a hard time. Would you

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<v Speaker 9>think a second presidency if he wins the next election

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<v Speaker 9>means for the world.

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<v Speaker 7>Well, I'm not going to speculate on the result of

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<v Speaker 7>an American presidential election, or indeed on the result of

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<v Speaker 7>parties candidates and who they choose for candidates. I mean,

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<v Speaker 7>what I would say is that it was I would say,

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<v Speaker 7>a presidency like no other when we saw President Trump

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<v Speaker 7>in his position, and it was a more unpredictable, perhaps

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<v Speaker 7>and uncertain presidency. I think what we see now, and

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<v Speaker 7>in a sense the war in Ukraine has helped with

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<v Speaker 7>this is America again with its Western allies standing up

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<v Speaker 7>for Western values.

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<v Speaker 9>But do you see abuse of power in the US.

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<v Speaker 7>What I worry about in the US is the polarization

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<v Speaker 7>of politics. What I would say, the very hard line

0:12:22.360 --> 0:12:27.840
<v Speaker 7>polarization of politics, and I, as many around the world

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<v Speaker 7>in democracies, were deeply concerned about the mob attack on

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<v Speaker 7>the Capitol and what that meant for democracy, and in

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<v Speaker 7>a sense was a wake up call because in recent decades,

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<v Speaker 7>I think those of us in the West have taken

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<v Speaker 7>the view that liberal democracies were in the ascendancy, that

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<v Speaker 7>this was an accepted way forward, and we almost didn't

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<v Speaker 7>need to worry, became complacent. Actually, we have to fight,

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<v Speaker 7>We have to work hard to protect democracies and to

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<v Speaker 7>persuade good generations in our own countries of the importance

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<v Speaker 7>of democracy.

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<v Speaker 1>So that was Teresa May. Her book is The Abuse

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<v Speaker 1>of Power. She was speaking to Bloomberg's France scene Laqua Look.

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<v Speaker 1>I think the points that she makes around the UK's

0:13:13.000 --> 0:13:16.960
<v Speaker 1>attitude to China is immensely important and also kind of

0:13:16.960 --> 0:13:21.600
<v Speaker 1>democratic values. I think it's worth saying the response from China,

0:13:21.679 --> 0:13:26.400
<v Speaker 1>you know, has been quite pointed in terms of the

0:13:26.520 --> 0:13:29.520
<v Speaker 1>UK's concerns around spying. For example, you know, if you

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<v Speaker 1>read the China Daily talking about how the UK media

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<v Speaker 1>too frequently hypes up concerns around intervening in investments that

0:13:40.320 --> 0:13:42.600
<v Speaker 1>China is making in the UK or in these kind

0:13:42.600 --> 0:13:47.160
<v Speaker 1>of claims around spying. The attitude in China is much

0:13:47.200 --> 0:13:48.480
<v Speaker 1>more dubious.

0:13:48.559 --> 0:13:50.880
<v Speaker 3>Indeed, and that's interesting to hear Teresa May's view on

0:13:50.920 --> 0:13:53.400
<v Speaker 3>that as well. Let's turn into a different story now

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<v Speaker 3>and the boom and private credit markets used to be

0:13:55.760 --> 0:13:58.200
<v Speaker 3>a niche area, but rising interest rate environment has turned

0:13:58.200 --> 0:14:00.800
<v Speaker 3>it into a one and a half trillion dollar market

0:14:00.840 --> 0:14:03.520
<v Speaker 3>and everyone wants a slice of it. That has caused

0:14:03.520 --> 0:14:05.960
<v Speaker 3>a wave of consolidation in the spaces. Big players are

0:14:05.960 --> 0:14:08.400
<v Speaker 3>trying to get bigger and smaller firms want to remain

0:14:08.520 --> 0:14:10.440
<v Speaker 3>in the game. Joining us now to discuss is our

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<v Speaker 3>asset management reporter Lukia Giftopolu Lukia, good morning to you,

0:14:14.480 --> 0:14:14.719
<v Speaker 3>m and A.

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<v Speaker 2>And private credit is a hot market right now?

0:14:17.200 --> 0:14:22.400
<v Speaker 10>Why well, private credit has become very popular in general

0:14:22.480 --> 0:14:25.840
<v Speaker 10>because of the rising interest rates. The banks are not

0:14:25.960 --> 0:14:28.840
<v Speaker 10>lending us much anymore and you can charge very high

0:14:28.840 --> 0:14:31.480
<v Speaker 10>fees for these products. So a lot of people who

0:14:31.480 --> 0:14:34.160
<v Speaker 10>are not in the space before want to get in

0:14:34.440 --> 0:14:37.240
<v Speaker 10>and they're trying to get in by acquisition, by buying

0:14:37.640 --> 0:14:39.720
<v Speaker 10>other smaller players do the job for them.

0:14:40.720 --> 0:14:42.120
<v Speaker 1>So who is buying.

0:14:43.280 --> 0:14:46.680
<v Speaker 10>Well, right now m and A is mainly driven by

0:14:46.720 --> 0:14:49.400
<v Speaker 10>the big traditional asset managers who had nothing to do

0:14:49.480 --> 0:14:52.320
<v Speaker 10>with this before. And I'll slightly late to the party.

0:14:52.640 --> 0:14:54.440
<v Speaker 10>So we see a lot of these a lot of

0:14:54.440 --> 0:14:57.840
<v Speaker 10>these guys just trying to find kind of a superablel

0:14:58.000 --> 0:15:03.120
<v Speaker 10>private credit business to buy, and they've been driving acquisitions

0:15:03.200 --> 0:15:05.920
<v Speaker 10>where you speak to consultants, they say, well, you know,

0:15:06.440 --> 0:15:08.400
<v Speaker 10>M and A is a private trend game right now,

0:15:08.640 --> 0:15:11.000
<v Speaker 10>mainly because of them. But then you also have the

0:15:11.080 --> 0:15:15.440
<v Speaker 10>established players like rs Apollo and Autree, and they would

0:15:15.440 --> 0:15:17.840
<v Speaker 10>also be looking to buy kind of more high quality

0:15:17.880 --> 0:15:21.320
<v Speaker 10>staff because they're always on the lookout for for good deals.

0:15:21.520 --> 0:15:24.280
<v Speaker 10>And there's also a sense that the big guys may

0:15:24.360 --> 0:15:26.720
<v Speaker 10>want to try and get bigger before the banks decide

0:15:26.720 --> 0:15:28.480
<v Speaker 10>to come back in and start lending again.

0:15:29.120 --> 0:15:31.000
<v Speaker 3>And on the other side, why do the smaller private

0:15:31.080 --> 0:15:34.080
<v Speaker 3>kind of firms want to sell, Well, you know.

0:15:34.200 --> 0:15:38.120
<v Speaker 10>Several reasons, but mainly they're finding a lot harder to

0:15:38.240 --> 0:15:40.840
<v Speaker 10>raise money so they can't compete as much with the

0:15:40.840 --> 0:15:46.120
<v Speaker 10>bigger players. The current environment is kind of favoring the

0:15:46.160 --> 0:15:50.080
<v Speaker 10>more established players. Investors want to go to the to

0:15:50.240 --> 0:15:52.760
<v Speaker 10>the to the firms that have a longer track record

0:15:52.960 --> 0:15:56.200
<v Speaker 10>that have the experience with a downturn and more resources

0:15:56.200 --> 0:15:58.560
<v Speaker 10>to deal with it. If you know, if very section

0:15:58.760 --> 0:16:02.320
<v Speaker 10>finally caps, so the small the small firms they can

0:16:02.480 --> 0:16:04.880
<v Speaker 10>raise as much money and as a result, they can

0:16:05.280 --> 0:16:08.320
<v Speaker 10>make as many deals and they can pay for top

0:16:08.440 --> 0:16:09.520
<v Speaker 10>talent as well as it.

0:16:11.320 --> 0:16:14.040
<v Speaker 3>This is Bloomberg Daybreak Europe, your morning brief on the

0:16:14.120 --> 0:16:17.160
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0:16:17.440 --> 0:16:21.400
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0:16:38.320 --> 0:16:39.120
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